MARIANO FLOREZA, petitioner,

vs.
MARIA D. de EVANGELISTA and SERGIO EVANGELISTA, respondents.
G.R. No. L-25462 February 21, 1980
FIRST DIVISION

PONENTE: MELENCIO-HERRERA, J:

FACTS:
Respondents Maria de Evangelista and Sergio Evangelista are the owners
of a residential lot located at Sumilang St., Tanay, Rizal, with an area of 204.08
sq. meters. In May 1945, the respondents borrowed from petitioner Floreza
₱100.00. On or about November 1945, with the consent of the respondents,
petitioner occupied the above residential lot and built thereon a house of light
materials without any agreement as to payment for the use of said residential
lot since the respondents has an outstanding ₱100.00 balance.

The respondents borrowed certain amounts on several dates for a total of

P740.00 including the first loan. The last three items are evidenced by private
documents stating that the residential lot stands as security therefor and that
the amounts covered thereunder are payable within six years from date,
without mention of interest. The document executed on September 16, 1946
stated specifically that the loan was without interest.

On January 10, 1949, petitioner demolished the house and constructed

one with strong materials assessed in his name under Tax Declaration No.
4448.

On August 1, 1949, the respondents sold their residential lot in

consideration of ₱1,000.00 to petitioner with the right to repurchase within six
years from the said date up to August 1, 1955, as evidenced by notarial
document.

On January 2, 1955, the respondents paid in full the repurchase price of

₱1,000.00.

On April 25, 1956, the respondents, through their counsel, wrote the
petitioner a letter asking him to vacate the premises as they wanted to use their
residential lot. On May 4, 1956, the respondents made a formal written demand
to vacate, within five days from notice since that they had already fully paid for
the repurchase of the lot. The petitioner refused to vacate unless he was first
reimbursed the value of his house. Hence, he filed a complaint against the
respondents.

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ISSUE:
Whether or not, Article 448 of the Civil Code is applicable and that
petitioner Floreza can claim reimbursement against the respondents for the
house he erected in the residential lot.

RULING:
Article 448 of the Civil Code is inapplicable to the factual milieu herein.
Said codal provision applies only when the builder, planter, or sower believes
he had the right so to build, plant or sow because he thinks he owns the land or
believes himself to have a claim of title. In this case, petitioner makes no
pretensions of ownership whatsoever.

Petitioner concedes that he was a builder in bad faith but maintains that'
the Evangelistas should also be held in bad faith, so that both of them being in
bad faith, Article 453 of the Civil Code should apply. By the same token,
however, that Article 448 of the same Code is not applicable, neither is Article
453 under the ambiance of this case.

On the other hand, petitioner Floreza having retained the property

although a redemption had been made, he should be held liable for damages in
the form of rentals for the continued use of the subject residential lot at the
rate of ₱10.00 monthly from January 3, 1955, and not merely from the date of
demand on May 4, 1956, as held by the Court of Appeals, until the house was
removed and the property vacated by petitioner or his heirs.

DISPOSITIVE PORTION:
WHEREFORE, the judgment appealed from is hereby affirmed, with the
modification that payment of rentals by the heir, of Mariano Floreza, who are
hereby ordered substituted for him, shall commence on January 3, 1955 until
the date that the residential lot in question was vacated.

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 PAZ MERCADO, CAROLINA S. CHICO, LUCIANA CABRERA, JOAQUIN
IGNACIO, ELMER FLORES, AVELINA C. NUCOM, et al., petitioners,
vs.
HON. COURT OF APPEALS, HON. BENIGNO PUNO, LOLITA C. BULAONG,
FLORENTINO AGULTO, SEVERINO SALAYSAY, SUSANA BERNARDINO, et
al., respondents.
G.R. No. L-44001 June 10, 1988
FIRST DIVISION

PONENTE: NARVASA, J.:

FACTS:
The private respondents Bulaong Group, had for many years been
individual lessees of stalls in the public market of Baliuag, Bulacan.
Sometime in 1972, the members of the group sub-leased their individual
stalls to Mercado Group. After the Mercado Group had been in possession of
the market stalls, as sub-lessees, the municipal officials of Baliuag cancelled the
long standing leases of the Bulaong Group and declared the persons comprising
the Mercado Group as the rightful lessees of the stalls in question, in
substitution of the former. The municipal authorities justified the cancellation
of the leases by invoking the provisions of Municipal Ordinance No. 14 which
prohibited the sub-leasing of stalls by the lessees thereof.

The members of the Bulaong Group sued. They seek for recovery of their
stalls from the Mercado Group as well as damages, claiming ownership of the
stalls constructed by them at their own expense, and their resulting right, as
such owners, to sub-lease the stalls, and necessarily, to recover them from any
person withholding possession thereof from them.

ISSUE:
Whether or not the Bulaong Group members are considered builders in
good faith.

RULING:
No. The members of this group were admittedly lessees of space in the
public market; they therefore could not, and in truth never did make the claim,
that they were owners of any part of the land occupied by the market so that in
respect of any new structure put up by them thereon, they could be deemed
builders in good faith. To be deemed a builder in good faith, it is essential that
a person assert title to the land on which he builds; i.e., that he be a possessor
in concept of owner, and that he be unaware "that there exists in his title or
mode of acquisition any flaw which invalidates it. It is such a builder in good
faith who is given the right to retain the thing, even as against the real owner,
until he has been reimbursed in full not only for the necessary expenses but
also for useful expenses. On the other hand, unlike the builder in good faith, a

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lessee who "makes in good faith useful improvements which are suitable to the
use for which the lease is intended, without altering the form or substance of
the property leased," can only claim payment of "one-half of the value of the
improvements" or, "should the lessor refuse to reimburse said amount, ...
remove the improvements, even though the principal thing may suffer damage
thereby."

DISPOSITIVE PORTION:
WHEREFORE, the petition is dismissed, with costs against the petitioners.

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 ROSENDO BALUCANAG, petitioner,
vs.
HON. JUDGE ALBERTO J. FRANCISCO and RICHARD STOHNER, respondents.
G.R. No. L-33422. May 30, 1983
SECOND DIVISION

PONENTE: ESCOLIN, J.:

FACTS:
Mrs. Charvet leased her lot to Stohner for a period of five (5) years at a
monthly rental of P40.00. During the existence of the lease, Stohner made
fillings on the land and constructed a house thereon. Subsequently, Mrs.
Charvet sold the said lot to Balucanag.

For Stohner’s failure to pay the rents, Balucanag, demanded that Stohner
vacate the premises but Stohner claimed to be builder in good faith of the
residential house erected in the land. He offered proposals for possible
compromise in which no agreement was reached.

ISSUE:
Whether or not Stohner is a builder in good faith that cannot be ejected
until he is reimbursed for the value of the improvement.

RULING:
Respondent Stohner cannot be considered a builder in good faith. Article
448 of the Civil Code, relied upon by respondent judge, applies only to a case
where one builds on land in the belief that he is the owner thereof and it does
not apply where one's only interest in the land is that of a lessee under a rental
contract. In the case at bar, there is no dispute that the relation between
Balucanag and Stohner is that of lessor and lessee, the former being the
successor in interest of the original owner of the lot. As we ruled in Lopez, Inc.
vs. Phil. and Eastern Trading Co., Inc., " the principle of possessor in good
faith refers only to a party who occupies or possess property in the belief that
he is the owner thereof and said good faith ends only when he discovers a flaw
in his title so as to reasonably advise or inform him that after all he may not be
the legal owner of said property. It cannot apply to a lessee because as such
lessee he knows that he is not the owner of he leased premises. Neither can he
deny the ownership or title of his lessor. A lessee who introduces
improvements in the leased premises, does so at his own risk in the sense that
he cannot recover their value from the lessor, much less retain the premises
until such reimbursement."

DISPOSITIVE PORTION:
WHEREFORE, the decision in Civil Case No. 67503 is hereby set aside,
with costs against respondent Stohner. The latter is ordered to vacate the

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premises in question and to pay Rogelio Balucanag the rentals due from March
1969 up to the time he surrenders the premises, at the rate of P40.00 a month.

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 PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS,
represented by his Attorney-in-Fact, CHRISTIAN DE JESUS, respondent.
G.R. No. 149295. September 23, 2003
FIRST DIVISION

PONENTE: VITUG, J.:

FACTS:
On June 10, 1995, respondent filed a complaint against petitioner before
the Regional Trial Court of Occidental Mindoro for recovery of ownership and
possession, with damages, over the questioned property. In his complaint,
respondent stated that he had acquired a parcel of land with an area of 1,144
square meters covered by TCT No. T-17197. He had also caused a verification
survey of the property and discovered that the northern portion of the lot was
being encroached upon by a building of petitioner to the extent of 124 square
meters. Despite two letters of demand sent by respondent, petitioner failed and
refused to vacate the area.

Petitioner asserted that when it acquired the lot and the building sometime
in 1981 from then Mayor Bienvenido Ignacio and the encroachment already was
in existence when Mayor Ignacio offered to sell the area in question to
petitioner at P100.00 per square meter. The sale, however, did not materialize
when, without the knowledge and consent of petitioner, Mayor Ignacio later
mortgaged the lot to the Development Bank of the Philippines.

ISSUE:
Whether or not PNB is a builder in good faith over the encroached
property of De Jesus.

RULING:
No. The petitioner was quite aware, and indeed advised, prior to its
acquisition of the land and building from Ignacio that a part of the building
sold to it stood on the land not covered by the land conveyed to it.

Equally significant is the fact that the building, constructed on the land by
Ignacio, has in actuality been part of the property transferred to
petitioner. Article 448, of the Civil Code refers to a piece of land whose
ownership is claimed by two or more parties, one of whom has built some
works (or sown or planted something) and not to a case where the owner of the
land is the builder, sower, or planter who then later loses ownership of the land
by sale or otherwise for, elsewise stated, where the true owner himself is the
builder of works on his own land, the issue of good faith or bad faith is entirely
irrelevant.

Property Law Cases- Rules Governing BPS Page 7

 In fine, petitioner is not in a valid position to invoke the provisions of
Article 448 of the Civil Code. The Court commiserates with petitioner in its
present predicament; upon the other hand, respondent, too, is entitled to his
rights under the law, particularly after having long been deprived of the
enjoyment of his property. Nevertheless, the Court expresses hope that the
parties will still be able to come up with an arrangement that can be mutually
suitable and acceptable to them.

DISPOSITIVE PORTION:
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No.
56001 is AFFIRMED. No costs.

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 URBANO JAVIER and LEONILA ALBIELA, petitioners,
vs.
HON. HERMOGENES CONCEPCION, JR., Hon. ANDRES REYES, Hon. LUIS
REYES, LIM CHUA, TAN TIAN ON alias TAN TIAN UNA and TAN SIOK TAN
alias TAN SIOK TUAN, respondents.
G.R. No. L-36566 November 7, 1979
SECOND DIVISION

PONENTE: SANTOS, J.:

FACTS:
Javier claims that Lot 12 was acquired partly by purchase and partly by
inheritance and they, as well as their predecessor-in-interest, have been in
possession of the same adversely, publicly, continuously, peacefully, and in the
concept of owners against the whole world since Spanish time up to present.
The respondents were never been the owners of Lot 12 or portion thereof, and
if the same had been included in their title, i.e. TCT No. 16817 of the Register of
Deeds of Quezon Province, the registration and the notices of publication that
said Lot 6 belonged to them and within the jurisdiction of Candelaria, Quezon,
thus deceiving the whole world of the proper location of the land subject of
registration and publication.

By way of counterclaim, Javier claimed P5,000 for attorney’s fees and

P1,000 for litigation expenses, and that in the event that plaintiffs-respondents
are declared lawful owners of the lot in question, they be reimbursed the
amount of P150,000 for the reasonable value of improvements they introduced
thereon consisting of a house, camarin made of strong materials and various
fruit trees.

ISSUE:
Whether or not, Javier is a possessor in good faith and may claim
reimbursement over the improvements introduced to the land in question.

RULING:
As possessors in good faith, petitioners are entitled to the fruits received
before their possession was legally interrupted upon receipt of judicial
summons in connection with the filing of the complaint for reconveyance on
October 17, 1959. However, the records do not show when the summons were
received by the defendants-spouses, Javier, In the absence of such proof and in
the interest of justice, We hold that possession in good faith was legally
interrupted on November 11, 1959, when their amended answer was filed, —
which is less than a month from the date the summons was apparently
received. For the difference of a few days or about two (2) weeks in reckoning
the starting date of possession in bad faith will not materially affect the
prevailing party's entitlement to the fruits of the holding since the same will be

Property Law Cases- Rules Governing BPS Page 9

reckoned seasonally. Petitioners should also be refunded the necessary and
useful expenses, with the right to retain the land until reimbursed of the same,
pursuant to Article 546 of the Civil Code. Under the said provision,
respondents have the option to refund the amount of useful expenses or to pay
the increase in value which the land may have acquired by reason thereof. In
this connection, petitioners have placed the market value of improvements on
the property consisting of various fruit trees, bamboos, a house and camarin
made of strong materials, at P150, 000.00 and this amount does not appear to
be disputed. The average share of the owner was likewise compromised at sixty
(60) cavans per year, at an average price of seven pesos (P7.00) per cavan as of
the date of the hearing on September 23, 1960.

DISPOSITIVE PORTION:
WHEREFORE, the decision of the Court of Appeals is hereby AFFIRMED,
with the modification that petitioners render an accounting of the entire
produce of the holding from November 11, 1959, which, with respect to palay
crop had been fixed at sixty (60) cavans a year at seven pesos (p7.00) per cavan
as of September 23, 1960, up to the time the subject land is actually reconveyed
to private respondents. The value of necessary and useful expenses due
petitioners in the amount of One Hundred Fifty Thousand Pesos P150,000.00)
having been proved and not controverted, no further proof is required.

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 EDEN BALLATAN and SPS. BETTY MARTINEZ and CHONG CHY
LING, petitioners,
vs.
COURT OF APPEALS, GONZALO GO, WINSTON GO, LI CHING YAO, ARANETA
INSTITUTE OF AGRICULTURE and JOSE N. QUEDDING, respondents.
G.R. No. 125683. March 2, 1999
SECOND DIVISION
PONENTE: PUNO, J.:

FACTS:
In 1985, petitioner Ballatan constructed her house on Lot No. 24. During
the construction, she noticed that the concrete fence and side pathway of the
adjoining house of respondent Winston Go encroached on the entire length of
the eastern side of her property. Her building contractor informed her that the
area of her lot was actually less than that described in the title. Forthwith,
Ballatan informed respondent Go of this discrepancy and his encroachment on
her property. Respondent Go, however, claimed that his house, including its
fence and pathway, were built within the parameters of his father's lot; and that
this lot was surveyed by Engineer Jose Quedding.

In a report dated February 28, 1985, Engineer Quedding found that the
lot area of petitioner Ballatan was less by few meters and that of respondent Li
Ching Yao, which was three lots away, increased by two (2) meters.

On June 2, 1985, Engineer Quedding made a third relocation survey upon

request of the parties. It was found out that Lots Nos. 25, 26 and 27 moved
westward to the eastern boundary of Lot No. 24.

On the basis of this survey, petitioner Ballatan made a written demand on

respondents Go to remove and dismantle their improvements on Lot No. 24.
Respondents Go refused. The parties including Li Ching Yao, however, met
several times to reach an agreement one matter. However, no amicable
settlement was reached.

ISSUE:
Whether or not, Go and other respondents were builders in good faith.

RULING:
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.

Art. 448 of the Civil Code provides:

Art. 448. The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate

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 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.

In light of these rulings, petitioners, as owners of Lot No. 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 No. 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, the 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.

DISPOSITIVE PORTION:

Property Law Cases- Rules Governing BPS Page 12

NUGUID V. CA

PONENTE:

FACTS:
Pecson owned a commercial lot, on which he built a four-door two-storey
apartment building. For failure to pay realty taxes, the lot was sold for public
auction by the City Treasurer of City to Mamerto Nepomuceno, who in turn sold
it for P103,000 to the spouses Juan and Erlinda Naguid.

Pecson challenged the validity of the auction sale before the RTC of
Quezon City. The RTC upheld the spouses’ title but declared that the four-door
two-storey apartment building was not included in the auction sale which was
affirmed bythe Courtof Appeals and the Supreme Court in Pecson v. Court of
Appeals, G.R. No. 105360, 25 May1993.

On the basis of the G.R. No. 115814, Pecson filed a Motion to Restore
Possession and a Motion to Render Accounting, praying respectively for
restoration of the possession over the subject 256-square meter commercial
lost and for the spouses Nuguid to be directed to render an accounting under
oath, of the income derived from the subject four-door apartment from 22
November 1993 until possession of the same was returned to him. RTC denied
the Motion to Restore Possession averring that the current market value of the
building be determined. Pending the said determination, the resolution of the
Motion for Accounting was likewise held in abeyance. Spouses Nuguid filed a
Motion for Reconsideration to the RTC which was denied for lack of merit then
appealed to the Court of Appeals which modified the trial court’s ruling,
reducing the rentals from P1,344,999 to P280,000. Spouses Nuguid claimed that
the agreed price is P400,000 for the improvements, they only made a partial
payment of P300,000. Thus, they contended that their failure to pay the price
for the improvements will, at most, entitle Pecson to be restored possession,
but not collect rentals. On the other hand, Pecson disagreed with the
interpretation of G.R.No.115814.

ISSUE:
Whether or not, spouses Nuguid should pay the rental income and the
unpaid balance to Pecson.

RULING:
Yes, Pecson has a right of retention being a builder in good faith. Under
Article 448, the landowner is given the option, either to appropriate the
improvement as his own upon payment of the proper amount of indemnity or
to sell the land to the possessor in good faith. Relatedly, Article 546 provides
that a builder in good faith is entitled to full reimbursement for all the

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necessary and useful expenses incurred; it also gives him right of retention
until full reimbursement is made.

A builder in good faith cannot be compelled to pay rentals during the

period of retention nor be disturbed in his possession by ordering him to
vacate. In addition, as in this case, the owner of the land is prohibited from
offsetting or compensating the necessary and useful expenses with the fruits
received by the builder possessor in good faith. Otherwise, the security
provided by law would be impaired. This is so because the right to the expenses
and the right to the fruits both pertain to the possessor, making compensation
juridically impossible; and one cannot be used to reduce the other.

DISPOSITIVE PORTION:

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