Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 115814 May 26, 1995
PEDRO P. PECSON, petitioner,
vs.
COURT OF APPEALS, SPOUSES JUAN NUGUID an ERLINDA
NUGUID, respondents.

DA!IDE, JR., J.:
This petition for revie on certiorari see!s to set aside the decision
1
of the "ourt of
#ppeals in "#$%.R. SP No. &'()* affir+in, in part the order
2
of the Re,ional Trial
"ourt -RT". of /ue0on "it1, 2ranch 343, in "ivil "ase No. /$535)4.
The factual and procedural antecedents of this case as ,athered fro+ the record are
as follos6
Petitioner Pedro P. Pecson as the oner of a co++ercial lot located in 7a+ias
Street, /ue0on "it1, on hich he built a four$door to$store1 apart+ent buildin,. For
his failure to pa1 realt1 ta8es a+ountin, to telve thousand pesos -P3',444.44., the
lot as sold at public auction b1 the cit1 Treasurer of /ue0on "it1 to Ma+erto
Nepo+uceno ho in turn sold it on 3' October 3*9& to the private respondents, the
spouses :uan Nu,uid and ;rlinda Tan$Nu,uid, for one hundred three thousand pesos
-P34&,444.44..
The petitioner challen,ed the validit1 of the auction sale in "ivil "ase No. /$535)4
before the RT" of /ue0on "it1. In its decision of 9 Februar1 3*9*, the RT" dis+issed
the co+plaint, but as to the private respondents< clai+ that the sale included the
apart+ent buildin,, it held that the issue concernin, it as =not a sub>ect of the . . .
liti,ation.= In resolvin, the private respondents< +otion to reconsider this issue, the trial
court held that there as no le,al basis for the contention that the apart+ent buildin,
as included in the sale.
"
2oth parties then appealed the decision to the "ourt of #ppeals. The case as
doc!eted as "#$%.R. "V No. '*&3. In its decision of &4 #pril 3**',
4
the "ourt of
#ppeals affir+ed in toto the assailed decision. It also a,reed ith the trial court that the
apart+ent buildin, as not included in the auction sale of the co++ercial lot. Thus6
Indeed, examining the record we are fully convinced that it was only
the land without the apartment building which was sold at the
auction sale, for plaintiff's failure to pay the taxes due thereon. Thus,
in the "ertificate of Sale of Delin?uent Propert1 To Purchaser -;8h.
7, p. &@', Record. the propert1 sub>ect of the auction sale at hich
Ma+erto Nepo+uceno as the purchaser is referred to as Aot No.
'3$#, 2loc! No. 7$&5, at 7a+ias, 2aran,a1 PiBahan, ith an area of
'@(.& s?. +., ith no +ention hatsoever, of the buildin, thereon.
The sa+e description of the sub>ect propert1 appears in the Final
Notice To ;8ercise The Ri,ht of Rede+ption -over sub>ect propert1.
dated Septe+ber 35, 3*93 -;8h. A, p. &@&, Record. and in the Final
2ill of Sale over the sa+e propert1 dated #pril 3*, 3*9' -;8h. P, p.
&@), Record.. Needless to sa1, as it as onl1 the land ithout an1
buildin, hich Nepo+uceno had ac?uired at the auction sale, it as
also onl1 that land ithout an1 buildin, hich he could have le,all1
sold to the Nu,uids. Verily, in the Deed of Absolute Sale of
egistered !and executed by "amerto #epomuceno in favor of the
#uguids on $ctober %&, '()* +,xh- ., p- *//, ecord0 it clearly
appears that the property sub1ect of the sale for 2'3*,333-33 was
only the parcel of land, !ot %'4A, 5l6- 74*8 containing an area of
%&/-* s9- meters, without any mention of any improvement, much
less any building thereon. -e+phases supplied.
The petition to revie the said decision as subse?uentl1 denied b1 this "ourt.
5
;ntr1
of >ud,+ent as +ade on '& :une 3**&.
6
On Nove+ber 3**&, the private respondents filed ith the trial court a +otion for
deliver1 of possession of the lot and the apart+ent buildin,, citin, article @5( of the
"ivil "ode.
#
#ctin, thereon, the trial court issued on 3@ Nove+ber 3**& the
challen,ed order
8
hich reads as follos6
Sub+itted for resolution before this "ourt is an uncontroverted CsicD
for the Deliver1 of Possession filed b1 defendants ;rlinda Tan, :uan
Nu,uid, et al. considerin, that despite personal service of the Order
for plaintiff to file ithin five -@. da1s his opposition to said +otion, he
did not file an1.
In support of defendant<s +otion, +ovant cites the la in point as
#rticle @5( of the "ivil "ode . . .
Movant a,rees to co+pl1 ith the provisions of the la considerin,
that plaintiff is a builder in ,ood faith and he has in fact, opted to pa1
the cost of the construction spent b1 plaintiff. Fro+ the co+plaint
itself the plaintiff stated that the construction cost of the apart+ent is
+uch +ore than the lot, hich apart+ent he constructed at a cost of
P@&,444.44 in 3*(@ -par. 9 co+plaint.. This a+ount of P@&,444.44 is
hat the +ovant is supposed to pa1 under the la before a rit of
1
possession placin, hi+ in possession of both the lot and apart+ent
ould be issued.
Eoever, the co+plaint alle,es in para,raph * that three doors of
the apart+ent are bein, leased. This is further confir+ed b1 the
affidavit of the +ovant presented in support of the +otion that said
three doors are bein, leased at a rental of P),444.44 a +onth each.
The +ovant further alle,es in his said affidavit that the present
co++ercial value of the lot is P34,444.44 per s?uare +eter or
P',@44,444.44 and the reasonable rental value of said lot is no less
than P'3,444.44 per +onth.
The decision havin, beco+e final as per ;ntr1 of :ud,+ent dated
:une '&, 3**& and fro+ this date on, bein, the uncontested oner
of the propert1, the rents should be paid to hi+ instead of the plaintiff
collectin, the+. Fro+ :une '&, 3**&, the rents collected b1 plaintiff
a+ountin, to +ore than P@&,444.44 fro+ tenants should be offset
fro+ the rents due to the lot hich accordin, to +ovant<s affidavit is
+ore than P'3,444.44 a +onth.
FE;R;FOR;, findin, +erit in the Motion, the "ourt hereb1 ,rants
the folloin, pra1er that6
3. The +ovant shall rei+burse plaintiff the
construction cost of P@&,444.44.
'. The pa1+ent of P@&,444.44 as rei+burse+ent
for the construction cost, +ovant :uan Nu,uid is
hereb1 entitled to i++ediate issuance of a rit of
possession over the Aot and i+prove+ents
thereon.
&. The +ovant havin, been declared as the
uncontested oner of the Aot in ?uestion as per
;ntr1 of :ud,+ent of the Supre+e "ourt dated
:une '&, 3**&, the plaintiff should pa1 rent to the
+ovant of no less than P'3,444.44 per +onth
fro+ said date as this is the ver1 sa+e a+ount
paid +onthl1 b1 the tenants occup1in, the lot.
5. The a+ount of P@&,444.44 due fro+ the +ovant
is hereb1 offset a,ainst the a+ount of rents
collected b1 the plaintiff fro+ :une '&, 3**&, to
Septe+ber '&, 3**&.
SO ORD;R;D.
The petitioner +oved for the reconsideration of the order but it as not acted upon b1
the trial court. Instead, on 39 Nove+ber 3**&, it issued a rit of possession directin,
the deput1 sheriff =to place said +ovant :uan Nu,uid in possession of sub>ect propert1
located at No. )* 7a+ias Road, /ue0on "it1, ith all the i+prove+ents thereon and to
e>ect therefro+ all occupants therein, their a,ents, assi,nees, heirs and
representatives.=
9
The petitioner then filed ith the "ourt of #ppeals a special civil action
for certiorari and prohibition assailin, the order of 3@ Nove+ber 3**&, hich as
doc!eted as "#$%.R. SP No. &'()*.
1$
In its decision of ) :une 3**5, the "ourt of
#ppeals affir+ed in part the order of the trial court citin, #rticle 559 of the "ivil "ode.
In disposin, of the issues, it stated6
#s earlier pointed out, private respondent opted to appropriate the
i+prove+ent introduced b1 petitioner on the sub>ect lot, ,ivin, rise to
the ri,ht of petitioner to be rei+bursed of the cost of constructin,
said apart+ent buildin,, in accordance ith #rticle @5( of the . . .
"ivil "ode, and of the ri,ht to retain the i+prove+ents until he is
rei+bursed of the cost of the i+prove+ents, because, basicall1, the
ri,ht to retain the i+prove+ent hile the correspondin, inde+nit1 is
not paid i+plies the tenanc1 or possession in fact of the land on
hich the1 are built . . . C' TOA;NTINO, "IVIA "OD; OF TE;
PEIAIPPIN;S -3**'. p. 33'D. Fith the facts e8tant and the settled
principle as ,uides, e a,ree ith petitioner that respondent >ud,e
erred in orderin, that =the +ovant havin, been declared as the
uncontested oner of the lot in ?uestion as per ;ntr1 of :ud,+ent of
the Supre+e "ourt dated :une '&, 3**&, the plaintiff should pa1 rent
to the +ovant of no less than P'3,444 per +onth fro+ said date as
this is the ver1 sa+e a+ount paid +onthl1 b1 the tenants occup1in,
the lot.
Fe, hoever, a,ree ith the findin, of respondent >ud,e that the
a+ount of P@&,444.44 earlier ad+itted as the cost of constructin,
the apart+ent buildin, can be offset fro+ the a+ount of rents
collected b1 petitioner fro+ :une '&, 3**& up to Septe+ber '&, 3**&
hich as fi8ed at P),444.44 per +onth for each of the three doors.
Our underl1in, reason is that durin, the period of retention,
petitioner as such possessor and receivin, the fruits fro+ the
propert1, is obli,ed to account for such fruits, so that the a+ount
thereof +a1 be deducted fro+ the a+ount of inde+nit1 to be paid to
hi+ b1 the oner of the land, in line ith Mendo0a vs. De %u0+an,
@' Phil. 3(5 . . . .
The "ourt of #ppeals then ruled as follos6
FE;R;FOR;, hile it appears that private respondents have not
1et inde+nified petitioner ith the cost of the i+prove+ents, since
#nne8 I shos that the Deput1 Sheriff has enforced the Frit of
2
Possession and the pre+ises have been turned over to the
possession of private respondents, the ?uest of petitioner that he be
restored in possession of the pre+ises is rendered +oot and
acade+ic, althou,h it is but fair and >ust that private respondents pa1
petitioner the construction cost of P@&,444.44G and that petitioner be
ordered to account for an1 and all fruits of the i+prove+ents
received b1 hi+ startin, on :une '&, 3**&, ith the a+ount of
P@&,444.44 to be offset therefro+.
IT IS SO ORD;R;D.
11
#,,rieved b1 the "ourt of #ppeals< decision, the petitioner filed the instant petition.
The parties a,ree that the petitioner as a builder in ,ood faith of the apart+ent
buildin, on the theor1 that he constructed it at the ti+e hen he as still the oner of
the lot, and that the !e1 issue in this case is the application of #rticles 559 and 5@( of
the "ivil "ode.
The trial court and the "ourt of #ppeals, as ell as the parties, concerned the+selves
ith the application of #rticles 559 and @5( of the "ivil "ode. These articles read as
follos6
#rt. 559. The oner of the land on hich an1thin, has been built,
son or planted in ,ood faith, shall have the ri,ht to appropriate as
his on the or!s, soin, or plantin,, after pa1+ent of the
inde+nit1 provided for in articles @5( and @59, or to obli,e the one
ho built or planted to pa1 the price of the land, and the one ho
soed, the proper rent. Eoever, the builder or planter cannot be
obli,ed to bu1 the land if its value is considerabl1 +ore than that of
the buildin, or trees. In such case, he shall pa1 reasonable rent, if
the oner of the land does not choose to appropriate the buildin, or
trees after proper inde+nit1. The parties shall a,ree upon the ter+s
of the lease and in case of disa,ree+ent, the court shall fi8 the
ter+s thereof. -&(3a.
888 888 888
#rt. @5(. Necessar1 e8penses shall be refunded to ever1 possessorG
but onl1 the possessor in ,ood faith +a1 retain the thin, until he has
been rei+bursed therefor.
Hseful e8penses shall be refunded onl1 to the possessor in ,ood
faith ith the sa+e ri,ht of retention, the person ho has defeated
hi+ in the possession havin, the option of refundin, the a+ount of
the e8penses or of pa1in, the increase in value hich the thin, +a1
have ac?uired b1 reason thereof. -5@&a.
21 its clear lan,ua,e, #rticle 559 refers to a land hose onership is clai+ed b1 to
or +ore parties, one of ho+ has built so+e or!s, or son or planted so+ethin,.
The buildin,, soin, or plantin, +a1 have been +ade in ,ood faith or in bad faith. The
rule on ,ood faith laid don in #rticle @'( of the "ivil "ode shall be applied in
deter+inin, hether a builder, soer or planter had acted in ,ood faith.
12
#rticle 559 does not appl1 to a case here the oner of the land is the builder, soer,
or planter ho then later loses onership of the land b1 sale or donation. This "ourt
said so in :oleongco vs. egalado6
1"
#rticle &(3 of the old "ivil "ode is not applicable in this case, for
Re,alado constructed the house on his on land before he sold said
land to "oleon,co. #rticle &(3 applies onl1 in cases here a person
constructs a buildin, on the land of another in ,ood or in bad faith,
as the case +a1 be. It does not appl1 to a case here a person
constructs a buildin, on his on land, for then there can be no
?uestion as to ,ood or bad faith on the part of the builder.
;lseise stated, here the true oner hi+self is the builder of or!s on his on land,
the issue of ,ood faith or bad faith is entirel1 irrelevant.
Thus in strict point of la, #rticle 559 is not apposite to the case at bar. Nevertheless,
e believe that the provision therein on inde+nit1 +a1 be applied b1 analo,1
considerin, that the pri+ar1 intent of #rticle 559 is to avoid a state of forced co$
onership and that the parties, includin, the to courts belo, in the +ain a,ree that
#rticles 559 and @5( of the "ivil "ode are applicable and inde+nit1 for the
i+prove+ents +a1 be paid althou,h the1 differ as to the basis of the inde+nit1.
#rticle @5( does not specificall1 state ho the value of the useful i+prove+ents should
be deter+ined. The respondent court and the private respondents espouse the belief
that the cost of construction of the apart+ent buildin, in 3*(@, and not its current
+ar!et value, is sufficient rei+burse+ent for necessar1 and useful i+prove+ents
+ade b1 the petitioner. This position is, hoever, not in consonance ith previous
rulin,s of this "ourt in si+ilar cases. In ;avier vs. :oncepcion, ;r.,
14
this "ourt pe,,ed
the value of the useful i+prove+ents consistin, of various fruits, ba+boos, a house
and ca+arin +ade of stron, +aterial based on the +ar!et value of the said
i+prove+ents. In Sarmiento vs. Agana,
15
despite the findin, that the useful
i+prove+ent, a residential house, as built in 3*() at a cost of beteen ei,ht
thousand pesos -P9,444.44. to ten thousand pesos-P34,444.44., the landoner as
ordered to rei+burse the builder in the a+ount of fort1 thousand pesos -P54,444.44.,
the value of the house at the ti+e of the trial. In the sa+e a1, the landoner as
re?uired to pa1 the =present value= of the house, a useful i+prove+ent, in the case
of De <u=man vs. De la >uente,
16
cited b1 the petitioner.
The ob>ective of #rticle @5( of the "ivil "ode is to ad+inister >ustice beteen the
parties involved. In this re,ard, this "ourt had lon, a,o stated in ivera vs. oman
:atholic Archbishop of "anila
1#
that the said provision as for+ulated in tr1in, to
ad>ust the ri,hts of the oner and possessor in ,ood faith of a piece of land, to
3
ad+inister co+plete >ustice to both of the+ in such a a1 as neither one nor the other
+a1 enrich hi+self of that hich does not belon, to hi+. %uided b1 this precept, it is
therefore the current +ar!et value of the i+prove+ents hich should be +ade the
basis of rei+burse+ent. # contrar1 rulin, ould un>ustl1 enrich the private respondents
ho ould otherise be alloed to ac?uire a hi,hl1 valued inco+e$1ieldin, four$unit
apart+ent buildin, for a +easl1 a+ount. "onse?uentl1, the parties should therefore be
alloed to adduce evidence on the present +ar!et value of the apart+ent buildin,
upon hich the trial court should base its findin, as to the a+ount of rei+burse+ent to
be paid b1 the landoner.
The trial court also erred in orderin, the petitioner to pa1 +onthl1 rentals e?ual to the
a,,re,ate rentals paid b1 the lessees of the apart+ent buildin,. Since the private
respondents have opted to appropriate the apart+ent buildin,, the petitioner is thus
entitled to the possession and en>o1+ent of the apart+ent buildin,, until he is paid the
proper inde+nit1, as ell as of the portion of the lot here the buildin, has been
constructed. This is so because the ri,ht to retain the i+prove+ents hile the
correspondin, inde+nit1 is not paid i+plies the tenanc1 or possession in fact of the
land on hich it is built, planted or son.
18
The petitioner not havin, been so paid, he
as entitled to retain onership of the buildin, and, necessaril1, the inco+e therefro+.
It follos, too, that the "ourt of #ppeals erred not onl1 in upholdin, the trial court<s
deter+ination of the inde+nit1, but also in orderin, the petitioner to account for the
rentals of the apart+ent buildin, fro+ '& :une 3**& to '& Septe+ber 3**&.
FE;R;FOR;, the decision of the "ourt of #ppeals in "#$%.R. SP No. &'()* and the
Order of 3@ Nove+ber 3**& of the Re,ional Trial "ourt, 2ranch 343, /ue0on "it1 in
"ivil "ase No. /$535)4 are hereb1 S;T #SID;.
The case is hereb1 re+anded to the trial court for it to deter+ine the current +ar!et
value of the apart+ent buildin, on the lot. For this purpose, the parties shall be alloed
to adduce evidence on the current +ar!et value of the apart+ent buildin,. The value
so deter+ined shall be forthith paid b1 the private respondents to the petitioner
otherise the petitioner shall be restored to the possession of the apart+ent buildin,
until pa1+ent of the re?uired inde+nit1.
No costs.
SO ORD;R;D.
4