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Lao Chit v Security Bank & Trust Co. and Consolidated Investment, Inc.

(17 ISSUES + RULING:


April 1959)
Concepcion, J. WoN the lower court erred in rendering judgment against the Bank. YES.
 It is clear that the Bank entered into the premises in question pursuant to a
FACTS: lease contract with the lessor.
 Consolidated Investments (lessor), leaser to Domingo Dikit part of the  The Bank paid the rentals and fulfilled its obligations under the contract.
lobby of the Consolidated Building at Plaza Goiti, Manila to be used as  It cannot be denied that the improvements introduced became property of
offices for a proposed Bank of Manila to be organized by Dikit and Jose the lessor pursuant to the provision in the contract between it and Dikit and
Silva. Silva that the former shall own said improvements upon expiration and/or
 The lessee undertook to construct walls, partitions, and other improvements; rescission of the contract.
such improvements “shall become the property” of the lessor “upon the  Although Lao Chit was not a party to said contract, this stipulation is
termination and/or rescission” of the lease contract. binding upon him, he having introduced said improvements pursuant to his
 Dikit and Silva entered into a contract with plaintiff Lao Chit for the latter contract with Dikit, from whom he derived, therefore, his right to enter the
to furnish the materials and the work for the improvements at a total cost of building and make the improvements.
P59,365 payable “as soon as the Bank of Manila opens for business, and is o In short, insofar as the construction thereof, Lao Chit was, vis-a-vis
given permit by the Central Bank.” The permit was never issued. the lessor, a mere agent or representative of Dikit and, as such, was
 The rentals for the lease of the space were also not paid. The lessor then privy to the undertakings of Dikit under his contract of lease with
instituted an unlawful detainer action. the lessor.
 Municipal Court of Manila: rendered judgment sentencing Dikit.
 Dikit appealed to the CFI and eventually the Supreme Court. WoN the lessor is liable to Lao Chit for the improvements. NO.
 The cases were soon dismissed upon agreement of the parties that Dikit will  The lower court held the lessor liable to Lao upon the ground that he was a
relinquish whatever rights he might have to the possession of the leased builder in good faith, and under the theory of unjust enrichment.
premises and disclaimed all rights to and over any and all improvements  Art. 361 (now 448) of the [Old] Civil Code provides:
introduced therein. o The owner of land on which anything has been built, sown, or
 Lao filed a separate civil action against Dikit and Silva for recovery of planted, in good faith, shall be entitled to appropriate the thing so
whatever was due from them. built, sown, or planted, upon paying the compensation mentioned
 CFI of Manila: ruled in favor of Lao and sentenced Dikit and Silva as in Articles 453 and 454, or to compel the person who has built or
solidarily liable for the sum of P59,365. planted to pay him the value of the land, and the person who sowed
 A writ of execution was issued but remained unsatisfied. Dikit nor Silva had thereon to pay the proper rent therefor.
any properties registered in their respective names and Silva was nowhere to  However, this provision refers to one who builds upon a land which he
be found. believes to be his property. Neither Lao nor Dikit claimed the building as
 Lao Chit then brought the present action against Security Bank and (Bank) their own.
to which lessor had leased the property, together with the improvements. He  Moreover, the provision is limited in its application to “buddings”
demanded a payment of P1,000/month by way of rentals. constructed on another’s land, and not to partitions, railing, counters,
 In its answer, the Bank alleged that it used the improvements pursuant to its shelves, and the like.
contract of lease with the lessor.  Moreover, there was no bad faith on the part of the lessor since it was bound
 Soon after, Lao demanded the amount of the improvements plus to permit Dikit and Lao as his agent to construct improvements.
P1000/month from the lessor, which did not heed said demand.  The lower court also relied on Art. 356 (now 443) in ruling that there should
 According to the lessor, it had no contractual or juridical relation with Lao be no unjust enrichment:
and that the improvements belonged to it and not to Lao. o He who receives fruits is obliged to pay any expenses which may
 CFI of Manila: sentenced Consolidated Investments and Security Bank have been incurred by another in the production, gathering, and
solidarily to pay P59,365 and rentals at the rate of P1,000/mo. preservation thereof.
 Defendants filed a motion for reconsideration and new trial, but were  The Supreme Court ruled, however, that the provision is not on point since
denied. Hence, this appeal. it refers to "expenses" of production, gathering and preservation" of fruits
received by the owner of a property, not to improvements, whereas the
claim of Lao Chit is based upon "improvements" introduced, not "expenses" After trial, the Municipal Court found that DUMLAO was a builder in good faith,
incurred by him for the "production, gathering and preservation" of fruits. and applying Article 448 of the Civil Code. DEPRA did not accept payment of
 The provision on quasi-contracts (Art. 2142) of the Civil Code cannot rentals so that DUMLAO deposited such rentals with the Municipal Court. In this
likewise be applied. It provides: case, the Municipal Court, acted without jurisdiction, its Decision was null and void
o Certain lawful, voluntary and unilateral acts give rise to the and cannot operate as res judicata to the subject complaint for Queting of Title. The
juridical relation of quasi-contract to the end that no one shall be court conceded in the MCs decision that Dumlao is a builder in good faith.
unjustly enriched or benefited at the expense of another. Held: Owner of the land on which improvement was built by another in good faith is
 The construction of the improvements in question was not a "purely entitled to removal of improvement only after landowner has opted to sell the land
voluntary act" or "unilateral act" of Lao Chit. and the builder refused to pay for the same. Res judicata doesn’t apply wherein the
 He introduced them in compliance with a bilateral "obligation" he first case was for ejectment and the other was for quieting of title.
undertook under his contract with Dikit.
 For the principle of undue enrichment to apply, there must be "enrichment" ART. 448. The owner of the land on which anything has been built sown or planted
and the same must be "undue" or "unjust". in good faith, shall have the right to appropriate as his own the works, sowing or
 In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000 planting, after payment of the indemnity provided for in articles 546 and 548, or to
from October, 1949. Up to July 1, 1951, when the premises in question oblige the one who built or planted to pay the price of the land, and the one who
were leased to the Bank, the rentals due from Dikit aggregated, therefore, sowed, the proper rent.
P105,000.
 Thus, despite the fact that the lessor had become the owner of the However, the builder or planter cannot be obliged to buy the land if its value is
improvements in question, worth P59,365.00, it still suffered a loss of over considerably more than that of the building or trees. In such case, he shall pay
P45,000.00. Such "loss" negates the idea of "enrichment". 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
 Had he been reasonably vigilant, Lao Chit could have demanded from Dikit
and in case of disagreement, the court shall fix the terms thereof.
a mortgage, or a bond, or some other security, for the protection of his
rights, yet he did not do so.
 Should the lessor be required to pay Lao Chit what he is entitled to recover
from Dikit, but which he (Lao Chit) cannot—due to his oversight, The properties of Francisco Depra and Agustin Dumlao were adjoining each other.
carelessness or negligence—collect from Dikit, the effect would be to In 1972, Dumlao built his house however, he unwittingly built the kitchen portion of
relieve Lao Chit of the consequences of his own inadvertence or negligence, his house on Depra’s land. Depra then sued Dumlao for unlawful detainer. During
and hold the lessor responsible therefor. pre-trial, the parties agreed that Dumlao was a builder in good faith.
DISPOSITION: Reversed. Costs against Lao Chit. Eventually, the trial court ruled that both parties were in good faith but then a forced
lease was ordered whereby Dumlao retains the kitchen but he shall pay a rental to
Depra at P5.00 per month. But Depra refused to receive the rental payments from
DEPRA V. DUMLAO 136 SCRA 475 Dumlao, instead, Depra filed an action for quieting of title against Dumlao. In his
defense, Dumlao raised the defense of res judicata considering that the nature and
Jul4
purpose of the initial unlawful detainer case and that of the subsequent quieting of
title case is ejectment.
FACTS: ISSUES:
1. Whether or not the order of forced lease decreed in the unlawful detainer case is
Francisco Depra, is the owner of a parcel of land registered, situated in the
valid.
municipality of Dumangas, Iloilo. Agustin Dumlao, defendant-appellant, owns an
adjoining lot. When DUMLAO constructed his house on his lot, the kitchen thereof 2. Whether or not the subsequent case of res judicata is barred by prescription due to
had encroached on an area of thirty four (34) square meters of DEPRA’s property, the prior case of unlawful detainer.
After the encroachment was discovered in a relocation survey of DEPRA’s lot made
on November 2,1972, his mother, Beatriz Depra after writing a demand letter asking HELD:
DUMLAO to move back from his encroachment, filed an action for Unlawful
Detainer. Said complaint was later amended to include DEPRA as a party plaintiff.
1. No. The judgment of forced lease is improper. A forced lease, just like co- 2.Whether or not Sarmiento could exercise both refusal to pay the spouses
ownership is not favored. It should be considered that the parties themselves and give option to purchase.
stipulated that Dumlao, the builder, was in good faith and it was later found that
Depra, the owner, was also in good faith. Hence, what applies is the provisions of Held:
Article 448 of the Civil Code, which provides in sum that:
a. Builder in good faith – entitled to retain the possession of the land on which he 1.Yes. We agree that ERNESTO and wife were builders in good faith in
built in good faith until he is paid the value of the building he built in good faith; view of the peculiar circumstances under which they had constructed the
RESIDENTIAL HOUSE. As far as they knew, the LAND was owned by
b. Owner in good faith – has the option to either (i) pay for the building OR (ii) sell ERNESTO's mother-in-law who, having stated they could build on the property,
his land to the builder in good faith but builder cannot be forced to buy said land if could reasonably be expected to later on give them the LAND.
the same is considerably more than the value of the building.
Forced rent only comes in if the owner exercises his right to sell the land but the In regards to builders in good faith, Article 448 of the Code provides:têñ.£îhqwâ£
builder rejects it by reason of the price thereof being considerably more than the
value of the building – in such case, the parties shall agree to the terms of the lease, if ART. 448. The owner of the land on which anything has been
they can’t agree then they may bring the issue to court. built, sown or planted in good faith,shall have the rightto
2. No. The action for quieting of title is not barred by reason of res judicata. The appropriate as his own the works, sowing or planting, after
cause of action in the unlawful detainer case involves possession while the cause of payment of the indemnity provided for in articles 546 and 548, or
action in the quieting of title case involves ownership. Furthermore, the Rules of to oblige the one who built or planted to pay the price of the land,
Court explicitly provides that judgment in a detainer case shall not bar an action and the one who sowed, the proper rent.However, the builder or
between the same parties respecting title to the land. 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
Property choose to appropriate the building or trees after proper indemnity.
The parties shall agree upon the terms of the lease and in case of
Topic art.448 disagreement, the court shall fix the terms thereof.

Sarmiento vs. Agana 129 scra 122 2.No. 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
Facts: building, under article 453 (now Article 546). The owner, of the land. upon, the other
hand, has the option, under article 361 (now Article 448), either to pay for the
ERNESTO was still courting his wife, the latter's mother had told him the building or to sell his land to the owner of the building. But he cannot, as
couple could build a RESIDENTIAL HOUSE whom Ernesto did construct a respondents here did, refuse both to pay for the building and to sell the land and
RESIDENTIAL HOUSE on the LAND at a cost of P8,000.00 to P10,000.00 who compel the owner of the building to remove it from the land where it is erected. He is
probably assumed that the wife's mother was the owner of the LAND and that, it entitled to such remotion only when, after having chosen to sell his land, the other
would be transferred to the spouses. Subsequently turned out that the LAND had party fails to pay for the same.
been titled in the name of Mr. & Mrs. Jose C. Santo, Jr. who, sold the same to
petitioner SARMIENTO. SARMIENTO filed an Ejectment suit against them. In the We hold, therefore, that the order of Judge Natividad compelling
evidentiary hearings before the Municipal Court, SARMIENTO submitted the deed defendants-petitioners to remove their buildings from the land
of sale of the LAND in her favor, which showed the price to be P15,000.00. On the belonging to plaintiffs-respondents only because the latter chose
other hand, ERNESTO testified that the then cost of the RESIDENTIAL HOUSE neither to pay for such buildings nor to sell the land, is null and
would be from P30,000.00 to P40,000.00.Sarmiento refuse to pay and give option to void, for it amends substantially the judgment sought to be
buy the property. executed and is, furthermore, offensive to articles 361 (now Article
448) and 453 (now Article 546) of the Civil Code. (Ignacio vs.
Issue: 1.Whether or not Ernesto was in good faith. Hilario, 76 Phil. 605, 608 [1946]).
Disposition: WHEREFORE, the Petition for Certiorari is hereby ordered 448 governs in case real property (like a house) encroaches the land of another. This
dismissed, without pronouncement as to costs. is provided that good faith exists.

SARMIENTO v. AGANA
FACTS:

The case involves two friendly parties who are co-owners of a corner lot at Flores
FACTS: 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
Before Ernesto Valentino and Rebecca Lorenzo wed, Rebecca’s mother offered a lot
typical Starbux café)
in Paranaque that they could build their house on. In 1967, they finally built their
home which cost about PhP8,000-10,000, thinking that someday, the lot would be
transferred to them in their name. It turns out, though, that the lot was owned by the Later on, the two parties decided to divide the co-owned property into two lots. 30
Spouses Santos who , in turn, sold the same to Leonila Sarmiento in 1974. A year square meters went to the plaintiffs and 15 square meters went to the defendants.
later, Sarmiento ordered the Valentinos to vacate their lot, then eventually filed and From the sketch plan, both parties discovered that the house of the defendants
Ejection Suit against them. occupied a portion of the plaintiff’s adjacent lot, eating 5 sqm of it. The parties then
requested the trial court to adjudicate who should take possession of the encroached
5 sqm.
The lower court ruled in Sarmiento’s favor and ordered her to pay 20,000 as the
value of the house. But the case was then elevated to the CFI of Pasay (w/ Agana as
Judge), and pursuant to Art.448 of the CC (March 1979), the Court ordered The trial court ruled that Art 448 does not apply. The owner of the land on which
Sarmiento to exercise the option in 60 days to pay Ernesto 40,000 as the value of the anything has been built, sown or planted in good faith, shall have the right to
house or to let them purchase the land for 25,000. Sarmiento was not able to exercise appropriate as his own the works, sowing or planting, after payment of the indemnity
this option, and the CFI allowed Ernesto to deposit the 25,000 purchase price with provided for in Articles 546 and 548, or to oblige the one who built or planted to pay
the Court. 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
ISSUE: 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
Whether or not the land owner is compelled to exercise either option: to buy the shall fix the terms thereof. Since art 448 does not apply, the Plaintiff cannot be
building or to sell the land? obliged to pay for the portion of defendant’s house that entered into the 30 sqm lot,
AND Defendant cannot be obliged to pay for the price of the 5 sqm their house
occupied. Why? The RTC believed the rules of co-ownership should govern, and not
that of accession.
HELD:

Ernesto and his wife (BPS) were clearly in good faith as they believed that Rebecca’s RTC then assigned the full 30sqm to Plaintiff and ordered Defendants to demolish
mother has the capacity to eventually transfer the title of the land to them. In line the 5sqm part of their house encroaching the 30sqm lot of the Plaintiffs. Defendants
with this, Sarmiento (LO) was required to exercise only 2 options: To purchase the where aghast at having to axe the family home, hence they appealed.
house or to sell the land to them, in this case, based on the value decided by the
courts. Since Sarmiento failed to exercise the option within the allotted period, and
based on Art. 448, the LO is compelled by law to exercise either option. Not CA affirmed the decision. So we have the SC coming to the rescue.
choosing either is a violation of the law.

DEL CAMPO V. ABESIA ISSUE:

w/n the rules of accession applies (and not coownership) on property that used to be
When land is co-owned by two parties, but the co-ownership is terminated, Article co-owned, but was subdivided.
HELD: HELD:

The rule of accession applies because co-ownership was terminated upon the Petitioner has the right whether to appropriate the houses or to sell his land! The
partitioning of the lot. Art 448 therefore governs. The house of Defendant overlapped ruling of the RTC and IAC contravened the explicit provisions of Art 448 which
that of Plaintiff, but this was built on good faith. Hence, the plaintiffs have the right granted him the explicit right to choose. The law is clear when it bestows choice
to choose one of two options upon the aggrieved land owner and not upon the builders or the courts.

> Appropriate the 5sqm portion of the house of Defendants after indemnifying the G.R. No. 117642 April 24, 1998
Defendants; or EDITHA ALVIOLA and PORFERIO ALVIOLA, petitioners,
> Obliging the Defendants to pay a portion of the land on which their home rested. ( vs. HONORABLE COURT OF APPEALS, FORENCIA BULING Vda de
or they can rent it) TINAGAN, DEMOSTHENES TINAGAN, JESUS TINAGAN, ZENAIDA T.,
JOSEP and JOSEPHINE TINAGAN, respondents.
IGNAO VS IAC Facts:
When co-ownership is terminated by division of land, Art 448 applies to parties in In this petition for review on certiorari, petitioners assail the decision 1 of the Court
good faith. The party whose land is encroached upon has the sole right to choose of Appeals dated April 8, 1994 which affirmed the decision of the lower court
whether to sell his land encroached or to appropriate that which encroaches his ordering petitioners to peacefully vacate and surrender the possession of the disputed
land. properties to the private respondents.
On April 1, 1950, Victoria Tinagan purchased from Mauro Tinagan 2 parcels of land.
One parcel of land contains an area of 5,704 square meters, more or less; while the
other contains 10,860 square meters. Thereafter, Victoria and her son Agustin, took
FACTS:
possession of said parcels of land.
The case involves Petitioner Florencio Ignao and his Uncles Juan and Isidro Ignao as Sometime in 1960, petitioners occupied portions thereof whereat they built a copra
Respondents. Both Petitioner and Respondents co-owned land with 534 sqm (about dryer and put up a store wherein they engaged in the business of buying and selling
the size of an Olympic swimming pool.) in Cavite. The parties had a falling out copra.
(maybe the uncles had bad breath) and so attempted to partition the land, with 133 On June 23, 1975, Victoria died. On October 26, 1975, Agustin died, survived by
going to the uncles and 266 going to Petitioner. The attempt failed. Later, Petitioner herein private respondents.
discovered that the two houses of Respondent uncles encroached his land. Juan ate On December 24, 1976, petitioner Editha assisted by her husband filed a complaint
42 sqm and Isidro ate 59 sqm… for the grand total of 101 sqm. He complained. for partition and damages, claiming to be an acknowledged natural child of deceased
Agustin Tinagan and demanding the delivery of her shares in the properties left by
the deceased. This case was dismissed by the trial court on the ground that
The RTC said that uncles built in good faith therefore that exempts them from recognition of natural children may be brought only during the lifetime of the
damages. Art 448 therefore applies But things didn’t go to well for the Petitioner. presumed parent and petitioner Editha did not fall in any of the exceptions
The RTC said that if Petitioner opted to appropriate the sections of the encroaching enumerated in Article 285 of the Civil Code.
houses, the Uncles will be left with worthless hovels. Hence, RTC ordered Petitioner On March 29, 1988, private respondents filed a complaint for recovery of possession
to just sell his land which was encroached. “No Good!” cried Petitioner and he against Editha and her husband Porferio, praying, among others, that they be
appealed to the IAC. He lost again. Petitioner trooped to the SC for vindication declared absolute owners of the said parcels of land, and that petitioners be ordered
to vacate the same, to remove their copra dryer and store, to pay actual damages (in
the form of rentals), moral and punitive damages, litigation expenses and attorney's
ISSUE: fees.
In their answer, petitioners contend that they own the improvements in the disputed
1. Whether or not Petitioner has the right to choose whether to appropriate the house properties which are still public land; that they are qualified to be beneficiaries of the
encroaching his land or to sell his land. comprehensive agrarian reform program and that they are rightful possessors by
2. Whether or not the courts and respondents can rob Petitioner of the options occupation of the said properties for more than twenty years.
provided for under Art 448.
After trial, the lower court rendered judgment in favor of the private respondents. CA Appellant testified that the areas on which their store and dryer were located were
affirmed. Hence, this petition. exchanged for the amount of P7,602.04 owed to them by Agustin in 1967; that he did
Issue: W/N the lands in question are public lands and W/N the petitioners are rightful not bother to execute a document reflecting such agreement "because they were our
possessors by occupation for more than 20 year. parents and we had used the land for quite sometime already they had also sold their
Held: No copra to us for a long time." Yet, as earlier discussed, the tax declarations in
Ratio: appellants' answer show that even after 1967, they expressly declared that the parcels
Petitioners aver that respondent court erred in declaring private respondents the of land on which their store and dryer were constructed, belonged to Victoria and
owners of the disputed properties. They contend that ownership of a public land Agustin. If appellants really believed that they were in possession of the said
cannot be declared by the courts but by the Executive Department; and that the particular areas in the concept of owners, they could have easily declared it in said
respondent court erred in not considering that private respondents' predecessor-in- tax declarations.
interest, Victoria Tinagan, during her lifetime, ceded her right to the disputed Concededly, petitioners have been on the disputed portions since 1961. However,
properties in favor of petitioners. their stay thereon was merely by tolerance on the part of the private respondents and
Moreover, petitioners maintain that the respondent court erred in holding that they their predecessor-in-interest. The evidence shows that the petitioners were permitted
were in bad faith in possessing the disputed properties and in ruling that the by Victoria to build a copra dryer on the land when they got married. Subsequently,
improvements thereon are transferable. They claim that the copra dryer and the store petitioner Editha Alviola, claiming to be the illegitimate daughter of Agustin, filed a
are permanent structures, the walls thereof being made of hollow-blocks and the petition for partition demanding her share in the estate of the deceased Agustin.
floors made of cement. However, the petition was dismissed since it was brought only after the death of
Private respondents counter that the question of whether or not the disputed Agustin Tinagan. Considering that the petitioners' occupation of the properties in
properties are public land has been resolved by overwhelming evidence showing dispute was merely tolerated by private respondents, their posture that they have
ownership and possession by the Tinagans and their predecessors-in-interest prior to acquired the property by "occupation" for 20 years does not have any factual or legal
1949. They further aver that they merely tolerated petitioners' possession of the foundation.
disputed properties for a period which was less than that required for extraordinary As correctly ruled by the respondent court, there was bad faith on the part of the
prescription. petitioners when they constructed the copra dryer and store on the disputed portions
The petition must fail. since they were fully aware that the parcels of land belonged to Victoria Tinagan.
The private respondents adduced overwhelming evidence to prove their ownership And, there was likewise bad faith on the part of the private respondents, having
and possession of the two (2) parcels of land. Private respondents' tax declarations knowledge of the arrangement between petitioners and Victoria Tinagan relative to
and receipts of payment of real estate taxes, as well as other related documents, the construction of the copra dryer and store. Thus, for purposes of indemnity,
prove their ownership of the disputed properties. Moreover, the realty taxes on the Article 448 of the New Civil Code should be applied. However, the copra dryer and
two lots have always been paid by the private respondents. There can be no doubt, the store, as determined by the trial court and respondent court, are transferable in
therefore, that the two parcels of land are owned by the private respondents. nature. Thus, it would not fall within the coverage of Article 448. To fall within the
The record further discloses that Victoria and her son, Agustin, took possession of provision of this Article, the construction must be of permanent character, attached to
the said properties in 1950, introduced improvements thereon, and for more than 40 the soil with an idea of perpetuity; but if it is of a transitory character or is
years, have been in open, continuous, exclusive and notorious occupation thereof in transferable, there is no accession, and the builder must remove the construction. The
the concept of owners. proper remedy of the landowner is an action to eject the builder from the land.
Petitioners' own evidence recognized the ownership of the land in favor of Victoria The private respondents' action for recovery of possession was the suitable solution
Tinagan. In their tax declarations, petitioners stated that the house and copra dryer to eject petitioners from the premises.
are located on the land of Victoria S. Tinagan/Agustin Tinagan. By acknowledging
that the disputed portions belong to Victoria/Agustin Tinagan in their tax Alviola v. CA
declarations, petitioners' claim as owners thereof must fail.
Petitioners contend that while the 2 parcels of land are owned by private respondents, FACTS:
the portions wherein the copra dryers and store stand were ceded to them by Victoria
S. Tinagan in exchange for an alleged indebtedness of Agustin in the sum of Victoria Tinagan bought two parcels of land in 1950. She and her son Agustin took
P7,602.04. possession of the said land thereafter.
This claim of the petitioners was brushed aside by the respondent court as merely an
afterthought, thus —
Sometime in 1960, petitioners occupied portions of the land whereat they built a The Court brushed as an afterthought the petitioners’ later defense that the portions
copra dryer and put up a store wherein they engaged in the business of buying and where the copra dryer and store are located were ceded to them by Victoria in
selling copra. exchange for a prior debt since it was not supported by any document pointing to
Victoria transferring the ownership of the said portion and the lack of declaration on
On 1975, Victoria and Agustin died, the latter survived by his wife and children who the part of the petitioners.
are the private respondents in the instant case.
The Court also ruled that though the petitioners were in occupation of the portions of
The private respondents filed a complaint for recovery of possession against the land in question for 20 years, they were able to do so out of the tolerance of the
petitioners asking the Regional Trial Court of Negros Oriental that they be declared private respondents and thus, their posture that they have acquired the property by
the absolute owners of the said parcels of land and that petitioners be ordered vacate "occupation" for 20 years does not have any factual or legal foundation.
the same, to remove their copra dryer and store, to pay actual damages (in the form
of rentals), moral and punitive damages, litigation expenses and attorney's fees. As correctly ruled by the respondent court, there was bad faith on the part of the
petitioners when they constructed the copra dryer and store on the disputed portions
The trial court ruled in favour of the private respondents, hence this petition. since they were fully aware that the parcels of land belonged to Victoria Tinagan.

The petitioners put up the defense that the contested parcels of land are public lands,
But there was likewise bad faith on the part of the private respondents, having
making them qualify to become beneficiaries of the comprehensive agrarian reform
knowledge of the arrangement between petitioners and Victoria Tinagan relative to
program and rightful possessors of the land in virtue of their occupation of the same
the construction of the copra dryer and store.
for 20 years.

The petitioners also contend that the copra dryer and the store are permanent Thus, for purposes of indemnity, Article 448 of the New Civil Code should be
structures as they are made of hollow blocks and cement. applied. 32 However, the copra dryer and the store, as determined by the trial
court and respondent court, are transferable in nature. Thus, it would not fall
Private respondents on the other hand offer overwhelming evidence of their within the coverage of Article 448. As the noted civil law authority, Senator Arturo
ownership and possession of the land and contended that they merely tolerated the Tolentino, aptly explains: "To fall within the provision of this Article, the
petitioner’s occupation of the disputed property. construction must be of permanent character, attached to the soil with an idea of
perpetuity; but if it is of a transitory character or is transferable, there is no accession,
ISSUE: and the builder must remove the construction. The proper remedy of the landowner is
an action to eject the builder from the land." 33
WON the petitioners have ownership over the portions of land where the copra dryer
and store are located. The private respondents' action for recovery of possession was the suitable solution
to eject petitioners from the premises.
HELD:
Petition dismissed.
No.

The petitioners’ defense that the said parcels of land are public lands is rebutted by
the Private respondents' tax declarations and receipts of payment of real estate taxes,
Facts of the Case:
as well as other related documents which prove their ownership of the disputed
The petitioner bought a lot owned by Mrs. Charvet which was then previously leased
properties.
by the latter to one Richard Stohner. The said lease contract provided that the lessee
may erect structures and improvements which shall remain as lessee's property and
The record further discloses that Victoria S. Tinagan and her son, Agustin Tinagan,
he may remove them at any time. It further provided that should the lessee fail to
took possession of the said properties in 1950, introduced improvements thereon, and
remove the same structures or improvements withing two months after the expiration
for more than 40 years, have been in open, continuous, exclusive and notorious
of the lease, the lessor may remove them or cause them to be removed at the expense
occupation thereof in the concept of owners.
of the lessee. Stohner made fillings on the land and constructed a house. When he
failed to pay the rent, the petitioner, through counsel, sent Stohner a demand letter
ordering him to vacate the lot. The lessee contended that he is a 'builder in good ISSUE: Whether or not the partition was valid
faith.'
Issue: Is the lessee a builder in good faith? The extrajudicial partition of the estate of Jacinto Pada among his heirs made in
Ruling: No, the lessee cannot be considered a builder in good faith. The provision 1951 is valid, albeit executed in an unregistered private document. No law requires
under Art. 448 of the New Civil Code (Philippine) on a builder of good faith applies partition among heirs to be in writing and be registered in order to be valid. The
only to the owner of the land who believes he is the rightful owner thereof, but not to object of registration is to serve as constructive notice to others. It follows then that
a lessee who's interest in the land is derived only from a rental contract. Neither can the intrinsic validity of partition not executed with the prescribed formalities is not
Stohner be considered a 'possessor in good faith'. A possessor in good faith is a party undermined when no creditors are involved. Without creditors to take into
who possesses property believing that he is its rightful owner but discovers later on a consideration, it is competent for the heirs of an estate to enter into an agreement
flaw in his title that could indicate that he might not be its legal owner. It cannot for distribution thereof in a manner and upon a plan different from those provided by
apply to a lessee because he knows right from the start that he is merely a lessee and the rules from which, in the first place, nothing can be inferred that a writing or other
not the owner of the premises. formality is essential for the partition to be valid. The partition of inherited property
As a mere lessee, he introduces improvements to the property at his own risk such need not be embodied in a public document so as to be effective as regards the heirs
that he cannot recover from the owner the reimbursements nor he has any right to that participated therein. The extrajudicial partition which the heirs of Jacinto Pada
retain the premises until reimbursements. What applies in this case is Art. 1678 executed voluntarily and spontaneously in 1951 has produced a legal status. When
(NCC) which provides that, " if the lessee, makes, in good faith, useful they discussed and agreed on the division of the estate of Jacinto Pada, it is presumed
improvements which are suitable to the use for which the lease is intended, without that they did so in furtherance of their mutual interests. As such, their division is
altering the form or substance of the property leased, the lessor upon the termination conclusive, unless and until it is shown that there were debts existing against the
of the lease shall pay the lessee 1/2 of the value of the improvements at the time. estate which had not been paid. No showing, however, has been made of any
Should the lessor refuse to reimburse said amount, the lessee may remove the unpaid charges against the estate of Jacinto Pada. Thus, there is no reason why the
improvements even though the principal thing may suffer damage thereby. He shall heirs should not be bound by their voluntary acts.
not. however, cause any more impairment upon the property leased than is
necessary." The belated act of Concordia, Esperanza and Angelito, who are the heirs of
Amador Pada, of donating the subject property to petitioners after forty four (44)
years
Kilario v. CA of never having disputed the validity of the 1951 extrajudicial partition that allocated
G.R. No. 134329. January 19, 2000 the subject property to Marciano and Ananias, produced no legal effect. The
donation made by his heirs to petitioners of the subject property, thus, is void for
Respondent Silverio Pada filed an ejectment case against sps. Kilario. The latter they were not the owners thereof. At any rate it is too late in the day for the heirs
occupies a portion of the intestate estate of Jacinto Pada, Grandfather of Silverio. of Amador Pada to
The repudiate the legal effects of the 1951 extrajudicial partition as prescription and
Kilario’s have been living therein since 1960 by sheer tolerance. When Jacinto Pada laches have equally set in.Petitioners are estopped from impugning the extrajudicial
dies, his heirs entered into extrajudicial partition of his estate in 1951. As a result partition executed by the heirs of Jacinto Pada after explicitly admitting in their
thereof, lot 5581 was allocated to Ananias and Marciano who became co-owners of Answer that they had been occupying the subject property since 1960 without ever
said paying any rental as they only relied on the liberality and tolerance of the Pada
lot. family. Their admissions are evidence of a high order and bind them insofar as the
character of their possession of the subject property is concerned.
Ananias died and his daughter succeeded in his right as co-owner. Eventually,
Juanita sold her right in the co-ownership to Engr. Paderes. Mariaon the other hand, LUMUNGO V. USMAN
heir of Marciano, sold her share to her cousin respondent Silverio Pada. The latter 25 SCRA 255
demanded sps. Kilario to vacate but the sps. refused.On June 1995, a complaint for
ejectment was filed against sps. Kilario. On July1995 a deed of donation in their FACTS:
favor Dominga Usman sold and transfers her rights in and to the 3 lots in question
was executed by heirs of Amador Pada. to Jose Angeles. The latter made the purchase with the knowledge that the property
was already in dispute by Atty. Usman, husband of Dominga, and by the plaintiffs.
Angeles, upon taking possession of the land, planted the same with coconuts, which,
together with those already planted by Dominga Usman, numbered about 3,000, building thereon, which is the property of the defendant, or of selling to him the land
most of which are now fruit-bearing. In short, Angeles was a purchaser and a builder on which it stands.
in bad faith.

ISSUE:
Whether or not Angeles is entitled to reimbursement for the coconuts tree he planted MWSS V. CA
on the property in litigation.
143 SCRA 20
HELD:
No. It should be noted that said trees are improvements, not "necessary
expenses of preservation," which a builder, planter or sower in bad faith may recover
under Arts. 452 and 546, first paragraph, of the Civil Code. The facts and findings of FACTS:
both the trial court and the Court of Appeals leave no room for doubt that Jose
Angeles was a purchaser and a builder in bad faith. The provision applicable to this MWSS had an account from PNB. Its treasurer, auditor, and General
case is, accordingly, Article 449 of the Civil Code, which provides that, "he who Manager are the ones authorized to sign checks. During a period of time,
builds, plants or sows in bad faith on the land of another, loses what is built, planted 23 checks were drawn and debited against the account of petitioner. Bearing
or sown without right to indemnity." the same check numbers, the amounts stated therein were again
debited from the account of petitioner. The amounts drawn were deposited in the
accounts of the payees in PCIB. It was found out though that the names stated in the
MUNICIPALITY OF OAS V. ROA drawn checks were all fictitious. Petitioner demanded the return of the amounts
7 PHIL. 20 debited but the bank refused to do so. Thus, it filed a complaint.

FACTS:
The Municipality brought the action for the recovery of a tract of land in the
pueblo of Oas, claiming that it was a part of the public square of said town, while HELD:
Roa alleged that he was the owner of the property. The defendant admitted in writing
There was no categorical finding that the 23 checks were signed by
that he knew that the land is owned by the Municipality and that Jose Castillo, whom
persons other than those authorized to sign. On the contrary, the NBI reports
he bought the property did not own the land. When Roa constructed a substantial
shows that the fraud was an “inside job” and that the delay in the
building on the property in question after he “acquired” the property from Castillo,
reconciliation of the bank statements and the laxity and loss of records
the Municipality did not oppose the construction.
control in the printing of the personalized checks facilitated the fraud. It further
doesn’t provide that the signatures were forgeries.
ISSUE:
Whether or not the municipality owns the land.
Forgery cannot be presumed. It should be proven by clear, convincing and positive
evidence. This wasn’t done in the present case.
HELD:
Yes. The defendant was not a purchaser in good faith. The plaintiff, having The petitioner cannot invoke Section 23 because it was guilty of negligence not only
permitted the erection by the defendant of a building on the land without objection, before the questioned checks but even after the same had already been negotiated.
acted in bad faith. The rights of the parties must, therefore, be determined as if they
both had acted in good faith. To the case are applicable those provisions of the Civil FILIPINAS COLLEGES, INC. VS MARIA GARCIA TIMBANG
Code which relate to the construction by one person of a building upon land No. L-12813. Spetember 29, 1959
belonging to another. Article 364 (now Art.453) of the Civil Code is as follows:
"When there has been bad faith, not only on the part of the person who built, sowed, SUCCESSFUL BIDDERS – MARIA GARCIA TIMBANG AND MARCELINO
or planted on another's land, but also on the part of the owner of the latter, the rights TIMBANG
of both shall be the same as if they had acted in good faith.” The Supreme declared DEFENDANT APPELLANTS
that the Municipality is the owner of the land and that it has the option of buying the
PLAINTIFF APPELLEE – MARIA GERVACIO BLAS
FACTS:
Whether or not the respondent Blas is a builder in good faith?
Maria Gervacio Blas was declared to be a builder in good faith of the school building
constructed on the lot in question. HELD:

Spouses Timbang were the successful bidders of the school building sold at a public Yes. The Supreme Court affirms the decision of the Court of Appeals.
auction and shall pay Maria Gervacio Blas directly or through Sheriff of Manila
P5,750.00. The court ordert he appellants to pay appellee Blas the amount of their bid made at
public auction.
Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses
Timbang in and to Lot No. 2 thereof, Filipinas Colleges Inc was ordered to pay the ANALYSIS:
spouses Timbang the amount of P15,807.90 plus other amounts which said spouses
might have paid to the original vendor of Filipinas Colleges. 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
Filipinas College Inc, purchaser of the said building was ordered to deliver to Blas building. Blas’ claim is therefore not a mere preferred credit, but is actually a lien on
stock certificate for 108 shares of the said school with par value of P10,800.0 and to the school building.
pay Blass the sum of P8,200.00 representing the unpaid balance of the purchase price
of the house. CONCLUSION:

In case Filipinas Colleges failed to comply in the 90 day period, the latter would lose It is true that the owner of the land has the right to choose between appropriating the
all its rights to the land and spouses Timbang would become the owners thereof. building by reimbursing the builder of the value thereof or compelling the builder in
good faith to pay for his land.
Upon failure to settle the payments, spouses Timbang had chosen not to appropriate
the building but to compel Filipinas Colleges Inc to acquire the land and pay them
the value thereof.

Blas through a cpunsel, sent a letter to the Sherff of Manila advising him of her
preferential claim or lien on the house to satisfy the unpaid balance of the purchase
price thereof and to withhold from the process of the auction sale the sum of P8,200.

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.

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
or the debtor, and the Timbangs, owners of the house are not the debtors of Blas.

The owners of the land, instead of electing any of the alternatives, 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. And 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.

ISSUE: