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Bicerra v. Teneza [G.R. No. L-16218. November 29, 1962.

]
Bicerra v. Teneza
[G.R. No. L-16218. November 29, 1962.]
En Banc, Makalintal (J): 10 concur.
FACTS: The Bicerras are supposedly the owners of the house worth P200, built on a lot owned by them in Lagangilang, Abra;
which the Tenezas forcibly demolished in January 1957, claiming to be the owners thereof. The materials of the house were
placed in the custody of the barrio lieutenant. The Bicerras filed a complaint claiming actual damages of P200, moral and
consequential damages amounting to P600, and the costs. The CFI Abra dismissed the complaint claiming that the action was
within the exclusive (original) jurisdiction of the Justice of the Peace Court of Lagangilang, Abra.
ISSUE:
W/N the action involves title to real propety.
W/N the dismissal of the complaint was proper.
HELD:
The Supreme Court affirmed the order appealed. Having been admitted in forma pauperis, no costs were adjudged.
1. House is immovable property even if situated on land belonging to a different owner; Exception, when demolished
A house is classified as immovable property by reason of its adherence to the soil on which it is built (Article 415, paragraph 1,
Civil Code). This classification holds true regardless of the fact that the house may be situated on land belonging to a different
owner. But once the house is demolished, as in this case, it ceases to exist as such and hence its character as an immovable
likewise ceases.
2. Recovery of damages not exceeding P2,000 and involving no real property belong to the Justice of the Peace Court
The complaint is for recovery of damages, the only positive relief prayed for. Further, a declaration of being the owners of the
dismantled house and/or of the materials in no wise constitutes the relief itself which if granted by final judgment could be
enforceable by execution, but is only incidental to the real cause of action to recover damages. As this is a case for recovery of
damages where the demand does not exceed PhP 2,000 and that there is no real property litigated as the house has ceased to exist,
the case is within the jurisdiction of the Justice of the Peace Court (as per Section 88, RA 296 as amended) and not the CFI
(Section 44, id.)

Davao Sawmill Co. vs Castillo


61 PHIL 709
GR No. L-40411
August 7, 1935
A tenant placed machines for use in a sawmill on the landlord's land.
FACTS
Davao Sawmill Co., operated a sawmill. The land upon which the business was conducted was leased from another person. On
the land, Davao Sawmill erected a building which housed the machinery it used. Some of the machines were mounted and placed
on foundations of cement. In the contract of lease, Davo Sawmill agreed to turn over free of charge all improvements and
buildings erected by it on the premises with the exception of machineries, which shall remain with the Davao Sawmill. In an
action brought by the Davao Light and Power Co., judgment was rendered against Davao Sawmill. A writ of execution was
issued and the machineries placed on the sawmill were levied upon as personalty by the sheriff. Davao Light and Power Co.,
proceeded to purchase the machinery and other properties auctioned by the sheriff.
ISSUE
Are the machineries real or personal property?
HELD
Art.415 of the New Civil Code provides that Real Property consists of:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry ot works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said
industry or works;
Appellant should have registered its protest before or at the time of the sale of the property. While not conclusive, the appellant's
characterization of the property as chattels is indicative of intention and impresses upon the property the character determined by
the parties.
Machinery is naturally movable. However, machinery may be immobilized by destination or purpose under the following
conditions:

General Rule: The machinery only becomes immobilized if placed in a plant by the owner of the property or plant.
Immobilization cannot be made by a tenant, a usufructuary, or any person having only a temporary right.
Exception: The tenant, usufructuary, or temporary possessor acted as agent of the owner of the premises; or he intended to
permanently give away the property in favor of the owner.
As a rule, therefore, the machinery should be considered as Personal Property, since it was not placed on the land by the owner of
the said land.

Pastor Ago v CA
Posted on June 21, 2013
Pastor D. Ago vs CA, Hon. Montao Ortiz, The Provincial Sheriff of Surigao, and Grace Park Engineering, Inc.
GR No. L-17898
October 31, 1962
FACTS
Ago bought sawmill machineries and equipments from Grace Park Engineer Domineering, Inc. (GPED) A chattel mortgage was
executed over the said properties to secure the unpaid balance of P32,000, which Ago agreed to pay in installment basis.
Because Ago defaulted in his payment, GPED instituted extra-judicial foreclosure proceedings of the mortgage. To enjoin the
foreclosure, Ago instituted a special civil case in the CFI of Agusan. The parties then arrived at a compromise agreement.
However, a year later, Ago still defaulted in his payment. GPED filed a motion for execution with the lower court, which was
executed on September 23, 1959.
Acting upon the writ of execution, the Provincial Sheriff of Surigao levied upon and ordered the sale of the sawmill machineries
and equipment.
Upon being advised that the public auction sale was set on December 4, 1959, Ago filed a petition for certiorari and prohibition
on December 1, 1959 with the CA. He alleged that his counsel only received the copy of the judgment on September 25, 1959
two days after the execution of the writ; that the order of sale of the levied properties was in grave abuse of discretion and in
excess of jurisdiction; and that the Sheriff acted illegally by levying the properties and attempting to sell them without prior
publication of the notice of sale thereof in some newspaper of general circulation as required by the Rules of Court.
The CA issued a writ of preliminary injunction against the Sheriff, but it turned out that the properties were already sold on
December 4, 1959. The CA ordered the Sheriff to suspend the issuance of the Certificate of Sale until the decision of the case.
The CA then rendered its decision on November 9, 1960.
ISSUES
1. Is the fact that petitioner was present in open court as the judgment was rendered, sufficient notice of the said judgment?
2. Was the Sheriff's sale of the machineries and equipment at a public auction valid despite lack of publication of the notice of
sale?
HELD
1) No. The mere pronouncement of the judgment in open court does not constitute a rendition of judgment.
The filing of the judge's signed decision with the Clerk of Court constitutes the rendition of a valid and binding judgment.
Sec. 1, Rule 35 of the Rules of Court require that all judgments be rendered in writing, personally and directly prepared by
the judge, and signed by him, stating clearly and distinctly the facts and the law on which it is based, filed with the clerk
of the court.
Prior to the filing, the decision could still be subject to amendment and change and may not constitute the real judgment of the
court.
Moreover, the hearing of the judgment in open court does not constitute valid notice thereof. No judgment can be notified to the
parties unless it has previously been rendered.
Sec.7 of Rule 27 expressly requires that final orders or judgments be served either personally or by registered mail.
The signed judgment not having been served upon the petitioner, said judgment could not be effective upon him who had not
received it. As a consequence, the issuance of the writ of execution is null and void, having been issued before petitioner was
served a copy of the decision, personally or by registered mail.
2) The subject sawmill machineries and equipment became real estate properties in accordance with the provision of Art. 415
(5) of the NCC:
ART. 415 The following are immovable property:
xxxx

(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said
industry or works;
The installation of the sawmill machineries in the building of Gold Pacific Sawmill, Inc., for use in the sawing of logs carried on
in the said building converted them into Real Properties as they became a necessary & permanent part of the building or real
estate on which the same was constructed.
And if they are judicially sold on execution without the necessary advertisement of sale by publication in a newspaper as required
in Sec.16 of Rule 39 of the Rules of Court, the sale made by the sheriff would be null and void.

RICARDO PRESBITERO vs, FERNANDEZ (Immovable Calinisan)


Facts:
1) ESPERIDION Presbitero failed to furnish Nava the value of the properties under litigation.
2) Presbitero was ordered by the lower court to pay Nava to settle his debts.
3) Nava's counsel still tried to settle this case with Presbitero, out of court. But to no avail.
4) Thereafter, the sheriff levied upon and garnished the sugar quotas allotted to the plantation and adhered to the Ma-ao Mill
District and registered in the name of Presbitero as the original plantation owner.
5) The sheriff was not able to present for registration thererof to the Registry of Deeds.
6) The court then ordered Presbitero to segregate the portion of Lot 608 pertaining to Nava from the mass of properties belonging
to the defendant within a period to expire on August 1960.
7) Bottomline, Presbitero did not meet his obligations, and the auction sale was scheduled.
8) Presbitero died after.
9) RICARDO Presbitero, the estate administrator, then petitioned that the sheriff desist in holding the auction sale on the ground
that the levy on the sugar quotas was invalid because the notice thereof was not registered with the Registry of Deeds.
Issue: W/N the sugar quotas are real (immovable) or personal properties.
Held:
1) They are real properties.
2) Legal bases:
a) The Sugar Limitation Law
xxx attaching to the land xxx (p 631)
b) RA 1825
xxx to be an improvement attaching to the land xxx (p 631)
c) EO # 873
"plantation" xxx to which is attached an allotment of centrifugal sugar.
3) Under the express provisions of law, the sugar quota allocations are accessories to the land, and cannot have independent
existence away from a plantation.
4) Since the levy is invalid for non-compliance with law, xxx the levy amount to no levy at all.
ASSOCIATED INSURANCE and SURETY COMPANYINC., plaintiff,
vs.
ISABEL IYA, ADRIANO VALINO and LUCIA VALINO, defendants
Facts:
Valino&Valino were the owners and possessors of a house of strong materials in Rizal, which they purchased on installment
basis. To enable her to purchase on credit rice from NARIC, Valino filed a bond (P11,000) subscribed by Associated Insurance
and Surety Co Inc, and as a counter-guaranty, Valino executed an alleged chattel mortgage on the aforementioned house in favour
of the surety company. At the same time, the parcel of land which the house was erected was registered in the name of Philippine
Realty Corporation
Valino, to secure payment of an indebtedness (P12,000) executed a real estate mortgage over the lot and the house in favour of
Iya
Valino failed to satisfy her obligation to NARIC, so the surety company was compelled to pay the same pursuant to the
undertaking of the bond. In turn, surety company demanded reimbursement from Valino, and as they failed to do so, the company
foreclosed the chattel mortgage over the house. As a result, public sale was conducted and the property was awarded to the surety
company
The surety company then learned of the existence of the real estate mortgage over the lot and the improvements thereon; thus,
they prayed for the exclusion of the residential house from the real estate mortgage and the declaration of its ownership in virtue
of the award given during bidding.
Iya alleged that she acquired a real right over the lot and the house constructed thereon, and that the auction sale resulting from
the foreclosure of chattel mortgage was null and void
Surety company argued that as the lot on which the house was constructed did not belong to the spouses at the time the chattel
mortgage was executed, the house might be considered as personal property, and they prayed that the said building be excluded
from the real estate mortgage

Issue:
There is no question over Iyas right over the land by real estate mortgage; however, as the building instructed thereon has been
the subject of two mortgages, controversy arise as to which of these encumbrances should receive preference over the other
Held:
The building is subject to the real estate mortgage, in favour of Iya. Iyas right to foreclose not only the land but also the building
erected thereon is recognized
While it is true that real estate connotes the land and the building constructed thereon, it is obvious that the inclusion of the
building, separate and distinct from the land, in the enumeration of what may constitute real properties (Article 415), could only
mean that a building is by itself an immovable property. Moreover, in view of the absence of any specific provision to the
contrary, a building is an immovable property irrespective of whether or not said structure and the land on which it is adhered to
belong to the same owner
A building certainly cannot be divested of its character of a realty by the fact that the land on which it is constructed belongs to
another.
In the case at bar, as personal properties could only be the subject of a chattel mortgage and as obviously the structure in question
is not one, the execution of the chattel mortgage covering said building is clearly invalid and a nullity. While it is true that said
document was correspondingly registered in Chattel Mortgage Registry of Rizal, this act produced no effect whatsoever, for
where the interest conveyed is in the nature of real property, the registration of the document in the registry of chattels is merely a
futile act. Thus, the registration of the chattel mortgage of a building of strong materials produced no effect as far as the building
is concerned

BERKENKOTTER VS. CU UNJIENG E HIJOS (immovable - Delgado)


Facts: Appellant Berkenkotter appeals the judgement to CFI of Manila. Mabalacat Sugar Company obtained a loan from Cu
Unjieng e Hijos. The loan was then secured by a first mortgage constituted on two parcels of land with all its buildings,
improvements, sugar-cane mill, steel railway, telephone line, apparatus, utensils and whatever forms part the necessary
complement of said sugar-cane mill. Shortly after obtaining a loan, Mabalacat decided to increase its capacity by buying
additional machinery and equipment. To carry out this plan, the president of Mabalacat, Mr. Green, proposed to Mr. Berkenkotter
to advance the necessary amount for the purchase of the effects with the promise that it would be reimbursed after Mabalacat
obtains another loan to from Cu Unjieng. Mr. Green furnished the amount adding to its existing credit in Mabalacat amounting to
47 thousand (unpaid salary and loan). Machinery and equipment were bought. Mabalacat obtained another 75,000 Php loan from
Cu Unjieng and offered the machinery and equipment as added security.
Appelllant contends that installation of machinery and equipment claimed by him was not permanent in character aas much as
Mr. Green in proposing to him to advance money said that when their new loan to Cu Unjieng ends in futility, the machinery and
equipment will be security. Thus Mr. Green binds himself not to mortgage it or encumber to anyone until he is reimbursed.
Issue: W/N lower court erred in declaring that the additional machinery and equipment as improvement incorporated with the
sugar central are subject to the deed of mortgage executed in favor of Cu Unjieng.
Held: Yes. It is a well established rule that the mortgage on real properties includes the improvements of the same. The Civil
Code gives the character of real propertyto machinery, liquid containers, instruments or implements intended by the owner of
any building or land for use in connection with any industry or trade being carried on therein and which are expressly adaptedto
meet the requirements of such trade and industry.
Installation or machinery and equipment converted them into real property by reason of their purpose, it cannot be said that their
incorporation therewith was not permanent in character because, as essential and principal elements of sugar central, without
them sugar central would be unable to function or carry the industrial purpose for which it is established.

Mindanao Bus Company vs City Assessor


116 PHIL 501
GR No. L-17870
September 29, 1962
FACTS
The City Assessor of Cagayan de Oro City assessed a realty tax on several equipment and machineries of Mindanao Bus Co.
These equipment were placed on wooden or cement platforms and can be moved around in the bus companys repair shop. The
bus company appealed the assessment to the Board of Tax Appeals on the ground that the same are not realty. The Board of Tax
Appeals of the City, however, sustained the city assessor. Thus, the bus company appealed to the Court of Tax Appeals, which
likewise sustained the city assessor.
HELD
Art. 415 of the NCC classifies the following as immovable property:
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry or works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said
industry or works;

Note that the stipulation expressly states that the equipment are placed on wooden or cement platforms. They can be moved
around and about in petitioner's repair shop.
Before movables may be deemed immobilized in contemplation of Article 415 (5), it is necessary that they must first be
essential and principal elements of an industry or works without which such industry or works would be unable to function
or carry on the industrial purpose for which it was established.
In this case, the tools and equipment in question are by their nature, not essential and principal elements of Mindanao Bus Co.s
business of transporting passengers and cargoes by motor trucks. They are merely incidentals acquired as movables and used
only for expediency to facilitate and/or improve its service. Even without such tools and equipments, its business may be carried
on.
Aside from the element of essentiality the Art.415 (5) also requires that the industry or works be carried on in a building or on a
piece of land. A sawmill would also be installed in a building on land more or less permanently, and the sawing is conducted in
the land/building.
However, in the instant case, the equipments in question are destined only to repair or service the transportation business, which
is not carried on in a building or permanently on a piece of land, as demanded by law. The equipments in question are not
absolutely essential to the petitioner's transportation business, and petitioner's business is not carried on in a building, tenement or
on a specified land.
As such, the equipments in question are not deemed real property because the transportation business is not carried on in a
building or permanently on a piece of land, as demanded by law.
The transportation business could be carried on without the repair or service shop, if its rolling equipment is repaired or
serviced in another shop belonging to another.
Therefore, the imposition of realty tax on the maintenance and repair equipment was not proper because the properties involved
were not real property under Article 415 (5).
Board of Assessment Appeals QC v MERALCO
Posted on June 22, 2013
Board of Assessment Appeals, Q.C. vsMeralco
10 SCRA 68
GR No. L-15334
January 31, 1964
FACTS
On November 15, 1955, the QC City Assessor declared the MERALCO's steel towers subject to real property tax. After the
denial of MERALCO's petition to cancel these declarations, an appeal was taken to the QC Board of Assessment Appeals, which
required respondent to pay P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956.
MERALCO paid the amount under protest, and filed a petition for review in the Court of Tax Appeals (CTA) which rendered a
decision ordering the cancellation of the said tax declarations and the refunding to MERALCO by the QC City Treasurer of
P11,651.86.
ISSUE
Are the steel towers or poles of the MERALCO considered real or personal properties?
HELD
Pole long, comparatively slender, usually cylindrical piece of wood, timber, object of metal or the like; an upright standard to
the top of which something is affixed or by which something is supported.
MERALCO's steel supports consists of a framework of 4 steel bars/strips which are bound by steel cross-arms atop of which are
cross-arms supporting 5 high-voltage transmission wires, and their sole function is to support/carry such wires. The exemption
granted to poles as quoted from Part II, Par.9 of respondent's franchise is determined by the use to which such poles are
dedicated.
It is evident that the word poles, as used in Act No. 484 and incorporated in the petitioner's franchise, should not be given a
restrictive and narrow interpretation, as to defeat the very object for which the franchise was granted. The poles should be taken
and understood as part of MERALCO's electric power system for the conveyance of electric current to its consumers.
Art. 415 of the NCC classifies the following as immovable property:
(1) Lands, buildings, roads and constructions of all kinds adhered to the soil;
xxx

(3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without
breaking the material or deterioration of the object;
xxx
(5) Machinery, receptacles, instruments or implements intended by the owner pf the tenement for an industry ot works
which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said
industry or works;
Following these classifications, MERALCO's steel towers should be considered personal property. It should be noted that the
steel towers:
(a) are neither buildings or constructions adhered to the soil;
(b) are not attached to an immovable in a fixed manner they can be separated without breaking the material or
deterioration of the object;
are not machineries, receptacles or instruments, and even if they are, they are not intended for an industry to be carried
on in the premises.
TUMALAD vs. VICENCIO, G.R. No. L-30173, September 30, 1971
TUMALAD V. VICENCIO
41 SCRA 143
FACTS:
Vicencio and Simeon executed a chattel mortgage in favor of plaintiffs Tumalad over their house, which was being rented by
Madrigal and company. This was executed to guarantee a loan, payable in one year with a 12% per annum interest.
The mortgage was extrajudicially foreclosed upon failure to pay the loan. The house was sold at a public auction and the
plaintiffs were the highest bidder. A corresponding certificate of sale was issued. Thereafter, the plaintiffs filed an action for
ejectment against the defendants, praying that the latter vacate the house as they were the proper owners.
ISSUE:
W/N the chattel mortgage was null and void ab initio because only personal properties can be subject of a chattel mortgage.
HELD:
Certain deviations have been allowed from the general doctrine that buildings are immovable property such as when through
stipulation, parties may agree to treat as personal property those by their nature would be real property. This is partly based on the
principle of estoppel wherein the principle is predicated on statements by the owner declaring his house as chattel, a conduct that
may conceivably stop him from subsequently claiming otherwise.
In the case at bar, though there be no specific statement referring to the subject house as personal property, yet by ceding, selling
or transferring a property through chattel mortgage could only have meant that defendant conveys the house as chattel, or at least,
intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise.
NAVARRO vs. PINEDA G. R, No. L-18456 November 30 1963
NAVARRO V. PINEDA
9 SCRA 631

FACTS:
Pineda and his mother executed real estate and chattel mortgages in favor of Navarro, to secure a loan they got from the latter.
The REM covered a parcel of land owned by the mother while the chattel mortgage covered a residential house. Due to the
failure to pay the loan, they asked for extensions to pay for the loan. On the second extension, Pineda executed a PROMISE
wherein in case of default in payment, he wouldnt ask for any additional extension and there would be no need for any formal
demand. In spite of this, they still failed to pay.
Navarro then filed for the foreclosure of the mortgages. The court decided in his favor.

ISSUE:
W/N the deed of real estate mortgage and chattel mortgage appended to the complaint is valid notwithstanding the fact that the
house was made subject of chattel mortgage for the reason that it is erected on a land that belongs to a third person.

HELD:
Where a house stands on a rented land belonging to another person, it may be the subject matter of a chattel mortgage as
personal property if so stipulated in the document of mortgage, and in an action by the mortgagee for the foreclosure, the validity
of the chattel mortgage cannot be assailed by one of the parties to the contract of mortgage.
Furthermore, although in some instances, a house of mixed materials has been considered as a chattel between the parties and
that the validity of the contract between them, has been recognized, it has been a constant criterion that with respect to
third persons, who are not parties to the contract, and specially in execution proceedings, the house is considered as
immovable property.

FILIPINAS COLLEGES INC. vs. MARIA GARCIATIMBANG, 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 a s c h o o l b u i l d i n g s o l d a t p u b l i c a u c t i o n n u l l a n d v o i d u n l e s s
w i t h i n 1 5 d a y s f r o m n o t i c e o f s a i d o r d e r t h e s u c c e s s f u l b i d d e r s , d e f e n d a n t s - a p p e l l a n t s spouses
Maria Garcia Timbang and MarcelinoTimbang, shall pay to, appelleeM a r i a G e r v a c i o B l a s d i r e c t l y o r t h r o u g h
t h e S h e r i f f o f M a n i l a t h e s u m o f P5,750.00 that the spouses Timbang had bid for the building at the
Sheriff'ss a l e ; ( b ) d e c l a r i n g t h e o t h e r a p p e l l e e F i l i p i n a s C o l l e g e s , I n c . o w n e r o f 24,5
00/3,285,934 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
unpaidp o r t i o n o f t h e j u d g m e n t i n f a v o r o f a p p e l l e e B l a s a n d a g a i n s t F i l i p i n a s C o l l
eges, Inc. in the amount of P8,200.00 minus the sum of P5,750.00mentioned in (
a ) a b o v e . T h e o r d e r a p p e a l e d f r o m i s t h e r e s u l t o f t h r e e motions filed in the courta
q u o i n t h e c o u r s e o f t h e e x e c u t i o n o f a f i n a l judgment of the Court of Appeals rendered in 2 cases appealed to it
in whichthe spouses Timbang, the Filipinas Colleges, Inc., and Maria GervacioBlaswere the parties. The
Timbang spouses presented their opposition to eachand all of this motion. In assailing the order of the
court a quo directing the appellants to pay appellee Blas the amount of their bid (P5,750.00) made
att h e p u b l i c a u c t i o n , a p p e l l a n t s ' c o u n s e l h a s p r e s e n t e d a n o v e l , a l b e i t ingenious,
argument. The y 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 ownersipsofacto
.
ISSUE/S:
1.Whether or not the contention of the appellants is valid. If not, whatare the remedies left
t o t h e o w n e r o f t h e l a n d i f t h e b u i l d e r f a i l s t o pay?
2 . W h e t h e r o r n o t t h e a p p e l l a n t s , a s o wn e r o f t h e l a n d , m a y s e e k
r e c o v e r y o f t h e v a l u e o f t h e i r l a n d b y a w r i t o f e x e c u t i o n ; l e v y t h e house 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 t wo articles, 448 and 546, which would justify the conclusion 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 becomes automatically 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
p a y t h e l a n d a f t e r t h e o w n e r t h e r e o f h a s c h o s e n t h i s a l t e r n a t i v e , t h e builder's right of
retention provided in Article 546 is lost, nevertheless therewas nothing said that as a consequence thereof, the builder loses
entirely
allr i g h t s o v e r h i s o w n b u i l d i n g . T h e r e m e d y l e f t t o t h e p a r t i e s i n s u c h eve
ntualit y where the builder fails to pa y the value of the land, though the
Code is silent on this Court,
a b u i l d e r i n g o o d f a i t h n o t b e r e q u i r e d t o p a y rentals. He has right to retain the land on which he has
built in good faith until he is reimbursed the expenses incurred by him.
Possibly he might bemade to pay rental only when the owner of the land chooses not to appropriate the
improvement and requires the builder in good faithto pay for the land but that the builder is unwilling or unable to
payt h e l a n d , a n d t h e n t h e y d e c i d e t o l e a v e t h i n g s a s t h e y a r e a n d assume 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.,8 0 1 . A f u r t h e r r e m e d y i s i n d i c a t e d i n t h e c a s e o f 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 the house in payment thereof.
The second contention was without merit.
Inthe instant case, 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. 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) da ys from notice of the final judgment, an order of execution shall 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 the said amount.

calapan lumber vs. community sawmill

TayagvsYuseco

IGNAO v. INTERMEDIATE APPELLATE COURT


Facts:
Petitioner Florencio Ignao and his uncles Private Respondents Juan Ignao and IsidroIgnao were co-owners of a parcel of
land with an area of 534 sq.m. Petitioner filed for an action for partition and in February 1975, the court ruled allotting
133.5 sq.m. or 2/8 of theland to private respondents Juan and Isidro, and giving the remaining portion of 266.5 sq.m.(6/8) to
petitioner Florencio. However, no actual partition was ever effected.In 1978, petitioner filed a complaint for recovery of possession of real property
againstrespondents alleging that the are occupied by the 2 houses built by respondents exceeded
the133.5 sq.m. previousl y allotted to them. After an ocular inspection and survey, it wasdisclosed that the house
of Juan occupied 42 sq.m. while that of Isidro occupied 59 sq.m. of Florencios land or a total of 101 sq.m. The court ruled that
pursuant to Art. 448 of the CivilCode, the owner of the land (Florencio) should have the choice to either appropriate that
parto f t h e h o u s e s t a n d i n g o n h i s l a n d a f t e r p a y m e n t o f i n d e m n i t y t o r e s p o n d e n t s f o r t h e improvem
ents (houses), or oblige the builders in good faith to pay the price of the encroachedland. However, the court observed that it would be useless and
unsuitable for Florencio toappropriate since this would render the houses of Juan and Isidro worthless it
effected a workable solution (based on
Grana v. CA)
ordering Florencio to sell to Juan and Isidro thoseportions of the land occupied by them for P40.00 per sq.m. On appeal, the
IAC (now CA)affirmed the decision of the lower court.Hence, this petition for review filed by Florencio.
I
s
s
u
e
s
:
1
.
The CA erred in considering respondents as builders in good faith thusapplying Art. 448 of the Civil Code although the land is still owned by
the parties in co-ownership hence the applicable provision is Art. 486 but it was not applied.
2.
That granting that Art 448 is applicable, the Court wrongly applied the workablesolution in
Grana v. CA,
which was just an opinion in said case, and not the judgment rendered therein.
3.
That granting respondents could buy the portion of the land occupied by them, thepriced fixed by the court is unrealistic and pre-war price.
The Courts Ruling:
MODIFIED. The records reveal that the land originally belonged to Baltazar Ignao who marriedtwice. In the first marriage, he had 4
children: Justo (father of petitioner Florencio), Leon, andrespondents Juan and Isidro. In the second marriage, he also had 4 children but the
latterwaived their rights over the controverted land in favor of Justo. Thus Justo owned 4/8 (waivedby other 4 children) plus his 1/8 share making
5/8. He then acquired Leons share of 1/8 forP500 which he later sold to Florencio for the same amount. Justo died and Florencio inheritedthe 5/8
share of Justo plus the share he bought making it 6/8. Juan and Isidro have 1/8 shareeach. Before the February 1975 decision in the partition
case was promulgated, Florencio sold134 sq.m. of his share to Victa in January 1975.1.Prior to the partition, all the co-owners hold the
propert y in common dominion but atthe same time, each is an owner of a share which is abstract and
undetermined until partition is effected. As co-owners, the parties may have unequal shares in the commonproperty, quantitatively
speaking. But in a qualitative sense, each co-owner has the sameright as any one of the other co-owners. Art. 448 is applicable to land co-owned as in thiscase
when the co-ownership was terminated by a partition and it appears that the house of an erstwhile co-owner has encroached upon
a portion pertaining to another co-ownerwhich was however made in good faith.
2.
The lower courts erred in adopting the workable solution in
Grana v. CA
because itdeprived Florencio, the landowner, of the right to choose between appropriating the landor obliging the builder to buy the land.3.The question on
the price is premature since Florencio has yet to exercise his option asowner of the land

PECSON V. CA244 SCRA 407


FACTS:
Petitioner was the owner of a parcel of land wherein he built an apartment complex. Due to his failure to pay for realty taxes, his
land was sold in a public auction and was sold to spouses Nuguid. He moved for the setting aside of the auction but was denied.
HELD:

Article 448 doesn't apply to a case where the owner of the land is the builder who then later loses ownership of the
land by sale or auction.
Nevertheless, the provision therein on indemnity may be applied by analogy considering that the primary intent of this
provision is to avoid a state of forced ownership.
The current market value of the improvements which should be made the basis of reimbursement to the builder in good
faith
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, planted or sown and retention of ownership of the improvements, and necessarily,
the income therefrom