Bachrach vs.

Seifert
Facts: The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald
Bachrach, in his last will and testament made various legacies in cash and willed the remainder of his
estate. The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge
Mining Co., Inc., received from the latter 54,000 shares representing 50 per cent stock dividend on the
said 108,000 shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant of the
estate, petitioned the lower court to authorize the Peoples Bank and Trust Company, as administrator of
the estate of E. M. Bachrach, to transfer to her the said 54,000 shares of stock dividend by indorsing
and delivering to her the corresponding certificate of stock, claiming that said dividend, although paid
out in the form of stock, is fruit or income and therefore belonged to her as usufructuary or life tenant.
Sophie Siefert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the ground that
the stock dividend in question was not income but formed part of the capital and therefore belonged not
to the usufructuary but to the remainderman. While appellants admit that a cash dividend is an income,
they contend that a stock dividend is not, but merely represents an addition to the invested capital.
Issue: whether or not a dividend is an income and whether it should go to the usufructuary.
Held: The usufructuary shall be entitled to receive all the natural, industrial, and civil fruits of the
property in usufruct. The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares
of stock dividend are civil fruits of the original investment. They represent profits, and the delivery of
the certificate of stock covering said dividend is equivalent to the payment of said profits. Said shares
may be sold independently of the original shares, just as the offspring of a domestic animal may be sold
independently of its mother. If the dividend be in fact a profit, although declared in stock, it should be
held to be income. A dividend, whether in the form of cash or stock, is income and, consequently,
should go to the usufructuary, taking into consideration that a stock dividend as well as a cash dividend
can be declared only out of profits of the corporation, for if it were declared out of the capital it would
be a serious violation of the law.
Under the Massachusetts rule, a stock dividend is considered part of the capital and belongs to the
remainderman; while under the Pennsylvania rule, all earnings of a corporation, when declared as
dividends in whatever form, made during the lifetime of the usufructuary, belong to the latter. The
Pennsylvania rule is more in accord with our statutory laws than the Massachusetts rule.
Bachrach vs. Talisay silay
Facts: On 22 December 1923, the Talisay-Silay Milling Co., Inc., was indebted to the PNB. To secure
the payment of its debt, it succeeded in inducing its planters, among whom was Mariano Lacson
Ledesma, to mortgage their land to the bank. And in order to compensate those planters for the risk
they were running with their property under that mortgage, the aforesaid central, by a resolution passed
on the same date, and amended on 23 March 1928, undertook to credit the owners of the plantation
thus mortgaged every year with a sum equal to 2% of the debt secured according to the yearly balance,
the payment of the bonus being made at once, or in part from time to time, as soon as the central
became free of its obligations to the bank, and of those contracted by virtue of the contract of
supervision, and had funds which might be so used, or as soon as it obtained from said bank authority
to make such payment.
<It seems Mariano Lacson Ledesma is indebted from Bachrach Motor; the circumstance of which is
not found in the case facts.> Bachrach Motor Co., Inc. filed a complaint against the Talisay-Silay
Milling Co., Inc., for the delivery of the amount of P13,850 or promissory notes or other instruments of

credit for that sum payable on 30 June 1930, as bonus in favor of Mariano Lacson Ledesma. The
complaint further prays that the sugar central be ordered to render an accounting of the amounts it owes
Mariano Lacson Ledesma by way of bonus, dividends, or otherwise, and to pay Bachrach Motors a
sum sufficient to satisfy the judgment mentioned in the complaint, and that the sale made by said
Mariano Lacson Ledesma be declared null and void. The PNB filed a third party claim alleging a
preferential right to receive any amount which Mariano Lacson Ledesma might be entitled from
Talisay-Silay Milling as bonus. Talisay-Silay answered the complaint that Mariano Lacson Ledesmas
credit (P7,500) belonged to Cesar Ledesma because he had purchase it. Cesar Ledesma claimed to be
an owner by purchase in good faith. At the trial all the parties agreed to recognize and respect the sale
made in favor of Cesar Ledesma of the P7,500 part of the credit in question, for which reason the trial
court dismissed the complaint and cross-complaint against Cesar Ledesma authorizing the central to
deliver to him the sum of P7,500. And upon conclusion of the hearing, the court held that the Bachrach
Motor Co., Inc., had a preferred right to receive the amount of P11,076.02 which was Mariano Lacson
Ledesmas bonus, and it ordered the central to deliver said sum to Bachrach Motors. PNB appealed.
The Supreme Court affirmed the judgment appealed from, as it found no merit in the appeal;, without
express finding as to costs.
1. Civil Fruits under Article 355 of the Civil Code
Article 355 of the Civil Code considers three things as civil fruits: First, the rents of buildings;
second, the proceeds from leases of lands; and, third, the income from perpetual or life annuities, or
other similar sources of revenue. According to the context of the law, the phrase u otras analogas
refers only to rents or income, for the adjectives otras and analogas agree with the noun
rentas, as do also the other adjectives perpetuas and vitalicias. The civil fruits the
Civil Code understands one of three and only three things, to wit: the rent of a building, the rent of
land, and certain kinds of income.
2. Bonus not a civil fruit; not an income of the land
The amount of the bonus, according to the resolution of the central granting it, is not based upon the
value, importance or any other circumstance of the mortgaged property, but upon the total value of the
debt thereby secured, according to the annual balance, which is something quite distinct from and
independent of the property referred to. As the bonus is not obtained from the land, it is not civil fruits
of that land. It is neither rent of buildings, proceeds from lease of lands, or income under Article 355 of
the Civil Code.
Bernardo vs. Bataclan
Facts: By a contract of sale executed from Pastor Samonte and others ownership of a parcel of land of
about 90 hectares. To secure possession of the land from the vendors the said plaintiff, on July 20,
1929, instituted a civil case. The trial court found for the plaintiff in a decision which was affirmed by
this Supreme Court on appeal (G.R. No. 33017). When plaintiff entered upon the premises, however,
he found the defendant herein, Catalino Bataclan, who appears to have been authorized by former
owners, as far back as 1922, to clear the land and make improvements thereon. As Bataclan was not a
party in the civil case, plaintiff, on June 11, 1931, instituted against him a civil case. In this case,
plaintiff was declared owner but the defendant was held to be a possessor in good faith, entitled for
reimbursement in the total sum of P1,642, for work done and improvements made. The defendant states
that he is a possessor in good faith and that the amount of P2,212 to which he is entitled has not yet

been paid to him. Therefore, he says, he has a right to retain the land in accordance with the provisions
of article 453 of the Civil Code. In obedience to the decision of this court in G.R. No. 37319, the
plaintiff expressed his desire to require the defendant to pay for the value of the land. The said
defendant could have become owner of both land and improvements and continued in possession
thereof. But he said he could not pay and the land was sold at public auction to Toribio Teodoro. When
he failed to pay for the land, the defendant herein lost his right of retention.
Issue: Whether or not there is good faith.
Held: The judgment of the lower court is accordingly modified by eliminating therefrom the
reservation made in favor of the defendant-appellant to recover from the plaintiff the sum of P2,212. In
all the respects, the same is affirmed, without pronouncement regarding costs. So ordered
The sale at public auction having been asked by the plaintiff himself (p. 22, bill of exceptions) and the
purchase price of P8,000 received by him from Toribio Teodoro, we find no reason to justify a rapture
of the situation thus created between them, the defendant-appellant not being entitled, after all, to
recover from the plaintiff the sum of P2,212.
Ignacio vs. Hilario
Sometime during the 1940s in Pangasinan, a civil suit arose between Damian Ignacio and Elias Hilario.
Hilario was the owner of a parcel of land. He later discovered that Ignacio built some buildings therein
(a granary and a house). After trial, Judge Antonio Felix of the Court of First Instance of Pangasinan
ruled that both were in good faith (Hilario was the owner in good faith while Ignacio was the builder in
good faith).
Judge Felix then spelled out the rights of the parties to wit:
a.) Ignacio can retain possession over the buildings he erected until after he is paid by Hilario for the
value of the buildings he erected;
b.) Hilario can choose to buy the said buildings or he can choose to sell Ignacio his land since the value
of his land was only P45.00 while the value of the buildings erected was P2,000.00.
However, Hilario refused to avail of his options. Instead, he filed a motion in court to have Ignacio be
ejected and have them destroy the buildings he erected. Judge Felipe Natividad (he replaced Judge
Felix), granted Hilarios motion.
ISSUE: Whether or not Hilario, the owner in good faith, may eject a builder in good faith without
choosing either to appropriate the building for himself after payment of its value or to sell his land to
the builder in good faith.
HELD: No. The owner in good faith has to make a choice. He cannot dispense the options under the
law and then eject the builder in good faith. This is because both are in good faith.
But when can the owner in good faith compel the builder in good faith to remove the building he
erected?
This is only available if after the owner in good faith chose to sell his land to the builder in good faith
and the latter fails to pay the value of the land within the agree period. Only then can the owner in good
faith compel the builder in good faith to remove the building he erected.
Depra vs. Dumlao
The properties of Francisco Depra and Agustin Dumlao were adjoining each other. In 1972, Dumlao
built his house however, he unwittingly built the kitchen portion of his house on Depras land. Depra
then sued Dumlao for unlawful detainer. During pre-trial, the parties agreed that Dumlao was a builder

in good faith.
Eventually, the trial court ruled that both parties were in good faith but then a forced lease was ordered
whereby Dumlao retains the kitchen but he shall pay a rental to Depra at P5.00 per month. But Depra
refused to receive the rental payments from Dumlao, instead, Depra filed an action for quieting of title
against Dumlao. In his defense, Dumlao raised the defense of res judicata considering that the nature
and purpose of the initial unlawful detainer case and that of the subsequent quieting of title case is
ejectment.
ISSUES:
1. Whether or not the order of forced lease decreed in the unlawful detainer case is valid.
2. Whether or not the subsequent case of res judicata is barred by prescription due to the prior case of
unlawful detainer.
HELD: 1. No. The judgment of forced lease is improper. A forced lease, just like co-ownership is not
favored. It should be considered that the parties themselves stipulated that Dumlao, the builder, was in
good faith and it was later found that Depra, the owner, was also in good faith. Hence, what applies is
the provisions of Article 448 of the Civil Code, which provides in sum that:
a. Builder in good faith entitled to retain the possession of the land on which he built in good faith
until he is paid the value of the building he built in good faith;
b. Owner in good faith has the option to either (i) pay for the building OR (ii) sell his land to the
builder in good faith but builder cannot be forced to buy said land if the same is considerably more than
the value of the building.
Forced rent only comes in if the owner exercises his right to sell the land but the builder rejects it by
reason of the price thereof being considerably more than the value of the building in such case, the
parties shall agree to the terms of the lease, if they cant agree then they may bring the issue to court.
2. No. The action for quieting of title is not barred by reason of res judicata. The cause of action in the
unlawful detainer case involves possession while the cause of action in the quieting of title case
involves ownership. Furthermore, the Rules of Court explicitly provides that judgment in a detainer
case shall not bar an action between the same parties respecting title to the land.
SARMIENTO v. AGANA
FACTS:
Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccas mother offered a lot in Paranaque
that they could build their house on. In 1967, they finally built their home which cost about PhP8,00010,000, thinking that someday, the lot would be transferred to them in their name. It turns out, though,
that the lot was owned by the Spouses Santos who , in turn, sold the same to Leonila Sarmiento in
1974. A year later, Sarmiento ordered the Valentinos to vacate their lot, then eventually filed and
Ejection Suit against them.
The lower court ruled in Sarmientos favor and ordered her to pay 20,000 as the value of the house.
But the case was then elevated to the CFI of Pasay (w/ Agana as Judge), and pursuant to Art.448 of the
CC (March 1979), the Court ordered Sarmiento to exercise the option in 60 days to pay Ernesto 40,000
as the value of the house or to let them purchase the land for 25,000. Sarmiento was not able to
exercise this option, and the CFI allowed Ernesto to deposit the 25,000 purchase price with the Court.
ISSUE:
Whether or not the land owner is compelled to exercise either option: to buy the building or to sell the
land?

HELD:
Ernesto and his wife (BPS) were clearly in good faith as they believed that Rebeccas mother has the
capacity to eventually transfer the title of the land to them. In line with this, Sarmiento (LO) was
required to exercise only 2 options: To purchase the house or to sell the land to them, in this case, based
on the value decided by the courts. Since Sarmiento failed to exercise the option within the allotted
period, and based on Art. 448, the LO is compelled by law to exercise either option. Not choosing
either is a violation of the law.
FILIPINAS COLLEGES INC. vs. MARIA GARCIA TIMBANG, ET AL.[G.R. No. L-1281,
September 29, 1959]BARRERA, J.:FACTS:
This is an appeal taken from an order of the Court of First Instance of Maniladated May 10, 1957 (a)
declaring the Sheriff's certificate of sale covering aschool building sold at public auction null and void
unless within 15 daysfrom notice of said order the successful bidders, defendants-appellantsspouses
Maria Garcia Timbang and Marcelino Timbang, shall pay to, appelleeMaria Gervacio Blas directly or
through the Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the building
at the Sheriff'ssale; (b) declaring the other appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934
undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which the building sold in
the auction sale is situated; and(c) ordering the sale in public auction of the said undivided interest of
theFilipinas Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaidportion of the judgment
in favor of appellee Blas and against FilipinasColleges, Inc. in the amount of P8,200.00 minus the sum
of P5,750.00mentioned in (a) above. The order appealed from is the result of threemotions filed in the
court
a quo
in the course of the execution of a final judgment of the Court of Appeals rendered in 2 cases appealed
to it in whichthe spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blaswere the
parties. The Timbang spouses presented their opposition to eachand all of this motion. In assailing the
order of the court a quo directing theappellants to pay appellee Blas the amount of their bid (P5,750.00)
made atthe public auction, appellants' counsel has presented a novel, albeitingenious, argument. They
contend that since the builder in good faith hasfailed to pay the price of the land after the owners
thereof exercised theiroption under Article 448 of the Civil Code, the builder has lost his right andthe
appellants as owners of the land automatically became the owners
ipsofacto
ISSUE/S:
1.Whether or not the contention of the appellants is valid. If not, whatare the remedies left to the owner
of the land if the builder fails topay?2.Whether or not the appellants, as owner of the land, may
seekrecovery of the value of their land by a writ of execution; levy thehouse of the builder and sell it in
public auction.
HOLDING & RATIO DECIDENDI:NO, THE APPELLANTS CONTENTION IS SUPERFLUOUS.
There is nothingin the language of these two articles, 448 and 546, which would justify theconclusion
of appellants that, upon the failure of the builder to pay the valueof the land, when such is demanded by
the land-owner, the latter becomesautomatically the owner of the improvement under Article 445.
Although it istrue, it was declared therein that in the event of the failure of the builder to
pay the land after the owner thereof has chosen this alternative, thebuilder's right of retention provided
in Article 546 is lost, nevertheless therewas nothing said that as a consequence thereof, the builder

loses entirely allrights over his own building. The remedy left to the parties in sucheventuality where
the builder fails to pay the value of the land, though the
Code is silent on this Court,
a builder in good faith not be required to payrentals. He has right to retain the land on which he has
built in good faithuntil he is reimbursed the expenses incurred by him.
Possibly he might bemade to pay rental only when the owner of the land chooses not toappropriate the
improvement and requires the builder in good faithto pay for the land but that the builder is unwilling
or unable to paythe land, and then they decide to leave things as they are andassume the relation of
lessor and lessee, and should they disagreeas to the amount of rental then they can go to the court to fix
thatamount.
This was ruled in the case of Miranda vs. Fadullon, et al
., 97 Phil.,801. A further remedy is indicated in the case of
Bernardo vs. Bataclan,supra
, where this Court approved the sale of the land and the improvementin a public auction applying the
proceeds thereof first to the payment of thevalue of the land and the excess, if any, to be delivered to
the owner of thehouse in payment thereof.
The second contention was without merit.
Inthe instant case, the Court of Appeals has already adjudged that appelleeBlas is entitled to the
payment of the unpaid balance of the purchase price of the school building. With respect to the order of
the court declaring appelleeFilipinas Colleges, Inc. part owner of the land to the extent of the value of
itspersonal properties sold at public auction in favor of the Timbang, this Courtlikewise finds the same
as justified, for such amount represents, in effect, apartial payment of the value of the land. Failure of
the Timbang spouses topay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00
withinfifteen (15) days from notice of the final judgment, an order of executionshall issue in favor of
Maria Gervasio Blas to be levied upon all properties of the Timbang spouses not exempt from
execution for the satisfaction of thesaid amount.

Ortiz vs. Kayanan

Facts: Plaintiff used to be the legal guardian of Martin Dolorico II. When his
ward died, plaintiff continued to cultivate and possess the latters property,
which was formerly a subject of homestead application. In the said
application, the wards uncle was named as his heir and successor in interest.
Thus, the uncle executed an affidavit relinquishing his rights over the property
in favor of Comintan and Zamora, his grandson and son-in-law and requested
the Director of Lands to cancel the homestead application. The homestead
application was cancelled to the protest of Ortiz saying that he should be
given preference to purchase the lot inasmuch as he is the actual occupant
and has been in continuous possession of the same. Still, the lot in question
was sold at a public auction wherein defendant Comintan was the only bidder.
The plaintiffs protest was investigated upon but his claim was not given due
course. On appeal, respondent court rules that half of the portion of land
should be given to the defendant, being the successful bidder. The other half
should be awarded to Zamora without prejudice to the right of Ortiz to
participate in the public bidding of the lot. If Ortiz is to be not declared the

successful bidder, defendants should reimburse jointly said plaintiff for the
improvements introduced on the land, with him, having the right to retain the
property until after he has been paid for.
Plaintiff appealed the judgment. It was later found out that Ortiz collected tolls
on a portion of the property wherein he has not introduced any improvement.
The judgment became final and executory. Private respondents filed a motion
for its execution requesting that they file a bond in lieu of the amount that
should be paid to Ortiz, on the condition that after the accounting of the tolls
collected by plaintiff, there is still and amount due and payable to the said
plaintiff, the bond shall be held answerable.
Petitioner thus filed the instant petition, contending that in having issued the
Order and Writ of Execution, respondent Court "acted without or in excess of
jurisdiction, and/or with grave abuse of discretion, because the said order and
writ in effect vary the terms of the judgment they purportedly seek to
enforce." He argued that since said judgment declared the petitioner a
possessor in good faith, he is entitled to the payment of the value of the
improvements introduced by him on the whole property, with right to retain
the land until he has been fully paid such value. He likewise averred that no
payment for improvements has been made and, instead, a bond therefor had
been filed by defendants (private respondents), which, according to petitioner,
is not the payment envisaged in the decision which would entitle private
respondents to the possession of the property. Furthermore, with respect to
portion "B", petitioner alleges that, under the decision, he has the right to
retain the same until after he has participated and lost in the public bidding of
the land to be conducted by the Bureau of Lands. It is claimed that it is only in
the event that he loses in the bidding that he can be legally dispossessed
thereof. It is the position of petitioner that all the fruits of the property,
including the tolls collected by him from the passing vehicles, which according
to the trial court amounts to P25,000.00, belongs to petitioner and not to
defendant/private respondent Quirino Comintan, in accordance with the
decision itself, which decreed that the fruits of the property shall be in lieu of
interest on the amount to be paid to petitioner as reimbursement for
improvements. Any contrary opinion, in his view, would be tantamount to an
amendment of a decision which has long become final and executory and,
therefore, cannot be lawfully done.
The issue decisive of the controvery isafter the rendition by the trial court of
its judgment in Civil Case No. C-90 on March 22, 1966 confirming the award of
one-half of the property to Quirino Comintanwhether or not petitioner is still
entitled to retain for his own exclusive benefit all the fruits of the property,
such as the tolls collected by him from March 1967 to December 1968, and
September 1969 to March 31, 1970, amounting to about P25,000.00.
RULING: Negative. No contention that the possessor in good faith is entitled to

the fruits received before the possession is legally interrupted. Possession in

good faith ceases or is legally interrupted from the moment defects in the title
are made known to the possessor, by extraneous evidence or by the filing of
an action in court by the true owner for the recovery of the property. Hence,
all the fruits that the possessor may receive from the time he is summoned in
court, or when he answers the complaint, must be delivered and paid by him
to the owner or lawful possessor.
However, even after his good faith ceases, the possessor can still retain the
property (Art 546) until he has been fully reimbursed for all the necessary and
useful expenses made by him on the property. he principal characteristic of
the right of retention is its accessory character. It is accessory to a principal
obligation. Considering that the right of the possessor to receive the fruits
terminates when his good faith ceases, it is necessary, in order that this right
to retain may be useful, to concede to the creditor the right to secure
reimbursement from the fruits of the property by utilizing its proceeds for the
payment of the interest as well as the principal of the debt while he remains
in possession.
Petitioner cannot appropriate for his own exclusive benefit the tolls which he
collected from the property retained by him. It was his duty under the law,
after deducting the necessary expenses for his administration, to apply such
amount collected to the payment of the interest, and the balance to the
payment of the obligation.
We hold, therefore, that the disputed tolls, after deducting petitioner's
expenses for administration, belong to Quirino Comintan, owner of the land
through which the toll road passed, further considering that the same was on
portions of the property on which petitioner had not introduced any
improvement. The trial court itself clarified this matter when it placed the toll
road under receivership. The omission of any mention of the tolls in the
decision itself may be attributed to the fact that the tolls appear to have been
collected after the rendition of the judgment of the trial court.
As to the other lot, it appears that no public sale has yet been conducted by
the Bureau of Lands and, therefore, petitioner is entitled to remain in
possession thereof. This is not disputed by respondent Eleuterio Zamora. After
public sale is had and in the event that Ortiz is not declared the successful
bidder, then he should be reimbursed by respondent Zamora in the
corresponding amount for the improvements on Lot 5785-B.
FLOREZA v EVANGELISTA [96 SCRA 130 (February 21, 1980)]
Facts: The Evangelistas were the owner of a residential lot in Rizal with an
area of 204.08 sq. m. assessed at P410.
May 1945: Evangelistas borrowed P100 from Floreza.
November 1945: Floreza occupied the residential lot and built a house of light
material (barong-barong) with the consent of the Evangelistas.

Additional Loans made by the Evangelistas: Sept. 1946 P100, August 1947
P200, January 1949 P200, April 1949 P140. TOTAL = P740 (including first
loan)
January 1949: Floreza demolished the house of light material and constructed
one of strong material assessed at P1400. Floreza has not been paying any
rentals since the beginning of their transactions.
August 1949: Evangelistas sold, with a right to repurchase within 6 years,
their land to Floreza for P1000.
Seven months before the expiry of the repurchase period, the Evangelistas
were able to pay in full.
Floreza refused to vacate the lot unless he was first reimbursed for the value
of the house he built.
Evangelistas filed a complaint. CFI ruled based on Art, 448 of the Civil Code
saying that Evangelistas have the choice between purchasing the house or
selling the land to Floreza.
CA ruled that Art. 448 was inapplicable and that Floreza was not entiled to the
reimbursement of his house and could remove the same at his own expense.
Issue:
WON Floreza was entitled to reimbursement of the cost of his house. NO.
WON he (his heirs who replaced him) should pay rental of the land. YES.
Held/Ratio:
Issue of reimbursement is not moot because if Floreza has no right of
retention, then he must pay damages in the form of rentals.
Agree with CA that Art. 448 is inapplicable because it applies only when the
builder is in good faith (he believed he had a right to build).Art. 453 is also not
applicable because it requires both of the parties to be in bad faith. Neither is
Art. 1616 applicable because Floreza is not a vendee a retro. The house was
already constructed in 1945 (light materials) even before the pacto de retro
was entered into in 1949.
Floreza cannot be classified as a builder in good faith nor a vendee a retro,
who made useful improvements during the pacto de retro, he has no right to
reimbursement of the value of the house, much less to the retention of the
premises until he is paid.
His rights are more akin to a usufructury under Art. 579, who may make on
the property useful improvements but with no right to be indemnified thereof,
He may, however, remove such improvements should it be possible to do so
without damage to the property.
From the time the redemption price was paid in January 3, 1955, Florezas
right to use the residential lot without rent ceased. He should be held liable
for damages in the form of rentals for the continued use of the lot for P10
monthly from January 3, 1955 until the house was removed and the property
vacated by Floreza or his heirs.
SPOUSES DEL CAMPO V. ABESIA 160 SCRA 379

Facts: This case involves a parcel of land, situated at the corner of F. Flores and Cavan Streets, Cebu
City. An action for partition was filed by plaintiffs in the CFI of Cebu. Plaintiffs and defendants are coowners pro indiviso of this lot in the proportion of and 1/3 share each, respectively. The trial court
appointed a commissioner in accordance with the agreement of the parties. ,the Id commissioner
conducted a survey, prepared a sketch plan and submitted a report to the trial court on May 29, 1976,
recommending that the property be divided into two lots: Lot 1161-A with an area of 30 square meters
for plaintiffs and Lot No. 1161-B with an area of 15 square meters for the defendants. The houses of
plaintiffs and defendants were surveyed and shown on the sketch plan. The house of defendants
occupied the portion with an area of 5 square meters of Lot 1161-A of plaintiffs. The parties manifested
their conformity to the report and asked the trial court to finally settle and adjudicate who among the
parties should take possession of the 5 square meters of the land in question.
Issue: Whether or Not Article 448 of the Civil Code is applicable to a builder in good faith when the
property involved is owned in common.
Held: When the co-ownership is terminated by the partition and it appears that the house of defendants
overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the
defendants obviously built in good faith, then the provisions of Article 448 of the new Civil Code
should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply
even when there was co-ownership if good faith has been established.
Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said
portion of the house of defendants upon payment of indemnity to defendants as provided for in Article
546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of the land
occupied by their house. However, if the price asked for is considerably much more than the value of
the portion of the house of defendants built thereon, then the latter cannot be obliged to buy the land.
The defendants shall then pay the reasonable rent to the plaintiff upon such terms and conditions that
they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course,
defendants may demolish or remove the said portion of their house, at their own expense, if they so
decide.
Article 448 of the New Civil Code provides as follows:
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.

IGNAO VS. IAC

FACTS: Florencio Ignao and his uncles (private respondents) were co-owners
of a parcel of land. This was originally owned by Baltazar Ignao, who married
twice. In his first marriage, he had four children, including the father of the
petitioner. In his second marriage, he also had four children who waived their
rights over the controverted land.
Justo, Florencios father owned 5/8 of the land. Thereafter, Justo acquired 1/8

share of brother Leon for P500, which was later sold to his son Florencio for
the same amount. When Justo died, Florencio inherited the 5/8 share of his
father, which brought his land share to 6/8. Private respondents Juan and
Isidro each has 1/8 share on the land.
Petitioner brought an action for partition. Before it was promulgated, Florencio
sol 134 sqm of his share. The decision for partition allotted 2/8 of the land to
private respondents. However, no actual partition was effected. Thus,
petitioner instituted a complaint for recovery of possession of real property
against private respondents, because the area occupied by the two houses
built by private respondents exceeded the portion allotted to them. Trial court
ruled that the private respondents are builders in good faith.
ISSUE: Whether or not the provisions of Art 448 should apply on a property
held in common
RULING: Affirmative
It should be noted that prior to partition, all the co-owners hold the property in
common dominion but at the same time each is an owner of a share which is
abstract and undetermined until partition is effected. As cited in Eusebio vs.
Intermediate Appellate Court, "an undivided estate is co-ownership by the
heirs."As co-owners, the parties may have unequal shares in the common
property, quantitatively speaking. But in a qualitative sense, each co-owner
has the same right as any one of the other co-owners. Every co-owner is
therefore the owner of the whole, and over the whole he exercises the right of
dominion, but he is at the same time the owner of a portion which is truly
abstract, because until division is effected such portion is not concretely
determined.
Whether or not the provisions of Article 448 should apply to a builder in good
faith on a property held in common has been resolved in the affirmative in the
case of Spouses del Campo vs. Abesia, wherein the Court ruled that:The court
a quo correctly held that Article 448 of the Civil Code cannot apply where a
co-owner builds, plants or sows on the land owned in common for then he did
not build, plant or sow upon land that exclusively belongs to another but of
which he is a co-owner. The co-owner is not a third person under the
circumstances, and the situation is governed by the rules of coownership.However, when, as in this case, the ownership is terminated by the
partition and it appears that the home of defendants overlaps or occupies a
portion of 5 square meters of the land pertaining to plaintiffs which the
defendants obviously built in good faith, then the provisions of Article 448 of
the new Civil Code should apply. Manresa and Navarro Amandi agree that the
said provision of the Civil Code may apply even when there is a co-ownership
if good faith has been established.In other words, when the co-ownership is
terminated by a partition and it appears that the house of an erstwhile coowner has encroached upon a portion pertaining to another co-owner which

was however made in good faith, then the provisions of Article 448 should
apply to determine the respective rights of the parties. Petitioner's second
assigned error is however well taken. Both the trial court and the Appellate
Court erred when they peremptorily adopted the "workable solution" in the
case of Grana vs. Court of appeals, and ordered the owner of the land,
petitioner Florencio, to sell to private respondents, Juan and Isidro, the part of
the land they intruded upon, thereby depriving petitioner of his right to
choose. Such ruling contravened the explicit provisions of Article 448 to the
effect that "(t)he owner of the land . . . shall have the right to appropriate . .
.or to oblige the one who built . . . to pay the price of the land . . . ." The law is
clear and unambiguous when it confers the right of choice upon the
landowner and not upon the builder and the courts. Thus, in Quemuel vs.
Olaes, the Court categorically ruled that the right to appropriate the works or
improvements or to oblige the builder to pay the price of the land belongs to
the landowner.
PEDRO P. PECSON v. COURT OF APPEALS, SPS. NUGUID
FACTS:Pedro Pecson was the owner of a commercial lot on which he built a 4-door-2-storey apartment
building. He failed to pay realty taxes amounting to P12k so the lot was sold at public auction to
Mamerto Nepomuceno who later on sold it to the Sps. Nuguid. Pecson challenged the validity of the
auction before the RTC but was dismissed but the RTC held that the apartment bldg was not subject of
the litigation. On appeal, the CA appealed in toto the decision of the RTC that the apartment bldg was
not included in the auction sale. After an entry of judgment was made, the Sps. Nuguid filed a motion
with the RTC for a motion for delivery of possession of the lot and the apartment bldg citing Art. 546
of the CC. The RTC issued an order declaring that the owner of the lot and apartment bldg were the
Sps. Nuguid and to pay the construction cost of the apartment before a writ of possession would be
issued and to pay rent to the spouses. Pecson moved for reconsideration but the Trial court did not act
on it, instead it issued a writ of possession. The CA affirmed in part the decision declaring the cost of
construction can be offset from the amount of rents to be collected and that since Sps. Nuguid opted to
appropriate the improvement, Pecson is entitled to be reimbursed the cost of construction at the time it
was built in 1965 which is at P53k and the right the retain the improvement until full indemnity is paid.
Thus the case at bar.
ISSUE:Whether or not Art. 448 and 546 applies in the case at bar
HELD: YES> With regard to Art. 448, the provision on indemnity may be applied in analogy. Whoever
is the owner of the land may appropriate whatever has been built, planted or sown after paying
indemnity. However, it does not apply when the owner of the land is also the builder of the works on
his own land who later on loses ownership by sale or donation. > Art. 546 refers to the necessary and
useful expenses which shall be refunded to the possessor in good faith with right of retention. However,
it does not state how to determine the value of the useful improvement. The respondents [court and
private respondents alike] espouses as sufficient reimbursement the cost of construction in 1965,

however, this is contrary to previous rulings which declares that the value to the reimbursed should be
the present market value of said improvements so as not to unjustly enrich either of the parties. [the
trial court erred in ordering Pecson to pay rent since the Sps. Nuguid has yet to pay the indemnity
therefore Pecson has the right to retain the improvements and the income thereof. The case was
remanded to the trial court for determination of the current market value of the apartment bldg and
ordered the Sps to pay Pecson otherwise it shall be restored to Pecson until payment of indemnity.]