SARMIENTO v.

AGANA

FACTS:

Before Ernesto Valentino and Rebecca Lorenzo got married, Rebecca’s 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-P10,000, thinking that someday, the lot would be
transferred to them in their name. It was probably assumed that the Rebecca’s mother
was the owner of the LAND and that, eventually, it would somehow be transferred to the
spouses. 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 an Ejection Suit against them.

The lower court ruled in Sarmiento’s 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 Article 448 of the Civil Code (March 1979), the Court ordered
Sarmiento to exercise the option in 60 days to pay Ernesto Valentino P40,000 as the
value of the house or to let them purchase the land for P25,000. Sarmiento was not able
to exercise this option, and the CFI allowed Ernesto to deposit the 25,000 purchase
price with the Court.

ISSUE:

Whether the land owner is compelled to exercise either option: to buy the building or to
sell the land

HELD:

Ernesto and his wife (BPS) were clearly in good faith as they believed that Rebecca’s
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: (1) to purchase the
house or (2) 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.
DEPRA v. DUMLAO

FACTS:

Dumlao is the owner of a parcel of land in Iloilo, while Depra owns the lot adjoining his.
Dumlao built his house on his own land, but the kitchen encroached about 34 sq.m on
Depra’s property. Upon finding this, Depra’s mom ordered Dumlao to move back from
his encroachment, then subsequently filed an action for unlawful detainer against
Dumlao.

The lower court found that Dumlao was a builder in good faith, and ordered him to pay
rent (PhP5.00/month) – forced lease between the parties. Depra refused to accept the
rentals so Dumlao deposited this with the MTC. Neither party appealed judgment so this
became final and executory.

1 year later, though, Depra filed an complaint for Quieting of Title. Dumlao contested
this, stating that the suit is barred by res judicata. But Depra averred that the lower court
did not have jurisdiction to rule on encumbrances of real property – only the CFI has
jurisdiction.

ISSUE:

1. Whether res judicata would apply to the case at bar

2. Whether the land owner can be compelled to accept rent payments by the court
(with both LO and BPS being in good faith)
3. Whether the decision of the MTC is valid

HELD:

In the first issue, res judicata would not apply should the first case be one for ejectment
and the other for quieting of title. Article 448 of the Civil Code provides that the land
owner has 2 options – to buy the building or to sell/rent his land. This is so because the
rights of the owner of the land are older, and by the principle of accession, he also has a
right to the accessories.

The Court remanded the case to the RTC to determine the fair price of the land, the
expenses incurred by the BPS (Dumlao), the increase in value of the land, and whether
the value of the land is considerably more than the value of the kitchen built on it. The
RTC shall then give Depra 15 days to exercise such option.

Addressing the issue of validity of the Decision of the Municipal Court, the Supreme
Court held the same to be null and void. The judgment in a detainer case is effective in
respect of possession only (Sec. 7, Rule 70, Rules of Court). The Municipal Court over-
stepped its bounds when it imposed upon the parties a situation of "forced lease", which
like "forced co-ownership" is not favored in law. Furthermore, a lease is an interest in
real property, jurisdiction over which belongs to Courts of First Instance (now Regional
Trial Courts) (Sec. 44(b), Judiciary Act of 1948; Sec. 19 (2) Batas Pambansa Blg. 129).
Since the Municipal Court, acted without jurisdiction, its Decision was null and void and
cannot operate as res judicata to the subject complaint for Queting of Title. Besides,
even if the Decision were valid, the rule on res judicata would not apply due to
difference in cause of action. In the Municipal Court, the cause of action was the
deprivation of possession, while in the action to quiet title, the cause of action was
based on ownership. Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly
provides that judgment in a detainer case "shall not bar an action between the same
parties respecting title to the land."

ART. 448. The owner of the land on which anything has been built sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper rent.

However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

Pursuant to the foregoing provision, DEPRA has the option either to pay for the
encroaching part of DUMLAO's kitchen, or to sell the encroached 34 square meters of
his lot to DUMLAO. He cannot refuse to pay for the encroaching part of the building,
and to sell the encroached part of his land, 5 as he had manifested before the Municipal
Court. But that manifestation is not binding because it was made in a void proceeding.

However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of
First Instance. It was thus error for the Trial Court to have ruled that DEPRA is "entitled
to possession," without more, of the disputed portion implying thereby that he is entitled
to have the kitchen removed. He is entitled to such removal only when, after having
chosen to sell his encroached land, DUMLAO fails to pay for the same. 6 In this case,
DUMLAO had expressed his willingness to pay for the land, but DEPRA refused to sell.