Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 151815 February 23, 2005
SPOUSES JUAN NUGUI AN ER!INA T. NUGUI, petitioners,
vs.
"ON. COURT OF APPEA!S AN PERO P. PECSON, respondents.
D ! I S I O N
#UISUM$ING, J.:
This is a petition for revie" on certiorari of the Decision
#
dated Ma$ %#, %&&#, of the
!ourt of 'ppeals in !'().R. !V No. *+%,-, "hich .odified the Order dated /ul$ 0#,
#,,1 of the Re2ional Trial !ourt 3RT!4 of 5ue6on !it$, 7ranch #&# in !ivil !ase No.
5(+#+8&. The trial court ordered the defendants, a.on2 the. petitioner herein /uan
Nu2uid, to pa$ respondent herein Pedro P. Pecson, the su. of P#,0++,&&& as
rei.burse.ent of unreali6ed inco.e for the period be2innin2 Nove.ber %%, #,,0 to
Dece.ber #,,8. The appellate court, ho"ever, reduced the trial court9s a"ard in favor
of Pecson fro. the said P#,0++,&&& to P%1&,&&&. :uall$ assailed b$ the petitioners is
the appellate court9s Resolution
%
dated /anuar$ #&, %&&%, den$in2 the .otion for
reconsideration.
It .a$ be recalled that relatedl$ in our Decision dated Ma$ %*, #,,-, in ).R. No.
##-1#+, entitled Pecson v. !ourt of 'ppeals, "e set aside the decision of the !ourt of
'ppeals in !'().R. SP No. 0%*8, and the Order dated Nove.ber #-, #,,0, of the
RT! of 5ue6on !it$, 7ranch #&# and re.anded the case to the trial court for the
deter.ination of the current .ar;et value of the four(door t"o(store$ apart.ent
buildin2 on the %-*(s:uare .eter co..ercial lot.
The antecedent facts in this case are as follo"s<
Pedro P. Pecson o"ned a co..ercial lot located at %8 =a.ias Road, 5ue6on !it$, on
"hich he built a four(door t"o(store$ apart.ent buildin2. For failure to pa$ realt$ ta>es,
the lot "as sold at public auction b$ the !it$ Treasurer of 5ue6on !it$ to Ma.erto
Nepo.uceno, "ho in turn sold it for P#&0,&&& to the spouses /uan and rlinda
Nu2uid.
Pecson challen2ed the validit$ of the auction sale before the RT! of 5ue6on !it$ in
!ivil !ase No. 5(+#+8&. In its Decision,
0
dated Februar$ 1, #,1,, the RT! upheld the
spouses9 title but declared that the four(door t"o(store$ apart.ent buildin2 "as not
included in the auction sale.
+
This "as affir.ed in toto b$ the !ourt of 'ppeals and
thereafter b$ this !ourt, in its Decision
-
dated Ma$ %-, #,,0, in ).R. No. #&-0*&
entitled Pecson v. !ourt of 'ppeals.
On /une %0, #,,0, b$ virtue of the ntr$ of /ud2.ent of the aforesaid decision in ).R.
No. #&-0*&, the Nu2uids beca.e the uncontested o"ners of the %-*(s:uare .eter
co..ercial lot.
's a result, the Nu2uid spouses .oved for deliver$ of possession of the lot and the
apart.ent buildin2.
In its Order
*
of Nove.ber #-, #,,0, the trial court, rel$in2 upon 'rticle -+*
8
of the !ivil
!ode, ruled that the Spouses Nu2uid "ere to rei.burse Pecson for his construction
cost of P-0,&&&, follo"in2 "hich, the spouses Nu2uid "ere entitled to i..ediate
issuance of a "rit of possession over the lot and i.prove.ents. In the sa.e order the
RT! also directed Pecson to pa$ the sa.e a.ount of .onthl$ rentals to the Nu2uids
as paid b$ the tenants occup$in2 the apart.ent units or P%#,&&& per .onth fro. /une
%0, #,,0, and allo"ed the offset of the a.ount of P-0,&&& due fro. the Nu2uids
a2ainst the a.ount of rents collected b$ Pecson fro. /une %0, #,,0 to Septe.ber %0,
#,,0 fro. the tenants of the apart.ent.
1
Pecson dul$ .oved for reconsideration, but on Nove.ber 1, #,,0, the RT! issued a
?rit of Possession,
,
directin2 the deput$ sheriff to put the spouses Nu2uid in
possession of the sub@ect propert$ "ith all the i.prove.ents thereon and to e@ect all
the occupants therein.
'22rieved, Pecson then filed a special civil action for certiorari and prohibition
doc;eted as !'().R. SP No. 0%*8, "ith the !ourt of 'ppeals.
In its decision of /une 8, #,,+, the appellate court, rel$in2 upon 'rticle ++1
#&
of the
!ivil !ode, affir.ed the order of pa$.ent of construction costs but rendered the issue
of possession .oot on appeal, thus<
?ARFOR, "hile it appears that private respondents Bspouses Nu2uidC have not
$et inde.nified petitioner BPecsonC "ith the cost of the i.prove.ents, since 'nne> I
sho"s that the Deput$ Sheriff has enforced the ?rit of Possession and the pre.ises
have been turned over to the possession of private respondents, the :uest of petitioner
that he be restored in possession of the pre.ises is rendered .oot and acade.ic,
althou2h it is but fair and @ust that private respondents pa$ petitioner the construction
cost of P-0,&&&.&&D and that petitioner be ordered to account for an$ and all fruits of
the i.prove.ents received b$ hi. startin2 on /une %0, #,,0, "ith the a.ount of
P-0,&&&.&& to be offset therefro..
IT IS SO ORDRD.
##
BEnderscorin2 supplied.C
Frustrated b$ this turn of events, Pecson filed a petition for revie" doc;eted as ).R.
No. ##-1#+ before this !ourt.
1
On Ma$ %*, #,,-, the !ourt handed do"n the decision in ).R. No ##-1#+, to "it<
?ARFOR, the decision of the !ourt of 'ppeals in !'().R. SP No. 0%*8, and the
Order of #- Nove.ber #,,0 of the Re2ional Trial !ourt, 7ranch #&#, 5ue6on !it$ in
!ivil !ase No. 5(+#+8& are hereb$ ST 'SID.
The case is hereb$ re.anded to the trial court for it to deter.ine the current .ar;et
value of the apart.ent buildin2 on the lot. For this purpose, the parties shall be allo"ed
to adduce evidence on the current .ar;et value of the apart.ent buildin2. The value
so deter.ined shall be forth"ith paid b$ the private respondents BSpouses /uan and
rlinda Nu2uidC to the petitioner BPedro PecsonC other"ise the petitioner shall be
restored to the possession of the apart.ent buildin2 until pa$.ent of the re:uired
inde.nit$.
No costs.
SO ORDRD.
#%
B.phasis supplied.C
In so rulin2, this !ourt pointed out that< 3#4 'rticle ++1 of the !ivil !ode is not apposite
to the case at bar "here the o"ner of the land is the builder, so"er, or planter "ho
then later lost o"nership of the land b$ sale, but .a$, ho"ever, be applied b$ analo2$D
3%4 the current .ar;et value of the i.prove.ents should be .ade as the basis of
rei.burse.entD 304 Pecson "as entitled to retain o"nership of the buildin2 and,
necessaril$, the inco.e therefro.D 3+4 the !ourt of 'ppeals erred not onl$ in upholdin2
the trial court9s deter.ination of the inde.nit$, but also in orderin2 Pecson to account
for the rentals of the apart.ent buildin2 fro. /une %0, #,,0 to Septe.ber %0, #,,0.
On the basis of this !ourt9s decision in ).R. No. ##-1#+, Pecson filed a Motion to
Restore Possession and a Motion to Render 'ccountin2, pra$in2 respectivel$ for
restoration of his possession over the sub@ect %-*(s:uare .eter co..ercial lot and for
the spouses Nu2uid to be directed to render an accountin2 under oath, of the inco.e
derived fro. the sub@ect four(door apart.ent fro. Nove.ber %%, #,,0 until
possession of the sa.e "as restored to hi..
In an Order
#0
dated /anuar$ %*, #,,*, the RT! denied the Motion to Restore
Possession to the plaintiff averrin2 that the current .ar;et value of the buildin2 should
first be deter.ined. Pendin2 the said deter.ination, the resolution of the Motion for
'ccountin2 "as li;e"ise held in abe$ance.
?ith the sub.ission of the parties9 assess.ent and the reports of the sub@ect realt$,
and the reports of the 5ue6on !it$ 'ssessor, as "ell as the .e.bers of the dul$
constituted assess.ent co..ittee, the trial court issued the follo"in2 Order
#+
dated
October 8, #,,8, to "it<
On Nove.ber %#, #,,*, the parties .anifested that the$ have arrived at a co.pro.ise
a2ree.ent that the value of the said i.prove.entFbuildin2 is P+&&,&&&.&& The !ourt
notes that the plaintiff has alread$ receivedP0&&,&&&.&&. Ao"ever, "hen defendant
"as read$ to pa$ the balance of P#&&,&&&.&&, the plaintiff no" insists that there should
be a rental to be paid b$ defendants. ?hether or not this should be paid b$
defendants, incident is hereb$ scheduled for hearin2 on Nove.ber #%, #,,8 at 1<0&
a...
Meanti.e, defendants are directed to pa$ plaintiff the balance of P#&&,&&&.&&.
SO ORDRD.
#-
On Dece.ber #,,8, after pa$in2 the said P#&&,&&& balance to Pedro Pecson the
spouses Nu2uid pra$ed for the closure and ter.ination of the case, as "ell as the
cancellation of the notice of lis pendens on the title of the propert$ on the 2round that
Pedro Pecson9s clai. for rentals "as devoid of factual and le2al bases.
#*
'fter conductin2 a hearin2, the lo"er court issued an Order dated /ul$ 0#, #,,1,
directin2 the spouses to pa$ the su. of P#,0++,&&& as rei.burse.ent of the
unreali6ed inco.e of Pecson for the period be2innin2 Nove.ber %%, #,,0 up to
Dece.ber #,,8. The su. "as based on the co.putation of P%1,&&&F.onth rentals of
the four(door apart.ent, thus<
The !ourt finds plaintiff9s .otion valid and .eritorious. The decision of the Supre.e
!ourt in the aforesaid case BPecson vs. !ourt of 'ppeals, %++ S!R' +&8C "hich set
aside the Order of this !ourt of Nove.ber #-, #,,0 has in effect upheld plaintiff9s ri2ht
of possession of the buildin2 for as lon2 as he is not full$ paid the value thereof. It
follo"s, as declared b$ the Supre.e !ourt in said decision that the plaintiff is entitled
to the inco.e derived therefro., thus G
. . .
Records sho" that the plaintiff "as dispossessed of the pre.ises on Nove.ber %%,
#,,0 and that he "as full$ paid the value of his buildin2 in Dece.ber #,,8. Therefore,
he is entitled to the inco.e thereof be2innin2 on Nove.ber %%, #,,0, the ti.e he "as
dispossessed, up to the ti.e of said full pa$.ent, in Dece.ber #,,8, or a total of +1
.onths.
The onl$ :uestion left is the deter.ination of inco.e of the four units of apart.ents per
.onth. 7ut as correctl$ pointed out b$ plaintiff, the defendants have the.selves
sub.itted their affidavits attestin2 that the inco.e derived fro. three of the four units
of the apart.ent buildin2 is P%#,&&&.&& or P8,&&&.&& each per .onth, or P%1,&&&.&&
per .onth for the "hole four units. Aence, at P%1,&&&.&& per .onth, .ultiplied b$ +1
.onths, plaintiff is entitled to be paid b$ defendants the a.ount of P#,0++,&&&.&&.
#8
The Nu2uid spouses filed a .otion for reconsideration but this "as denied for lac; of
.erit.
#1
2
The Nu2uid couple then appealed the trial court9s rulin2 to the !ourt of 'ppeals, their
action doc;eted as !'().R. !V No. *+%,-.
In the !ourt of 'ppeals, the order appealed fro. in !'().R. !V No. *+%,-, "as
.odified. The !' reduced the rentals fro. P#,0++,&&& to P%1&,&&& in favor of the
appellee.
#,
The said a.ount represents accrued rentals fro. the deter.ination of the
current .ar;et value on /anuar$ 0#, #,,8
%&
until its full pa$.ent on Dece.ber #%,
#,,8.
Aence, petitioners state the sole assi2n.ent of error no" before us as follo"s<
TA !OERT OF 'PP'HS RRD IN AOHDIN) PTITIONRS HI'7H TO P'I
RNT OVR 'ND '7OV TA !ERRNT M'R=T V'HE OF TA
IMPROVMNT ?AN SE!A ?'S NOT PROVIDD FOR IN TA DISPOSITIV
PORTION OF TA SEPRM !OERT9S REHIN) IN ).R. No. ##-1#+.
Petitioners call our attention to the fact that after reachin2 an a2reed price of P+&&,&&&
for the i.prove.ents, the$ onl$ .ade a partial pa$.ent of P0&&,&&&. Thus, the$
contend that their failure to pa$ the full price for the i.prove.ents "ill, at .ost, entitle
respondent to be restored to possession, but not to collect an$ rentals. Petitioners
insist that this is the proper interpretation of the dispositive portion of the decision in
).R. No. ##-1#+, "hich states in part that JBtChe value so deter.ined shall be forth"ith
paid b$ the private respondents BSpouses /uan and rlinda Nu2uidC to the petitioner
BPedro PecsonC other"ise the petitioner shall be restored to the possession of the
apart.ent buildin2 until pa$.ent of the re:uired inde.nit$.J
%#
No" herein respondent, Pecson, disa2rees "ith herein petitioners9 contention. Ae
ar2ues that petitioners are "ron2 in clai.in2 that inas.uch as his clai. for rentals "as
not deter.ined in the dispositive portion of the decision in ).R. No. ##-1#+, it could
not be the sub@ect of e>ecution. Ae points out that in .ovin2 for an accountin2, all he
as;ed "as that the value of the fruits of the propert$ durin2 the period he "as
dispossessed be accounted for, since this !ourt e>plicitl$ reco2ni6ed in ).R. No.
##-1#+, he "as entitled to the propert$. Ae points out that this !ourt ruled that JBtChe
petitioner BPecsonC not havin2 been so paid, he "as entitled to retain o"nership of the
buildin2 and, necessaril$, the inco.e therefro..J
%%
In other "ords, sa$s respondent,
accountin2 "as necessar$. For accordin2l$, he "as entitled to rental inco.e fro. the
propert$. This should be 2iven effect. The !ourt could have ver$ "ell specificall$
included rent 3as fruit or inco.e of the propert$4, but could not have done so at the
ti.e the !ourt pronounced @ud2.ent because its value had $et to be deter.ined,
accordin2 to hi.. 'dditionall$, he faults the appellate court for .odif$in2 the order of
the RT!, thus defeatin2 his ri2ht as a builder in 2ood faith entitled to rental fro. the
period of his dispossession to full pa$.ent of the price of his i.prove.ents, "hich
spans fro. Nove.ber %%, #,,0 to Dece.ber #,,8, or a period of .ore than four
$ears.
It is not disputed that the construction of the four(door t"o(store$ apart.ent, sub@ect of
this dispute, "as underta;en at the ti.e "hen Pecson "as still the o"ner of the lot.
?hen the Nu2uids beca.e the uncontested o"ner of the lot on /une %0, #,,0, b$
virtue of entr$ of @ud2.ent of the !ourt9s decision, dated Ma$ %-, #,,0, in ).R. No.
#&-0*&, the apart.ent buildin2 "as alread$ in e>istence and occupied b$ tenants. In
its decision dated Ma$ %*, #,,- in ).R. No. ##-1#+, the !ourt declared the ri2hts and
obli2ations of the liti2ants in accordance "ith 'rticles ++1 and -+* of the !ivil !ode.
These provisions of the !ode are directl$ applicable to the instant case.
Ender 'rticle ++1, the lando"ner is 2iven the option, either to appropriate the
i.prove.ent as his o"n upon pa$.ent of the proper a.ount of inde.nit$ or to sell the
land to the possessor in 2ood faith. Relatedl$, 'rticle -+* provides that a builder in
2ood faith is entitled to full rei.burse.ent for all the necessar$ and useful e>penses
incurredD it also 2ives hi. ri2ht of retention until full rei.burse.ent is .ade.
?hile the la" ai.s to concentrate in one person the o"nership of the land and the
i.prove.ents thereon in vie" of the i.practicabilit$ of creatin2 a state of forced co(
o"nership,
%0
it 2uards a2ainst un@ust enrich.ent insofar as the 2ood(faith builder9s
i.prove.ents are concerned. The ri2ht of retention is considered as one of the
.easures devised b$ the la" for the protection of builders in 2ood faith. Its ob@ect is to
2uarantee full and pro.pt rei.burse.ent as it per.its the actual possessor to re.ain
in possession "hile he has not been rei.bursed 3b$ the person "ho defeated hi. in
the case for possession of the propert$4 for those necessar$ e>penses and useful
i.prove.ents .ade b$ hi. on the thin2 possessed.
%+
'ccordin2l$, a builder in 2ood
faith cannot be co.pelled to pa$ rentals durin2 the period of retention
%-
nor be
disturbed in his possession b$ orderin2 hi. to vacate. In addition, as in this case, the
o"ner of the land is prohibited fro. offsettin2 or co.pensatin2 the necessar$ and
useful e>penses "ith the fruits received b$ the builder(possessor in 2ood faith.
Other"ise, the securit$ provided b$ la" "ould be i.paired. This is so because the
ri2ht to the e>penses and the ri2ht to the fruits both pertain to the possessor, .a;in2
co.pensation @uridicall$ i.possibleD and one cannot be used to reduce the other.
%*
's "e earlier held, since petitioners opted to appropriate the i.prove.ent for
the.selves as earl$ as /une #,,0, "hen the$ applied for a "rit of e>ecution despite
;no"led2e that the auction sale did not include the apart.ent buildin2, the$ could not
benefit fro. the lot9s i.prove.ent, until the$ rei.bursed the i.prover in full, based on
the current .ar;et value of the propert$.
Despite the !ourt9s reco2nition of Pecson9s ri2ht of o"nership over the apart.ent
buildin2, the petitioners still insisted on dispossessin2 Pecson b$ filin2 for a ?rit of
Possession to cover both the lot and the buildin2. !learl$, this resulted in a violation of
respondent9s ri2ht of retention. ?orse, petitioners too; advanta2e of the situation to
benefit fro. the hi2hl$ valued, inco.e($ieldin2, four(unit apart.ent buildin2 b$
collectin2 rentals thereon, before the$ paid for the cost of the apart.ent buildin2. It
"as onl$ four $ears later that the$ finall$ paid its full value to the respondent.
Petitioners9 interpretation of our holdin2 in ).R. No. ##-1#+ has neither factual nor
le2al basis. The decision of Ma$ %*, #,,-, should be construed in connection "ith the
le2al principles "hich for. the basis of the decision, 2uided b$ the precept that
@ud2.ents are to have a reasonable intend.ent to do @ustice and avoid "ron2.
%8
3
The te>t of the decision in ).R. No. ##-1#+ e>pressl$ e>e.pted Pecson fro. liabilit$
to pa$ rentals, for "e found that the !ourt of 'ppeals erred not onl$ in upholdin2 the
trial court9s deter.ination of the inde.nit$, but also in orderin2 hi. to account for the
rentals of the apart.ent buildin2 fro. /une %0, #,,0 to Septe.ber %0, #,,0, the
period fro. entr$ of @ud2.ent until Pecson9s dispossession. 's pointed out b$ Pecson,
the dispositive portion of our decision in ).R. No. ##-1#+ need not specificall$ include
the inco.e derived fro. the i.prove.ent in order to entitle hi., as a builder in 2ood
faith, to such inco.e. The ri2ht of retention, "hich entitles the builder in 2ood faith to
the possession as "ell as the inco.e derived therefro., is alread$ provided for under
'rticle -+* of the !ivil !ode.
)iven the circu.stances of the instant case "here the builder in 2ood faith has been
clearl$ denied his ri2ht of retention for al.ost half a decade, "e find that the increased
a"ard of rentals b$ the RT! "as reasonable and e:uitable. The petitioners had reaped
all the benefits fro. the i.prove.ent introduced b$ the respondent durin2 said period,
"ithout pa$in2 an$ a.ount to the latter as rei.burse.ent for his construction costs
and e>penses. The$ should account and pa$ for such benefits.
?e need not belabor no" the appellate court9s reco2nition of herein respondent9s
entitle.ent to rentals fro. the date of the deter.ination of the current .ar;et value
until its full pa$.ent. Respondent is clearl$ entitled to pa$.ent b$ virtue of his ri2ht of
retention over the said i.prove.ent.
?ARFOR, the instant petition is DNID for lac; of .erit. The Decision dated
Ma$ %#, %&&# of the !ourt of 'ppeals in !'().R. !V No. *+%,- is ST 'SID and the
Order dated /ul$ 0#, #,,1, of the Re2ional Trial !ourt, 7ranch #&#, 5ue6on !it$, in
!ivil !ase No. 5(+#+8& orderin2 the herein petitioners, Spouses /uan and rlinda
Nu2uid, to account for the rental inco.e of the four(door t"o(store$ apart.ent buildin2
fro. Nove.ber #,,0 until Dece.ber #,,8, in the a.ount of P#,0++,&&&, co.puted on
the basis of T"ent$(ei2ht Thousand 3P%1,&&&.&&4 pesos .onthl$, for a period of +1
.onths, is hereb$ RINST'TD. Entil full$ paid, said a.ount of rentals should bear
the le2al rate of interest set at si> percent 3*K4 per annu. co.puted fro. the date of
RT! @ud2.ent. If an$ portion thereof shall thereafter re.ain unpaid, despite notice of
finalit$ of this !ourt9s @ud2.ent, said re.ainin2 unpaid a.ount shall bear the rate of
interest set at t"elve percent 3#%K4 per annu. co.puted fro. the date of said notice.
!osts a2ainst petitioners.
SO ORDRD.
4