Property Cases 3

BACHRACH MOTORS V. TALISAY-SILAY MILLINGkn [G.R. NO. 35223. SEPTEMBER 17, 1931.]

En Banc, Romualdez (J): 7 concurring

Facts: On 22 December 1923, the Talisay-Silay Milling Co., Inc., was indebted to the PNB. To secure the payment of its debt, it succeeded in inducing its planters, among whom was Mariano Lacson Ledesma, to mortgage their land to the bank. And in order to compensate those planters for the risk they were running with their property under that mortgage, the aforesaid central, by a resolution passed on the same date, and amended on 23 March 1928, undertook to credit the owners of the plantation thus mortgaged every year with a sum equal to 2% of the debt secured according to the yearly balance, the payment of the bonus being made at once, or in part from time to time, as soon as the central became free of its obligations to the bank, and of those contracted by virtue of the contract of supervision, and had funds which might be so used, or as soon as it obtained from said bank authority to make such payment.

Bachrach Motor Co., Inc. filed a complaint against the Talisay-Silay Milling Co., Inc., for the delivery of the amount of P13,850 or promissory notes or other instruments of credit for that sum payable on 30 June 1930, as bonus in favor of Mariano Lacson Ledesma. The complaint further prays that the sugar central be ordered to render an accounting of the amounts it owes Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to pay Bachrach Motors a sum sufficient to satisfy the judgment mentioned in the complaint, and that the sale made by said Mariano Lacson Ledesma be declared null and void. The PNB filed a third party claim alleging a preferential right to receive any amount which Mariano Lacson Ledesma might be entitled from Talisay-Silay Milling as bonus. Talisay-Silay answered the complaint that Mariano Lac son Ledesma’s credit (P7,500) belonged to Cesar Ledesma because he had purchase it. Cesar Ledesma claimed to be an owner by purchase in good faith. At the trial all the parties agreed to recognize and respect the sale made in favor of Cesar Ledesma of the P7,500 part of the credit in question, for which reason the trial court dismissed the complaint and cross-complaint against Cesar Ledesma authorizing the central to deliver to him the sum of P7,500. And upon conclusion of the hearing, the court held that the Bachrach Motor Co., Inc., had a preferred right to receive the amount of P11,076.02 which was Mariano Lacson Ledesma’s bonus, and it ordered the central to deliver said sum to Bachrach Motors. PNB appealed. The Supreme Court affirmed the judgment appealed from, as it found no merit in the appeal;, without express finding as to costs.

1. Civil Fruits under Article 355 of the Civil Code Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings; second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities, or other similar sources of revenue. According to the context of the law, the phrase “u otras analogas” refers only to rents or income, for the adjectives “otras” and “analogas” agree with the noun “rentas,” as do also the other adjectives “perpetuas” and “vitalicias.” The “civil fruits” the Civil Code understands one of three and only three things, to wit: the rent of a building, the rent of land, and certain kinds of income.

2. Bonus not a civil fruit; not an income of the land The amount of the bonus, according to the resolution of the central granting it, is not based upon the value, importance or any other circumstance of the mortgaged property, but upon the total value of the debt thereby secured, according to the annual balance, which is something quite distinct from and independent of the property referred to. As the bonus is not obtained from the land, it is not civil fruits of that land. It is neither rent of buildings, proceeds from lease of lands, or income under Article 355 of the Civil Code.

Pacific Farms v. Esguerra [G.R. No. L-21783. November 29, 1969.]

En Banc, Castro (J): 8 concur, 1 concurs in result Facts: On several occasions from 1 October 1956 to 2 March 1957 the Carried Lumber Company sold and delivered lumber and construction materials to the Insular Farms, Inc. which the latter used in the construction of 6 buildings at its compound in Bolinao, Pangasinan, of the total procurement price of P15,000, the sum of P4,710.18 has not been paid by Insular Farms, Inc. Consequently, on 17 October 1958 the Company instituted Civil Case D-775 with the CFI Pangasinan to recover the said unpaid balance from the Insular Farms. On August 23, 1 961 the trial court rendered ju dgment sustaining the Company’s claim. The  judgment-debtor did not appeal; so on 19 December 1961 the corresponding writ of execution was issued. On 16 January 1962 the sheriff levied upon the 6 buildings. On 30 January 1962, the Pacific Farms filed a third-party claim asserting ownership over the levied buildings which it had acquired from the Insular Farms by virtue of a deed of absolute sale executed on 21 March 1958, about 7 months before the Company filed the present action (Civil case D-775). Shielded by an indemnity bond of P7,120 put up by the Company and the Cosmopolitan Insurance Company, the sheriff proceeded with the announced public auction on 12 February 1962 and sold the levied buildings to the Company for P6,110.78. Asserting absolute and exclusive ownership of the buildings in question, the Pacific Farms filed a complaint on 14 May 1962 against the Company and the sheriff with the CFI Pangasinan, praying that judgment be rendered, (a) declaring null and void the levy and judicial sale of the 6 buildings, and (b) adjudging the defendants jointly and severally liable to the plaintiff in the sum of P2,000 by way of actual damages and for such amount as the court may deem proper and just to impose by way of exemplary damages and for costs of the suit. After due trial and on 30 May 1963, the court rendered judgment annulling the levy of 16 January 1962 and the certificate of sale of 12 February 1962. The court, however, denied the plaintiff’s claim for actual and exemplary damages on the ground that it was not “prepared to find that there was gross negligence or bad faith on the part of any of the defendants.” Hence, the appeal. The Supreme Court reversed the judgment, and dismissed the complaint. The Court granted, however in view of the equities attendant in the case, Pacific Farms a period of 30 days from the date of the finality of the judgment, within which it may exercise the option of redeeming the 6 buildings, by paying Carried Lumber Company the sum of P4,710.18 with legal interest from 23 September 1961 until the said amount shall have been fully paid; without pronouncement as to costs. G.R. No. L-21783, Inc. v. Company, 32 SCRA 36 Republic of the Philippines

SUPREME COURT Manila EN BANC DECISION March 25, 1970 G.R. No. L-21783

PACIFIC FARMS, INC. , plaintiff-appellee, vs.

SIMPLICIO G. ESGUERRA, ET AL., defendants, CARRIED LUMBER COMPANY , defendant-appellant. RESOLUTION

Castro, J.: Subject of this resolution is a motion filed by the plaintiff-appellee Pacific Farms, Inc. for reconsideration of our decision of November 29, 1969. Briefly stated, the plaintiff-appellee's first a rgument is that it should not have been found liable for the payment of the unpaid portion of the procurement price of the lumber and construction materials furnished by the appellant to its predecessor-in-interest, the Insular Farms, Inc., because it was a purchaser for value and in good faith of the

six buildings in question. The flaw in this argument lies in its assumption that the reason we held the appellee liable is that it was not a buyer in good faith and for value, which is incorrect. When we applied article 447 of the Civil Code by analogy to this case, we did so on the assumption that the plaintiff-appellee was in good faith. Thus, after quoting said article, we stated: Although it does not appear from the records of this case that the land upon which the six buildings were built is owned by the appellee, nevertheless, that the appellee claims that it owns the six buildings constructed out of the lumber and construction materials furnished by the appellant, is indubitable. Therefore, applying article 447 by analogy, we perforce consider the buildings as the principal and the lumber and construction materials that went into their construction as the accessory. Thus the appellee, if it does own the six buildings, must bear the obligation to pay for the values of the said materials; the appellant - which apparently has no desire to remove the materials, and, even if it were minded to do so, cannot remove them without necessarily damaging the buildings has the corresponding right to recover the value of the unpaid lumber and construction materials. (Decision, pp. 4 5; emphasis supplied) Indeed, because we assumed that the appellee was in good faith, we did not pronounce it liable for the reparation of damages but only for the payment of the unpaid price of the lumber and construction materials due to the appellant as unpaid furnisher thereof. Based on this same assumption, we likewise held that the appellant has no right to remove the materials but only to recovery the value of the unpaid lumber and construction materials. Thus, since the appellee benefited from the accession, i.e., from the lumber and materials that went into the construction of the six buildings, it should shoulder the compensation due to the appellant as unpaid furnisher of materials, pursuant to the rule we cited in our decision that compensation should be borne by the person who has been benefited by the accession. Under the overall environmental circumstances of the case, considering that although the appellee was in a better position to protect its own interest it took no action to intervene in the suit filed by the appellant against the Insular Farms, Inc. or to hold the latter to account therefor, notwithstanding that it concededly acquired knowledge, after its purchase from the Insular Farms, Inc., on March 21, 1958 of the six buildings in question; of the filing and pendency of the appellant's suit for payment of the unpaid balance of the price of the lumber and construction materials delivered to the Insular Farms, Inc. and used in the construction of the said buildings, the Court believes that its decision upholding the sheriff's sale of the six buildings but granting the appellee the option of redeeming the same by paying to the appellant the unpaid balance with interest owing to it as supplier of the construction materials, is completely in consonance with justice and equity. ACCORDINGLY, the plaintiff-appellee's motion for reconsideration dated December 12, 1969 is hereby denied. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Fernando, Teehankee, Barredo and Villamor, JJ., concur. G.R. No. L-44606 November 28, 1938 VICENTE STO. DOMINGO BERNARDO, plaintiff-appellant, vs. CATALINO BATACLAN, defendant-appellant. TORIBIO TEODORO, purchaser-appellee. Pedro de Leon for plaintiff-appellant.  Ange l H. Moji Mojica ca a nd Franc F ranc isco Lavi Lavides des for def defend endant ant appe llan t.  Jose Y. Garde G arde for appe llee .

LAUREL, J.: This is an appeal taken by both the plaintiff and the defendant from the order of September 26, 193 5, hereinabove referred to, of the Court of First Instance of Cavite in Civil Case No. 2428. There is no controversy as to the facts. By a contract of sale executed from Pastor Samonte and others ownership of a parcel of land of about 90 hectares situated in sitio Balayunan, Silang, Cavite. To secure possession of the land from the vendors the said plaintiff, on July 20, 1929, instituted Civil Case No. 1935 in the Court of First Instance of Cavite. The trial court found for the plaintiff in a decision which was affirmed by this Supreme Court on appeal  1 (G.R. No. 33017).  When plaintiff entered upon the premises, however, he found the defendant herein, Catalino Bataclan, who appears to have been authorized by former owners, as far back as 1922, to clear the land and make improvements thereon. As Bataclan was not a party in C ase No. 1935, plaintiff, on June 11, 1931, instituted against him, in the Court of First Instance of Cavite, Civil Case No. 2428. In this case, plaintiff was declared owner but the defendant was held to be a possessor in good fa ith, entitled to reimbursement in the total sum of P1,642, for work done and improvements made. The dispositive part of the decision reads:  2

Both parties appealed to this court (G. R. No. 37319).  The decision appealed from was modified by allowing the defendant to recover compensation amounting to P2,212 and by reducing the price at which the plaintiff could require the defendant to purchase the land in question from P300 to P200 per hectare. Plaintiff was given by this court 30 days from the date when the decision became final within which to exercise his option, either to sell the land to the defendant or to buy the improvements from him. On January 9, 1934, the plaintiff manifested to the lower court his desire "to require the defendant to pay him the value of the land at the rate of P200 per hectare or a total price of P18,000 for the whole tract of land." The defendant informed the lower court that he was unable to pay the land and, on January 24, 1934, an order was issued giving the plaintiff 30 days within which to pay the defendant the sum of P2,212 stating that, in the event of failure to make such payment, the land would be ordered sold at public auction " Para hacer pago al demandante de la suma de P2,212 y el remanente despues de deducidos los gastos legales de la venta en publica subasta sera entregado al demandante ." On February 21, 1934, plaintiff moved to reconsider the foregoing order so that he would have preference over the defendant in the order of payment. The motion was denied on March 1, 1934 but on March 16 following the court below, motu  proprio modified its order of January 24, " en el sentido de que el demandante tiene derecho preferente al importe del terreno no se vendiere en publica subasta, a razon de P200 por hectares y el remanente, si acaso lo hubiere se entregara al demandado en pago de la cantidad de P2,212 por la limpieza del terreno y las mejoras introducidas en el mismo por el citado demandado ." On April 24, 1934, the court below, at the instance of the plaintiff and without objection on the part of the defendant, ordered the sale of the land in question at public auction. The land was sold on April 5, 1935 to Toribio Teodoro, the highest bidder, for P8,000. In the certificate of sale issued to said purchaser on the very day of sale, it was stated that the period of redemption of the land sold was to expire on April 5, 1936. Upon petition of Toribio Teodoro the court below ordered the provincial sheriff to issue another certificate not qualified by any equity of redemption. This was complied with by the sheriff on July 30, 1935. On September 18, 1935, Teodoro moved that he be placed in possession of the land purchased by him. The motion was granted by order of September 26, 1935, the dispositive part of which is as follows: The Civil Code confirms certain time-honored principles of the law of property. One of these is the principle of accession whereby the owner of property acquires not only that which it produces but that which is united to it either naturally or artificially. (Art. 353.) Whatever is built, planted or sown on the land of another, and the improvements or repairs made thereon, belong to the owner of the land (art. 358). Where, however, the planter, builder, or sower has acted in good faith, a conflict of rights arises between the owners and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating what Manresa calls a state of "forced coownership" (vol. 3, 4th ed., p. 213), the law has provided a just and equitable solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity or to oblige the builder or planter to pay for the land and the sower to pay the proper rent (art. 361). It is the owner of the land who is allowed to exercise the option because his right is older and because, by the principle of acc ession, he is entitled to the ownership of the a ccessory thing (3 Manresa,

4th ed., p. 213). In the case before us, the plaintiff, as owner of the land, chose to require the defendant, as owner of the improvements, to pay for the land. The defendant states that he is a possessor in good faith and that the amount of P2,212 to which he is entitled has not yet been paid to him. Therefore, he says, he has a right to retain the land in accordance with the provisions of article 453 of the Civil Code. We do not doubt the validity of the premises stated. " Considera la ley tan saarada y legitima la deuda, que, hasta que sea pagada, no consiente que la cosa se restituya all vencedor  ." (4 Manresa, 4th ed, p., 304.) We find, however, that the defendant has lost his right of retention. In obedience to the decision of this court in G.R. No. 37319, the plaintiff expressed his desire to require the defendant to pay for the value of the land. The said defendant could have become owner of both land and improvements and continued in possession thereof. But he said he could not pay and the land was sold at public auction to Toribio Teodoro. The law, as we have already said, requires no more than that the owner of the land should choose between indemnifying the owner of the improvements or requiring the latter to pay for the land. When he failed to pay for the land, the defendant herein lost his right of retention. The sale at public auction having been asked by the plaintiff himself (p. 22, bill of exceptions) and the purchase price of P8,000 received by him from Toribio Teodoro, we find no reason to justify a rapture of the situation thus created between them, the defendant-appellant not being entitled, after all, to recover from the plaintiff the sum of P2,212. lawphi1.net  The judgment of the lower court is accordingly modified by eliminating therefrom the reservation made in favor of the defendant-appellant to recover from the plaintiff the sum of P2,212. In all the respects, the same is affirmed, without pronouncement regarding costs. So ordered.  Avanceña, C.J., Villa-Real, Imperial and Diaz, JJ., concur.

G.R. No. L-12486 August 31, 1960 LEONOR GRANA and JULIETA TORRALBA, petitioners, vs. THE COURT OF APPEALS, AURORA BONGATO and JARDENIO SANCHEZ, respondents.

Tranquilino O. Calo, Jr. for petitioners. E.D. Mercado, J.V. Ong and J.T. Gonzales for respondents.

GUTIERREZ DAVID,  J .: .: This is a petition to review on certiorari a decision of the Court of Appeals. Leonor Grana and Julieta Torralba, defendants below and herein petitioners, were on April 13, 1951 sued by Aurora Bongato and Jardenio Sanchez, respondents herein, before the Court of First Instance of Agusan, for the recovery of 87 square meters of residential land. After trial, the court rendered judgment declaring the plaintiffs, herein respondents, owners of the land in controversy and ordering petitioners to vacate and deliver it to said respondents and to pay a monthly rental of P10.00 from the filing of the complaint until they actually vacate the same, plus attorney's fees and costs. The decision, on appeal, having been affirmed by the Court of Appeals with the only modification of disallowing the award for attorney's fees, petitioners brought the case to this Court through the present petition for review. The record discloses that sometime in 1909 a cadastral survey of Butuan, Agusan, was made by the Bureau of Lands. In that survey, the parcel of land here in question was included as part of the lot belonging to Gregorio Bongato and Clara Botcon for which Original Certificate of Title No. RO-72 (138) was issued in their favor on February 12, 1923. On November 25, 1933, this lot was purchased by the spouses Marcos Bongato and Eusebia

More, and upon their death, the land was inherited by the respondents Aurora Bongato and Jardenio Sanchez, the former being the daughter of Marcos Bongato by his first marriage while the latter is the son of Eusebia More also by her first marriage. Petitioners claim that the lands in Butuan were subsequently resurveyed due to conflicts and overlapping of boundaries. In that resurvey (TS-65 Butuan Cadastre), Gregorio Bongato's lot, according to petitioners, was identified as Lot No. 311 and that of Isidaria Trillo, their predecessor in interest, as Lot No. 310. Citing the fact that Original Certificate of Title No. RO-72 (138) covers 295 square meters of land, while the sketch plan of the second cadastral survey of Butuan shows that Lot No. 311 has only 230 square meters, petitioners maintain that it is the latter area properly belongs to respondents and that the land in question is part of the a djoining land, Lot No. 310, which belonged to their predecessor in interest. Petitioners' stand is untenable. No proof was presented to show that the first survey was erroneous or that it included part of the contigous land of petitioners' predecessor in interest as part of the lot now covered by Original Certificate of Title No. RO-72 (138). Note that the difference in area between the land covered by said title and Lot No. 311 of the resurvey plan is 65 square meters while the area of the land in dispute if 87 square meters. And what is more, the alleged sketch plan of the resurvey was not presented in evidence. Upon the other hand, it is not disputed that the land in question is part of the lot covered by the Torrens title issued way back in 1923 in the name of respondents' predecessor in interest. Said title has not been contested up to the present, and, therefore, has become inconvertible evidence of the ownership of the land covered by it. Well settled is the rule that a Torrens certificate of title becomes conclusive and indefeasible after the lapse of the period within which it may be impugned (Reyes, et al. vs. Borbon, et al., 50 Phil., 791; Yumul vs. Rivera, et al., 64 Phil., 13). Petitioners' contention that the Court of Appeals erred in not granting their motion for new trial on the ground of newly discovered evidence, likewise, cannot be sustained. The new evidence sought to be introduced was the sketch plan of the second survey, which, with the employment of reasonable diligence would have easily been discovered and produced at the trial. Anyway, even if presented at the result of the case. If a subsequent certificate of title cannot be permitted to prevail over a previous Torrens title (Reyes, et al, vs. Borbon, et al., supra) with more reason should a resurvey plan not to be allowed to alter or modify such title so as to make the area of the land therein described agree with that given in the plan. (See Government of the Philippines vs. Arias, 36 Phil., 195). Although without any legal and valid claim over the land in question, petitioners, however, were found by the Court of Appeals to have constructed a portion of their house thereon in good faith. Under Article 361 of the old Civil Code (Article 448 of the new), the owner of the land on which anything has been built in good faith shall have the right to appropriate as his own faith shall have the right to appropriate as his own the building, after payment to the builder of necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure, or to oblige the builder to pay the price of the land. Respondents, as owners of the land, have therefore the choice of either appropriating the portion of petitioners' house which is on their land upon payment of the proper indemnity to petitioners, or selling to petitioners that part of their land on which stands the improvement. It may here be pointed out that it would be impractical for respondents to choose to exercise the first alternative, i.e., buy that portion of the house standing on their land, for in that event the whole building might be rendered useless. The more workable solution, it would seem, is for respondents to sell to petitioners that part of their land on which was constructed a portion of the latter's house. If petitioners are unwilling or unable to buy, then they must vacate the land and must pay rentals until they do so. Of course, respondents cannot oblige petitioners to buy the land if its value is considerably more than that of the aforementioned portion of the house. If such be the case, then petitioners must pay reasonable rent. The parties must come to an agreement as to the conditions of the lease, and should they fail to do so, then the court shall fix the same. (Article 361, old Civil Code; Article 448 of the new).

In this connection, the appellate court erred in ordering petitioners to pay monthly rentals of P10 .00 from the date of filing of the complaint until they actually vacate said land. A builder in good faith may not be required to pay rentals. He has a right to retain the land on which he has built in good faith until he is reimbursed the expenses incurred by him. (Miranda vs. Fadullon, et al., 97 Phil., 801; 51 Off. Gaz., 6226, see also Martinez vs. Baganus, 28 Phil., 500; De Guzman vs.  De la Fuente, 55 Phil., 501; Kasilag vs. Rodriguez, Off. Gaz., Supp., August 16, 1941, p. 247). Petitioners further contend that he complaint should have been dismissed for nonjoinder of an indispensable party, it being alleged that their mother Maria Cupin, who owns the land in question as part of her Lot No. 310, has not been made a party defendant in the case. This contention, which was not raised in the trial court, deserves scant consideration. Petitioners clearly asserted ownership over the land in dispute as well as over Lot No. 310 in their answer to the complaint. They are consequently estopped from alleging otherwise. As to petitioners' assertion that they should have been awa rded damages alleged to have been suffered by them in their counterclaim, suffice it to say that petitioners failed to prove that they suffered any damage at all by reason of the filing of the complaint. Indeed, in the light of the view we have taken of the case, they could not have substantiated their claim for damages. In view of the foregoing, the appealed decision is modified in the sense that respondents are hereby directed to exercise within 30 days from this decision their option to either buy the portion of the petitioners' house on their land or sell to said petitioners the portion of their land and petitioners are unwilling or unable to buy, then they must vacate the same and must pay reasonable rent of P10.00 monthly from the time respondents made their choice up to the time they actually vacate the premises. But if the value of the eland is considerably more than the value of the improvement, then petitioners may elect to rent the land, in which case the parties shall agree upon the terms of a lease. Should they disagree, the court of origin is hereby instructed to intervene and fix the terms thereof. Petitioners shall pay reasonable rent of P10.00 monthly up to the time the parties agree on the terms of the lease or until the curt fixes such terms. So ordered without pronouncement as to costs. G.R. No. L-175 April 30, 1946 DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS I GNACIO, petitioners, vs. ELIAS HILARIO and his wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First Instance of Pangasinan, respondents. Leoncio R. Esliza for petitioners. Mauricio M. Monta for respondents.

MORAN, C.J. : This is a petition for certiorari  arising  arising from a case in the Court of First Instance of Pangasinan between the herein respondents Elias Hilario and his wife Dionisia Dres as plaintiffs, and the herein petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning the ownership of a parcel of land, partly rice-land and partly residential. After the trial of the case, the lower court, presided over by Hon. Alfonso Felix, rendered judgment holding plaintiffs as the legal owners of the whole property but conceding to defendants the ownership of the houses and granaries built by them on the residential portion with the rights of a possessor in good faith, in accordance with article 361 of the Civil Code. The dispositive part of the decision, hub of this controversy, follows: Wherefore, judgment is hereby rendered declaring:

(1) That the plaintiffs are the owners of the whole property described in transfer certificate of title No. 12872 (Exhibit A) issued in their name, and entitled to the possession of the same; (2) That the defendants are entitled to hold the position of the residential lot until after they are paid the actual market value of their houses and granaries erected thereon, unless the plaintiffs prefer to sell them said residential lot, in which case defendants shall pay the plaintiffs the proportionate value of said residential lot taking as a basis the price paid for the whole land according to Exhibit B; and (3) That upon defendant's failure to purchase the residential lot in question, said defendants shall remove their houses and granaries after this decision becomes final and within the period of sixty (60) days from the date that the court is informed in writing o f the attitude of the parties in this respect. No pronouncement is made as to damages and costs. Once this decision becomes final, the plaintiffs and defendants may appear again before this court for the purpose of determining their respective rights under article 361 of the Civil Code, if they cannot come to an extra-judicial settlement with regard to said rights. Subsequently, in a motion filed in the same Court of First In stance but now presided over by the herein respondent Judge Hon. Felipe Natividad, the plaintiffs prayed for an order of execution alleging that since they chose neither to pay defendants for the buildings nor to sell to them the residential lot, said defendants should be ordered to remove the structure at their own expense and to restore plaintiffs in the possession of said lot. Defendants objected to this motion which, after hearing, was granted by Judge Natividad. Hence, this petition by defendants praying for (a) a restraint and annulment of the order of execution issued by Judge Natividad; (b) an order to compel plaintiffs to pay them the sum of P2,000 for the buildings, or sell to them the residential lot for P45; or (c), a rehearing of the case for a determination of the rights of the parties upon failure of extra-judicial settlement. The judgment rendered by Judge Felix is founded on articles 361 and 453 of the Civil Code which are as follows: ART. 361. The owner of land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the work, sowing or planting, after the payment of the indemnity stated in articles 453 and 454, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. ART. 453. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until such expenses are made good to him. Useful expenses shall be refunded to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or paying the increase in value which the thing may have acquired in consequence thereof. The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is paid the value of his building, under article 453. The owner of the land, upon the other hand, has the option, under article 361, either to pay for the building or to sell his land to the owner of the building. But he cannot, as respondents here did, refuse both to pay for the building and to sell the land and compel the owner of the building to remove it from the land where it is erected. He is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same. But this is not the case before us. We hold, therefore, that the order of Judge Natividad compelling defendants-petitioners to remove their buildings from the land belonging to plaintiffs-respondents only because the latter chose neither to pay for such buildings

not to sell the land, is null and void, for it amends substantially the judgment sought to be executed and is, furthermore, offensive to articles 361 and 453 of the Civil Code. There is, however, in the decision of Judge Felix a question of procedure which calls for the clarification, to avoid uncertainty and delay in the disposition of cases. In that decision, the rights of both parties are well defined under articles 361 and 453 of the Civil Code, but it fails to determine the value of the buildings and of the lot where they are erected as well as the periods of time within which the option may be exercised and payment should be made, these particulars having been left for determination apparently after the judgment has become final. This procedure is erroneous, for after the judgment has become final, no additions can be made thereto and nothing can be done therewith except its execution. And execution cannot be had, the sheriff being ignorant as to how, for how much, and within what time may the option be exercised, and certainly no authority is vested in him to settle these matters which involve exercise of judicial discretion. Thus the judgment rendered by Judge Felix has never become final, it having left matters to be settled for its completion in a subsequent proceeding, matters which remained unsettled up to the time the petition is filed in the instant case. For all the foregoing, the writ of execution issued by Judge Natividad is hereby set aside and the lower court ordered to hold a hearing in the principal case wherein it must determine the prices of the buildings and of the residential lot where they are erected, as well as the period of time within which the plaintiffs-respondents may exercise their option either to pay for the buildings or to sell their land, and, in the last instance, the period of time within which the defendants-petitioners may pay for the land, all these periods to be counted from the date the  judgment becomes executory or unappealable. After such hearing, the court shall render a final judgment according to the evidence presented by the parties. The costs shall be paid by plaintiffs-respondents. DEPRA v. DUMLAO, G.R. No. L-57348 May 16, 1985

Dumlao is the owner of a parcel of land in Iloilo, while Depra owns the lot adjoining his. Dumlao built his house on his own land, but the kitchen encroached about 34 sq.m on Depra’s property. Upon finding this, Depra’s mom ordered Dumlao to move back from his encroachment, then subsequently filed an action for unlawful detainer against Dumlao. The lower court found that Dumlao was a builder in good faith, and ordered him to pay rent (PhP5.00/month)  – forced lease between the parties. Depra refused to accept the rentals so Dumlao deposited this with the MTC. Neither party appealed judgment so this became final and executory. 1 year later, though, Depra filed an complaint for Quieting of Title. Dumlao contested this, stating that the suit is barred by res judicata. But Depra averred that the lower court did not have jurisdiction to rule on encumbrances of real property  – only the CFI has jurisdiction. ISSUE: 1. Whether or not res judicata would apply to the case at bar? 2. Whether or not the land owner can be compelled to accept rent payments by the court (with both LO and BPS being in good faith)?

HELD: In the first issue, res judicata would not apply should the first case be one for ejectment and the other for quieting of title. Article 448 of the C ivil Code provides that the land owner has 2 options  – to buy the building or to sell/rent his land. This is so because the rights of the owner of the land is older, and by the principle of accession, he also has a right to the accessories. The Court remanded the case to the RTC to determine the fair price of the land, the expenses incurred by the BPS (Dumlao), the increase in value of the land, and whether the value of the land is considerably more than the value of the kitchen built on it. The RTC shall then give Depra 15 days to exercise such option. Ortiz vs. Kayanan, G.R. No. L-32974 July 30, 1979

Facts: Plaintiff used to be the legal guardian of Martin Dolorico II. When his ward died, plaintiff continued to cultivate and possess the latter’s property, which was formerly a subject of homestead application. In the said application, the ward’s uncle was named as his heir and successor in interest. Thus, the uncle executed an affidavit relinquishing his rights over the property in favor of Comintan and Zamora, his grandson and son-in-law and requested the Director of Lands to cancel the homestead application. The homestead application was cancelled to the protest of Ortiz saying that he should be given preference to purchase the lot inasmuch as he is the actual occupant and has been in continuous possession of the same. Still, the lot in question was sold at a public auction wherein defendant Comintan was the only bidder. The plaintiff’s  protest  prot est was inve i nvestig stigate ated d upon upo n but his clai c laim m was not give given n due due cour course se.. On appe appeal al,, resp respon onde dent nt court rules that half of thep ortion of land should be given to the defendant, being the successful bidder. The other half should be awarded to Zamora without prejudice to the right of Ortiz to participate in the public bidding of the lot. If Ortiz is to be not declared the successful bidder, defendants should reimburse jointly said plaintiff for the improvements introduced on the land, with him, having the right tor etain the property until after he has been paid for. Plaintiff appealed the judgment. It was later found out that Ortiz collected tolls on a portion of the propert property y wherei wherein n he has not introdu introduced ced any improv improveme ement. nt. The judgme jud gment nt becam bec ame e fina fi nall and an d execu exe cuto tory ry.. Priv Pr ivat ate e resp re spon onde dent ntss file fi led d a motion motion for its execut execution ion requesti requesting ng that they they filea bond in lieu lieu of the the amountthat should should be be paid to Ortiz Ortiz,, on the condition that after the accounting of the tolls collected by plaintiff, there is still and amount due and payable to the said plaintiff, the bond shall be held answerable. Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of Execution, Execution, responde respondent nt Court "acted "acted wi th ou t or in ex ce ss of jurisdiction, and/or with grave abuse of discretion, because the said order and writ in effect vary the terms of the  judgment they purportedly seek to enforce." He argued that since said judgment declared the petitioner a possessor in good faith, he is entitled to the payment of the value of the improvements introduced by him on the whole prop pr oper erty ty,, with wi th righ ri ghtt to reta re tain in the th e land until until he has been been fully paid such value. value. He likewise likewise averred averred that that no no paymen paymentt for for improvements has been made and, instead, a bond therefor had been filed by defendants (private respondents), which, according to petitioner, is not the payment envisaged in the decision which would entitle private respondents to the possession of the property. Furthermore, with respect to portion "B", petitioner alleges that, under the decision, he has the right to retain the same until after he has participated and lost in the public bidding of the land to be conducted by the Bureau of Lands. It is claimed that it is only in t h e e v e n t t h a t h e l o s e s i n t h e b i d d i n g t h a t h e c a n b e l e g a l l y d ispossessed thereof. thereof. It is the position of petitioner that all the fruits of the property, including the tolls collected collected by him from the passing vehicles, which according to the trial court amounts to P25,000.00, belongs to petitioner and not to defendant/private respondent Quirino Quirino Comintan, in accordance with the decision itself, which decreed that the fruits of the property shall be in lieu of interest on the amount to be paid to petitioner as reimbursement for improvements. Any contrary opinion, in his view, would be tantamount to an amendment of a decision decision which which has has long long become become final nal and and executor executory y and, therefor therefore, e, cannot cannotbe lawfully lawfully done. The issu is sue e deci de cisi sive ve of the th e con c ontr trov over ersy sy is—afte af terr the th e rend re ndit itio ion n by the th e trial court court of its judgment judgment in in Civil Case Case No. No. C-90 on March 22, 22, 1966confirm 1966confirming ing the the award award of one-half one-half of the property to Quirino Comintan —whether or not petitioner is still entitled to retain for his own exclusive benefit all the fruits of the property, such as the tolls collected by him from March 1967 to December 1968, and September 1969 to March 31, 1970, amounting to about P25,000.00. RULING: Negative 1.

No contention that the possessor in good faith is entitled to the fruits received before the possession is legally interrupted. Possession in good faith ceases or is legally interrupted from the moment defects in the title are made known to the possessor, by extraneous evidence or by the filing of an action in court by the true owner for the recovery of the property.

2.

3.

4.

Hence, all the fruits that the possessor may receive from the time he is summoned in court, or when he answers the complaint, must be delivered and paid by him to the owner or lawful possessor. However, even after his good faith ceases, the possessor can still retain the property (Art 546) until he has been been fully reimbursed for all the necessary and useful expenses made by him on the property. The principal characteristic of the right of retention is its accessory character. It is accessory to a principal obligation. Considering that the right of the possessor to receive the fruits terminates when his good faith ceases, it is necessary, in order that this right to retain maybe useful, to concede to the creditor the right to secure reimbursement from the fruits of the property by utilizing its proceeds for the payment of the interest as well as the principal of the debt while he remains in possession. Petitioner cannot appropriate for his own exclusive benefit the tolls which he collected from the property retained by him. It was his duty under the law, after deducting the necessary expenses for his administration, to apply such amount collected to the payment of the interest, and the balance to the payment of the obligation. We hold, therefore, that the disputed tolls, after deducting petitioner’s expenses for administration, belong to Quirino Comintan, owner of the land through which the toll road passed, further considering that the same was on portions of the property on which petitioner had not introduced any improvement. The trial court itself clarified this matter when when it placed the toll road under receivership. receivership. The Th e omi om issio ss ion n of o f any an y mentio men tion n of the tolls tol ls in the t he deci de cisio sion n itsel it selff may ma y be attrib attribute uted d to the the fact fact that that the the tolls tolls appea appearr to have have been been colle collecte cted d after the rendition of the judgment of the trial court. As to the other lot, it appears that no public sale has yet been conducted by the Bureau of Lands and, therefore, petitioner is entitled to remain in possession thereof. This is not disputed by respondent Eleuterio Zamora. After public sale is had and in the event that Ortiz is not declared the successful bidder, then he should be reimbursed by respondent Zamora in the corresponding amount for the improvements on Lot5785-B.

G.R. No. 72876 January 18, 1991 FLORENCIO IGNAO, petitioner, vs. HON. INTERMEDIATE APPELLATE COURT, JUAN IGNAO, substituted substituted by his Legal Heirs, and ISIDRO IGNAO, respondents.

Dolorfino and Dominguez Law Offices for petitioner.  Ambrosio Padilla, Mempin & Reyes Law Offices for private respondents.

FERNAN, C.J.: In this petition for review by certiorari , petitioner seeks the reversal of the decision of the Intermediate Appellate Court (now Court of Appeals) affirming in toto   the decision of the Court of First Instance of Cavite, ordering petitioner Florencio Ignao to sell to private respondents Juan and Isidro Ignao, that part of his property where private respondents had built a portion of their houses. The antecedent facts are as follows: Petitioner Florencio Ignao and his uncles private respondents Juan Ignao and Isidro Ignao were co-owners of a parcel of land with an area of 534 square meters situated in Barrio Tabon, Municipality of Kawit, Cavite. Pursuant to an action for partition filed by petitioner docketed as Civil Case No. N-1681, the then Court of First Instance of Cavite in a decision dated February 6, 1975 directed the partition of the aforesaid land, alloting 133.5 square meters or 2/8 thereof to private respondents Juan and Isidro, and giving the remaining portion with a total area of 1 266.5 square meters to petitioner Florencio. However, no actual partition was ever effected. On July 17, 1978, petitioner instituted a complaint for recovery of possession of real property against private respondents Juan and Isidro before the Court of First Instance of Cavite, docketed as Civil Case No. 2662. In his

complaint petitioner alleged that the area occupied by the two (2) houses built by private respondents exceeded the 133.5 square meters previously alloted to them by the trial court in Civil Case No. N-1681. Consequently, the lower court conducted an ocular inspection. It was found that the houses of Juan and Isidro actually encroached upon a portion of the land belonging to Florencio. Upon agreement of the parties, the trial court ordered a licensed geodetic engineer to conduct a survey to determine the exact area occupied by the houses of private respondents. The survey subsequently disclosed that the house of Juan occupied 42 square meters while that of Isidro occupied 59 square meters of Florencio's land or a total of 101 square meters. In its decision, the trial court (thru Judge Luis L. Victor) ruled that although private respondents occupied a portion of Florencio's property, they should be considered builders in good faith. The trial court took into account the 2 decision of the Court of First Instance of Cavite in the action for partition and quoted: . . . . Hence, it is the well-considered opinion of the Court that although it turned out that the defendants had, before partition, been in possession of more than what rightfully belongs to them, their possession of what is in excess of their rightful share can at worst be possession in good faith which exempts them from 3 being condemned to pay damages by reason thereof. Furthermore, the trial court stated that pursuant to Article 448 of the Civil Code, the owner of the land (Florencio) should have the choice to either appropriate that part of the house standing on his land after payment of indemnity or oblige the builders in good faith (Juan and Isidro) to pay the price of the land. However, the trial court observed that based on the facts of the case, it would be useless and unsuitable for Florencio to exercise the first option since this would render the entire houses of Juan and Isidro worthless. The trial court then applied the 4 ruling in the similar case of Grana vs. Court of Appeals , where the Supreme Court had advanced a more "workable solution". Thus, it ordered Florencio to sell to Juan and Isidro those portions of his land respectively occupied by the latter. The dispositive portion of said decision reads as follows: WHEREFORE, judgment is hereby rendered in favor of the defendants and — (a) Ordering the plaintiff Florencio Ignao to sell to the defendants Juan and Isidro Ignao that portion of his property with an area of 101 square meters at P40.00 per square meter, on which part the defendants had built their houses; and (b) Ordering the said plaintiff to execute the necessary deed of conveyance to the defendants in accordance with paragraph (a) hereof. Without pronouncement as to costs.

5

Petitioner Florencio Ignao appealed to the Intermediate Appellate Court. On August 27, 1985, the Appellate Court, 6 Second Civil Cases Division, promulgated a decision, affirming the decision of the trial court. Hence the instant petition for review which attributes to the Appellate Court the fol lowing errors: 1. That the respondent Court has considered private respondents builders in good faith on the land on question, thus applying Art. 448 of the Civil Code, although the land in question is still owned by the parties in co-ownership, hence, the applicable provision is Art. 486 of the Civil Code, which was not applied. 2. That, granting for the sake of argument that Art. 448 . . . is applicable, the respondent Court has adjudged the working solution suggested in Grana and Torralba vs. CA. (109 Phil. 260), which is just an opinion by way of passing, and not the judgment rendered therein, which is in accordance with the said

provision of the Civil Code, wherein the owner of the land to buy ( sic) the portion of the building within 30 days from the judgment or sell the land occupied by the building. 3. That, granting that private respondents could buy the portion of the land occupied by their houses, the 7 price fixed by the court is u nrealistic and pre-war price. The records of the case reveal that the disputed land with an area of 534 square meters was originally owned by Baltazar Ignao who married twice. In his first marriage, he had four children, namely Justo (the father of petitioner Florencio), Leon and private respondents Juan and Isidro. In his second marriage, Baltazar had also four children but the latter waived their rights over the controverted land in favor of Justo. Thus, Justo owned 4/8 of the land which was waived by his half-brothers and sisters plus his 1/8 share or a total of 5/8. Thereafter, Justo acquired the 1/8 share of Leon for P500.00 which he later sold to his son Florencio for the same amount. When Justo died, Florencio inherited the 5/8 share of his father Justo plus his 1/8 share of the land which he bought or a total of 6/8 (representing 400.5 square meters). Private respondents, Juan and Isidro, on the other hand, had 1/8 share (66.75 square meters) each of the land or a total of 133.5 square meters. Before the decision in the partition case was promulgated, Florencio sold 134 square meters of his share to a certain Victa for P5,000.00 on January 27, 1975. When the decision was handed down on February 6,1975, the lower court alloted 2/8 of the land to private respondents Juan and Isidro, or a total of 133.5 square meters. It should be noted that prior to partition, all the co-owners hold the property in common dominion but at the same time each is an owner of a share which is abstract and undetermined until partition is effected. As cited 8 in Eusebio vs . Intermediate Appellate Court, "an undivided estate is co-ownership by the heirs." As co-owners, the parties may have unequal shares in the common property, quantitatively speaking. But in a qualitative sense, each co-owner has the same right as any one of the other co-owners. Every co-owner is therefore the owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract, because until division is effected such portion is not concretely 9 determined. Petitioner Florencio, in his first assignment of error, asseverates that the court a quo erred in applying Article 448 of the Civil Code, since this article contemplates a situation wherein the land belongs to one person and the thing built, sown or planted belongs to another. In the instant case, the land in dispute used to be owned in common by the contending parties. Article 448 provides: Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in cas e of disagreement, the court shall fix the terms thereof. Whether or not the provisions of Article 448 should apply to a builder in good faith on a property held in common 10 has been resolved in the affirmative in the case of Spouses del Campo vs. Abesia , wherein the Court ruled that: The court  a quo  correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon land that

exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership. However, when, as in this case, the ownership is terminated by the partition and it appears that the home of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code should apply . Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when 11 there is a co-ownership if good f aith has been established.

In other words, when the co-ownership is terminated by a partition and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner which was however made in good faith, then the provisions of Article 448 should a pply to determine the respective rights of the parties. Petitioner's second assigned error is however well taken. Both the trial court and the Appellate Court erred when 12 they peremptorily adopted the "workable solution" in the case of Grana vs. Court of appeals , and ordered the owner of the land, petitioner Florencio, to sell to private respondents, Juan and Isidro, the part of the land they intruded upon, thereby depriving petitioner of his right to choose. Such ruling contravened the explicit provisions of Article 448 to the effect that "(t)he owner of the land . . . shall have the right to appropriate . . .or to oblige the one who built . . . to pay the price of the land . . . ." The law is clear and unambiguous when it confers the right of choice upon the landowner and not upon the builder and the courts. 13

Thus, in Quemuel vs. Olaes , the Court categorically ruled that the right to appropriate the works or improvements or to oblige the builder to pay the price of the land belongs to the landowner. As to the third assignment of error, the question on the price to be paid on the land need not be discussed as this would be premature inasmuch as petitioner Florencio has yet to exercise his option as the owner of the land. WHEREFORE, the decision appealed from is hereby MODIFIED as follows: Petitioner Florencio Ignao is directed within thirty (30) days from entry of judgment to exercise his option to either appropriate as his own the portions of the houses of Juan and Isidro Ignao occupying his land upon payment of indemnity in accordance with Articles 546 and 548 of the Civil Code, or sell to private respondents the 101 square meters occupied by them at such price as may be agreed upon. Should the value of the land exceed the value of the portions of the houses that private respondents have erected thereon, private respondents may choose not to buy the land but they must pay reasonable rent for the use of the portion of petitioner's land as may be agreed upon by the parties. In case of disagreement, the rate of rental and other terms of the lease shall be determined by the trial court. Otherwise, private respondents may remove or demolish at their own expense the said portions of their houses encroaching 14 upon petitioner's land. No costs. SO ORDERED.

G.R. No. L-12812

September 29, 1959

FILIPINAS COLLEGES, INC., plaintiff-appellee, vs.

MARIA GARCIA TIMBANG, ET AL., defendants. ------------------------------

G.R. No. L-12813 September 29, 1959 MARIA GARCIA TIMBANG, ET AL., plaintiffs. MARIA GARICA TIMBANG, plaintiff-appellant, vs.

MARIA GERVACIO BLAS, defendant-appellee. De Guzman and Fernandez for appellee Filipinas Colleges, Colleges, Inc. San Huan, Africa and Benedicto for appellant Maria Garcia Timbang. Nicanor S. Sison for appellee Maria Gervacio Blas.

BARRERA, J.: This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring the Sheriff's certificate of sale covering a school building sold at public auction null and void unless within 15 days from notice of said order the successful bidders, defendants-appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas directly or through the Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the building at the Sheriff's sale; (b) declaring the other appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which the building sold in the auction sale is situated; and (c) ordering the sale in public auction of the said undivided interest of the Filipinas Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the  judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in the amount of P8,200.00 m inus the sum of P5,750.00 mentioned in (a) above. The order appealed from is the result of three motions filed in the court a quo in the course of the execution of a final judgment of the Court of Appeals rendered in 2 cases appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the parties. IN that judgment of the Court of Appeals, the respective rights of the litigants have been adjudicated as follows: 1âwphïl.nêt  (1) Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses Timbang in and to lot No. 2-a mentioned above and in consideration thereof, Filipinas Colleges, Inc., was ordered to pay the spouses Timbang the amount of P15,807.90 plus such other amounts which said spouses might have paid or had to pay after February, 1953, to Hoskins and Co. Inc., agent of the Urban Estates, Inc., original vendor of the lot. Filipinas Colleges, Inc. original vendor of the total amount with the court within 90 days after the decision shall have become final. (2) Maria Gervacio Blas was declared to be a builder in good faith of the school building constructed on the lot in question and entitled to be paid the amount of P19,000.00 for the same. Filipinas Colleges, Inc., purchaser of the said building was ordered to deliver to Blas stock certificate (Exh. C) for 108 shares of Filipinas Colleges, Inc. with a par value of P10,800.00 and to pay Blas the sum of P8,200.00 of the house. (3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which after liquidation was fixed at P32,859.34, within the 90-day period set by the court, Filipinas Colleges would lose all its rights to the land and the spouses Timbang would then become the owners thereof. In that eventuality, the Timbangs would make known to the court their option under Art. 448 of the Civil Code whether they would appropriate the building in question, in which even they would have to pay Filipinas Colleges, Inc. the sum of P19,000.00, or would compel the latter to acquire the land and pay the price thereof.

Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time prescribed, the spouses Timbang, in compliance with the judgment of the Court of Appeals, on September 28, 1956, made known to the court their decision that they had chosen not of appropriate the building but to compel Filipinas Colleges, Inc., for the payment of the sum of P3 2,859,34. The motion having been granted, a writ of execution was issued on January 8, 1957. On January 16, 1957, appellee Blas in turn filed a motion for execution of her judgment of P8,200.00 representing the unpaid portion of the price of the house sold to Filipinas Colleges, Inc. Over the object of the Timbangs, the court grated the motion and the corresponding writ of execution was issued on January 30, 1957, date of the granting of the motion for execution, Blas through counsel, sent a letter to the Sheriff of Manila advising him of her preferential claim or lien on the house to satisfy the unpaid balance of the purchase price thereof under Article 2242 of the Civil Code, and to withhold from the proceed of the auction sale the sum of P8,200.00. Levy having been made on the house in virtue of the writs of execution, the Sheriff of Manila on March 5, 1957, sold the building in public auction in favor of the spouses Timbang, as the highest bidders, in the amount of P5,750.00. Personal properties of Filipinas Colleges, Inc. were also auctioned for P245.00 in favor of the spouses Timbang. As a result of these actuation, three motion were subsequently filed before the lower court: (1) By appellee Blas, praying that the Sheriff of Manila and/or the Timbang spouses be ordered to pay and deliver to her the sum of P5,750.00 representing the proceeds of the auction sale of the building of Filipinas Colleges, Inc. over which she has a lien of P8,200.00 for the unpaid balance of the purchase price thereof;. (2) Also by the appellee Bals, praying that there being still two unsatisfied executions, one for the sum of P32,859.34 in favor the land involved, Lot No. 2-a, be sold at public auction; and (3) By Filipinas Colleges, Inc. praying that because its p roperties, the house and some personal properties, have been auctioned for P5,750.00 and P245.00 respectively in favor of the Timbang spouses who applied the proceeds to the partial payment of the sum of P32,859.34 value of the land, Lot No. 2-a, it (Filipinas Colleges, Inc.) be declared part owner of said lot to the extent of the total amount realized from the execution sale of its properties.1âwphïl.nêt  The Timbang spouses presented their opposition to each and all of these motion. After due hearing the lower court rendered its resolution in the manner indicated at the beginning of this decision, from which the Timbangs alone have appealed. In assailing the order of the court a quo directing the appellants to pay appellee Blas the amount of their bid (P5,750.00) made at the public auction, appellants' counsel has presented a novel, albeit ingenious, argument. It is contended that because the builder in good faith has failed to pay the price of the land after the owners thereof exercised their option under Article 448 of the Civil Code, the builder lost his right of retention provided in Article 546 and by operation of Article 445, the appellants as owners of the land automatically became the owners ipso  facto, the execution sale of the house in their favor was superfluous. Consequently, they are not bound to make good their bid of P5,750.00 as that would be to make goods to pay for their own property. By the same token, Blas claim for preference on account of the unpaid balance of the purchase price of the house does not apply because preference applies only with respect to the property of the debtor, and the Timbangs, owners of the house, are not the debtors of Blas. This Court cannot accept this oversimplification of appellants' position. Article 448 and 546 of the Civil Code defining the right of the parties in case a person in good faith builds, sows or plants on the land of another, respectively provides:

ART. 448. The owner of the land on which anything has been built, sown or plated in good faith shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnify provided for in article 546 and 548, or to obligate the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in cas e of disagreement, the court shall fix the terms thereof. ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention the person who has defeated him in the possession having to option of refunding the amount of expenses or of paying the case in value which thing may have acquired by reason thereof. Under the terms of these article, it is true that the owner of the land has the right to choose between appropriating the building by reimbursing the builder of the value thereof or compelling the builder in good faith to pay for his land. Even this second right cannot be exercised if the value of the land is considerably more than that of the building. In addition to the right of the builder to be paid the value of his improvement, Article 546 gives him the corollary right of retention of the property until he is indemnified by the owner of the land. There is nothing in the language of these two article, 448 and 546, which would justify the conclusion of appellants that, upon the failure of the builder to pay the value of the land, when such is demanded by the land-owner, the latter becomes automatically the owner of the improvement under Article 445. The case of Bernardo vs. Bataclan, 66 Phil., 590 cited by appellants is no authority for this conclusion. Although it is true it was declared therein that in the event of the failure of the builder to pay the land after the owner thereof has chosen this alternative, the builder's right of retention provided in Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder loses entirely all rights over his own building. The question is; what is the recourse or remedy left to the parties in such eventuality where the builder fails to pay the value of the land? While the Code is silent on this Court in the cases of Miranda vs. Fadullon, et al ., 97 Phil., 801; 51 Off. Gaz., [12] 6226; Ignacio vs. Hilario , 76 Phil., 605 and the cited case of Bernardo vs. Bataclan , supra. In the first case, this Court has said: A builder in good faith not be required to pay rentals. he has right to r etain the land on which he has built in good faith until he is reimbursed the expenses incurred by him. Possibly he might be made to pay rental only when the owner of the land chooses not to appropriate the improvement and requires the builder in good faith to pay for the land but that the builder is unwilling or unable to pay the land, and then they decide to leave things as they are and assume the relation of lessor and lessee, and should they disagree as to the amount of rental then they can go to the court to fix that amount  . (Emphasis supplied) Should the parties not agree to leave things as they are and to assume the relation of lessor and lessee, another remedy is suggested in the case of Ignacio vs. Hilario, supra , wherein the court has ruled that the owner of the land in entitled to have the improvement removed when after having chosen to sell his land to the other party, i.e., the builder in good faith fails to pay for the same. A further remedy is indicated in the case of Bernardo vs. Bataclan, supra , where this Court approved the sale of the land and the improvement in a public auction applying the proceeds thereof first to the payment of the value of the land and the excess, if any, to be delivered to the owner of the house in payment thereof.

The appellants herein, owners o the land, instead of electing any of the alternative above indicated chose to seek recovery of the value of their land by asking for a writ of execution; levying on the house of the builder; and selling the same in public auction. Sand because they are the highest bidder in their own auction sale, they now claim they acquired title to the building without necessity of paying in cash on account of their bid. In other words, they in effect pretend to retain their land and acquire the house without paying a cent therefor. This contention is without merit. This Court has already held in Matias vs. The Provincial Sheriff of Nueva Ecija  (74 Phil., 326) that while it is the inveriable practice, dictated by common sense, that where the successful bidder is the execution creditor himself, he need not pay down the amount of the bid if it does not exceed the amount of his judgement, nevertheless, when their is a claim by a third-party, to the proceeds of the sale superior to his  judgment credit, the execution execution creditor, as successful bidder, must pay in cash the amount of his bid as a condition precedent to the issuance to him of the certificate of sale. In the instant case, the Court of Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid balance of the purchase price of the school building. Blas is actually a lien on the school building are concerned. The order of the lower court directing the Timbang spouses, as successful bidders, to pay in cash the amount of their bid in the sum of P5,750.00 is therefore correct. With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of the land to the extent of the value of its personal properties sold at public auction in favor of the Timbang, this Court Likewise finds the same as justified, for such amount represents, in effect, a partial payment of the value of the land. If this resulted in the continuation of the so-called involuntary partnership questioned by the difference between P8,200.00 — the unpaid balance of the purchase price of the building and the sum of P5,750.00 — amount to be paid by the Timbangs, the order of the court directing the sale of such undivided interest of the Filipinas Colleges, Inc. is likewise justified to satisfy the claim of the appellee Blas. Considering that the appellant spouses Marcelino Timbang and Maria Garcia Timbang may not voluntarily pay the sum of P5,750.00 as ordered, thereby further delaying the final termination of this case, the first part of the dispositive portion of the order appealed from is modified in the sense that upon failure of the Timbang spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within fifteen (15) days from notice of the final  judgment, an order of execution shall issue in favor of Maria Gervasio Blas to be levied upon all properties of the Timbang spouses not exempt from execution for the satisfaction o f the said amount. In all other respects, the appealed order of the court a quo is hereby affirmed, with costs against the appellants. It is so ordered. Paras, C.J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion and Endencia, JJ., concur.

G.R. No. L-47475 August 19, 1988 MANOTOK REALTY, INC., petitioner, vs. THE HONORABLE JOSE H. TECSON, Judge of the Court of First Instance of Manila and NILO MADLANGAWA, respondents. Ceferino V. Argueza for petitioner. Magtanggol C. Gunigundo for respondents.

GUTIERREZ, JR.,  J.:

In a complaint filed by the petitioner for recovery of possession and damages against the private respondent, the then Court of First Instance of Manila rendered judgment, the dispositive portion of which provides inter alia: WHEREFORE, judgment is hereby rendered: xxx xxx xxx xxx xxx xxx (c) In Civil Case No. 72872, declaring the defendant Nilo Madlangawa as a builder or possessor in good faith; ordering the plaintiff to recognize the right of said defendant to remain in Lot No. 345, Block 1, of the Clara Tambunting Subdivision until after he shall have been reimbursed by the plaintiff the sum of P7,500.00, without pronouncement as to costs. (p. 24, Rollo) Not satisfied with the trial court's decision, the petitioner appealed to the Court of Appeals and upon affirmance by the latter of the decision b elow, the petitioner elevated its case to this C ourt. On July 13, 1977, we issued a resolution dated July 11, 1977 denying the petitioner's petition for lack of merit. Hence, on August 5, 1977, the petitioner filed with the trial court, presided over by respondent Judge Jose H. Tecson, a motion for the approval of petitioner's exercise of option and for satisfaction of judgment, praying that the court issue an order: a) approving the exercise of petitioner's option to appropriate the improvements introduced by the private respondent on the property; b) thereafter, private respondent be ordered to deliver possession of the property in question to the petitioner. On October 7, 1977, the respondent judge issued the disputed order, to wit: Acting on the motion for approval of plaintiffs exercise of option and for satisfaction of judgment filed by the plaintiff, and the opposition thereto interposed by the defendant, both through counsels, and after a judicious review of all the facts and circumstances obtaining in this case, in the light of statutory provisions (Art. 6, New Civil Code) and jurisprudential doctrines ( Vide, Benares v. Capitol Subdivision, Inc., L-7330 (Nov. 29, 1960), and considering further the definitive ruling of our Supreme Tribunal in the case of Jose C. Cristobal v. Alejandro Melchor, G.R. No. L43203 promulgated on July 29, 1977, wherein the Court says: "This Court, applying the principle of equity, need not be bound to a rigid application of the law but rather its action should conform to the conditions or exigencies of a given problem or situation in order to grant relief that it will serve the ends of justice." 

xxx xxx xxx the Court is of the considered view that under the peculiar circumstances which supervened after the institution of this case, like, for instance, the introduction of certain major repairs of and other substantial improvements on the controverted property, the instant motion of the plaintiff is not well-taken and therefore not legally proper and tenable. WHEREFORE, and for lack of merit, the instant motion for approval of the plaintiff's fai-rn of option and for satisfaction of judgment should be, as hereby it is, denied. (pp. 45-46, Rollo) After a denial of its motion for reconsideration, the petitioner filed the present petition for mandamus alleging that the respondent judge committed grave abuse of discretion in denying his motion to exercise option and for execution of judgment on the grounds that under Articles 448 and 546 of the Civil Code, the exercise of option

belongs to the owner of the property, who is the petitioner herein, and that upon finality of judgment, the prevailing party is entitled, as a matter of right, to its execution which is only a ministerial act on the part of the respondent judge. On April 15, 1978, the private respondent filed his comment on the petition alleging that the same has already become moot and academic for two reasons: first, fire gutted not only the house of the private respondent but the majority of the houses in Tambunting Estate; and second, as a result of the said fire, the then First Lady and Metro Manila Governor Imelda R. Marcos has placed the disputed area under her Zonal Improvement Project, thereby allowing the victims of the fire to put up new structures on the premises, so that the willingness and readiness of the petitioner to exercise the alleged option can no longer be exercised since the subject-matter thereof has been extinguished by the fire. Furthermore, the President of the Philippines has already issued a Presidential Decree for the expropriation of certain estates in Metro Manila including the Tambunting Estate. Therefore, the beneficient and humanitarian purpose of the Zonal Improvement Project and the expropriation proceeding would be d efeated if petitioner is allowed to exercise an option which would result in the ejectment of the private respondent. On December 28, 1980, Presidential Decree (P.D.) No. 1669 was issued providing for the expropriation of the Tambunting Estate. However, this decree was challenged before this Court in G.R. No, 55166 entitled The "Elisa R. Manotok, et al. v. National Housing Authority, et al." Hence, we decided to hold the decision on this petition pending the resolution of the above entitled case. On May 21, 1987, the Court rendered a decision in the Elisa Manotok case (Manotok v. National Housing Authority, 150 SCRA 89) ruling that P.D. 1669 is unconstitutional for being violative of the due process clause. Thus, since the present petition has not been rendered moot and academic by the decision in said case, we will now decide on its merits. As stated earlier, the petitioner argues that since the judgment of the trial court has already become final, it is entitled to the execution of the same and that moreover, since the house of the private respondent was gutted by fire, the execution of the decision would now involve the delivery of possession of the disputed area by the private respondent to the petitioner. We find merit in these arguments. When the decision of the trial court became final and executory, it became incumbent upon the respondent judge to issue the necessary writ for the execution of the same. There is, therefore, no basis for the respondent judge to deny the petitioner's motion to avail of its option to approriate the improvements made on its property. In the case of Duenas v. Mandi  (151  (151 SCRA 530, 545), we said: xxx xxx xxx ...Likewise settled is the rule that after a judgment has become final, no additions can be made thereto, and nothing can be done therewith except its execution, otherwise there would be no end to legal processes. (Fabular v. Court of Appeals, 11 9 SCRA 329) Neither can the respondent judge deny the issuance of a writ of execution because the private respondent was adjudged a builder in good faith or on the ground of "peculiar circumstances which supervened after the institution of this case, like, for instance, the introduction of certain major repairs of and other substantial improvements..." because the option given by law either to retain the premises and pay for the improvements thereon or to sell the said premises to the builder in good faith belongs to the owner of the property. As we have in Quemel v. Olaes  (1 SCRA 1159,1163):

xxx xxx xxx ...The plaintiffs claim that their second cause of action is based on Article 448 in connection with Art. 546, of the new Civil Code. A cursory reading of these provisions, however, will show that they are not applicable to plaintiff's case. Under Article 448, the right to appropriate the works or improvements or to oblige the one who built or planted to pay the price of the land' belongs to the owner of the land. The only right given to the builder in good faith is the right to reimbursement for the improvements; the builder, cannot compel the owner of the land to sell such land to the former. ... Again, in the recent case of Paz Mercado, et al. v. Hon. Court of Appeals, et al. , (G.R. No. L- 44001, June 10, 1988), we said: ... To be deemed a builder in good faith, it is essential that a person assert title to the land on which he builds; i.e., that he be a possessor in concept of owner (Art. 525, Civil Code; Lopez, Inc. v. Phil. Eastern Trading Co., Inc., 98 Phil. 348) and that he be unaware 'that there exists in his title or mode of acquisition any flaw which invalidates it.' (Art. 526, Civil Code; Granados v. Monton, 86 Phil. 42; Arriola v. Gomez de la Serna, 14 Phil. 627; See also Manotok Realty, Inc. v. C.A., 134 SCRA 329, citing Caram v. Laureta, 103 SCRA 7) It is such a builder in good faith who is given the 1ight to retain the thing, even as against the real owner, until he has been reimbursed in full not only for the necessary expenses but also for useful expenses. (Art. 546, Civil Code; Policarpio v. CA., 129 SCRA 51; Sarmiento v. Agana, 129 SCRA 1221; cf, Queto v. C.A., 122 SCRA 206) ... Furthermore, the private respondent's good faith ceased after the filing of the complaint below by the petitioner. In the case of Mindanao Academy, Inc. v. Yap  (13 SCRA 190,196), we ruled: xxx xxx xxx ...Although the bad faith of one party neutralizes that of the other and hence as between themselves their rights would be as if both of them had acted in good faith at the time of the transaction, this legal fiction of Yap's good faith ceased when the complaint against him was filed, and consequently the court's declaration of liability for the rents thereafter is correct and proper . A possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted, and such interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil Code). Thus, the repairs and improvements introduced by the said respondents after the complaint was filed cannot be considered to have been built in good faith, much less, justify the denial of the petitioner's fai-rn of option. Since the improvements have been gutted by fire, and therefore, the basis for private respondent's right to retain the premises has already been extinguished without the fault of the petitioner, there is no other recourse for the private respondent but to vacate the premises and deliver the same to herein petitioner. WHEREFORE, IN VIEW OF THE FOREGOING, the petition is GRANTED and the respondent judge is hereby ordered to immediately issue a writ of execution ordering the private respondent to vacate the disputed premises and deliver possession of the same to the petitioner. SO ORDERED. Fernan, C.J., Feliciano, Bidin and Cortos, JJ., concur.

DEL CAMPO V. ABESIA G.R. No. L-49219 April 15, 1988

When land is co-owned by two parties, but the co-ownership is terminated, Article 448 governs in case real property (like a house) encroaches the land of another. This is provided that good faith exists.

FACTS: The case involves two friendly parties who are co-owners of a corner lot at Flores and Cavan Streets in Cebu City. Plaintiff owns 2/3 of the lot and Defendant owns 1/3 of the same. The total size of the lot is 45 square meters (which is about the size of a typical Starbux café) Later on, the two parties decided to divide the co-owned property into two lots. 30 square meters went to the plaintiffs and 15 square meters went to the defendants. From the sketch plan, both parties discovered that the house of the defendant s occupied a portion of the plaintiff’s adjacent lot, eating 5 sqm of it. The parties then requested the trial court to adjudicate who should take possession of the encroached 5 sqm. The trial court ruled that Art 448 does not apply. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. Since art 448 does not apply, the Plainti ff cannot be obliged to pay for the portion of defendant’s house that entered into the 30 sqm lot, AND Defendant cannot be obliged to pay for the price of the 5 sqm their house occupied. Why? The RTC believed the rules of co-ownership should govern, and not that of accession. RTC then assigned the full 30sqm to Plaintiff and ordered Defendants to demolish the 5sqm part of their house encroaching the 30sqm lot of the Plaintiffs. Defendants where aghast at having to axe the family home, hence they appealed. CA affirmed the decision. So we have the SC coming to the rescue.

ISSUE: w/n the rules of accession applies (and not coownership) on property that used to be co-owned, but was subdivided.

HELD: The rule of accession applies because co-ownership was terminated upon the partitioning of the lot. Art 448 therefore governs. The house of Defendant overlapped that of Plaintiff, but this was b uilt on good faith. Hence, the plaintiffs have the right to choose one of two options

> Appropriate the 5sqm portion of the house of Defendants after indemnifying the Defendants; or > Obliging the Defendants to pay a portion of the land on which their home rested. ( or they can rent it)

PEDRO P. PECSON v. COURT OF APPEALS, SPS. NUGUID G.R. No. 115814 May 26, 1995

FACTS: Pedro Pecson was the owner of a commercial lot on which he built a 4-door-2-storey apartment building. He failed to pay realty taxes amounting to P12k so the lot was sold at public auction to Mamerto Nepomuceno who later on sold it to the Sps. Nuguid. Pecson challenged the validity of the auction before the RTC but was dismissed but the RTC held that the apartment bldg was not subject of the litigation. On appeal, the CA appealed in toto the decision of the RTC that the apartment bldg was not included in t he auction sale. After an entry of judgment was made, the Sps. Nuguid filed a motion with the RTC for a motion for delivery of possession of the lot and the apartment bldg citing Art. 546 of the CC. The RTC issued an order declaring that the owner of the lot and apartment bldg were the Sps. Nuguid and to pay the construction cost of the apartment before a writ of possession would be issued and to pay rent to the spouses. Pecson moved for reconsideration but the Trial court did not act on it, instead it issued a writ of possession. The CA affirmed in part the decision declaring the cost of construction can be offset from the amount of rents to be coll ected and that since Sps. Nuguid opted to appropriate the improvement, Pecson is entitled to be reimbursed the cost of construction at the time it was built in 1965 which is at P53k and the right the retain the improvement until full indemnity is paid. Thus the case at bar. ISSUE: Whether or not Art. 448 and 546 applies in the case at bar HELD: YES > With regard to Art. 448, the provision on indemnity may be applied in analogy. Whoever is the owner of the land may appropriate whatever has been built, planted or sown after paying indemnity. However, it does not apply when the owner of the land is also the builder of the works on his own land who later on loses ownership by sale or donation. > Art. 546 refers to the necessary and useful expenses which shall be refunded to the possessor in good faith with right of retention. However, it does not state how to determine the value of the useful improvement. The respondents [court and private respondents alike] espouses as sufficient reimbursement the cost of construction in 1965, however, this is contrary to previous rulings which declares that the va lue to the reimbursed should be the present market value of said improvements so as not to unjustly enrich either of the parties. [the trial court erred in ordering Pecson to pay rent since the Sps. Nuguid has yet to pay the indemnity therefore Pecson has the right to retain the improvements and the income thereof. The case was remanded to the trial court for determination of the current market value of the apartment bldg and ordered the Sps to pay Pecson otherwise it shall be restored to Pecson until payment of indemnity.]

G.R. No. 151815 February 23, 2005 SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners, vs. HON. COURT OF APPEALS AND PEDRO P. PECSON, respondents.

DECISION

QUISUMBING, J.: 1

This is a petition for review on certiorari  of  of the Decision dated May 21, 2001, of the Court of Appeals in CA-G.R. CV No. 64295, which modified the Order dated July 31, 1998 of the Regional Trial Court (RTC) of Quezon City, Branch 101 in Civil Case No. Q-41470. The trial court ordered the defendants, among them petitioner herein Juan Nuguid, to pay respondent herein Pedro P. Pecson, the sum of P1,344,000 as reimbursement of unrealized income for the period beginning Nove mber 22, 1993 to December 1997. The appellate court, however, reduced the trial court’s award in favor of Pecson from the said P1,344,000 to P280,000. Equally assailed by the petitioners is the appellate 2 court’s Resolution dated January 10, 2002, denying the motion for reconsideration. It may be recalled that relatedly in our Decision dated May 26, 1995, in G.R. No. 115814, entitled Pecson v. Court of Appeals, we set aside the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order dated November 15, 1993, of the RTC of Quezon City, Branch 101 and remanded the case to the trial court for the determination of the current market value of the four-door two-storey apartment building on the 256-square meter commercial lot. The antecedent facts in this case are as follows: Pedro P. Pecson owned a commercial lot located at 27 Kamias Road, Quezon City, on which he built a four-door two-storey apartment building. For failure to pay realty taxes, the lot was sold at public auction by the City Treasurer of Quezon City to Mamerto Nepomuceno, who in turn sold it for P103,000 to the spouses Juan and Erlinda Nuguid. Pecson challenged the validity of the auction sale before the RTC of Quezon City in Civil Case No. Q-41470. In its 3 Decision, Decision, dated February 8, 1989, the RTC upheld the spouses’ title but declared that the four -door two-storey 4 apartment building was not included in the auction sale . This was affirmed in toto by the Court of Appeals and 5 thereafter by this Court, in its Decisio n dated May 25, 1993, in G.R. No. 105360 entitled Pecson v. Court of Appeals. On June 23, 1993, by virtue of the Entry of Judgment of the aforesaid decision in G.R. No. 105360, the Nuguids became the uncontested owners of the 256-square meter c ommercial lot. As a result, the Nuguid spouses moved for delivery of possession of the lot and the apartment building. 6

7

In its Order Orde r of November 15, 1993, the trial court, relying upon Article 54 6 of the Civil Code, ruled that the Spouses Nuguid were to reimburse Pecson for his construction cost of P53,000, following which, the spouses Nuguid were entitled to immediate issuance of a writ of possession over the lot and improvements. In the same order the RTC also directed Pecson to pay the same amount of monthly rentals to the Nuguids as paid by the tenants occupying the apartment units or P21,000 per month from June 23, 1993, and allowed the offset of the amount of P53,000 due from the Nuguids against the amount of rents collected by Pecson from June 23, 1993 to 8 September 23, 1993 from the tenants of the apartment .

9

Pecson duly moved for reconsideration, but on November 8, 1993, the RTC issued a Writ of Possession , directing the deputy sheriff to put the spouses Nuguid in possession of the subject property with all the improvements thereon and to eject all the occupants therein. Aggrieved, Pecson then filed a special civil action for certiorari and prohibition docketed as CA-G.R. SP No. 32679 with the Court of Appeals. 10

In its decision of June 7, 1994, the appellate court, relying upon Article 448 of the Civil Code, affirmed the order of payment of construction costs but rendered the issue of possession moot on a ppeal, thus: WHEREFORE, while it appears that private respondents [spouses Nuguid] have not yet indemnified petitioner [Pecson] with the cost of the improvements, since Annex I shows that the Deputy Sheriff has enforced the Writ of Possession and the premises have been turned over to the possession of private respondents, the quest of petitioner that he be restored in possession of the premises is rendered moot and academic, although it is but fair and just that private respondents pay petitioner the construction cost of P53,000.00; and that petitioner be ordered to account for any and all fruits of the improvements received by him starting on June 23, 1993, with the amount of P53,000.00 to be offset therefrom. IT IS SO ORDERED. ORDERED .

11

[Underscoring supplied.]

Frustrated by this turn of events, Pecson filed a petition for review docketed as G.R. No. 115814 before this Court. On May 26, 1995, the Court handed down the decision in G.R. No 115814, to wit: WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of 15 November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470 are hereby SET ASIDE. The case is hereby remanded to the trial court for it to determine the current market value of the apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on the current market value of the apartment building. The value so determined shall be forthwith paid by the private respondents [Spouses Juan and Erlinda Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the possession of the apartment building until payment of the required indemnity. No costs. 12

SO ORDERED. ORDERED. [Emphasis supplied.] In so ruling, this Court pointed out that: (1) Article 448 of the Civil Code is not apposite to the case at bar where the owner of the land is the builder, sower, or planter who then later lost ownership of the land by sale, but may, however, be applied by analogy; (2) the current market value of the improvements should be made as the basis of reimbursement; (3) Pecson was entitled to retain ownership of the building and, necessarily, the income therefrom; (4) the Court of Appeals erred not only in upholding the trial court’s determination of the indemnity, but also in ordering Pecson to account for the rentals of the apartment building from June 23, 1993 to September 23, 1993. On the basis of this Court’s decision in G.R. No. 115814, Pecson filed a Motion to Restore Possession and a Motion to Render Accounting, praying respectively for restoration of his possession over the subject 256-square meter commercial lot and for the spouses Nuguid to be directed to render an accounting under oath, of the income derived from the subject four-door apartment from November 22, 1993 until possession of the same was restored to him.

13

In an Order Order dated January 26, 1996, the RTC denied the Motion to Restore Possession to the plaintiff averring that the current market value of the building should first be determined. Pending the said determination, the resolution of the Motion for Accounting was likewise held in abeyance. With the submission of the parties’ assessment and the reports of the subject rea lty, and the reports of the Quezon City Assessor, as well as the members of the duly constituted assessment committee, the trial court issued 14 the following Order Orde r dated October 7, 1997, to wit:

On November 21, 1996, the parties manifested that they have arrived at a compromise agreement that the value of the said improvement/building is P400,000.00 The Court notes that the plaintiff has already receivedP300,000.00. However, when defendant was ready to pay the balance of P100,000.00, the plaintiff now insists that there should be a rental to be paid by defendants. Whether or not this should be paid by defendants, incident is hereby scheduled for hearing on November 12, 1997 at 8:30 a.m. Meantime, defendants are directed to pay plaintiff the balance of P100,000.00. SO ORDERED. ORDERED.

15

On December 1997, after paying the said P100,000 balance to Pedro Pecson the spouses Nuguid prayed for the closure and termination of the case, as well as the cancellation of the notice of lis pendens on the title of the 16 property on the ground that Pedro Pecson’s claim for rentals was devoid of fac tual and legal bases. bases . After conducting a hearing, the lower court issued an Order dated July 31, 1998, directing the spouses to pay the sum of P1,344,000 as reimbursement of the unrealized income of Pecson for the period beginning November 22, 1993 up to December 1997. The sum was based on the computation of P28,000/month rentals of the four-door apartment, thus: The Court finds plaintiff’s motion valid and meritorious. The decision of the Supreme Court in the aforesaid case [Pecson vs. Court of Appeals, 244 SCRA 407] which set aside the Order of this Court of November 15, 1993 has in effect upheld plaintiff’s right of  possession of the building for as long as he is not fully paid the value thereof. It follows, as declared by the Supreme Court in said decision that the plaintiff is entitled to the income derived therefrom, thus  – ... Records show that the plaintiff was dispossessed of the premises on November 22, 1993 and that he was fully paid the value of his building in December 1997. Therefore, he is entitled to the income thereof beginning on November 22, 1993, the time he was dispossessed, up to the time of said full payment, in December 1997, or a total of 48 months. The only question left is the determination of income of the four units of apartments per month. But as correctly pointed out by plaintiff, the defendants have themselves submitted their affidavits attesting that the income derived from three of the four units of the apartment building is P21,000.00 or P7,000.00 each per month, or P28,000.00 per month for the whole four units. Hence, at P28,000.00 per month, multiplied by 48 months, plaintiff 17 is entitled to be paid by defendants the amount of P1,344,000.00 . The Nuguid spouses filed a motion for reconsideration but this was denied for lack of merit .

18

The Nuguid couple then appealed the trial court’s ruling to the Court of Appeals, their action docketed as CA -G.R. CV No. 64295.

In the Court of Appeals, the order appealed from in CA-G.R. CV No. 64295, was modified. The CA reduced the 19 rentals from P1,344,000 to P280,000 in favor of the appellee . The said amount represents accrued rentals from 20 the determination of the current market value on January 31, 1997 until its full payment on December 12, 1997. Hence, petitioners state the sole assignment of error now before us as follows: THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE TO PAY RENT OVER AND ABOVE THE CURRENT MARKET VALUE OF THE IMPROVEMENT WHEN SUCH WAS NOT PROVIDED FOR IN THE DISPOSITIVE PORTION OF THE SUPREME COURT’S RULING IN G.R. No. 115814. Petitioners call our attention to the fact that after reaching an agreed price of P400,000 for the improvements, they only made a partial payment of P300,000. Thus, they contend that their failure to pay the full price for the improvements will, at most, entitle respondent to be restored to possession, but not to collect any rentals. Petitioners insist that this is the proper interpretation of the dispositive portion of the decision in G.R. No. 115814, which states in part that "[t]he value so determined shall be forthwith paid by the private respondents [Spouses Juan and Erlinda Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the 21 possession of the apartment building until payment of the required indemnity. " Now herein respondent, Pecson, disagrees with herein petitioners’ contention. He argues that petitioners ar e wrong in claiming that inasmuch as his claim for rentals was not determined in the dispositive portion of the decision in G.R. No. 115814, it could not be the subject of execution. He points out that in moving for an accounting, all he asked was that the value of the fruits of the property during the period he was dispossessed be accounted for, since this Court explicitly recognized in G.R. No. 115814, he was entitled to the property. He points out that this Court ruled that "[t]he petitioner [Pecson] not having been so paid, he was entitled to retain 22 ownership of the building and, necessarily, the income therefrom." In other words, says respondent, accounting was necessary. For accordingly, he was entitled to rental income from the property. This should be given effect. The Court could have very well specifically included rent (as fruit or income of the property), but could not have done so at the time the Court pronounced judgment because its value had yet to be determined, according to him. Additionally, he faults the appellate court for modifying the order of the RTC, thus defeating his right as a b uilder in good faith entitled to rental from the period of his dispossession to full payment of the price of his improvements, which spans from November 22, 1993 to December 1997, or a period of more than four years.

It is not disputed that the construction of the four-door two-storey apartment, subject of this dispute, was undertaken at the time when Pecson was still the owner of the lot. When the Nuguids became the uncontested owner of the lot on June 23, 1993, by virtue of entry of judgment of the Court’s decision, dated May 25, 1993, in G.R. No. 105360, the apartment building was already in existence and occupied by tenants. In its decision dated May 26, 1995 in G.R. No. 115814, the Court declared the rights and obligations of the litigants in accordance with Articles 448 and 546 of the Civil Code. These provisions of the Code are directly applicable to the instant case. Under Article 448, the landowner is given the option, either to appropriate the improvement as his own upon payment of the proper amount of indemnity or to sell the land to the possessor in good faith. Relatedly, Article 546 provides that a builder in good faith is entitled to full reimbursement for all the necessary and useful expenses incurred; it also gives him right of retention until full reimbursement is made. While the law aims to concentrate in one person the ownership of the land and the improvements thereon in view 23 of the impracticability of creating a state of forced co-ownership , it guards against unjust enrichment insofar as the good- faith builder’s improvements are concerned. The right of retention is considered as one of the measures devised by the law for the protection of builders in good faith. Its object is to guarantee full and prompt reimbursement as it permits the actual possessor to remain in possession while he has not been reimbursed (by the person who defeated him in the case for possession of the property) for those necessary expenses and useful 24 improvements made by him on the thing possessed . Accordingly, a builder in good faith cannot be compelled to 25 pay rentals during the period of retention nor be disturbed in his possession by ordering him to vacate. In

addition, as in this case, the owner of the land is prohibited from offsetting or compensating the necessary and useful expenses with the fruits received by the builder-possessor in good faith. Otherwise, the security provided by law would be impaired. This is so because the right to the expenses and the right to the fruits both pertain to the 26 possessor, making compensation juridically impossible; and one cannot be used to reduce the other . As we earlier held, since petitioners opted to appropriate the improvement for themselves as early as June 1993, when they applied for a writ of execution despite knowledge that the auction sale did not include the apartment building, they could not benefit from the lot’s improvement, until they reimbursed the improver  in full, based on the current market value of the property. Despite the Court’s recognition of Pecson’s right of ownership over the apartment building, the petitioners still insisted on dispossessing Pecson by filing for a Writ of Possession to cover both the lot and the building. Clearly, this resulted in a violation of respondent’s right of retention. Worse, petitioners took advantage of the situation to benefit from the highly valued, income-yielding, four-unit apartment building by collecting rentals thereon, before they paid for the cost of the apartment building. It was only four years later that they finally paid its full value to the respondent. Petitioners’ interpretation of our holding in G.R. No. 115814 has neither factual nor legal basis. The de cision of May 26, 1995, should be construed in connection with the legal principles which form the basis of the decision, 27 guided by the precept that judgments are to have a reasonable intendment to do justice and avoid wrong .

The text of the decision in G.R. No. 115814 expressly exempted Pecson from liability to pay rentals, for we found that the Court of Appeals erred not only in upholding the trial court’s de termination of the indemnity, but also in ordering him to account for the rentals of the apartment building from June 23, 1993 to September 23, 1993, the period from entry of judgment until Pecson’s dispossession. As pointed out by Pecson, the dispositive portion of our decision in G.R. No. 115814 need not specifically include the income derived from the improvement in order to entitle him, as a builder in good faith, to such income. The right of retention, which entitles the builder in good faith to the possession as well as the income derived therefrom, is already provided for under Article 546 of the Civil Code. Given the circumstances of the instant case where the builder in good faith has been clearly denied his right of retention for almost half a decade, we find that the increased award of rentals by the RTC was reasonable and equitable. The petitioners had reaped all the benefits from the improvement introduced by the respondent during said period, without paying any amount to the latter as reimbursement for his construction costs and expenses. They should account and pay for such benefits. We need not belabor now the appellate court’s recognition of herein respondent’s entitlement to rentals from the date of the determination of the current market value until its full payment. Respondent is clearly entitled to payment by virtue of his right of retention over the said improvement.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision dated May 21, 2001 of the Court of Appeals in CA-G.R. CV No. 64295 is SET ASIDE and the Order dated July 31, 1998, of the Regional Trial Court, Branch 101, Quezon City, in Civil Case No. Q-41470 ordering the herein petitioners, Spouses Juan and Erlinda Nuguid, to account for the rental income of the four-door two-storey apartment building from November 1993 until December 1997, in the amount of P1,344,000, computed on the basis of Twenty-eight Thousand (P28,000.00) pesos monthly, for a period of 48 months, is hereby REINSTATED. Until fully paid, said amount of rentals should bear the legal rate of interest set at six percent (6%) per annum computed from the date of RTC judgment. If any portion thereof shall thereafter remain unpaid, despite notice of finality of this Court’s judgment, said remaining unpaid amount shall bear the rate of interest set at twelve percent (12%) per annum computed from the date of said notice. Costs against petitioners.

SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur. Write-up

Under the law (Article 448 Ci vil Code), the landowner is given the option either to a ppropriate the improvement as his own upon payment of the proper indemnity or to sell the land to the possessor in good faith. On the other hand, the builder or possessor of the improvement in good faith is entitled to full reimbursement for all the necessary and useful expenses incurred and the right to retain said improvements until full reimbursement is made (Article 546). These rules are illustrated in this case of Pablo and the spouses Nubla.

Pablo owned a 256-square meter commercial lot on which he built a four door two-storey apartment. For failure to pay the taxes, the lot was sold at public auction by the City Treasurer to Manny who in turn sold it to the spouses Nubla for P103,000. While Pablo challenged the validity of the auction sale in the Courts, it was ultimately and finally ruled by the Supreme Court (SC) that the four-door two-storey apartment building was not included in the auction sale. So on June 23, 1993, by virtue of the Entry of Final Judgment, the spouses Nubla became the uncontested owners of the 256 sq. m. lot. As a result, they moved for delivery of possession of the lot including the apartment building.

On November 15, 1993, the trial court ruled that the spouses Nubla should reimburse Pablo the sum of P53,000 for his construction cost before the writ of possession could be issued in their favor. In the same order the trial court likewise directed Pablo to pay the Nublas the amount of P21,000 monthly rentals he collected from the tenants occupying the apartments from June 23, 1993 to September 23, 1993 and allowed the off-set of the P53,000 due from the Nublas against the said amount.

Pablo filed a motion for reconsideration of this ruling but the trial court already issued a Writ of Possession directing the Sheriff to put the Nublas in possession of the subject property and all the improvements thereon and to eject all the occupants therein. Thus on November 22, 1993, Pablo was dispossessed of the lot and the building. Aggrieved, Pablo questioned this ruling all the way back to the SC which on May, 26, 1995 handed down a decision setting aside the November 15, 1993 ruling of the trial court and remanding the case to it for determination of the current market value of the apartment building. The decision further said that the value so determined shall be forthwith paid by the spouses Nubla to Pablo otherwise the latter shall be restored to the possession of the apartment building until payment of the required indemnity. The SC applied Article 448 of the Civil Code by analogy and considered Pablo as builder in good faith of the apartment built on his own land which was taken away from him in the auction sale.

Upon remand of the case, the parties arrived at a compromised value of the building in the sum of P400,000. Since Pablo had already received P300,000, the Nublas offered to pay the balance of P100,000 and indeed paid it in December 1997 and asked for the closure and termination of the case. But Pablo insisted that he should also be paid the rentals of the apartment as his unrealized income from the time he was dispossessed of it on November 22, 1993 until December 1997 or 48 months. The trial court agreed with Pablo and ordered the Nublas to reimburse Pablo P1,344,000 as rentals of the building for said period of 48 months. Was the trial court correct?

Yes. While the law aims to concentrate in one person the ownership of the land and the improvements thereon in view of the impracticality of creating a forced co-ownership, it guards against unjust enrichment insofar as the

good faith builders’ improvements are concerned. The right of retention is one of the measures devised by law for the protection of builders in good faith. It guarantees the full and prompt reimbursement as it permits the actual possessor to remain in possession pending reimbursement of the necessary expenses and useful improvements he made on the thing possessed by the person who defeated him in the case for the possession of the property. Accordingly, a builder in good f aith cannot be compelled to pay rentals during the period of retention nor be disturbed in his possession by ordering him to vacate. Otherwise the security provided by law would be impaired.

In this case, since the Nublas opted to appropriate the improvements for themselves as early as June 1993, when they applied for a writ of possession despite knowledge that the auction sale did not include the apartment, they could not benefit from said improvement until they reimburse the improver in full based on the current market value of the property. Since they insisted on dispossessing Pablo, they violated Pablo’s right of retention of the apartment. Worse they took advantage of the situation to benefit from the highly valued, income yielding, four-unit apartment by collecting rentals thereon. It was only four years later when they paid its full value to Pablo. Given these circumstances the increased award of rentals by the trial court was reasonable and equitable. The Nublas reaped all the benefits from the improvement introduced by Pablo during the said period without paying any amount to the latter as reimbursement for his construction cost and expenses. They should account and pay for such benefits. So they should pay the P1,344,000 with legal interest of 6 percent per annum from the date of the trial court’s judgment (Nuguid vs. Court of Appeals, G.R. 151815, February 23, 2005. 452 SCRA 243).

SPS. NUGUID v. CA Facts: Pedro Pecson was the owner of a commercial lot on which he built a 4-door-2-storey apartment building. He failed to pay realty taxes amounting to P12k so the lot was sold at public auction to Mamerto Nepomuceno who later on sold it to the Sps. Nuguid for an amount of P103,000. Pecson challenged the validity of the auction sale before the RTC of QC in which it upheld the sps. title but declared that the four door two storey apartment building was not included in the auction sale. This decision was then affirmed by the CA and by the SC. The Nuguids became the uncontested owner of the commercial lot and was then moved for the delivery of the possession of the lot and the apartment building. Issue: Won the Nuguids should reimburse the Pecson for the bene fits derived from the apartment building. Held: YES. Since the petitioners opted to appropriate the improvement for themselves as early as June 1993, when they applied for a writ of execution despite knowledge that the auction sale did not include the apartment building, they could not benefit from the lot’s improvement, until they reimbursed the improver in full, based on the curre nt market value of the property. Under Article 448, the landowner is given the option, either to appropriate the improvement as his own upon payment of the proper amount of indemnity or to sell the land to the possessor in good faith. Readily, Article 547 provides that a builder in good faith is entitled to full reimbursement for all the

necessary and useful expenses incurred; it also gives him the right of full retention until full reimbursement is made. The right of retention is considered as one of the measures devised by the law for the protection of builders in good faith. Its subject is to guarantee full and prompt reimbursement as it permits the actual possessor to remain in possession while he has not been reimbursed for those necessary expenses and useful improvements made by him on the thing possessed. Given the circumstances of the given case where the builder in good faith has been clearly denied his right of retention for almost half a decade, we find that the increased award of rentals by the RTC was reasonable and equitable. The petitioners had reaped all the benefits from the improvement introduced by the respondent during said period without paying any amount to the latter as reimbursement for his construction costs and expenses. They should account and pay for such benefits.

G.R. No. L-23497 April 26, 1968 J.M. TUASON and CO., INC., petitioner, vs. ESTRELLA VDA. DE LUMANLAN and the COURT OF APPEALS (FIFTH DIVISION), respondents.

Tuason and Sison for petitioner.  Jose Chuico and Wilfredo E. Dizon for respondents.

REYES, J.B.L., Actg. C.J.: J. M. Tuason & Co., Inc. petitioned for a review by certiorari  of   of the decision issued by the Court of Appeals (Fifth Division) in its case CA-G.R. No. 27259-R, reversing the judgment rendered by the Court of First Instance of Rizal (Civil Case No. Q-4243) that ordered defendant (now respondent) Estrella Vda. de Lumanlan to vacate the lot occupied by her in Sta. Mesa Heights Subdivision, barrio Tatalon, Quezon City, and to remove therefrom the house and other structures constructed thereon, paying P240.00 a month until restoration of the premises to plaintiff. The facts are stated in the decision of the Court of Appeals (accepted by both parties) in this wise: 1äwphï1.ñët  . . . That in the complaint filed in this case by plaintiff, J. M. Tuason & Co., Inc., hereinafter called Tuason, on 30 April, 1969, the basis is that it being the registered owner of the property known as Santa Mesa Heights Subdivision, situated at Barrio North Tatalon, Quezon City, herein defendant sometime in April, 1949 unlawfully entered into possession of 800 square meters, and therein constructed his house so that plaintiff prayed for ejectment and damages for the occupancy; and defendant in her answer set forthaffirmative defense  that on 12 March, 1949, she had bought the property she was occupying from one Pedro Deudor, and that in a compromise agreement between Pedro and Tuason on 16 March 1953, approved by the Court of First Instance of Quezon City, she was one of the buyers therein recognized, so that she asked that her rights be recognized and the complaint dismissed; but on the ba sis of the evidence presented by both parties in the trial, Lower Court sustained plaintiff, holding that Tuason being the registered owner, and the question being purely one of possession, therefore, defendant's said evidence was "completely immaterial". . . . (Page 2 of Decision, Annex "A" of Petition.) Upon the facts thus stated, the Fifth Division of the Court of Appeals held that, pursuant to this Supreme Court's ruling in Evangelista vs. Deudor , L-12826, September 10, 1959, the Compromise Agreement (Exh. 2) between the petitioner Tuason & Co. and the Deudors constituted a valid defense against the possessory action filed by Tuason & Co.; that under paragraph 7 of said Compromise Agreement, petitioner bound and committed itself to sell to respondent Lumanlan the lot occupied by her at a reasonable price; that said respondent had a right to compel

petitioner to accept payment for the lot in question; and that the compromise agreement legalized the possession of respondent. These pronouncements are assailed by the petitioner in this appeal as legally incorrect and contrary to the decisions of this Court. The terms of the compromise agreement between the heirs of Telesforo Deudor and J. M. Tuason & Co. have been taken cognizance of in many decisions of this Court (Evangelista vs. Deudor,  jam. cit ; Deudor vs. J. M. Tuason & Co., L-18768, May 30, 1961, and L-20105, Oct. 31, 1963; J. M. Tuason vs. Jaramillo, et al., L-18932-34, Sept. 30, 1963; J. M. Tuason vs. Macalindong, L-15398, Dec. 29, 1962 and others). The Deudors had therein recognized the registered title of Tuason & Co. over the lands claimed by them, and received payment of certain sums of money; but as the Deudors had, prior to the compromise, sold their possessory rights to various persons, paragraph seventh of the compromise agreement (case Q-135 of the court of origin) provided: That the sales of the possessory rights claimed by the DEUDORS, are described in the lists submitted by them to the OWNERS which are attached hereto marked Annexes "B" and "C" and made part hereof. Whatever amounts may have been collected by the DEUDORS on account thereof, shall be deducted from the total sum of P1,201,063.00 to be paid to them. It shall be the joint and solidary obligation of the DEUDORS to make the buyer of the lots purportedly sold by them to recognize the title of the OWNERS over the property purportedly bought by them, and to make them sign, whenever possible, new contracts of purchase for said property at the current paces and terms specified by the OWNERS in their sales of lots in their subdivision known at "Sta. Mesa Heights Subdivision." The DEUDORS HEREBY advised the OWNERS that the buyer listed in Annex "B" herein with the annotation "continue" shall buy the lots respectively occupied by them and shall sign contracts, but the sums already paid by them to the DEUDORS amounting to P134,922.84 (subject to verification by the Court) shall be credited to the buyers and shall be deducted from the sums to be paid to the DEUDORS by the OWNERS. The DEUDORS also advise the OWNERS that, the buyers listed in Annex "C" herein with the annotation "Refund" have decided not to continue with their former contracts or purchases with the DEUDORS and the sums already paid by them to the DEUDORS TOTALLING P101,182.42 (subject to verification by the Court) shall be refunded to them by the OWNERS and deducted from the sums that may be due to the DEUDORS from the OWNERS (J.M. Tuason & Co., Inc. vs. Jaramillo, L-189 32, Sept. 30, 1963); Careful analysis of this paragraph of the compromise agreement will show that while the same created "a sort of contractual relation" between the J. M. Tuason & Co., Inc., and the Deudor vendees (as ruled by this Court in Evangelista vs. Deudor, ante), the same in no way obligated Tuason & Co. to sell to those buyers the lots occupied by them at the price stipulated with the Deudors, but at "the current prices and terms specified by the OWNERS (Tuason) in their sales of lots in their subdivision known as 'Sta. Mesa Heights Subdivision'". This is what is expressly provided. Further, the paragraph plainly imports that these buyers of the Deudors must "recognize the title of the OWNERS (Tuason) over the property  purportedly  bought by them" from the Deudors, and "sign, whenever possible, new contracts of purchase for said property"; and, if and when they do so, "the sums paid by them to the Deudors . . . shall be credited to the buyers." All that Tuason & Co. agreed to, therefore, was to grant the Deudor buyers preferential right to purchase "at current prices and terms" the lots occupied by them, upon their recognizing the title of Tuason & Co., Inc., and signing new   contracts therefor; and to credit them for the amounts they had paid to the Deudors. Nowhere in her answer did the respondent Estrella Vda. de Lumanlan claim that she had signed a new contract with J. M. Tuason & Co., Inc. for the purchase of the lot occupied. What is worse, instead of recognizing the title of the owners (Tuason & Co.) as required by the aforementioned compromise agreement, she charged in paragraph 6 of her special defense (Rec. on Appeal, p. 10) that "Pedro Deudor and his co-owners and the plaintiff herein . . .conspired together and helped each other  . . .  by entering into a supposed Compromise " whereby "Pedro Deudor and his co-owners renounced, ceded, waived and quitclaimed all their rights, title and interest in the property including the land sold to herein defendant, in favor of the plaintiff J. M. Tuason & Co., Inc., in consideration of the

sum of P1,201,063.00, without the knowledge and consent, and much less the intervention of the herein defendant ." ." In other words, the respondent Lumanlan in her answer repudiated and assailed the compromise between the Deudors and J. M. Tuason & Co. How then can she now claim to take advantage and derive rights from that compromise? Without the compromise agreement, Lumanlan must justify her possession on the basis of a pretended superiority of the Deudors' old Spanish informacion posesoria over Tuason's Certificate of Title No. 1 267, traceable back to the original Certificate of Title No. 735 of Rizal, issued under the Registration Act No. 496. But, as ruled by this Court in previous cases, Lumanlan is by now barred from assailing the decree of registration in favor of Tuason & Co., Inc.'s predecessors twenty years after its issuance (Tiburcio vs. PHHC, L-13429, Oct. 31, 1959; Tuason & Co. vs. Bolaños, 95 Phil. 107; Tuason & Co. vs. Santiago, 99 Phil. 622-623; Tuason & Co. vs. Macalindong, supra; Tuason & Co. vs. Jaramillo, L-16827, Jan. 31, 1963). It is thus apparent that no legal basis exists for the pronouncement in the appealed decision that Tuason & Co. had committed itself to sell to Lumanlan the lot occupied by her at a reasonable price, or that the compromise agreement legalized the possession of the respondent, since the latter does not rely on the compromise but, on the contrary, she assails it. The Court of Appeals ruled that the price to be paid by Lumanlan to Tuason & Co., Inc., is governed by Article 1474 of the new Civil Code of the Philippines, which provides that: Where the price cannot be determined in accordance with the preceding articles, or in any other manner, the contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer, he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case. Since there has been no contract between petitioner Tuason & Co. and respondent Lumanlan for the sale of the lot occupied by the latter, and by paragraph 7 of the Compromise Agreement (assuming that respondent-appellee still has the right to invoke the same, and seek refuge thereunder), Tuason & Co. did not consider itself bound by the sales made by the Deudors, but demanded that the Deudor buyers should sign new contracts with it at current  prices specified for the sales of lots in "Sta. Mesa Heights Subdivision" ( ante ) the aforequoted Article 1474 can have no bearing on the case, Lumanlan not being a buyer from Tuason & Co. As to Lumanlan's allegation in her counterclaim that she should be deemed a builder in good faith, a similar contention has been rejected in Tuason & Co. vs. Macalindong , L-15398, December 29, 1962, where we ruled that there being a presumptive knowledge of the Torrens titles issued to Tuason & Co. and its predecessors-in-interest since 1914, the buyer from the Deudors (or from their transferees) can not, in good conscience, say now that she believed her vendor had rights of ownership over the lot purchased. The reason given by the Court is that — Had he investigated before buying and before building his house on the questioned lot, he would have been informed that the land is registered under the Torrens system in the name of J. M. Tuason & Co., Inc., If he failed to make the necessary inquiry, appellant is now bound conclusively by appellee's Torrens title (Sec. 51, Act 496; Emas vs. Zuzuarregui, 35 Phil. 144) (Tuason & Co., Inc. vs. Macalindong, ante). Lumanlan had chosen to ignore the Torrens title of Tuason & Co., Inc. and relied instead upon the Deudors' claim of ownership, perhaps because such course appeared to her as more advantageous; hence, she has only herself to blame for the consequences now that the Deudors' claim has been abandoned by the Deudors themselves, and can not pretend good faith. The Court of First Instance, therefore, did not err in holding that she was not a rightful possessor and sentencing her to vacate.

Respondent could have asked that she recover or be credited with the amounts paid by her to the Deudors, but as no claim to such credit was ever advanced by her in the trial Court, no pronouncement can be made thereon in this appeal. Equity demands, however, that her right to claim such return, or to have the amount offset against the sums she was sentenced to pay, should be, as it is, reserved. WHEREFORE, the decision of the Court of Appeals is reversed and that of the Court of First Instance reinstated. Costs against respondent, Estrella Vda. de Lumanlan. Dizon, Makalintal, Bengzon,  Angeles, J., Concepcion, C.J., is on leave.

J.P.,

Zaldivar,

Sanchez, took

Castro

and

Fernando, no

JJ.,

concur. part.

Tuason v. Estrella and CA Facts: That in the complaint filed in this case by plaintiff, the basis is that it being the registered owner of the property known as Santa Mesa Heights Subdivision, herein defendant sometime in April, 1949 unlawfully entered into possession of 800 square meters, and therein constructed his house so that plaintiff prayed for ejectment and damages for the occupancy; and defendant in her answer set forth affirmative defense that on 12 March, 1949, she had bought the property she was occupying from one Pedro Deudor, and that in a compromise agreement between Pedro and Tuason on 16 March 1953, approved by the Court of First Instance of Quezon City, she was one of the buyers therein recognized, so that she asked that her rights be recognized and the complaint dismissed; but on the basis of the evidence presented by both parties in the trial, Lower Court sustained plaintiff, holding that Tuason being the registered owner, and the question being purely one of possession, therefore, defendant's said evidence was "completely immaterial". CA ruled that the Compromise Agreement between the petitioner Tuason & Co. and the Deudors constituted a valid defense against the possessory action filed by Tuason & Co.; that under paragraph 7 of said Compromise Agreement, petitioner bound and committed itself to sell to respondent Lumanlan the lot occupied by her at a reasonable price; that said respondent had a right to compel petitioner to accept payment for the lot in question; and that the compromise agreement legalized the possession of respondent. Issue: Won Estrella Lumanlan is considered to be a builder in good faith. Held: NO. As to Lumanlan's allegation in her counterclaim that she should be deemed a builder in good faith, a similar contention has been rejected in Tuason & Co. vs. Macalindong, L- 15398, December 29, 1962, where we ruled that there being a presumptive knowledge of the Torrens titles issued to Tuason & Co. and its predecessors-in-interest since 1914, the buyer from the Deudors (or from their transferees) can not, in good conscience, say now that she believed her vendor had rights of ownership over the lot purchased. The reason given by the Court is that — Had he investigated before buying and before building his house on the questioned lot, he would have been informed that the land is registered under the Torrens system in the name of J. M. Tuason & Co., Inc., If he failed to make the necessary inquiry, appellant is now bound conclusively by appellee's Torrens title (Sec. 51, Act 496; Emas vs. Zuzuarregui, 35 Phil. 144) (Tuason & Co., Inc. vs. Macalindong, ante).

 Lumanlan had chosen to ignore the Torrens title of Tuason & Co., Inc. and relied instead upon the Deudors' claim of ownership, perhaps because such course appeared to her as more advantageous; hence, she has only herself to blame for the consequences now that the Deudors' claim has been abandoned by the Deudors themselves, and can not pretend good faith. The Court of First Instance, therefore, did not err in holding that she was not a rightful possessor and sentencing her to vacate. Respondent could have asked that she recover or be credited with the amounts paid by her to the Deudors, but as no claim to such credit was ever advanced by her in the trial Court, no pronouncement can be made thereon in this appeal. Equity demands, however, that her right to claim such return, or to have the amount offset against the sums she was sentenced to pay, should be, as it is, reserved.

TECHNOGAS PHIL. v. CA, GR 08894 FACTS

Petitioner bought a lot together with the building and improvements including the wall which encroached that of the defendant. Upon learning of such encroachment, petitioner offered to buy the land but defendant refused. After 2 years, through an agreement, petitioner agreed to demolish the wall (but the case did not state what happened to this agreement, my assumption is that it did not happen due to conflicts that arose after) Defendant dug a canal along the wall which caused a portion of it to collapse. Petitioner filed a supplemental complaint re the action and a separate criminal action of malicious mischief (which the wife was convicted of) RTC decided for the petitioners and the CA reversed. Note that respondent wants to have the wall demolished. ISSUES: A. Whether or not petitioner is a builder in bad faith because it is 'presumed to know the metes and bounds of his property.' B. Whether or not amicable settlement was a proper remedy C. Whether or not respondent can opt to demolish the structure without exercising the option to sell the land to the petitioner and the latter cannot do buy the same RULING: Petition was granted. Good faith or Bad Faith  – No such doctrinal statement that supports that the knowledge of metes and bounds of a land due to the Torrens system would amount to bad faith if there was encroachment on the land of another. A. When the petitioner purchased the lot, the wall was already built. Even the respondent did not knew about the encroachment until he has hired a surveyor. B. Where one derives title to the property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former. And possession in good faith does not lose this character except when the possessor is aware of this impropriety. C. The encroachment was very narrow which can be considered as a mere error. Remedy  – the petitioner, despite being a purchaser of the original builder, can compel the landowner to either buy the property or sell the piece of land because:

1. 2.

He was really unaware of the encroachment basing on the fact presented by both sides. When the petitioner bought the land, he has stepped into the rights of the original owner (hence, the right to compel the LO to buy or sell is also transferred)

Estoppel  – Petitioner is not considered in estoppel only because it has previously agreed to demolish a part of the wall. Rather, it was to be negotiated by the parties concern. In the meantime, p etitioner has to pay the rent for the property occupied by its building only up to the date when respondent serves notice of their option. Case remanded back to the trial court for determination of the value of the land and the number of days to allot for the respondent to choose an option. PLEASANTVILLE DEVELOPMENT CORPORATION VS. COURT OF APPEALS G.R. NO. 79688 253 SCRA 10 FEBRUARY 1, 1996 PONENTE: PANGANIBAN, J.

Doctrine: Good faith consists in the belief of the builder that he land he is building on is his and his ignorance of any defect or flaw in his title. The burden of proving bad faith belongs to the one asserting it.

Facts: Edith Robillo purchased from Pleasantville Development Corporation, herein petitioner a parcel of land at Pleasantville Subdivision, Bacolod City. The property was designated as Lot 9, Phase II. In 1975, herein respondent Eldred Jardinico bought the said subject lot from the former purchaser. Eldred later discovered that the property he purchased had improvements introduced therein by respondent Wilson Kee. Kee on the other hand bought on installments Lot 8 of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI) which is the exclusive real estate agent of the petitioner. Under the contract Kee was allowed to take possession of the property even before full payment of the price. CTTEI through an employee, Zenaida Octaviano accompanied Kee’s wife Donabelle to inspect Lot No. 8. Octaviano however mistakenly pointed towards Lot 9. Hence spouses Kee had their residence, an auto repair shop, a store and other improvements constructed on the wrong lot. Upon discovery of the blunder both Kee and Jardinico tried to reach an amicable settlement but they failed. Jardinico demanded that the improvements be removed but as Kee refused, Jardinico filed a complaint for ejectment with damages against Kee at the Municipal Trial Court in Cities (MTCC) of Bacolod City. Kee filed a thirdparty complaint against herein petitioner and CTTEI. The MTCC found that the error was attributable to CTTEI also since at present the contract with Kee has rescinded for Kee’s failure to pay installments. Kee no longer had any right over the subject property and must pay rentals for its use. The Regional Trial Court (RTC) of Bacolod City ruled that petitioner and CTTEI were not at fault or were not negligent. It argued that Kee was a builder in bad faith. Even if assuming that he was in good faith, he was no longer so and must pay rentals from the time that he was given notice to vacate the lot. The Court of Appeals ruled that Kee was a builder in good faith as he was unaware of the mix-up when he constructed the improvements. It was in fact due to the negligence and wrongful delivery of CTTEI which included its principal the herein petitioner. It further ruled that the award of rental w as without basis. Pending the resolution of the case at the Court of Appeals Jardinico and Kee entered into a deed of sale, wherein Lot 9 was sold to Kee. In the said deed a provision stating that regardless of the outcome of the decision, such shall not be pursued by the parties and shall be considered dismissed and without effect. The appellate court was not informed of this deal.

Issue: Whether or not a lot buyer who constructs improvements on the wrong property erroneously delivered by the owner’s agent, a builder in good faith?

Held: Yes. Article 527 of the Civil Code provides the presumption that petitioner has the burden of proving that Kee was a builder in bad faith. Kee may be made liable for the violation of the contract with CTTEI but this may not be used as a basis of bad faith and as a sufficient ground to negate the presumption of good faith. Jardinico is presently only allowed to file a complaint for unlawful detainer. Good faith is based on the belief of the builder that the land he is building on is his and his ignorance of any flaw or defect in is title. Since at the time when Kee constructed his improvements on Lot 8, he was not aware that it was actually Lot 9 that was delivered to him. Petitioner further contends that Kee was negligent as a provision in the Contract of Sale on Installment stated that the vendee must have personally examined the property and shall bear on his own the consequential expenses in the changes that may happen thereon. The court held that such provision cannot be interpreted as a waiver of the vendee’s right to recover damages resulting from petitioner’s negligence. Such interpretation of the waiver is contrary to law and public policy and cannot be allowed. Petitioner cannot claim and excuse itself from liability by claiming that it was not directly involved in the delivery of the property. The principal must be responsible for the acts of the agent done within the scope of his authority. CTTEI was the sole real estate representative of the petitioner when the delivery was made. Wilson Kee is therefore declared a builder in good faith. Petitioner and respondent CTTEI are declared solidarily liable for damages due to negligence. The award of rentals to Jardinico is dispensed with. G.R. Nos. L-66075-76 July 5, 1990 EULOGIO AGUSTIN, HEIRS OF BALDOMERO LANGCAY, ARTURO BALISI & JUAN LANGCAY, petitioners, vs. INTERMEDIATE APPELLATE COURT, MARIA MELAD, TIMOTEO MELAD, PABLO BINAYUG & GERONI MA UBINA, respondents.

 Antonio N. Laggui for petitioners. Pedro R. Perez, Jr. for private respondents.

GRIÑO-AQUINO, J.: The Cagayan River separates the towns of Solana on the west and Tuguegarao on the east in the province of Cagayan. According to the unrebutted testimony of Romeo Rigor, Geodetic Engineer of the Bureau of Lands, in 1919 the lands east of the river were covered by the Tuguegarao Cadastre. In 1925, Original Certificate of Title No. 5472 was issued for land east of the Cagayan River owned by defendant-petitioner Eulogio Agustin (Exh. 2Agustin). As the years went by, the Cagayan River moved gradually eastward, depositing silt on the western bank. The shifting of the river and the siltation continued until 1968. In 1950, all lands west of the river were included in the Solana Cadastre. Among these occupying lands covered by the Solana Cadastre were plaintiffs-private respondents, namely, Pablo Binayug, who has been in possession of Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885, 7891 and 7892, and Maria Melad, who owns Lot 3351 (Exh. 3-Binayug; Exh. B-Melad). Pablo Binayug began his possession in 1947. An area of eight (8) hectares was planted to tobacco and corn while 12 hectares were overgrown with talahib  (Exh. C-1 Binayug.) Binayug's Homestead Application No. W-79055 over this land was approved in 1959 (Exh. B-Binayug). Binayug's possession was recognized in the decision in Civil Case No. 101 (Exh. F-Binayug). On the other hand, as a result of Civil Case No. 343-T, Macario Melad, the predecessor-in-interest of Maria Melad and Timoteo Melad, was issued Original Certificate of Title No. P-5026 for Lot 3351 of Cad. 293 on June 1, 1956.

Through the years, the Cagayan River eroded lands of the Tuguegarao Cadastre on its eastern bank among which was defendant-petitioner Eulogio Agustin's Lot 8457 (Exh. E-Melad), depositing the alluvium as accretion on the land possessed by Pablo Binayug on the western bank. However, in 1968, after a big flood, the Cagayan River changed its course, returned to its 1919 bed, and, in the process, cut across the lands of Maria Melad, Timoteo Melad, and the spouses Pablo Binayug and Geronima Ubina whose lands were transferred on the eastern, or Tuguegarao, side of the river. To cultivate those lots they had to cross the river. In April, 1969, while the private respondents and their tenants were planting corn on their lots located on the eastern side of the Cagayan River, the petitioners, accompanied by the mayor and some policemen of Tuguegarao, claimed the same lands as their own and drove away the private respondents from the premises. On April 21, 1970, private respondents Maria Melad and Timoteo Melad filed a complaint (Civil Case No. 343-T) to recover Lot No. 3351 with an area of 5 hectares and its 6.6-hectare accretion. On April 24, 1970, private respondent Pablo Binayug filed a separate complaint (Civil Case No. 344-T) to recover his lots and their accretions. On June 16, 1975, the trial court rendered a decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby made: In Civil Case No. 343- T, commanding Eulogio Agustin, Gregorio Tuliao, Jacinto Buquel and Octavio Bancud, or anybody acting as their representative[s] or agents to vacate Lot No. 3351 of Solana Cadastre together with its accretion consisting of portions of Lots 9463, 9462 and 9461 of Tuguegarao Cadastre and for these defendants to restore ownership in favor of Maria Melad and Timoteo Melad who are the only interested heirs of Macario Melad. In Civil Case No. 344-T, commanding defendants Justo Adduru, Andres Pastor, Teofilo Tagacay, Vicente Camilan, Nicanor Mora, Baldomero Cagurangan, Domingo Quilang, Cesar Cabalza, Elias Macababbad, Titong Macababbad, Arturo Balisi, Jose Allabun, Eulogio Agustin, Banong Aquino, Junior Cambri and Juan Langoay, or any of their agents or representatives to vacate the Lots 3349, 7876, 7877, 7878, 7879, 7875, 7881, 7882, 7883, 7884, 7885, 7891 and 7892, together with its accretion and to restore possession to plaintiffs Pablo Binayug and Geronima Ubina. Without pronouncement as to damages which were not properly proven and to costs. SO ORDERED. (As amended by the order dated August 15, 1975.) (pp. 24-25, Rollo.) Only defendant-petitioner Eulogio Agustin appealed in Civil Case No. 343-T, while in Civil Case No. 344-T, only defendants-petitioners Eulogio Agustin, Baldomero Cagurangan (substituted by his heir), Arturo Balisi and Juan Langcay appealed. But upon motion of plaintiffs-private respondents, the trial court ordered the execution pending appeal of the judgment in Civil Case No. 344-T against Cagurangan, Balisi and Langcay on the ground that their appeal was dilatory as they had not presented evidence at the trial (Order dated August 15, 1975). On November 29, 1983, the Intermediate Appellate Court rendered a decision affirming in toto  the judgment of the trial court, with costs against the defendants-appellants. In their petition for review of that decision, the petitioners allege that the Court of Appeals erred: 1. in declaring that the land in question had become part of private respondents' estate as a result of accretion;

2. in declaring that the accretion to private respondents' estate which used to pertain to petitioners' estate cannot preclude the private respondents from being the owners thereof; and 3. in declaring that the ownership of private respondents over the accretion is not affected by the sudden and abrupt change in the course of the Cagayan River when it reverted to it s old bed The petition is unmeritorious and must be denied. The finding of the Court of Appeals that there had been accretions to the lots of the private respondents who did not lose the ownership of such accretions even after they were separated from the principal lots by the sudden change of course of the river, is a finding of fact which is conclusive on this Court. That finding is supported by Art. 457 of the New Civil Code which provides: Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. (366) Accretion benefits a riparian owner when the following requisites are present: (1) that the deposit be gradual and imperceptible; (2) that it resulted from the effects of the current of the water; and (3) that the land where accretion takes place is adjacent to the bank of a river (Republic vs. CA, 132 SCRA 514). All these requisites of accretion are present in this ca se for, as the trial court found: . . . Cagayan River did move year by year from 1919 to 1968 or for a period of 49 years. Within this period, the alluvium ( sic) deposited on the other side has become greater in area than the original lands of the plaintiffs in both cases. Still the addition in every year is imperceptible in nature, one could not discern it but can be measured after the lapse of a certain time. The testimonial evidence in these cases that said Cagayan River moved eastward year by year is overwhelming as against the denial of defendant Eulogio Agustin alone. Cesar Caronan, one time mayor of Solana, Cagayan, said so. Arturo Taguian said so. Timoteo Melad said so. Francisco Ubina said so. Geodetic Engineer Rigor impliedly said so when he testified that when Solana Cadastre was executed in 1950 it overlapped portions of Tuguegarao Cadastre executed in 1919. This could not have happened if that part of Tuguegarao Cadastre was not eroded by the overflow of the Cagayan River. These testimonies cannot be destroyed by the denials of Vicente Cauilan, Marcelo Agustin and Eulogio Agustin alone . . . . (p. 27, Rollo.) The appellate court confirmed that the accretion on the western bank of the Cagayan River had been going on from 1919 up to 1968 or for a period of 49 years. It was gradual and imperceptible. Only when Lot No. 3351, with an original area of 5 hectares described in the free patent that was issued to Macario Melad in June 1956, was resurveyed in 1968 did it become known that 6.6 hectares had been added to it. Lot No. 3351, covered by a homestead patent issued in June, 1950 to Pablo Binayug, grew from its original area of 18 hectares, by an additional 50 hectares through alluvium as the Cagayan River gradually moved to the east. These accretions belong to riparian owners upon whose lands the alluvial deposits were made (Roxas vs. Tuason, 9 Phil. 408; Director of Lands vs. Rizal, 87 Phil. 806). The reason for this principle is because, if lands bordering on streams are exposed to floods and other damage due to the destructive force of the waters, and if by virtue of law they are subject to encumbrances and various kinds of easements, it is only just that such risks or dangers as may prejudice the owners thereof should in some way be compensated by the right of accretion (Cortes vs. City of Manila, 10 Phil. 567).i•t•c-aüsl  The private respondents' ownership of the accretion to their lands was not lost upon the sudden and abrupt change of the course of the Cagayan River in 1968 or 1969 when it reverted to its old 1919 bed, and separated or

transferred said accretions to the other side (or eastern bank) of the river. Articles 459 and 463 of the New Civil Code apply to this situation. Art. 459. Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided that he removes the same within two years. Art. 463. Whenever the current of a river divides itself into branches, leaving a piece of land or part thereof isolated, the owner of the land retains his ownership. He also retains it if a portion of land is separated from the estate by the current . (Emphasis supplied). In the case at bar, the sudden change of course of the Cagayan River as a result of a strong typhoon in 1968 caused a portion of the lands of the private respondents to be "separated from the estate by the current." The private respondents have retained the ownership of the portion that was transferred by avulsion to the other side of the river. WHEREFORE, the petition is denied for lack of merit. The decision of the Intermediate Appellate Court, now Court of Appeals, is hereby affirmed. Costs a gainst the petitioners. SO ORDERED. Narvasa, C.J., Cruz, Gancayco and Medialdea, JJ., concur.

GRANDE v. CA, G.R. No. L-17652,

June 30, 1962

FACTS: The Grandes are owners of a parcel of land in Isabela, by inheritance from their deceased mother, Patricia Angui, who likewise, inherited it from her parent s. In the early 1930’s, the Grandes decided to have their land surveyed for registration purposes. The land was described to have Cagayan River as the northeastern boundary, as stated in the title. By 1958, a gradual accretion took place due to the action of the current of the river, and an alluvial deposit of almost 20,000 sq.m. was added to the registered area. The Grandes filed an action for quieting of title against the Calalungs, stating that they were in peaceful and continuous possession of the land created by the alluvial deposit until 1948, when the Calalungs allegedly trespassed into their property. The Calalungs, however, stated that they were the rightful owners since prior to 1933. The CFI found for the Grandes and ordered the Calalungs to vacate the premises and pay for damages. Upon appeal to the CA, however, the decision was reversed.

ISSUE: Whether or not the alluvium deposited land automatically belongs to the riparian owners?

HELD: Art. 457 dictates that alluvium deposits on land belong to the owners of the adjacent land. However, this does not ipso jure become theirs merely believing that said land have become i mprescriptible. The land of the Grandes only specifies a specific portion, of which the alluvial deposits are not included, and are thus, subject to acquisition by prescription. Since the Calalungs proved that they have been in possession of the land since 1934 via two credible witnesses, as opposed to the Grande’s single witness who claims that the Calalungs only enter ed the land in 1948, the Calalungs have been held to have acquired the land created by the alluvial deposits by prescription. This is because the possession took place in 1934, when the law to be followed was Act 190, and not the New Civil Code, which only took effect in 1950.