You are on page 1of 11


Bachrach Motor Co., Inc. v. Talisay – Silay Milling Co.
G.R. No. 35223, September 17, 1931, 56 Phil. 117 Romualdez, J.
FACTS: On December 22, 1923, the Talisay-Silay Milling Co., Inc., was indebted to the
Philippine National Bank. 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
creditor bank. And in order to compensate those planters for the risk they were running
with their property under the mortgage, the aforesaid central, by a resolution passed on
that same date, i.e., December 22, 1923, undertook to credit the owners of the
plantation thus mortgaged every year with a sum equal to two per centum of the debt
secured according to 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
aforesaid 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.
Bachrach Motor Co., Inc. filed a complaint against the Talisay-Silay Milling Co., Inc., for
the delivery of the amount P13,850 or promissory notes or other instruments or credit for
that sum payable on June 30, 1930, as bonus in favor of Mariano Lacson Ledesma.
The Philippine National Bank filed a third party claim alleging a preferential right to
receive any amount which Mariano Lacson Ledesma might be entitled to from the
Talisay-Silay Milling Co. as bonus, because that would be civil fruits of the land
mortgaged to said bank by said debtor for the benefit of the central referred to, and by
virtue of a deed of assignment, and praying that said central be ordered to delivered
directly to the intervening bank said sum on account of the latter's credit against the
aforesaid Mariano Lacson Ledesma.
ISSUE: Whether or not the bonus in question is civil fruits
HELD: No. The said bonus bears no immediate, but only a remote accidental relation to
the land mentioned, having been granted as compensation for the risk of having
subjected one's land to a lien in favor of the bank, for the benefit of the entity granting
said bonus. If this bonus be income or civil fruits of anything, it is income arising from
said risk, or, if one chooses, from Mariano Lacson Ledesma's generosity in facing the
danger for the protection of the central, but certainly it is not civil fruits or income from
the mortgaged property. Hence, 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.
(2) Pacific Farms Inc. v. Esguerra
G.R. No. L-21783, November 29, 1969, 30 SCRA 684 Castro, J.
FACTS: On October 1, 1956 to March 2, 1957 the Company sold and delivered lumber
and construction materials to the Insular Farms Inc. which the latter used in the
construction of the si buildings at its compound in Bolinao, Pangasinan, of the total
procurement price of P15,000.00, the sum of P4,710.18 has not been paid.
Consequently, the Company instituted a civil case to recover the unpaid balance and the
court sustained their claim. The defendant sheriff levied th six buildings. The Pacific
Farms, Inc. filed a suit against the Company and the sheriff asserting ownership over the
levied buildings which it had acquired from the Insular Farms by virtue of absolute sale

Bataclan no longer has lost the right of retention. ISSUE: Whether or not Bataclan has the right of retention over the parcel of land in question. Thus the appellee. An appeal to the decision of the court was filed by both Bernardo and Bataclan. Otherwise. No. the Court consider the buildings as the principal and the lumber and construction materials that went into their construction as the accessory. it denied the plaintiff's claim for actual and exemplary damages on the ground that it was not "prepared to find there was gross negligence or bad faith on the part of any defendants". the appellant — which apparently has no desire to remove the materials. The trial court rendered judgment annulling the levy and the certificate of sale. after failure of Bataclan to pay within the period the purchase price. must bear the obligation to pay for the values of the said materials. even if it were minded to do so. ISSUE: Whether or not the application by analogy of the rules of accession would suffice for a just adjudication. After 30 days. November 28. The court then gave Bataclan 30 days to pay the price of the property and after the lapse of the period. the land was sold to Teodoro at a public auction. The decision was modified by lowering the price of the land from P300 to P200 per hectare. In order that he may take possession and occupy the said land. 1938. The option of the owner was already exercised where he decided that he will just allow the defendant to purchase the . He was within the premises because he was authorized by the previous owners to clear the land and make the necessary improvements he deems fit. further claiming that such authorization was granted to him ever since 1922. and the plantings. Bernardo chose the option which would require Bataclan to pay him the value of the land at the rate of P200 per hectare. (3) Bernardo v. the land shall be sold in a public auction. he filed a case in the CFI for such purpose and the court rendered a favorable decision for Bernardo.whether personally or through another . cannot remove them without necessarily damaging the buildings — has the corresponding right to recover the value of the unpaid lumber and construction materials. HELD: No. Bernardo was declared owner but the defendant was held to be a possessor in good faith for whom the work done and improvements made by him should be reimbursed. 598 Laurel. 1958. the owner of the materials is entitled to remove them. the accessory. the land being considered the principal. if it does own the six buildings. 66 Phil. Bernardo was given 30 days to exercise his option. Bataclan G. whether to sell the land to Bataclan or to buy the improvements from him. Applying article 447 by analogy.R. J. Pacific prays that the judicial sale of the six buildings be declared null and void. he found Bataclan. using materials belonging to somebody else.executed on March 21. becomes the owner of the said materials with the obligation however of paying for their value. L-44606.makes constructions or works thereon. However. when he was supposedly set in occupying the said land. Since Bataclan was not a party in the first case. FACTS: Bernardo bought a parcel of land from Samonte which was located in Cavite. HELD: Article 447 of the Civil Code contemplates a principal and an accessory. Bataclan informed the court that he will not be able to pay for the price of the land. provided no substantial injury is caused to the landowner. constructions or works. Bernardo filed against him a separate case. On the other hand. The owner of the land who in good faith . and. However. However. he has the right to reimbursement for the value of his materials.

But he cannot. either to pay for the building or to sell his land to the owner of the building. Hence. 76 Phil. sown or planted in good faith. but only the possessor in good faith may retain the thing until such expenses are made good to him. (4) (5) (6) Ignacio v. ISSUE: Whether the respondent Court erred in its judgment. L-175. (b) an order to compel plaintiffs to pay them the sum of P2. said defendants should be ordered to remove the structure at their own expense and to restore plaintiffs in the possession of said lot. The lower court rendered judgment holding plaintiffs as the legal owners of the whole property but conceding to defendants the ownership of the houses and granaries built by them on the residential portion with the rights of a possessor in good faith. From the moment that he told the courts of his inability to pay for the price of the land. 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. Necessary expenses shall be refunded to every possessor.000 for the buildings. . Hilario G. upon the other hand. ART. the plaintiffs 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. August 30. The Civil Code provides: ART. sowing or planting. after the payment of the indemnity stated in articles 453 and 454. after having chosen to sell his land. this petition by defendants praying for (a) a restraint and annulment of the order of execution issued by Judge Natividad. J. C. the proper rent. The owner of land on which anything has been built. Defendants objected to this motion which. the other party fails to pay for the same. shall have the right to appropriate as his own the work. after hearing. No. and the one who sowed. the person who has defeated him in the possession having the option of refunding the amount of the expenses or paying the increase in value which the thing may have acquired in consequence thereof. under article 453. under article 361. has the such that Bataclan was to comply with the option if he wants to retain the land. Subsequently. HELD: Yes. or sell to them the residential lot for P45. Useful expenses shall be refunded to the possessor in good faith with the same right of retention. he already lost his right to retain the land. in accordance with article 361 of the Civil Code. or to oblige the one who built or planted to pay the price of the land. was granted by Judge Natividad. 1946. The owner of the building erected in good faith on a land owned by another. He is entitled to another motion only when. is entitled to retain the possession of the land until he is paid the value of his building. partly rice-land and partly residential. 361. as respondents here did. 453. 605 Moran. or (c). The owner of the land. FACTS: This case concerns the ownership of a parcel of land.R. a rehearing of the case for a determination of the rights of the parties upon failure of extra-judicial settlement.

for it amends substantially the judgment sought to be executed and is. • Dolorico II named as successor and heir his uncle Dolorico. the CFI of Cavite directed the partition of the said land. (7) (8) ORTIZ v KAYANAN (1979. furthermore. Issue: WON petitioner is entitled to fruits while Comintan and Zamora have yet to pay the indemnity due petitioner. possessor in good faith is entitled to fruits. • All this time Ortiz was in possession and cultivation of the property. ruled that Florencio should have the choice to either appropriate to himself that part of the house standing on his lot or to require Juan and Isidro to pay the price of the land. • Also we must consider that tolls were collected from portions with no improvements of petitioner. this being considered as civil fruits. (9) Ignao v. Comintan and Zamora are to reimburse him for P13. therefore. offensive to articles 361 and 453 of the Civil Code. However.R. that the order of Judge Natividad compelling defendantspetitioners to remove their buildings from the land belonging to plaintiffs-respondents only because the latter chose neither to pay for such buildings not to sell the land. Decision: NO. If petitioner was not found to be the winner. No.5 was allotted to the petitioner. • Court found Ortiz to be in good faith. A geodetic engineer surveyed the land and it was found out that Juan and Isidro occupied a total of 101sqm of Florencio’s lot. A total of 133.5 sqm was allotted to the petitioner’s uncles while the remaining 266. • Petitioner contends that he is entitled to the fruits of the property while the P13. This is known as a right to retention. it ordered to sell to Juan and Isidro those portions occupied by them because it is the “workable solution”. C. Antonio) Facts: Homestead Application Lot belonged to Dolorico II. The trial court which based its decision on Article 448 of the Civil Code. therefore he really has no right to said fruits. This right ceases upon defects being known.000. Ortiz is to retain possession until the amount is paid. J. • CA affirmed RTC • Respondent Judge discovered that after the decision of the lower courts. Ortiz’s ward located in Barrio Cabuluan.The Court holds. FACTS: Petitioner Florencio Ignao and his uncles Juan Ignao and Isidro Ignao were coowners of a 534sqm land located in Cavite. 72876. when Juan and Isidro built their houses they encroached upon a portion of land belonging to Florencio. • Before possession is legally interrupted. January 18. but held the public bidding to be valid. Calauag. • Dolorico relinquished rights over property in favour of Comintan and Zamora. Ortiz collected tolls on portions of the land even if he had not introduced any improvements on said portions estimated to amount to P25. 1991. 193 SCRA 17 Fernan. for the creditor to obtain payment of a debt. then died. Pursuant to an action for partition filed by petitioner. But since the first option seems to be impractical. Intermediate Appellate Court G. Upon appeal petitioner .632.632 has yet to be paid. Quezon . is null and void.

failed to deposit the value of the land. Also.000. However. Filipinas Colleges. Blas filed a motion for execution of her judgment representing the unpaid portion of the price of the house sold to Filipinas which was granted.00 that the spouses Timbang had bid for the building at the Sheriff's sale. However. G. ISSUE: Whether or not Article 448 of the Civil Code is applicable in the case at bar.00. As to the workable solution applied by the lower court. Inc.750. Thus. the co-ownership has already been terminated by virtue of the partition. Garcia Timbang. the appellate court affirmed in toto the decision of the trial court. 2-a on which the building sold in the auction sale is situated. they are ordered to pay the spouses Timbang in the amount of P15. 1989. Levy was made on the house in virtue of the writs of execution. within the 90-day period set by the Court. v. among other things.R. September 29. The spouses Timbang contends that because the builder in good faith has failed to pay the price of the land after the owners thereof exercised their option under Article 448 of the Civil Code.859.00 for the same.90 plus such other amount which said spouses might have paid or had to pay. in which even they would have to pay Filipinas Colleges. the Court of Appeals held. and c) that the undivided interest of the Filipinas in the lot should be sold to satisfy the unpaid portion of the judgment in favor of Blas and against Filipinas in the amount of P8. thus. It is true that Article 448 cannot be applied where a co-owner builds upon a land owned in common. J. No.807. L-12812.34 so the spouses Timbang made known to the court their decision that they had chosen not to appropriate the building but to compel Filipinas Colleges. Inc.34 undivided interest in Lot No. whether it might seem impractical. or would compel the latter to acquire the land and pay the price thereof. Meanwhile. which after liquidation was fixed at P32. the sum of P19. the Sheriff of Manila sold the building in public auction in favor of the spouses Timbang.contends that Article 448 cannot be applied because they are co-owners of he subject property. Article 448 now applies since the builder is not anymore considered as an owner of the land where the house was built. HELD: Yes. the builder lost his right of retention provided in Article 546 and that by . Maria Gervacio Blas was also declared to be a builder in good faith of the school building constructed in the lot in question and was entitled to be paid the amount of P19. et. in case that Filipinas Colleges.000.. 164 SCRA 287 Barrera. (10) Filipinas Colleges. On the other hand. Several motion were the subsequently filed before the lower court wherein the court held that: a) the Sheriff's certificate of sale covering a school building sold at public auction was null and void unless within 15 days from notice of said order spouses Timbang shall pay to Blas the sum of P5. b) that Filipinas is owner of 245. a writ of execution was issued. the Timbangs are ordered to make known to the court their option under Article 448 of the Civil Code whether they would appropriate the building in question.200. the landowner may choose to appropriate the improvements.00/32.00 minus the sum of P5. FACTS: After appropriate proceedings. Filipinas Colleges would lose all its rights to the land and the spouses Timbang would then become the owners thereof. Inc. Inc. al.859.. Then. Inc. in the case at bar. the same cannot be upheld because Article 448 clearly states that the right of choice belongs to the land owner and not upon the builder and the courts.00.859. failed to pay the sum of P32. for the payment of the sum of P32. that Filipinas Colleges. are declared to have acquired the rights of the spouses Timbang in the questioned lots. Inc. If that is the case.859. As a consequence of which.750. as the highest bidders.34 which was granted by the Court.34.

nevertheless there was nothing said that as a consequence thereof. a motion for the approval of the company’s exercise of option and for satisfaction of judgment. The order of the lower court directing the Timbang spouses. the latter becomes automatically the owner of the improvement under Article 445. no basis for the respondent judge to deny the petitioner’s motion to avail of its option to appropriate the improvements made on its property. in the present case. the spouses Timbang as owners of the land automatically became the owners ipso facto of the school building. The case of Bataclan vs Bernardo cannot be applied in this case in the sense that although it is true 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. the builder loses entirely all rights over his own building. FACTS: Petitioner Manotok Realty filed a complaint against Nilo Madlangawa for recovery of possession with damages with the Court of First Instance of Manila. Tecson G. Neither can the judge deny the issuance of a writ of execution because the private respondent was adjudged a builder in good faith or on the ground of “peculiar .750. ISSUE: Whether or not respondent Judge Tecson can deny petitioner’s (landowner) motion to avail of its option. of the Clara Tambunting Subdivision until after he shall have been reimbursed by the company the sum of P7. 1988. There is. 1977. Article 546 gives him the corollary right of retention of the property until he is indemnified by the owner of the land. Not satisfied with the trial court’s decision.500. which would justify the conclusion of appellants that.operation of Article 445. without pronouncement as to costs. to pay in cash the amount of their bid in the sum of P5. J.R. therefore. Block 1. the Court of Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid balance of the purchase price of the school building.00 is therefore correct. Based on Article 448 and 546 of the New Civil Code. 164 SCRA 287 Gutierrez Jr. ISSUE: Whether or not the spouses Timbang automatically become the owners of the building upon failure of Filipinas to pay the value of the land. Hence. the builder's right of retention provided in Article 546 is lost. Blas is actually a lien on the school building are concerned. it elevated the case to the Supreme Court. HELD: No. 448 and 546. No. this petition is filed. upon the failure of the builder to pay the value of the land. petitioner appealed to the Court of Appeals and upon affirming the trial court’s decision. Judge Tecson denied the motion for approval. the Supreme Court issued a resolution denying Manotok’s petition for lack of merit. when such is demanded by the landowner. Said court rendered judgment declaring Madlangawa as a builder-possessor in good faith. Petitioner then filed with the trial court (Judge Jose H. as successful bidders. ordering the company to recognize the right of Madlangawa to remain in Lot 345. However. There is nothing in the language of these two articles. Even this second right cannot be exercised if the value of the land is considerably more than that of the building. In addition to the right of the builder to be paid the value of his improvement. (11) Manotok Realty v. Also. HELD: No. Tecson). the owner of the land has the right to choose between appropriating the building by reimbursing the builder of the value thereof or compelling the builder in good faith to pay for his land..00. On July 13. L-47475 August 19.

respectively. In case of disagreement. HELD: 1. .) It depends. (12) Spouses Del Ocampo v. like.circumstances which supervened after the institution of this case. 2. 1998. if they so decide. Otherwise. it was shown in the sketch plan that the house of the defendant occupied the portion with an area of 5 square meters of Lot 1161 – A of plaintiffs. 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. April 15. No. conducted a survey and recommended that the property be divided into two lots: Lot 1161 – A with an area of 30 square meters for the plaintiffs and Lot 1161 – B with an area of 15 square meters for the defendants. ISSUES: 1.) Whether or not the house of the defendant Abesia should be removed and demolished at their expense. Article 448 of the Civil Code cannot apply where a co-owner builds. 160 SCRA 379 Gancayco. Of course. FACTS: Plaintiffs – spouses Concepcion Fernandez and Estanislao Del Campo and defendant Bernarda Fernandez Abesia are co-owners of parcel of land with an area of 45 square meters and divided in the proportion of 2/3 and 1/3 share each. The only right given to the builder in good faith is the right of reimbursement of necessary expenses for the preservation of the land. Under Article 448 of the Civil Code. The defendant shall then pay the reasonable rent to the plaintiffs upon such terms and conditions that they may agree. if the price asked for is considerably much more than the value of the portion of the house of defendants built thereon. the right to appropriate the works or improvements or to oblige the one who built or planted to pay the proper price of the land belongs to the owner of the land.R. and the situation is governed by the rules of coownership. at their own expense. for instance. then the latter cannot be obliged to buy the land. as in this case. A commissioner. The co-owner is not a third person under the circumstances. J. plants or sows on the land owned in common for then. the rights of a builder in good faith. Applying Article 448 of the Civil Code. L-49219. the builder cannot compel the landowner to sell such land to the former.) Whether or not Article 448 of the Civil Code. 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. 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. However. plant or sow upon land that exclusively belongs to another but of which he is a co-owner. the trial court shall fix the terms thereof. who is appointed by the court. defendants may demolish or remove the said portion of their house. 2. The parties asked the court to finally settle and adjudicate who among the parties should take possession of the 5 square meters of land. the plaintiffs may oblige the defendants to pay the price of the land occupied by their house. Abesia G. However. However. when.) Yes. then the provisions of Article 448 of the new Civil Code should apply. the introduction of certain major repairs of and other substantial improvements…” because the option given by law belongs to the owner of the land. he did not build. should be applied to the plaintiff-spouses Del Campo.

As in this case. which later sold the same to the Nuguid spouses for P103. Court of Appeals G. Jr. good faith and bad faith becomes irrelevant.000 on October 12.00. necessarily. by analogy. 1995. he was entitled to retain ownership of the building and. The lower court ruled in favor of the private respondents. considering that the primary intent of Article 448 is to avoid a state of forced coownership and that the parties agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for the improvements may be paid. since the owner himself was the one who constructed the improvement. as well as of the portion of the lot where the building has been constructed.R. FACTS: Pedro Pecson owned a commercial lot situated in Kamias street. Quezon City. 115814.000. The building.000 from June 23. the indemnity may be applied. 1993 to September 23. Since the spouses have opted to appropriate the apartment building. The Spouses Nuguid then filed a motion for delivery of possession of the lot and the apartment building. The court ruled that though Article 448 do not apply in the case at bar. 1983. No. the spouses have yet to pay Pecson for the construction costs. The lower court judged in favor of Pecson. HELD: No. the commercial lot owned was sold at a public auction. but subject to the reimbursement to Pecson of the cost of constructing the apartment building minus the rents due to the spouses (calculated at P21. The Court ruled that since the spouses still haven’t reimbursed Pecson for the cost of construction of the building. Pecson then challenged the sale. one of whom has built some works. It was purchased by Nepomuceno. two-storey apartment building. contrary to the claim of the Nuguid spouses. and along with it. declaring that the apartment building was indeed not included in the subject sale. alleging that the apartment building. This is so because the right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built. (14) (15) . was not included in the sale. sowing or planting may have been made in good faith or in bad faith. The petitioner not having been so paid. the spouses then made a move to eject Pecson and as well as the tenants residing therein. Article 448 refers to a land whose ownership is claimed by two or more parties. or sown or planted something. The Court of Appeals affirmed the same. 244 SCRA 407 Davide. 1993). the latter has the right to retain the property. although they differ as to the basis of the indemnity. Pecson is thus entitled to the possession and enjoyment of the apartment building. the income therefrom. May 26. By its clear language. With the said decision at hand. the fruits of which during such possession.(13) Pecson v. But because of failure to pay realty taxes amounting to P12. until he is paid the proper indemnity. J. planted or sown. However. However. ISSUE: Whether the Nuguid Spouses can eject Pecson even if reimbursement hasn’t been given for the construction costs. on which he built a a four-door.

) No. by extraneous evidence or by suit for recovery of the property of the true owner.R. Furthermore. Inc. Court of Appeals G. 1975 for the preparation of lot plan. Under the Contract to Sell on installment. Has been shown.) Yes. Panganiban. 1996. Unless one is versed in the science of surveying. FACTS: On March 26. FACTS: Technogas purchased a parcel of land from Pariz Industries. the buildings and other structures were already in existence. Technogas is deemed to have stepped into the shoes of the seller with regard to all the rights of ownership of the property over the immovable sold. for it is only then that both parties will have been aware that a problem exists with regard to their property rights. Kee can exercise possession over the parcel of land even before the completion of installment payments. J. February. when both parties shall have become aware of it. Furthermore. 1975. Thus. ISSUES: 1.00 and another on January 27. Wilson Kee on installment Lot 8 from C. Only then will the occasion for exercising the option arise. Good faith consists in the belief of the builder that the land he is building on is his. 10. No. the landowner’s exercise of his option can only take place after the builder shall have to know the intrusion – in short. The following year. An article 527 of the New Civil Code presumes good faith. the structures should be presumed to have been built in good faith. upon delivery of the property to Pariz Industries. Pariz Industries. Portions of the buildings and wall bought by Technogas together with the land from Pariz Industries are occupying a portion of Uy’s adjoining land. the exclusive real estate agent of petitioner. as buyer.T. Kee paid CTTEI relocation fee of Php 50. On January 20. 108894. Similarly. February 1. HELD: 1. Consequently. including the right to compel Uy to exercise either of the two options under Article 448 of the New Civil Code. 79688. 2. The knowledge of some encroachment was only made known to both parties after their parties of their respective parcels of land. These . (17) Pleasantville Development Corporation v. 268 SCRA 5 Panganiban. 1997.(16) Technogas Philippines Manufacturing Corporation v. Torres Enterprises Inc. 1974. contrary as to the good faith of Technogas has not been overthrown. No. J.) Whether or not petitioner Technogas Philippines has stepped into the shoes of the seller. There is no question in that when Technogas purchased the land from Pariz Industries.R. Uy bought another lot adjoining the lot of Technogas. it is not clear as to who actually built these structures but it can be assumed that the predecessor-ininterest of Technogas. The good faith ceases from the moment the defects in the title are made known to the possessor. In the same year. Court of Appeals G. Eduardo Uy purchased the land adjacent to it. to Technogas. 2. Since no proof exists to show that the builder built the encroaching structures in bad faith. possession acquired in good faith does not lose this character except in case and from the moment facts exist which show that the possessor is not aware that he possesses the thing improperly or wrongfully. no one can determine the precise extent or location of his property by merely examining his paper title. and his ignorance of any defect or flaw in his title. as seller.) Whether or not petitioner Technogas Philippines is a possessor in bad faith. the latter acquired ownership of the property. did so.

petitioner has the burden of proving bad faith on the part of Kee. in turn filed a third-party complaint against Pleasantville Development Corporation and CTTEI. After the preparation of the lot plan and a copy was presented to Kee. Kee is in good faith. Kee. to Eldred Jardinico which at that time is vacant. Edith Robillo purchased from Pleasantville Development Corporation Lot 9. It was only that time that he discovered that Wilson Kee take possession of that lot and that the same have introduced improvements to the same lot. Kee refused which made Jardinico filed with the Municipal Trial Court in Cities.) Whether or not. The Appellate Court overturned the ruling of the RTC and held the Kee was a builder in good faith and the erroneous delivery was attributable to the negligence of CTTEI. petitioner points to Kee's violation of paragraphs 22 and 26 of the Contract of Sale on Installment. Thus. Octaviano pointed Lot 9. but may not be the basis to negate the presumption that Kee was a builder in good faith. Wilson Kee is a builder in good faith. 106367 in his name. On appeal. she sold the said parcel of land. Such violations have no bearing whatsoever on whether Kee was a builder in good faith. Hence the instant petition filed by Pleasantville. 1981. Kee constructed his residence on the said Lot 9 together a store. demanded that Kee vacate Lot 9 and remove all the improvements introduced by the latter. but failed. on his state of mind at the time he built the improvements on Lot 9. repair shop and other improvements. that is. Sometime in 1975. employee of CTTEI accompanied Donnabelle Kee the wife of Wilson Kee to inspect Lot 8. the Regional Trial Court held that Pleasantville and CTTEI were not negligent and that Kee was in bad faith. Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or flaw in his title. These alleged violations may give rise to petitioner's cause of action against Kee under the said contract (contractual breach). Lot 9. Unfortuantely. Kee believed that said lot was what he bought from petitioner. Bacolod City a complaint for ejectment with damages against Kee. Upon paying completely to Robillo. And as good faith is presumed. Branch 3. through his lawyer. Kee appealed directly to the Supreme Court which referred the matter to the Court of Appeals. To demonstrate Kee's bad faith. Petitioner failed to prove otherwise. On January 30. He was not aware that the lot delivered to him was not Lot 8. 2. ISSUES: 1. HELD: 1. Jardinico confronted Kee and tried to reach for an amicable settlement. Zenaida Octaviano.) Whether or not petitioner is liable for the acts of its agent CTTEI. 1978 Transfer Certificate of Title No. It has no merit. Thereafter.) Petitioner fails to persuade the Court to abandon the findings and conclusions of the Court of Appeals that Kee was a builder in good faith. At the time he built improvements on Lot 8. The MTCC held that the erroneous delivery was attributable to CTTEI and the Kee has no rights to Lot 9 because of the rescission made by CTTEI of their contract due to Kee’s failure to pay the installment. . MTCC also held that Kee must pay reasonable rental for the use of Lot 9 and furthermore he cannot claim reimbursement for the improvements introduced by him.amounts were paid by Kee before he took possession of Lot 8. Jardinico. Jardinico secured from the Register of Deeds of Bacolod City on December 19.

The rule is that the principal is responsible for the acts of the agent done within the scope of his authority. But CTTEI was acting within its authority as the sole real estate representative of petitioner when it made the delivery to Kee. per Articles 1909 and 1910 of the Civil Code. It was error for the Court of Appeals to make a "slight modification" in the application of such law [by holding petitioner and CTTEI solidarily liable]. Arts. 546 and 548 of the Civil Code). and should bear the damage caused to third persons.2. the petitioner should be held liable for damages.e. 448. respectively.) Yes. as principal of CTTEI. On the other hand. on the ground of "equity". it was negligent. . are regulated by law (i. It is this negligence that is the basis of petitioner's liability. as builder in good faith and owner in good faith.. only that in so acting. The rights of Kee and Jardinico vis-a-vis each other. For such negligence. the agent who exceeds his authority is personally liable for the damage.