Torbela vs Sps Rosario

Torbela vs. Spouses Rosario GR 140528 Dec. 07, 2011 FACTS: The issue is over a parcel of land inherited by the Torbela siblings from their parents. They executed a deed of absolute quitclaim over the property in favor of Dr. Rosario. Four days after, a TCT was issued in Dr. Rosario’s name covering the property. Another deed of absolute quitclaim was subsequently executed twelve days after by Dr. Rosario acknowledging that he only borrowed the lot from the Torbela siblings and was already returning the same. This deed was notarized but not immediately annotated. Dr. Rosario used the land as mortgage for a loan he obtain through DBP for P70,000.00. He used the proceeds of the loan to build a 4 storey building which was initially used as a hospital but later converted into a commercial space. Part was leased to PT&T and the rest to Rosario ’s sister who operated the Rose Inn Hotel and Restaurant. Dr. Rosario fully paid the loan from DBP and the mortgage was cancelled and ratified by a notary public. However, Dr. Rosario took another loan from PNB. He later acquired a third loan from Banco Filipino and bought out the loan from PNB cancelling the mortgage with PNB. Rosario failed to pay their loan in Banco Filipino and the property was extrajudicially foreclosed. Meanwhile, back in 1965, the Torbela siblings sought to register their ownership over the lot and to perfect their title but couldn’t because the title was still with DBP. They showed as proof the deed of absolute quitclaim presented executed by Rosario himself. In 1986, they filed a civil case for recovery of ownership and possession and damages. They tried to redeem the lot from Banco Filipino but failed. TCT was issued to Banco FIilipino. The Torbela’s claim they have right over the rents of the building through accession because they are the land owners. ISSUE: Who has right over the improvements made on the lot and the rents thereof. RULING: According to Art. 440, the accessory follows the principal. Ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or artificially. However, in the case at bar, both Torbela siblings and Rosario are deemed in bad faith. The Torbelas knew Rosario built on the land and even allowed him to use the land to obtain a loan from DBP. Rosario on the other hand consciously built on land he knew was not his. They both had knowledge and did not oppose. Art. 453 states that when both parties are in bad faith, the case shall be treated as though both were in good faith thus the application of Art. 448. 448 allows the Land Owner 2 options in the case at bar. Either indemnify Rosario and appropriate the lot to himself or ask Rosario to buy the lot or the rent rate. This case was remanded to the RTC for the Torbelas to make such decision.

Still following the rules of accession, civil fruits such as rent belong to the owner of the building. Rosario has rights over the rent and improvements and shall continue until the Torbela siblings have chosen an option from 448.