Article 428
Article 428
ISSUE:
Not later than 1-6-96: 4%
1. WON respondent’s non-payment of the balance of
the purchase price gave rise to a cause of action on the
In consecutive quarterly installments for a period of 5 part of petitioner to demand full payment of the
years: 70% purchase price; and
Respondent paid thirty (30%) down payment and the 2. WON Ayala should refund respondent the amount
quarterly amortization. However in 1998, respondent the latter paid under the contract to sell.
notified petitioner in writing that it will no longer
continue to pay due to the adverse effects of the
HELD: The petition is denied. The CA decision is
economic crisis to its business. Respondent then asked
affirmed.
for the immediate cancellation of the contract and for a
At the outset, it is significant to note that petitioner
refund of its previous payments as provided in the
does not dispute that its December 22, 1995 transaction
contract.
with respondent is a contract to sell. Also, the
questioned agreement clearly indicates that it is a
Petitioner refused to cancel the contract to sell. Instead, contract to sell, not a contract of sale. Paragraph 4 of
it filed with the RTC Makati City, a complaint for the contract provides:
specific performance against respondent, demanding 4. TITLE AND OWNERSHIP OF THE PROPERTY. – The title
from the latter the payment of the remaining unpaid to the property shall transfer to the PURCHASER upon
quarterly installments inclusive of interest and payment of the balance of the Purchase Price and all
penalties. expenses, penalties and other costs which shall be due
and payable hereunder or which may have accrued
thereto. Thereupon, the SELLER shall execute a Deed of
Respondent, in its answer, denied any further obligation
Absolute Sale in favor of the PURCHASER conveying all
to petitioner, asserting that it (respondent) notified the
the SELLER’S rights, title and interest in and to the
latter of its inability to pay the remaining installments.
Property to the PURCHASER
Respondent invoked the provisions of paragraphs 3 and
3.1 of the contract to sell providing for the refund to it
of the amounts paid, less interest and the sum of 25% 2. Eliseo Fajardo Jr., vs Freedom to Build Inc.
of all sums paid as liquidated damages. G. R. No. 134692 August 1, 2000
Facts: Freedom to Build Inc., an owner-developer and
seller of low-cost housing sold to petitioner-spouses a
The trial court rendered a Decision in favor of Ayala and
house and lot in the De La Costa Homes, in Barangka,
holding that respondent transgressed the law in obvious
Marikina, Metro Manila. The Contract to sell executed
bad faith. It ordered the defendant ordered to pay
between the parties, contained a Restrictive Covenant
Ayala the unpaid balance, interest agreed upon, and
providing certain prohibitions, to wit:
“Easements. For the good of the entire community, the The Court held that the argument of the petitioner-
homeowner must observe a two-meter easement in spouses has no merit; Article 1168 of the New Civil
front. No structure of any kind (store, garage, bodega, Code states that: “When the obligation consists in not
etc.) may be built on the front easement. doing and the obligor does what has been forbidden
him, it shall be undone at his expense.”
“Upward expansion. A second storey is not prohibited.
But the second storey expansion must be placed above This Court is not unaware of its ruling in Ayala
the back portion of the house and should not extend Corporation vs. Ray Burton Development Corporation,
forward beyond the apex of the original building. which has merely adjudged the payment of damages in
lieu of demolition. In the aforementioned case,
however, the elaborate mathematical formula for the
“Front expansion: 2nd Storey: No unit may be extended
determination of compensatory damages which takes
in the front beyond the line as designed and
into account the current construction cost index during
implemented by the developer in the 60 sq. m. unit. In
the immediately preceding 5 years based on the
other words, the 2nd floor expansion, in front, is 6
weighted average of wholesale price and wage indices
meters back from the front property line and 4 meters
of the National Census and Statistics Office and the
back from the front wall of the house, just as provided
Bureau of Labor Statistics is explicitly provided for in the
in the 60 sq. m. units.”
Deed of Restrictions entered into by the parties. This
unique and peculiar circumstance, among other strong
The above restrictions were also contained in Transfer justifications therein mentioned, is not extant in the
Certificate of Title No. N-115384 covering the lot issued case at bar.
in the name of petitioner-spouses.
In sum, the Court holds that since the extension
The controversy arose when the petitioners despite constructed exceeds the floor area limits of the
repeated demand from the respondent, extended the Restrictive Covenant, petitioner spouses can be
roof of their house to the property line and expanded required to demolish the structure to the extent that it
the second floor of their house to a point directly above exceeds the prescribed floor area limits.
the original front wall. Respondent filed before the RTC Wherefore, the assailed decision of the Court of
an action to demolish the unauthorized structures. Appeals is AFFIRMED. No costs.
The RTC rendered a judgment against the petitioner 3. Tayag Vs. Lacson
ordering them to immediately demolish and remove the Facts:
extension of their expanded housing unit that exceeds In March 1996 a group of farmer-tenants on three
the limitations imposed by the Restrictive Covenant, parcels of land owned by the Lacsons assigned to
otherwise the Branch Sheriff of this Court will execute petitioner Tayag their rights as tenants/tillers for
the this decision at the expense of the defendants. p50/sqm.
The said amount would be payable “when the
legal impediments to the sale of the property to
On appeal, the CA affirmed the decision of the RTC.
the petitioner no longer existed.” Tayag would
Hence, this petition for review.
have exclusive rights to purchase the property if
and when the Lacsons agreed to sell the
Issue: Whether or not the for the lack of a specific property.
provision, prescribing the penalty of the demolition in Tayag gave varied sums of money to the farmers
the “Restrictive Covenant” in the event of the breach as partial payments, and the farmers issued
thereof, the prayer of the respondent to demolish the receipts.
structure should fail. Sometime later Tayag discovered that the farmers
Ruling: changed their minds and would be selling their
rights to the Lacsons instead, prompting Tayag to
pray for Injunction against the farmers and "no one gives what he doesn't have" applies in this
Lacson. case.
In their defense, the Lacsons claimed that they did
not induce the farmers to violate their contracts Deeds of Assignment not valid; conditions stipulated
with Tayag, and that since the farmers were did not arise
merely tenants, they had no right to enter into The full payment of 50/sqm under Tayag and the
any transactions involving Lacson properties farmers’ ‘’option contracts’ were on the following
without the owners’ consent. conditions:
- that the Lacsons would agree to sell their property
Issue: WON there was a valid option contract between - that the deeds of assignment were subject to the
Tayag and the farmers by virtue of the deeds of approval of DAR
assignment. NO - that there was a prohibitive period within which the
farmers were able to sell their interest in the land
Held:
There is no showing in Tayag’s complaint that the
Option contract defined farmers had agreed to sell their property, and that the
An option is a contract by which the owner of the legal impediments to the agreement no longer existed.
property agrees with another person that he shall have They had yet to submit the Deeds of Assignment to the
the right to buy his property at a fixed price within a Department of Agrarian Reform which, in turn, had to
certain time or under, or in compliance with certain act on and approve or disapprove the same. Unless the
terms and conditions, or which gives to the owner of DAR approves the deeds, Tayag has no right to enforce
the property the right to sell or demand a sale. It the same by asking the trial court to fix a period within
imposes no binding obligation on the person holding which to pay.
the option, aside from the consideration for the offer.
Until accepted, it is not, properly speaking, treated as a
contract. Ross Rica v. Sps. Ong (2005)
On November 21, 1997, the respondents as the owners 2) Whether the Heirs of Macabangkits right to claim
of land with an area of 221,573 square meters situated just compensation had prescribed under section 3(i) of
in Ditucalan, Iligan City, sued NPC in the RTC for the Republic Act No. 6395, or, alternatively, under Article
recovery of damages and of the property, with the 620 and Article 646 of the Civil Code.
alternative prayer for the payment of just
compensation. They alleged that they had belatedly HELD: We uphold the liability of NPC for payment of
discovered that one of the underground tunnels of NPC just compensation.
that diverted the water flow of the Agus River for the
operation of the Hydroelectric Project in Agus V, Agus VI
and Agus VII traversed their land; that their discovery POLITICAL LAW: just compensation
had occurred in 1995 after Atty. Saidali C. Gandamra,
President of the Federation of Arabic Madaris School, The action to recover just compensation from the State
had rejected their offer to sell the land because of the or its expropriating agency differs from the action for
damages. The former, also known as inverse
condemnation, has the objective to recover the value of (h)To acquire, promote, hold, transfer, sell, lease, rent,
property taken in fact by the governmental defendant, mortgage, encumber and otherwise dispose of property
even though no formal exercise of the power of incident to, or necessary, convenient or proper to carry
eminent domain has been attempted by the taking out the purposes for which the Corporation was
agency.Just compensation is the full and fair equivalent created:Provided, That in case a right of way is
of the property taken from its owner by the necessary for its transmission lines, easement of right of
expropriator. The measure is not the takers gain, but way shall only be sought:Provided, however,That in
the owner's loss. The word just is used to intensify the case the property itself shall be acquired by purchase,
meaning of the word compensation in order to convey the cost thereof shall be the fair market value at the
the idea that the equivalent to be rendered for the time of the taking of such property.
property to be taken shall be real, substantial, full, and
ample. On the other hand, the latter action seeks to POLITICAL LAW: NPCs construction of the tunnel
vindicate a legal wrong through damages, which may be constituted taking of the land, and entitled owners to
actual, moral, nominal, temperate, liquidated, or just compensation
exemplary. When a right is exercised in a manner not
conformable with the norms enshrined in Article 19 and The Court held in National Power Corporation v.
like provisions on human relations in the Civil Code,and Ibrahim that NPC was liable to pay not merely an
the exercise results to the damage of another, a legal easement fee but rather the full compensation for land
wrong is committed and the wrongdoer is held traversed by the underground tunnels,viz:
responsible.
In disregarding this procedure and failing to recognize
The two actions are radically different in nature and respondents ownership of the sub-terrain portion,
purpose. The action to recover just compensation is petitioner took a risk and exposed itself to greater
based on the Constitution while the action for damages liability with the passage of time. It must be emphasized
is predicated on statutory enactments. Indeed, the that the acquisition of the easement is not without
former arises from the exercise by the State of its expense. The underground tunnels impose limitations
power of eminent domain against private property for on respondents use of the property for an indefinite
public use, but the latter emanates from the period and deprive them of its ordinary use. Based upon
transgression of a right. The fact that the owner rather the foregoing, respondents are clearly entitled to the
than the expropriator brings the former does not payment of just compensation.Notwithstanding the fact
change the essential nature of the suit as an inverse that petitioner only occupies the sub-terrain portion, it
condemnation, for the suit is not based on tort, but on is liable to pay not merely an easement fee but rather
the constitutional prohibition against the taking of the full compensation for land. This is so because in this
property without just compensation. It would very well case, the nature of the easement practically deprives
be contrary to the clear language of the Constitution to the owners of its normal beneficial use. Respondents, as
bar the recovery of just compensation for private the owner of the property thus expropriated, are
property taken for a public use solely on the basis of entitled to a just compensation which should be neither
statutory prescription. more nor less, whenever it is possible to make the
assessment, than the money equivalent of said
Due to the need to construct the underground tunnel, property.
NPC should have first moved to acquire the land from
the Heirs of Macabangkit either by voluntary tender to Here, like in National Power Corporation v. Ibrahim,
purchase or through formal expropriation proceedings. NPC constructed a tunnel underneath the land of the
In either case, NPC would have been liable to pay to the Heirs of Macabangkit without going through formal
owners the fair market value of the land, for Section expropriation proceedings and without procuring their
3(h) of Republic Act No. 6395 expressly requires NPC to consent or at least informing them beforehand of the
pay the fair market value of such property at the time of construction. NPCs construction adversely affected the
the taking, thusly: owners rights and interests because the subterranean
intervention by NPC prevented them from introducing eminent domain to acquire the easement over the
any developments on the surface, and from disposing of property as this power encompasses not only the taking
the land or any portion of it, either by sale or mortgage. or appropriation of title to and possession of the
expropriated property but likewise covers even the
We agree with both the RTC and the CA that there was imposition of a mere burden upon the owner of the
a full taking on the part of NPC, notwithstanding that condemned property. (Rep. v. PLDT, 136 Phil. 20
the owners were not completely and actually (1969)). Significantly, though, landowners cannot be
dispossessed. It is settled that the taking of private deprived of their right over their land until
property for public use, to be compensable, need not expropriation proceedings are instituted in court. The
be an actual physical taking or appropriation. Indeed, court must then see to it that the taking is for pubic use,
the expropriators action may be short of acquisition of that there is payment of just compensation and that
title, physical possession, or occupancy but may still there is due process of law.
amount to a taking. Compensable taking includes
destruction, restriction, diminution, or interruption of In disregarding this procedure and failing to recognize
the rights of ownership or of the common and the owners’ ownership of the sub-terrain portion, NPC
necessary use and enjoyment of the property in a lawful took a risk and exposed itself to greater liability with the
manner, lessening or destroying its value. It is neither passage of time. It must be emphasized that the
necessary that the owner be wholly deprived of the use acquisition of the easement is not without
of his property, nor material whether the property is expense. The underground tunnels imposed limitations
removed from the possession of the owner, or in any on the owners’ use of the property for an indefinite
respect changes hands. period and deprived them of its ordinary use. The
owners are clearly entitled to the payment of just
As a result, NPC should pay just compensation for the compensation. Notwithstanding the fact that NPC only
entire land. In that regard, the RTC pegged just occupied the sub-terrain portion, it is liable to pay not
compensation at P500.00/square meter based on its merely an easement fee but rather the full
finding on what the prevailing market value of the compensation for the land. This is so because, the
property was at the time of the filing of the complaint, nature of the easement practically deprived the
and the CA upheld the RTC. owners of its normal beneficial use. The owners, as the
owners of the property thus expropriated, are entitled
ARTICLE 437 to a just compensation which should be neither more
nor less, whenever it is possible to make the
1. NPC v. Ibrahim, et al., - Eminent Domain assessment, than the money equivalent of said
property. (NPC v. Ibrahim, et al., G.R. No. 168732, June
G.R. No. 168732, June 29, 2007 29, 2007).
The mortgage recites that it was entered into by and Any authority which he had to bind his wife should be
between Juan M. Poizat in his own behalf and as confined and limited to his power of attorney.
attorney in fact of his wife. That the record title of the
mortgaged property is registered in the name of his Giving to it the very broadest construction, he would
wife, Dona Gabriela Andrea de Coster. That they were not have any authority to mortgage her property, unless
legally married, and that the marriage between them the mortgage was executed for her "and in her name,
has never been dissolved. That with the object of place or stead," and as her act and deed. The mortgage
constructing a new building on the land. the six in question was not so executed. it was signed by Don
warehouses thereon were demolished, and that a new Juan M. Poizat in his own name, his own proper person,
building was erected. That the property is the subject of and by him only, and it was acknowledge by him in his
a new registration in which it must be made to appear personal capacity, and there is nothing in either the
that the land belongs in fee simple and in full ownership signature or acknowledgment which shows or tends to
as the paraphernal property of the wife, and that the show that it was executed for or on behalf of his wife or
new building thereon is the property of the conjugal "in her name, place or stead."
partnership. "That the Philippine Sugar Estates
Development Company, Ltd., having granted to Don It is contended that the instrument shows upon its face
Juan M. Poizat a credit of 10,000 Pounds Sterling with that it was intended to make the wife liable for his debt,
the mortgage upon the real property above described," and to mortgage her property to secure its payment,
that the Development Company "hereby grants Don and that his personal signature should legally be
Juan M. Poizat a credit in the amount of 10,000 Pounds construed as the joined or dual signature of both the
Sterling which the said Mr. Poizat may use, etc." That husband and that of the wife as her agent. That is to
should he personally or on behalf of his wife use the say, construing the recitals in the mortgage and the
credit he acknowledges, that he and his principal are instrument as a whole, his lone personal signature
indebted to the Development Company in the sum of should be construed in a double capacity and binding
10,000 Pounds Sterling which "they deem to have equally and alike both upon the husband and the wife.
received as a loan from the said commercial entity." No authority has been cited, and none will ever be
That he binds himself and his wife to pay that amount found to sustain such a construction.
with a yearly interest of 9 per cent, payable quarterly.
That as security for the payment of said credit in the As the husband of the wife, his signature was necessary
case Mr. Poizat should receive the money at any time, to make the mortgage valid. In other words, to make it
with its interest, "the said Mr. Poizat in the dual valid, it should have been signed by the husband in his
capacity that above mentioned binds himself, should he own proper person and by him as attorney in fact for his
receive the amount of the credit." wife, and it should have been executed by both
husband and wife, and should have been so
It thus appears that at the time the power of attorney acknowledged.
and the mortgage were executed, Don Juan M. Poizat
and Gabriela Andrea de Coster were husband and wife,
There is no principle of law by which a person can It is very probable that his particular question was not
become liable on a real mortgage which she never fully presented to or considered by the lower court.
executed either in person or by attorney in fact. It
should be noted that this is a mortgage upon real The mortgage as to the paraphernal property of the
property, the title to which cannot be divested except wife is declared null and void ab initio, and as to her
by sale on execution or the formalities of a will or deed. personally, the decree is declared null and void, and as
For such reasons, the law requires that a power of to her paraphernal property, the sale is set aside and
attorney to mortgage or sell real property should be vacated, and held for naught, leaving it free and clear
executed with all of the formalities required in a deed. from the mortgage, decree and sale, and in the same
For the same reason that the personal signature of condition as if the mortgage had never been executed,
Poizat, standing alone, would not convey the title of his with costs in favor of the appellant.
wife in her own real property, such a signature would
not bind her as a mortgagor in real property, the title to 2. G.R. No. L-14309 June 30, 1960
which was in her name.
CALTEX (PHILIPPINES) INC., petitioner,
That is good law. Applying it to the facts, under his vs.
power of attorney, Juan M. Poizat may have had FELISA FELIAS, respondent.
authority to borrow money and mortgage the real
property of his wife, but the law specifies how and in FACTS:
what manner it must be done, and the stubborn fact
remains that, as to the transaction in question, that Lot No. 107 aforementioned was originally owned by
power was never exercised. The mortgage in question the spouses Juliano Felias and Eulalia Felion. On March
was executed by him and him only, and for such reason, 31, 1928, said spouses donated said Lot No. 107 to their
it is not binding upon the wife, and as to her, it is null daughter, Felisa Felias, herein respondent, as a result of
and void. which Original Certificate of Title No. 645 was cancelled
and Transfer Certificate of Title No. 97 was issued in lieu
It follows that the whole decree against her and her thereof, in favor of Felisa Felias, making said lot her
paraphernal property and the sale of that property to paraphernal property.
satisfy the mortgage are null and void, and that any title
she may have had in or to her paraphernal property On March 26, 1941, the trial court (Court of First
remains and is now vested in the wife as fully and as Instance of Cebu) rendered judgment in Civil Case No.
absolutely as if the mortgage had never been executed, 1527, entitled Texas Company (Phil.,) Inc., plaintiff, vs.
the decree rendered or the property sold. As to Don Simeon Sawamoto, defendant, (husband of respondent
Juan M. Poizat, the decree is valid and binding, and Felias) ordering the latter to pay plaintiff the sum of
remains in full force and effect. P661.94, with legal interest from the date complaint
was filed, plus attorney's fees equivalent to 10% of the
It is an undisputed fact, which appears in the mortgage award, and the costs. A writ of execution was issued to
itself, that the land in question was the paraphernal the provincial sheriff who levied upon Lot No. 107,
property of the wife, but after the marriage the old together with the improvements thereon described in
buildings on the property were torn down and a new paragraph II of the amended complaint and a small
building constructed and, in the absence of evidence to parcel of coconut land located in Look, Nasipit, Agusan,
the contrary, it must be presumed that the new building and on August 20, 1941, sold them at public auction to
is conjugal property of the husband and wife. As such, it the Texas Company, now petitioner herein Caltex
is subject of the debts of the conjugal partnership for (Philippines) Inc. The corresponding certificate of sale
the payment or security of which the husband has the was annotated on the back of Transfer Certificate of
power to mortgage or otherwise encumber the Title No. 97 on August 21, 1941. Upon the expiration of
property . the one year period without judgment debtor
Sawamoto making the redemption, on January 25,
1947, the provincial sheriff executed in favor of Caltex
(Philippines) Inc., a final deed of sale which was duly ART. 1404. ...
recorded on the reconstituted Transfer Certificate of
Title No. RT-65 (97) on November 26, 1947. Buildings constructed during the marriage on
the land belonging to one of the spouse shall
On February 3, 1950, Felisa Felias (herein respondent) also belong to the partnership, but the value of
filed the present action to declare herself exclusive the land shall be paid to the spouse owning the
owner of the two parcels in question; on January 4, same.
1955, after hearing, the trial court rendered judgment
as follows: which legal provision was embodied in Article 158,
paragraph 2, of the New Civil Code, which reads thus:
Plaintiff Felisa Felias as well as defendant Caltex
(Philippines) Inc. appealed the foregoing judgment to ART. 158. ...
the Court of Appeals which court rendered the decision
sought to be reviewed, the dispositive portion of which Buildings constructed at the expense of
reads: partnership during the marriage on land
belonging to one of the spouses, also pertain to
"In view of the foregoing, the judgment appealed from the partnership, but the value of the land shall
is hereby modified; and judgment is hereby rendered— be reimbursed to the spouse who owns the
same.,
"1. Declaring that plaintiff is the owner of Lot No. 107 of
the Cadastral Survey of Nasipit; and ordering the it automatically became conjugal when during the
Register of Deeds to cancel: entry No. 234 referring to marriage, and with conjugal partnership funds, a
the sale with pacto de retro; entry No. 1951, notice of building was construed on it. However, the Court of
levy under attachment; entry No. 2050, notice of levy Appeals fund as a fact that at the time the building was
under execution; entry No. 2147, sheriff's certificate of constructed, the lot still belonged to the parents of
sale; entry No. 114, sheriff's deed of sale in favor of Felisa because the donation to her was not made until
Caltex (Phil.) Inc., dated January 28, 1947; entry No. March 31, 1928, whereas the building was constructed
121, affidavit of consolidation of ownership, all earlier, which building was assessed as early as
appearing in the memorandum of encumbrances at the September, 1927, at P12,000. Consequently, Article
back of Transfer Certificate of Title No. RT-65 (97) of the 1404 of the Old Civil Code is not applicable. The Court of
land records of Agusan; and Appeals itself said so, but nevertheless, it proceeded to
assume that article 1404 was applicable, and proceeded
"2. Declaring that Caltex (Phil.) Inc. is the exclusive to discuss the question thus:
owner of the small parcel of coconut land located in
sitio Look, municipality of Nasipit, Agusan, described in While it is true that the building was
paragraph X (b) of the amended complaint." constructed by the spouses Felisa and Simeon
Sawamoto on Lot No. 107 at a time when they
The only issues involved in this appeal is the status and were already married, nevertheless, it is equally
ownership of Lot 107 of the cadastral survey of the City true that then Lot No. 107 did not yet belong to
of Agusan at the time it was levied upon and later sold Felisa Felias, one of the spouses — that land
by the Sheriff. As already stated, the Court of Appeals was still the property of the parents of Felisa
found that it had been donated to Felisa Felias on Felias. It would seem therefore, that Article
March 31, 1928 by her parents, so that it became her 1404 of the Spanish Civil Code would not apply.
paraphernal property. It was levied upon and sold by That legal percept refers to a building
the Sheriff as conjugal property of the spouses Felisa constructed `on land belonging to one of the
and Simeon on the theory that under Article 1404, spouses.' Rather, we would say that the familiar
paragraph 2, of the Old Civil Code, which reads as rule of accessory following the principal should
follows: apply.
But conceding, for present purposes, that after loan, which the latter used to pay the debt to GSIS. The
the acquisition of the land by plaintiff, the balance of the loan (400k) will be delivered by MUNOS
matter of ownership of the land (on which the upon surrender of the title over the property and an
said building was erected) comes within the affidavit of waiver of rights (over the property) to be
coverage of Article 1404 still the question executed by the husband. While the spouses were able
arises: As of what time should the land be to turn over the title, no affidavit was signed by the
considered the property of the spouse? On this husband. Consequently, MUNOZ refused to give the
point, we have but to restate the jurisprudence 400k balance of the loan and since the spouses could no
established by Supreme Tribunal of this longer return the 200k (which was already paid to GSIS),
country. MUNOZ kept the title over the property and
subsequently, caused the issuance of a new one in his
We believe the assumption and the discussion to be own name.
profitless and unnecessary. For purposes of this appeal,
we shall decide the issue on the basis of the fact that The spouses then filed a case for the annulment of the
the building was construed when the lot belonged not purported sale of the property in favor of MUNOZ. The
to Felisa but her parents, in which case, as the Court of RTC ruled that the property was the wife’s exclusive
Appeals itself observed, what was applicable was "the paraphernal property (since she inherited it from her
familiar rule of accessory following the principal". In father) and as such, the sale is valid even without the
other words, when the lot was donated to Felisa by her husband’s consent.
parents, as owners of the land on which the building
was constructed, the lot became her paraphernal The CA reversed and ruled that while the property was
property. The donation transmitted to her the rights of originally exclusive paraphernal property of the wife, it
a landowner over a building constructed on it. became conjugal property when it was used as a
Therefore at the time of the levy and sale of the sheriff, collateral for a housing loan that was paid through
Lot No. 107 did not belong to the conjugal partnership, conjugal funds. Hence, the sale is void.
but it was paraphernal property of Felisa. As such, it
was not answerable for the obligations of her ISSUE (1): Is the property paraphernal or conjugal?
husband1 which resulted in the judgment against him in
favor of Caltex. It may be stated in this connection that RULING: PARAPHERNAL. As a general rule, all property
as further found by the Court of Appeals, the building acquired during the marriage is presumed to be
constructed on Lot No. 107 was destroyed during the conjugal unless the contrary is proved. In this case, clear
last war, so that "at the time the Sheriff executed the evidence that the wife inherited the lot from her father
final deed of sale in favor of Caltex (Phil.) Inc. on the has sufficiently rebutted this presumption of conjugal
27th day of January, 1947, that house which was ownership. Consequently, the residential lot is the
included in both deeds was no longer in existence." wife’s exclusive paraphernal property (pursuant to
Article 92 and 109 of FC).
In view of the foregoing, the appealed decision of the
Court of Appeals is hereby affirmed, though on another It was error for the CA to apply Article 158 of the CC and
ground, with costs against petitioner. the ruling on Calimlim-Canullas. True, respondents were
married during the effectivity of the CC and thus its
3. MUNOZ, JR. v. ERLINA RAMIREZ and ELISEO CARLOS, provisions should govern their property relations. With
G.R. 156125, 25 August 2010 the enactment of the FC however, the provisions of the
latter on conjugal partnership of gains superseded
FACTS:Respondent-spouses mortgaged a residential lot those of the CC. Thus, it is the FC that governs the
(which the wife inherited) to the GSIS to secure a present case and not the CC. And under Article 120 of
housing loan (200k). Thereafter, they used the money the FC (which supersedes Article 158 of the CC), when
loaned to construct a residential house on said lot. the cost of the improvement and any resulting increase
in the value are more than the value of the property at
It is alleged that MUNOZ granted the spouses a 600k the time of the improvement, the entire property shall
belong to the conjugal partnership, subject to Bolinao, Pangasian. Of the total procurement price of
reimbursement; otherwise, the property shall be P15,000, the sum of P4,710.18 has not been paid by the
retained in ownership by the owner-spouse, likewise Insular Farms, Inc. The Company instituted a civil case
subject to reimbursement for the cost of improvement. with the CIR of Pangasinan to recover the said unpaid
balance from the Insular Farms, Inc. The trial court
In this case, the husband only paid a small portion of rendered judgment in favor of the Company's claim.
the GSIS loan (60k). Thus, it is fairly reasonable to The corresponding writ of execution was issued because
assume that the value of the residential lot is there was no appeal instituted by Insular, Inc.
considerably more than the contribution paid by the
husband. Thus, the property remained the exclusive The Pacific Farms, Inc. filed a third-party claim asserting
paraphernal property of the wife at the time she ownership over the levied buildings which it had
contracted with MUNOZ; the written consent of the acquired from the Insular Farms, Inc. by virtue of a deed
husband was not necessary. of absolute sale executed about seven months before
the Company filed the civil action. Shielded by an
ISSUE (2): Was the transaction a sale or equitable indemnity bond put up by the Company and the
mortgage? Cosmopolitan Insurance Company, Inc., the sheriff
proceeded with the announced public auction and sold
RULING: EQUITABLE MORTGAGE. Under Article 1602 of the levied buildings to the Company.
the CC, a contract is presumed an equitable mortgage
ISSUE:
when: (a) price of sale with right to repurchase is
unusually inadequate; (b) vendor remains in possession WON the Company is entitled to a materialman’s lien to
as lessee or otherwise; (c) upon or after the expiration be paid by Pacific Farms, Inc?
of the right to repurchase, another instrument
extending the period of redemption is executed; (d) HELD: YES.
purchase retains for himself a part of the purchase
price; (e) vendor binds himself to pay the taxes on the Therefore, applying article 447 by analogy, we perforce
thing sold; and, (f) in any other case it may be fairly consider the buildings as the principal and the lumber
inferred that the real intention of the parties is for the and construction materials that went into their
transaction to secure the payment of a debt. construction as the accessory. Thus Pacific Farms, if it
does own the six buildings, must bear the obligation to
In this case, considering that (a) the spouses remained pay for the value of the said materials; the Company-
in possession of the property (albeit as lessees thereof); which apparently has no desire to remove the
(b) MUNOZ retained a portion of the ‘purchase price’ materials, and, even if it were minded to do so, cannot
(200k); (c) it was the spouses who paid real property remove them without necessarily damaging the
taxes on the property; and, (d) it was the wife who buildings has the corresponding right to recover the
secure the payment of the principal debt with the value of the unpaid lumber and construction materials.
subject property — the parties clearly intended an
Of course, the character of a buyer in good faith and for
equitable mortgage and not a contract of sale
value, if really possessed by the Pacific Farms, could
possibly exonerate it from making compensation. But
ART 447
the Pacific Farm's stance that it is an innocent purchaser
PACIFIC FARMS, INC. VS. SIMPLICIO G. ESGUERRA, for value and in good faith is open to grave doubt
CARRIED LUMBER COMPANY because of certain facts of substantial import (evident
from the records) that cannot escape notice.
FACTS:
In the deed of absolute sale, exhibit 1, the Insular
On several occasions, the Company sold and delivered Farms, Inc. (vendor) was represented in the contract by
lumber and construction materials to the Insular Farms, its president, J. Antonio Araneta. The latter was a
Inc. which the latter used in the construction of the director of the appellee (Pacific Farms, Inc.) and was the
aforementioned six buildings at its compound in counsel who signed the complaint filed by the appellee
in the court below. J. Antonio Araneta was, therefore, Petitioner contending that the Court of Appeals erred in
not only the president of the Insular Farms, Inc. but declaring that the compromise had the effect of
also a director and counsel of Pacific Farms. converting the previous contract of sale into one of loan
secured by a mortgage; and on failing to make a finding
During the trial of civil case the Insular Farms, Inc. was on the rights and obligations of the petitioner, with
represented by Attorney Amado Santiago, Jr. of the law respect to the houses builts on the lands in good faith
firm of J. Antonio Araneta. The latter was one of the by the petitioner Feliciano Martin and hi son-in-law and
counsels of the Pacific Farms, Inc. They cannot claim his daughter. The court of Appeals is also alleged to
ignorance of the pendency of civil case because the have made an error in declaring that the compromise
Insular Farms, Inc. was defended by the same lawyer was valid even if the court before which it was made
from the same law firm that commenced the present had no jurisdiction over the case brought and in which it
action. was entered into.
Pacific Farms merely folded its arms in disinterest and ISSUES:
waited, so to speak. Not until a decision was rendered
therein in favor of the Company, a writ of execution 1. W/N the compromise agreement have the effect of
issued, and the six buildings levied upon by the sheriff, converting the sale in into loan secured by mortgaged
did it file a third-party claim over the levied buildings.
2. W/N the CA failed to make a finding on the rights and
MARTIN VS MARTIN obligations of the petitioner, with respect to the houses
builts on the lands in good faith by the petitioner
FACTS Feliciano Martin and hi son-in-law and his daughter.
Jose Balagui and Dorotea Balagui, brother and sister, HELD
sold the two parcels of land subject of the action, to
Feliciano Martin and Florentino Martin for P1,200. Jose 1. NO. petitioner Feliciano Martin had actually signed
Balagui brought an action against said Feliciano and the compromise agreement, this being a finding of fact,
Florentino Martin for damages arising from failure of which is final and binding upon us. A person cannot
the Martins to comply with some conditions agreed repudiate the effects of his voluntary acts simply
upon in the sale. The said action was terminated by a because it does not fit him, or simply because the judge
compromise agreement between Feliciano Martin, before whom he executed the act did not have
Florentino Martin and Isidro Martin. jurisdiction of the case. In a regime of law and order,
repudiation of an agreement validly entered into can
CA found that Feliciano Martin did in fact the sign not be made without any ground or reason in law or in
agreement. The court also found that the intention of fact for such repudiation. The conclusion of the trial
the parties was to transform the original sale made in court in respect to the validity of the compromise
favor of Feliciano and Florentino Martin into an agreement and its binding effect upon Feliciano Martin
equitable mortgage, as contended by the spouses and cannot be questioned.
their transferees, the defendant Prudencio Martin and
intervenor Ignacio de la Cruz. The court also found that 2. Yes. The decision of the Court of Appeals is silent on
Jose Balagui sold the parcels of land in question to the rights and obligations of the parties with respect to
Ignacio de la Cruz for the sum of P2,500, with the the said houses. We find merit in the contention that
understanding that the purchaser would redeem the the Court of Appeals erred in failing to make a specific
lands from Feliciano Martin and Florentino Martin by pronouncement on the rights and obligations of the
paying to them the sum of P1,200. parties with respect to the said houses.
CA reversed the decision of the CFI which had declared The Court of Appeals found that the houses were built
the compromise null and void for having been made after October 31, 1930, after Feliciano Martin had
before a court which had no competent jurisdiction returned the amount of P600 that Florentino Martin
over the action. had contributed to the purchase money. At the time of
the construction, therefore, the petitioner had already
become the rightful possessor of the land having, Antonio then took possession of the portion
besides, declared them for tax purposes. No claim is sold to him and constructed a house thereon.
made by any of the parties-respondents that the
construction of the houses had been made in bad faith. Twelve (12) years later, Maria executed in favor
The compromise agreement did not specify within what of Antonio a Kasulatan ng Bilihang
period of time Feliciano Martin was to enjoy the Tuluyan covering the entire Lot 2-A. However,
possession and use of the lands in question. Neither has Antonio did not register the sale or pay the real
there any evidence submitted to show that the building property taxes for the subject land.
of the houses was prohibited by the original owners of
the land or by the subsequent purchaser. A portion of In 1994, Maria sold the same Lot 2-A to
the land was residential, so its use could only be Filomena. Filomena registered the sale with the
enjoyed by the building of a house thereon. So we must Registry of Deeds. Consequently, Transfer of
find as a fact that the building of the houses was made Certificate of Title was issued in the name of
in good faith and in the exercise of the rights granted to Filomena. Since then Filomena paid the real
Feliciano Martin by the compromise agreement. property taxes for the subject parcel of land.
The law applicable to petitioner is Article 361 of the In September 2000, Filomena filed a case
Spanish Civil Code, which provides as follows: for Accion Publiciana with Cancellation of Notice
of Adverse Claim against Antonio.
Art. 361. The owner of land on which anything has been
built sown, or planted, in good faith, shall be entitled to
She alleged at the time of the sale, she was not
appropriate the thing so built, sown, or planted, upon
aware that Antonio had any claim or interest
paying the indemnification mentioned in Articles 453
over the subject property.
and 454, or to compel the person who has built or
planted to pay him the value of the land, and the
Antonio assured her that there was no
person who sowed thereon to pay the proper rent
impediment to her acquisition of the land, and
therefor.
promised to vacate the property five (5) years
Ignacio de la Cruz is declared to be the owner of the after the sale. In August 1999, Antonio
lands subjects of the action and entitled to the requested an extension of one (1) year, and
possession thereof upon payment by him of the sum of offered to pay a monthly rental which she
P600 to petitioner Feliciano Martin, but the decision is granted. However, in 2000, Antonio refused to
modified by further ordering that the case be remanded vacate the property and, instead, claimed
to the court below for determination of the price or the absolute ownership of Lot 2-A.
value of the two houses built on the lands in question,
and thereafter for the intervenor-appellee to exercise Antonio asserted absolute ownership
the option specified in Article 361 of the Spanish Civil over Lot 2-A. He alleged that he purchased the
Code. subject property. He averred that Filomena was
aware of the sale; hence, the subsequent sale in
ART. 448 favor of Filomena was rescissible, fraudulent,
fictitious, or simulated.
1. Benedicto vs. Villaflores
RTC rendered a decision sustaining Filomena’s
FACTS:
ownership. According to the RTC, Filomena was
the one who registered the sale in good faith; as
Maria Villaflores (Maria) was the owner of Lot
such, she has better right than Antonio. It
2-A, with an area of 277 square meters, in
rejected Antonio’s allegation of bad faith on the
Bulacan. In 1980, Maria sold a portion of Lot 2-
part of Filomena because no sufficient evidence
A to her nephew, Antonio Villaflores.
was adduced to prove it. It declared Antonio a
builder in good faith.
encroached on 252 sq.m leaving Pascual with only
CA affirmed the decision of the RTC and 66sq.m. Pascual demanded rentals from Angeles or to
remanded the case to the RTC for further vacate but he refused. Pascual sued him for recovery of
proceedings to determine the respective rights possession and damages. CA affirmed but modified RTC.
of the parties under Articles 448 and 546 of the It applied Art. 448 which defined the rights of a builder,
Civil Code. sower, and planter in good faith. angeles appealed.
3. PNB V. DE JESUS
2. PEDRO ANGELES V ESTELITA PASCUAL
FACTS:
Pascual and Angeles were the registered owners of It would appear that on 10 June 1995, respondent filed
adjacent parcel of lands. Pascual owned Lot 4 while a complaint against petitioner before the Regional Trial
Angeles owned Lot 5. Each of them built a house on Court of Occidental Mindoro for recovery of ownership
respective lot, believing that their lots were properly and possession, with damages, over the questioned
delineated. However, Lot 3 was foreclosed and the property. In his complaint, respondent stated that he
geodetic engineer who caused the relocation survey had acquired a parcel of land situated in Mamburao,
found that Pascual’s house encroached Lot 3. He was Occidental Mindoro, with an area of 1,144 square
ejected. Pascual then caused the relocation survey of meters covered by TCT No. T-17197, and that on 26
his own lot and discovered that Angeles also March 1993, he had caused a verification survey of the
property and discovered that the northern portion of private respondents for P40.00 per month for a period
the lot was being encroached upon by a building of of 7 years.
petitioner to the extent of 124 square meters. Despite
two letters of demand sent by respondent, petitioner The private respondents then introduced additional
failed and refused to vacate the area. improvements and registered the house in their names.
After the expiration of the lease contract, however, the
Petitioner, in its answer, asserted that when it acquired petitioners' mother refused to accept the monthly
the lot and the building sometime in 1981 from then rentals.
Mayor Bienvenido Ignacio, the encroachment already
was in existence and to remedy the situation, Mayor It turned out that the lot in question was the subject of
Ignacio offered to sell the area in question (which then a suit, which resulted in its acquisition by one Maria Lee
also belonged to Ignacio) to petitioner at P100.00 per in 1972. Lee sold the lot to Lily Salcedo, who in turn
square meter which offer the latter claimed to have sold it to the spouses Dionisio. Spouses Dionisio
accepted. The sale, however, did not materialize when, executed a Deed of Quitclaim over the said property in
without the knowledge and consent of petitioner, favor of the petitioners.
Mayor Ignacio later mortgaged the lot to the
The petitioners sent a letter addressed to private
Development Bank of the Philippines. He also contends
respondent Mary Nicolas demanding that she vacate
that he is a builder in good faith.
the premises and pay the rentals in arrears within
ISSUE: twenty days from notice.
Whether or not being a builder in good faith matters Upon failure of the private respondents to heed the
under article 448. demand, the petitioners filed a complaint for unlawful
detainer and damages.
HELD:
ISSUE: WON Art. 448 is applicable to this case.
Article 448, of the Civil Code refers to a piece of land
whose ownership is claimed by two or more parties, HELD: NO.
one of whom has built some works (or sown or planted
The private respondents claim they are builders in good
something) and not to a case where the owner of the
faith, hence, Article 448 of the Civil Code should apply.
land is the builder, sower, or planter who then later
They rely on the lack of title of the petitioners' mother
loses ownership of the land by sale or otherwise for,
at the time of the execution of the contract of lease, as
elsewise stated, “where the true owner himself is the
well as the alleged assurance made by the petitioners
builder of works on his own land, the issue of good faith
that the lot on which the house stood would be sold to
or bad faith is entirely irrelevant.”
them.
4. GEMINIANO, ET. AL. VS. COURT OF APPEALS
But being mere lessees, the private respondents knew
FACTS: that their occupation of the premises would continue
only for the life of the lease. Plainly, they cannot be
It appears that subject lot was originally owned by the considered as possessors nor builders in good faith.
petitioners' mother, Paulina Amado vda. de Geminiano.
On a 12-square-meter portion of that lot stood the Article 448 of the Civil Code, in relation to Article 546 of
petitioners' unfinished bungalow, which the petitioners the same Code, which allows full reimbursement of
sold to the private respondents, with an alleged useful improvements and retention of the premises
promise to sell to the latter that portion of the lot until reimbursement is made, applies only to a
occupied by the house. Subsequently, the possessor in good faith, i.e., one who builds on land
petitioners' mother executed a contract of lease over a with the belief that he is the owner thereof. It does not
126 square-meter portion of the lot, including that apply where one's only interest is that of a lessee under
portion on which the house stood, in favor of the a rental contract; otherwise, it would always be in the
power of the tenant to "improve" his landlord out of his
property.
And even if the petitioners indeed promised to sell, it The Church despite knowledge that its intended
would not make the private respondents possessors or contract of sale with the NHA had not been perfected
builders in good faith so as to be covered by the proceeded to introduce improvements on the land. On
provisions of Article 448 of the Civil Code. The latter the other hand, NHA knowingly granted the Church
cannot raise the mere expectancy of ownership of the temporary use of the subject properties and did not
aforementioned lot because the alleged promise to sell prevent the Church from making improvements
was not fulfilled nor its existence even proven. thereon. Thus the Church and NHA, who both acted in
bad faith shall be treated as if they were both in good
5. NATIONAL HOUSING AUTHORITY vs. GRACE faith. In this connection Art 448 provides: “the owner of
BAPTIST CHURCH and COURT OF APPEALS the land in which anything has been built, sown or
planted in good faith, shall have the right to appropriate
FACTS:
as his own the works, sowing or planting, after payment
On June 13, 1986, Respondent Grace Baptist of the indemnity provided for in articles 546 and 548, or
Church wrote a letter to NHA manifesting their intent to to oblige the one who built or planted to pay the price of
purchase Lot 4 and 17 of the General Mariano Alvarez the land, and the one who sowed, the proper rent.
Resettlement Project in Cavite. The latter granted However, the builder or planter cannot be obliged to
request hence respondent entered into possession of buy the land and if its value is considerably more than
the lots and introduced improvements thereon. On that of the building or trees. In such case, he shall pay
February 22, 1991, NHA passed a resolution approving reasonable rent, if the owner of the land does not
the sale of the subject lots to respondent Church for choose to appropriate the building or trees after proper
700 per square meter, a total of P430,500. respondents indemnity. The parties shall agree, on case of
were duly informed. disagreement, court shall fix.”
On April 8, 1991, respondent church tendered a 6. SPOUSES JUAN NUGUID AND ERLINDA T.
check amounting to P55,350 contending that this was NUGUID VS. HON. COURT OF APPEALS AND
the agreed price. NHA avers stating that the price now PEDRO P. PECSON
(1991) is different from before (1986).
FACTS:
The trial court rendered a decision in favour of
Pedro P. Pecson owned a commercial lot on which he
NHA stating that there was no contract of sale, ordering
built a four-door two-storey apartment building. For
to return the said lots to NHA and to pay NHA rent of
failure to pay realty taxes, the lot was sold at public
200 pesos from the time it took possession of the lot.
auction by the City Treasurer to Mamerto Nepomuceno,
Respondent Church appealed to the CA which who in turn sold it for P103,000 to the spouses Juan and
affirms the decision of RTC regarding “no contract of Erlinda Nuguid.
sale” but modifying it by ordering NHA to execute the
Pecson challenged the validity of the auction sale
sale of the said lots to Church for 700 per square, with
before the RTC of Quezon City, the RTC upheld the
6% interest per annum from March 1991. Petitioner
spouses’ title but declared that the four-door two-
NHA filed a motion for reconsideration which was
storey apartment building was not included in the
denied. Hence this petition for review on certiorari
auction sale. This was affirmed by the CA and by the SC.
ISSUE:
The Nuguids became the uncontested owners of
WON NHA can be compelled to sell the lots under commercial lot. The Nuguid spouses moved for delivery
market value? of possession of the lot and the apartment building.
HELD: ISSUE:
No, because the contract has not been perfected. WON the Nuguids should reimburse Pecson for the
benefits derived from the apartment building.
HELD: YES. which was then in the possession of petitioners. The
RTC decided in favor of petitioners. The CA reversed the
Since petitioners opted to appropriate the judgment of the RTC and declared respondent as the
improvement for themselves as early as June 1993, owner of the subject property. Thereafter, a Writ of
when they applied for a writ of execution despite Execution and Writ of Demolition was issued against
knowledge that the auction sale did not include the petitioners, who were ordered to demolish their
apartment building, they could not benefit from the houses, structures, and improvements on the property.
lot’s improvement, until they reimbursed the improver
in full, based on the current market value of the Petitioners alleged that they were entitled to just
property. compensation relating to the value of the houses they
had built on the property, owing to their purported
Under Article 448, the landowner is given the option, status as builders in good faith. They claimed that the
either to appropriate the improvement as his own upon CA decision did not declare them as builders in bad
payment of the proper amount of indemnity or to sell faith, and thus, they were entitled to be reimbursed of
the land to the possessor in good faith. Relatedly, the value of their houses before these could be
Article 546 provides that a builder in good faith is demolished. They posited that without such
entitled to full reimbursement for all the necessary and reimbursement, they could not be ejected from their
useful expenses incurred; it also gives him right of houses.
retention until full reimbursement is made.
ISSUE:
The right of retention is considered as one of the
measures devised by the law for the protection of WON petitioners are in good faith.
builders in good faith. Its object is to guarantee full and
prompt reimbursement as it permits the actual HELD: NO.
possessor to remain in possession while he has not
The father of the petitioners (and their predecessor-in-
been reimbursed (by the person who defeated him in
interest) had already known that he did not own the
the case for possession of the property) for those
property, and that his stay therein was merely out of
necessary expenses and useful improvements made by
tolerance. Such conclusion in fact bolstered the
him on the thing possessed.
eventual conclusion that respondents were the owners
Given the circumstances of the instant case where the of the land and that petitioners should vacate the same.
builder in good faith has been clearly denied his right of
These premises remaining as they are, it is clear that
retention for almost half a decade, we find that the
petitioners are not entitled to the just compensation
increased award of rentals by the RTC was reasonable
they seek through the present complaint. Under Article
and equitable. The petitioners had reaped all the
448 of the Civil Code, the builder in bad faith on the
benefits from the improvement introduced by the
land of another loses what is built without right to
respondent during said period, without paying any
indemnity. Petitioners were in bad faith when they built
amount to the latter as reimbursement for his
the structures as they had known that the subject
construction costs and expenses. They should account
property did not belong to them.
and pay for such benefits.
8. FERNANDO CARRASCOSO, JR. VS. COURT OF
7. SPS. RASDAS, ET. AL. VS. ESTENOR, ET. AL.
APPEALS, LAURO LEVISTE
FACTS:
FACTS:
The dispute centers on a parcel of land with an situated
El Dorado Plantation, Inc. (El Dorado) was the registered
in Ilagan, Isabela. Respondent filed a Complaint For
owner of a land situated in Sablayan, Occidental
Recovery Of Ownership And Possession With Damages
Mindoro. At a special meeting of El Dorado’s Board of
against. The complaint was docketed and tried by the
Directors, a Resolution was passed authorizing Feliciano
RTC of Ilagan. In the same complaint, respondent
Leviste, then President of El Dorado, to negotiate the
asserted that he was the owner of the subject property,
sale of the property and sign all documents and
contracts bearing thereof. Through a Deed of Sale of FACTS:
Real Property, El Dorado, through Feliciano Leviste, sold
the property to Carrascoso, Jr. Spouses-petitioners Rodolfo V. Rosales and Lily
Rosqueta-Rosales (petitioners) are the registered
PLDT commenced construction of improvements on the owners of a parcel of land with an area of
1,000 hectare portion of the property immediately after approximately 315 square meters, covered by Transfer
the execution of Agreement to Buy and Sell. Certificate of Title (TCT) No. 36856[4] and designated as
Lot 17, Block 1 of Subdivision Plan LRC Psd-55244
Lauro Leviste (Lauro), a stockholder and member of the situated in Los Baños, Laguna.
Board of Directors of El Dorado, through his counsel,
Atty. Benjamin Aquino, called the attention of the Board On August 16, 1995, petitioners discovered that a house
to Carrascoso’s failure to pay the balance of the was being constructed on their lot, without their
purchase price of the property. He wants a rescission of knowledge and consent, by respondent Miguel
the sale made by the El Dorado Plantation, Inc. to Mr. Castelltort (Castelltort).
Carrascoso.
It turned out that respondents Castelltort and his wife
ISSUE: WON PLDT is in good faith when it built its Judith had purchased a lot, Lot 16 of the same
improvements on the subject land. Subdivision Plan, from respondent Lina Lopez-Villegas
(Lina) through her son-attorney-in-fact Rene Villegas
HELD: (Villegas) but that after a survey thereof by geodetic
engineer Augusto Rivera, he pointed to Lot 17 as the Lot
In the case at bar, it is undisputed that PLDT
16 the Castelltorts purchased.
commenced construction of improvements on the
1,000 hectare portion of the property immediately after
the execution of the July 11, 1975 Agreement to Buy
and Sell with the full consent of Carrascoso. Thus, until Negotiations for the settlement of the case thus began,
March 15, 1977 when the Notice of Lis Pendens was with Villegas offering a larger lot near petitioners’ lot in
annotated on Carrascoso’s TCT No. T-6055, PLDT is the same subdivision as a replacement thereof. In the
deemed to have been in good faith in introducing alternative, Villegas proposed to pay the purchase price
improvements on the 1,000 hectare portion of the of petitioners’ lot with legal interest. Both proposals
property. After March 15, 1977, however, PLDT could were, however, rejected by petitioners whose counsel,
no longer invoke the rights of a builder in good faith. by letter of August 24, 1995, directed Castelltort to stop
the construction of and demolish his house and any
Should El Dorado then opt to appropriate the other structure he may have built thereon, and desist
improvements made by PLDT on the 1,000 hectare from entering the lot.
portion of the property, it should only be made to pay
for those improvements at the time good faith existed Petitioners subsequently filed on September 1, 1995 a
on the part of PLDT or until March 15, 1977, to be complaint for recovery of possession and damages with
pegged at its current fair market value. prayer for the issuance of a restraining order and
preliminary injunction against spouses-respondents
The commencement of PLDT’s payment of reasonable Miguel and Judith Castelltort before the RTC of
rent should start on March 15, 1977 as well, to be paid Calamba, Laguna, docketed as Civil Case No. 2229-95-C.
until such time that the possession of the 1,000 hectare
portion is delivered to El Dorado, subject to the
reimbursement of expenses as aforestated, that is, if El
Dorado opts to appropriate the improvements. ISSUE:
If El Dorado opts for compulsory sale, however, the Under Art 448, who has the right of option?
payment of rent should continue up to the actual
HELD:
transfer of ownership.
HELD: ISSUES:
Yes. The defendant was not a purchaser in good faith. Whether or not Art. 458 is applicable.
The plaintiff, having permitted the erection by the
defendant of a building on the land without objection, Whether or not the property in question belongs to the
acted in bad faith. The rights of the parties must, public domain as a part of the bed of Laguna de Bay.
HELD: