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.
<It seems Mariano Lacson Ledesma is indebted from Bachrach Motor; the circumstance of which is not found in the
case facts.>
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 Lacson Ledesmas 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 Ledesmas 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, 1961 the trial court rendered judgment sustaining the Companys 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 plaintiffs 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 argument 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. 45; 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.
Angel H. Mojica and Francisco Lavides for defendant appellant.
Jose Y. Garde for appellee.

LAUREL, J.:
This is an appeal taken by both the plaintiff and the defendant from the order of September 26, 1935, 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 Case 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 faith, 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 accession, he is entitled to the ownership of the accessory 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.
Avancea, 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 adjoining 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 awarded 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 IGNACIO, 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 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 of 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 Instance 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 Depras property. Upon finding this, Depras 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 Civil 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
latters property, which was formerly a subject of homestead application. In the said application, the wards 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 plaintiffs protest was investigated upon but his claim was not given due course. On appeal, respondent
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 property wherein he has not introduced any improvement. The judgment became final and executory.
Private respondents filed a motion for its execution requesting that they file a bond in lieu of the amount that should be paid to 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,
respondent
Court
"acted
without
or in excess
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
property, with right to retain the land until he has been fully paid such value. He likewise averred that no payment 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. It is the position of petitioner that all the fruits of the property, including the tolls 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
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 which has long become final and executory and, therefore, cannot be lawfully done. The issue decisive of the controversy
isafter the rendition by the trial court of its judgment in Civil Case No. C-90 on March 22, 1966confirming the award of one-half of
the property to Quirino Comintanwhether 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 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 petitioners 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 it placed the toll road under receivership. The omission of any
mention of the tolls in the decision itself may be attributed to the fact that the tolls appear to have been collected
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 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.

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 following 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 unrealistic 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 case 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 faith 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 apply 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, 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 minus 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:1wphl.nt
(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 P32,859,34. 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 properties, 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.1wphl.nt
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 case 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 retain 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 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 of 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 below, the petitioner elevated its case to this Court.
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 defeated
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 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 caf)
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 defendants occupied a portion of the plaintiffs 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 Plaintiff cannot be obliged to pay for the portion of defendants 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 built 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 the 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 collected 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 value 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 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 November 22, 1993 to December 1997. The appellate court, however, reduced the trial courts
award in favor of Pecson from the said P1,344,000 to P280,000. Equally assailed by the petitioners is the appellate
2
courts 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, 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 Decision 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 commercial lot.
As a result, the Nuguid spouses moved for delivery of possession of the lot and the apartment building.
6

In its Order of November 15, 1993, the trial court, relying upon Article 546 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.

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 appeal, 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.
11

IT IS SO ORDERED. [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. [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 courts 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 Courts 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 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 realty, 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 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.

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 Pecsons claim for rentals was devoid of factual and legal 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 plaintiffs 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 plaintiffs 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 courts 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 COURTS 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 are
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 builder 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 Courts 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 builders 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 lots improvement, until they reimbursed the improver in full, based on
the current market value of the property.
Despite the Courts recognition of Pecsons 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 respondents 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 decision 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 courts determination 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 Pecsons 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 courts recognition of herein respondents 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 Courts 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 Civil Code), the landowner is given the option either to appropriate 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&#146; 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 faith 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&#146;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&#146;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 benefits 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 lots improvement, until they reimbursed the
improver in full, based on the current 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 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:1wph1.t
. . . 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 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". . . . (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-18932, 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. 1267, 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. Bolaos,
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, petitioner 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 Kees 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 Kees 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 was 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 owners 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
vendees right to recover damages resulting from petitioners 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 & GERO NIMA
UBINA, respondents.
Antonio N. Laggui for petitioners.
Pedro R. Perez, Jr. for private respondents.
GRIO-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 its 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 case 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).itc-asl
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 against 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 parents. In the early 1930s, 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 imprescriptible. 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 Grandes single witness who claims that the Calalungs only entered 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.