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Before Ernesto Valentino and Rebecca Lorenzo wed, Rebeccas mother offered a lot in Paranaque
that they could build their house on. In 1967, they finally built their home which cost about
PhP8,000-10,000, thinking that someday, the lot would be transferred to them in their name. It
turns out, though, that the lot was owned by the Spouses Santos who , in turn, sold the same to
Leonila Sarmiento in 1974. A year later, Sarmiento ordered the Valentinos to vacate their lot, then
eventually filed and Ejection Suit against them.

The lower court ruled in Sarmientos favor and ordered her to pay 20,000 as the value of the
house. But the case was then elevated to the CFI of Pasay (w/ Agana as Judge), and pursuant to
Art.448 of the CC (March 1979), the Court ordered Sarmiento to exercise the option in 60 days to
pay Ernesto 40,000 as the value of the house or to let them purchase the land for 25,000.
Sarmiento was not able to exercise this option, and the CFI allowed Ernesto to deposit the 25,000
purchase price with the Court.

Whether or not the land owner is compelled to exercise either option: to buy the building or to sell
the land?

Ernesto and his wife (BPS) were clearly in good faith as they believed that Rebeccas mother has
the capacity to eventually transfer the title of the land to them. In line with this, Sarmiento (LO) was
required to exercise only 2 options: To purchase the house or to sell the land to them, in this case,
based on the value decided by the courts. Since Sarmiento failed to exercise the option within the
allotted period, and based on Art. 448, the LO is compelled by law to exercise either option. Not
choosing either is a violation of the law.

SPS. MACASAET vs SPS. MACASAET G.R. 154391-92 Sept. 30, 2004

Petitioners Ismael and Teresita Macasaet and Respondents Vicente and Rosario Macasaet
are first-degree relatives. Ismael is the son of respondents and Teresita is his wife.
On December 10, 1997, the parents filed with the MTC of Lipa an ejectment suit against the
Respondents alleged that they were the owners of 2 parcels of land, situated at Banay-banay,
Lipa City; that by way of a verbal lease agreement, Ismael and Teresita occupied these lots in
Mar. 1992 and used them as their residence and the situs of their construction business; and
that despite repeated demands, petitioners failed to pay the agreed rental of P500.
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that
respondents had invited them to construct their residence and business on the subject lots in
order that they could all live near one another, employ marivic, the sister of Ismael, and help in
resolving the problems of the family.
They added that it was the policy of respondents to allot the land they owned as an advance
grant of inheritance in favor of their children.
The MTCC ruled in favour of respondents and ordered petitioners to vacate the premises. It
opined that Ismael and Teresita had occupied the lots, not by virtue of a verbal lease
agreement, but by tolerance of Vicente and Rosario.
As their stay was merely tolerance, petitioners were necessarily bound by an implied promise
to vacate the lots upon demand.
On appeal, the regional trial court upheld the findings of the MTCC. However, the RTC allowed
the respondents to appropriate the building and other improvements introduced by petitioners,
after payment of the indemnity provided for by Art. 448 in relation to Art. 546 and 548 of the
The CA sustained the finding of the two lower courts that Ismael and Teresita had been
occupying the subject lots only by the tolerance of Vicente and Rosario. Citing Calubayan v.
Pascual, the CA further ruled that petitioners status was analogous to that of a lessee or a
tenant whose term of lease had expired, but whose occupancy continued by tolerance of the
Consequently , in ascertaining the right of the petitioners to be reimbursed for the
improvements they had introduced on respondents properties, the appellate court applied the
Civil Codes provisions on lease.
W.O.N. the courts should fix the duration of possession.
That Ismael and Teresita had a right to occupy the lots is therefore clear, the issue is the
duration of possession. In the absence of a stipulation on this point, Art. 1197 of the civil Code
allows the courts to fix the duration or the period.
Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it
can be inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
Article 1197, however, applies to a situation in which the parties intended a period. Such
qualification cannot be inferred from the facts of the present case.
The mere failure to fix the duration of their agreement does not necessarily justify or authorize
the courts to do so
It can be safely concluded that the agreement subsisted as long as the parents and the
children mutually benefited from the arrangement.
Effectively, there is a resolutory condition in such an agreement.
Their possession which was originally lawful became unlawful when the reason therefore
love and solidarity ceased to exist between them.