TUATIS VS.

SPOUSES ELISEO AND VISMINDA ESCOL

G.R. No. 175399 October 27, 2009
FACTS:
Visminda Escol, the seller and Ophelia Tuatis, the buyer entered into a Deed of Sale by Installments, the
subject matter of which is a parcel of land in Sindangan. It provided that upon the failure of the buyer to pay
the remaining balance within the time stipulated, he shall return the land to the seller, and the seller shall
return all the amounts paid by the buyer. Tuatis took possession of the land and constructed a residential
building. Tuatis asserted that she paid Visminda the remaining balance of P3000 in the presence of one
Erik Selda and thereafter requested Visminda to sign the absolute deed of sale. Visminda refused
contending that the purchase price has not been fully paid. The RTC dismissed Tuatis’s complaint and also
ruled that Tuatis constructed the building in bad faith for she had knowledge of the fact that Visminda is still
the absolute owner of the land and there was also bad faith on the part of Visminda since she allowed the
construction of the building without opposition on her part. The rights of the parties must, therefore, be
determined as if they both had acted in bad faith. Their rights in such cases are governed by Article 448 of
the Civil Code. The Court of Appeals dismissed the appeal by Tuatis which resulted to the finality of the
appealed decision. Visminda filed a writ of execution. Tuatis then moved that the RTC issue an order
allowing her to buy the subject property and maintained that she has the right to choose between being
indemnified for the value of her building or buying from Visminda the parcel of land. During the pendency
of the motion, the writ of execution was enforced. Tuatis filed with the CA a petition for certiorari, prohibition
and mandamus but the same was denied hence this petition.

ISSUE:Whether or not Tuatis is entitled to exercise the options granted in Art. 448 of the Civil Code.

RULING:No, Tuatis is not entitled to exercise the options granted in Article 448 of the Civil Code.
Article 448 provides that the owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of
the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy
the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall
fix the terms thereof.

According to the provision, the landowner can choose between appropriating the building by paying the
proper indemnity for the same, as provided for in Articles 546 and 548 of the Civil Code; or obliging the
builder to pay the price of the land, unless its value is considerably more than that of the structures, in which
case the builder in good faith shall pay reasonable rent.

Under the first option, Visminda may appropriate for herself the building on the subject property after
indemnifying Tuatis for the necessary and useful expenses the latter incurred for said building, as provided
in Article 546 of the Civil Code. Until Visminda appropriately indemnifies Tuatis for the building constructed
by the latter, Tuatis may retain possession of the building and the subject property.

Under the second option, Visminda may choose not to appropriate the building and, instead, oblige Tuatis
to pay the present or current fair value of the land.The P10,000.00 price of the subject property, as stated
in the Deed of Sale on Installment executed in November 1989, shall no longer apply, since Visminda will
be obliging Tuatis to pay for the price of the land in the exercise of Visminda’s rights under Article 448 of
the Civil Code, and not under the said Deed. Tuatis’ obligation will then be statutory, and not contractual,
arising only when Visminda has chosen her option under Article 448 of the Civil Code

Still under the second option, if the present or current value of the land, the subject property herein, turns
out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to pay for the
subject property, but she must pay Visminda reasonable rent for the same. Visminda and Tuatis must agree
on the terms of the lease; otherwise, the court will fix the terms.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of the subject
property. There is no basis for Tuatis’ demand that, since the value of the building she constructed is
considerably higher than the subject property, she may choose between buying the subject property from
Visminda and selling the building to Visminda for P502,073.00. Again, the choice of options is for Visminda,
not Tuatis, to make. And, depending on Visminda’s choice, Tuatis’ rights as a builder under Article 448 are
limited to the following: (a) under the first option, a right to retain the building and subject property until
Visminda pays proper indemnity; and (b) under the second option, a right not to be obliged to pay for the
price of the subject property, if it is considerably higher than the value of the building, in which case, she
can only be obliged to pay reasonable rent for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord
with the principle of accession, i.e., that the accessory follows the principal and not the other way around.
Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner
cannot refuse to exercise either option and compel instead the owner of the building to remove it from the
land.

The raison d’etre for this provision has been enunciated thus: Where the builder, planter or sower has acted
in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner
of the improvements without causing injustice to the owner of the land. In view of the impracticability of
creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land
the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is
the owner of the land who is authorized to exercise the option, because his right is older, and because, by
the principle of accession, he is entitled to the ownership of the accessory thing.

Visminda’s Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to
recover possession of the subject property under the first option, since the options under Article 448 of the
Civil Code and their respective consequences were also not clearly presented to her by the 19 April 1999
Decision of the RTC. She must then be given the opportunity to make a choice between the options
available to her after being duly informed herein of her rights and obligations under both.

DAMIAN IGNACIO, FRANCISCO IGNACIO and LUIS IGNACIO, petitioners,
 vs.
ELIAS HILARIO and his
wife DIONISIA DRES, and FELIPE NATIVIDAD, Judge of First Instance of Pangasinan, respondents.

Facts: This is a petition for certiorari arising from a case in the Court of First Instance of Pangasinan
between the herein respondents Elias Hilario and his wife Dionisia Dres as plaintiffs, and the herein
petitioners Damian, Francisco and Luis, surnamed Ignacio, as defendants, concerning the ownership of a
parcel of land, partly rice-land and partly residential.

After the trial of the case, the lower court, presided over by Hon. Alfonso Felix, rendered judgment holding
plaintiff Hilario, as the legal owners of the whole property but conceding to defendants, Ignacio, the
ownership of the houses and granaries built by them on the residential portion with the rights of a possessor
in good faith, in accordance with article 361 of the Civil Code.

The plaintiff, Hilario, prayed for an order of execution alleging that since they chose neither to pay
defendants for the buildings nor to sell to them the residential lot, said defendant, Ignacio, should be ordered
to remove the structure at their own expense and to restore plaintiff in the possession of said lot.

Issue: W/N Plaintiff, Hilario, can validly opt not to buy the house nor sell the land, but instead order the
removal of those structures that Ignacio built in good faith.

Ruling: 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 building, under article 453.

The owner of the land, upon the other hand, has the option, under article 361, either to pay for the building
or to sell his land to the owner of the building. But he cannot, as respondents here did, refuse both to pay
for the building and to sell the land and compel the owner of the building to remove it from the land where
it is erected.

He is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay
for the same.

LEONOR GRANA and JULIETA TORRALBA VS. THE COURT OF APPEALS, AURORA BONGATO
and JARDENIO SANCHEZ

GR L-12486 31 AUG 1960

Facts: The herein Petitioners were sued by Bongato and Sanchez for the recovery of 87 square meters of
residential land which they have inherited as the children of the spouses Marcos Bongato and Eusebia.
The former were ordered by the to vacate and deliver it to said respondents and to pay a monthly rental of
P10.00 from the filing of the complaint until they actually vacate the same, plus attorney's fees and costs.

The Petitioners alleged that the said property became a subject of a cadastral survey due to conflicts and
overlapping of boundaries. In that survey, Gregorio Bongato's lot, according to petitioners, was identified
as Lot No. 311 and that of Isidaria Trillo, their predecessor in interest, as Lot No. 310. Citing the fact that
Original Certificate of Title No. RO-72 (138) covers 295 square meters of land, while the sketch plan of the
second cadastral survey of Butuan shows that Lot No. 311 has only 230 square meters, petitioners maintain
that it is the latter area properly belongs to respondents and that the land in question is part of the adjoining
land, Lot No. 310, which belonged to their predecessor in interest.

Issue: Whether or not the first survey was erroneous or that it included part of the contiguous land of
petitioners' predecessor in interest?

Held: Petitioners' stand is untenable. No proof was presented to show that the first survey was erroneous
or that it included part of the contigous land of petitioners' predecessor in interest as part of the lot now
covered by Original Certificate of Title No. RO-72 (138). Note that the difference in area between the land
covered by said title and Lot No. 311 of the resurvey plan is 65 square meters while the area of the land in
dispute if 87 square meters. And what is more, the alleged sketch plan of the resurvey was not presented
in evidence.

Upon the other hand, it is not disputed that the land in question is part of the lot covered by the Torrens title
issued way back in 1923 in the name of respondents' predecessor in interest. Said title has not been
contested up to the present, and, therefore, has become inconvertible evidence of the ownership of the
land covered by it. Well settled is the rule that a Torrens certificate of title becomes conclusive and
indefeasible after the lapse of the period within which it may be impugned (Reyes, et al. vs. Borbon, et al.,
50 Phil., 791; Yumul vs. Rivera, et al., 64 Phil., 13).

Although without any legal and valid claim over the land in question, petitioners, however, were found by
the Court of Appeals to have constructed a portion of their house thereon in good faith. Under Article 361
of the old Civil Code (Article 448 of the new), the owner of the land on which anything has been built in
good faith shall have the right to appropriate as his own faith shall have the right to appropriate as his own
the building, after payment to the builder of necessary and useful expenses, and in the proper case,
expenses for pure luxury or mere pleasure, or to oblige the builder to pay the price of the land. Respondents,
as owners of the land, have therefore the choice of either appropriating the portion of petitioners' house
which is on their land upon payment of the proper indemnity to petitioners, or selling to petitioners that part
of their land on which stands the improvement. It may here be pointed out that it would be impractical for
respondents to choose to exercise the first alternative, i.e., buy that portion of the house standing on their
land, for in that event the whole building might be rendered useless. The more workable solution, it would
seem, is for respondents to sell to petitioners that part of their land on which was constructed a portion of
the latter's house. If petitioners are unwilling or unable to buy, then they must vacate the land and must pay
rentals until they do so. Of course, respondents cannot oblige petitioners to buy the land if its value is
considerably more than that of the aforementioned portion of the house. If such be the case, then petitioners
must pay reasonable rent. The parties must come to an agreement as to the conditions of the lease, and
should they fail to do so, then the court shall fix the same. (Article 361, old Civil Code; Article 448 of the
new).

DEPRA V. DUMLAO 136 SCRA 475

FACTS: Francisco Depra, is the owner of a parcel of land registered, situated in the municipality of
Dumangas, Iloilo. Agustin Dumlao, defendant-appellant, owns an adjoining lot. When DUMLAO constructed
his house on his lot, the kitchen thereof had encroached on an area of thirty four (34) square meters of
DEPRA’s property, 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 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. After trial, the Municipal Court found that DUMLAO was a builder in good faith,
and applying Article 448 of the Civil Code. DEPRA did not accept payment of rentals so that DUMLAO
deposited such rentals with the Municipal Court. In this case, the Municipal Court, acted without jurisdiction,
its Decision was null and void and cannot operate as res judicata to the subject complaint for Queting of
Title. The court conceded in the MCs decision that Dumlao is a builder in good faith.
Held: Owner of the land on which improvement was built by another in good faith is entitled to removal of
improvement only after landowner has opted to sell the land and the builder refused to pay for the same.
Res judicata doesn’t apply wherein the first case was for ejectment and the other was for quieting of title.
ART. 448. The owner of the land on which anything has been built sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided
for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that
of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose
to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the
lease and in case of disagreement, the court shall fix the terms thereof.
Ballatan v. CA, 304 SCRA 34

Doctrine: In the event that the owner elects to sell to the builder, planter or sower the land on which the
improvement stands, the price must be fixed at the prevailing market value at the time of payment.

Facts: The parties herein are owners of adjacent lots. Lot 24 is registered in the name of petitioners
Ballatan. Lots 25 & 26 are registered in the name of respondent Go Sr. His son, Winston Go constructed a
house on Lot 25. Adjacent to Lot 26 is Lot 27, 4 registered in the name of respondent Li Ching Yao.

Petitioner Ballatan constructed her house on Lot 24. During the construction, she noticed that the concrete
fence and side pathway of respondent’s house encroached her property. Ballatan informed Go of this
discrepancy and his encroachment on her property. Surveys were made and it was found out that the lot
area of petitioner Ballatan was less by a few meters and that of respondent Li Ching Yao, which was three
lots away, increased by two 2 meters.

Petitioner Ballatan made a written demand on respondents Go to remove and dismantle their improvements
on Lot 24. Respondents Go refused. Hence, Ballatan filed for recovery of possession of real property. TC
decided in favor of petitioners. It ordered the Go's to vacate the subject portion, demolish their
improvements. CA modified: ordered Go to pay Ballatan, and respondent Li Ching Yao to pay Go and the
value to be fixed at the time of the taking.

Issue: WON the value should be fixed at the time of the taking.

Ruling: No. All the parties are presumed to have acted in good faith. Their rights must, therefore, be
determined in accordance with the appropriate provisions of the Civil Code on property specifically Art. 448.
Petitioners, as owners of Lot 24, may choose to purchase the improvement made by respondents Go on
their land, or sell to respondents Go the subject portion. If buying the improvement is impractical as it may
render the Go's house useless, then petitioners may sell to respondents Go that portion of Lot 24 on which
their improvement stands. If the Go's are unwilling or unable to buy the lot, then they must vacate the land
and, until they vacate, they must pay rent to petitioners. Petitioners, however, cannot compel respondents
Go to buy the land if its value is considerably more than the portion of their house constructed thereon. If
the value of the land is much more than the Go's improvement, then respondents Go must pay reasonable
rent. If they do not agree on the terms of the lease, then they may go to court to fix the same.

In the event that petitioners elect to sell to respondents Go the subject portion of their lot, the price must be
fixed at the prevailing market value at the time of payment.

Southwestern Univ. v. Salvador

FACTS: On December 6, 1963, SU an educational institution located in Cebu City filed separate actions
for ejectment against Jose Baliguat (Civil Case No. R-9965) and Julia Ilaya (Civil Case No. 9981) with the
City Court of Cebu. SU alleged that it had acquired by purchase (conditional sale) three parcels of land
located at Jones Avenue, Cebu City, from the Development Bank of the Philippines and more particularly
described in TCT Nos. 16951, 16952, 16953 sometime in July 1963. It sought to eject the defendant
Baliguat from the 84 square meters lot which forms part of the three parcels of land on which the defendant
built a house, when the latter failed to pay the P20.00 monthly rental despite repeated demands. Defendant
alleged, on the other hand, that the monthly rental of P20.00 is violative of the agreement between the
Philippine Railway Company which is the original owner of the land in question, the original agreed rental
having been only P5.00.

From the City Court's decision, SU filed an appeal with the Court of First Instance of Cebu City on July 14,
1969. On August 21, 1971, petitioner made an alleged consignation of the P3,000.00 in court. Later, after
the appeal was pending for more than three (3) years, it withdrew the appeal on February 1, 1973 on the
ground that it is no longer interested in pursuing the appeal, having been convinced of the fairness and
reasonableness of the judgment.

SU filed a Motion for Reconsideration. The City Court denied it in an order dated February 28, 1974 for lack
of merit and ordered the plaintiff to withdraw the amount of P8,400.00 from the office of the City Treasurer
and further required him to execute a Deed of Sale in favor of the defendant for the 84 square meters of
land located at Pelaez Street, Cebu City. (p. 88, Rollo).

From the above orders of the City Court, SU filed a petition for certiorari with the Court of First Instance of
Cebu, Branch XIV whereby the actuations of the respondent judge were assailed for lack, or being in
excess, of jurisdiction and tainted with grave abuse of discretion in issuing the above orders.

In its decision dated November 25, 1975, the CFI of Cebu dismissed the petition. (p. 87, Rollo). Motion for
Reconsideration was filed by petitioner-plaintiff but was denied. Thus petitioner filed the instant petition for
review on certiorari with this Court, but treated as a special civil action.

ISSUE: WHETHER OR NOT BALIGUAT IS A BUILDER IN GOOD FAITH TO JUSTIFY THE APPLICATION
OF ARTICLE 448 OF THE CIVIL CODE AND WHETHER THIS PROVISION GRANTS THE BUILDER IN
GOOD FAITH THE RIGHT TO BUY THE LAND.

HELD: The petitioner questions the finding of the City Court and the Court of First Instance that respondent
was a builder in good faith, by relying on the fact that as a lessee, he cannot be considered a builder in
good faith and therefore Article 448 of the Civil Code does not apply. Such finding of the lower courts can
no longer be disturbed at this stage because the petitioner's act of withdrawing his appeal is tantamount to
his acquiescense and acceptance of the decision, as petitioner himself said in his motion to dismiss that
"he is no longer interested in pursuing the appeal ...having been convinced of the fairness and
reasonableness of the judgment of the lower court. " (p. 137, Rollo). Where an appellant withdraws his
appeal, he must face the consequence of his withdrawal, such as the decision of the court a quo becoming
final and executory. (Director of Lands vs. Alberto, L-28516, July 31, 1973, 52 SCRA 186). Therefore, the
withdrawal of the appeal from the decision of the City Court holding that the defendant was a builder in
good faith and should be indemnified for P3,000 for the improvements made, and that failure to pay such
indemnity shall give the defendant the right to buy the land at a price agreed upon by both parties and with
the approval of the court, renders said decision final and executory as well as conclusive and estops the
petitioner from questioning anew said decision.