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The mother of Ernesto’s wife gave him a land where he constructed his home. Ernesto assumed that the
lot belonged from his wife’s mother. It turned out that the land was owned by Santos who sold it to
Sarmiento. Sarmiento asked Ernesto to vacate and subsequently instituted an ejectment suit against
Ernesto. The MTC rendered a judgment ejecting Ernesto from the land but in turn Sarmiento pays the
value of the home constructed by Ernesto which he built in good faith.

The suit was elevated to the CFI and they modified the judgment giving Sarmiento an option to pay the
value of the house or to let Ernesto buy the land. Sarmiento elevated the case to the Supreme Court.


Ernesto and his wife were builders in good faith, they inclined the fact that his mother-in-law was the
owner of the land. Article 448 applies in this case. Sarmiento has the option to pay for the value of the
house or to let Ernesto buy the land.


Charvet is an owner of a land which she leased it to Stohner for 5 years with a monthly rental of 40 pesos.
The contract provided that the lessee can make improvements in the land and it would be his property;
he can remove it anytime; upon the expiration of the contract, if the lessee will not remove the
improvements for 2 months the lessor can remove it at the expense of the lessee.

Stohner made improvements, fillings on the land. Charvet sold the land to Balucanag. Stohner failed to
pay the rents, Balucanag demanded Stohner to vacate, Stohner in turn offered a compromise where the
lessor pays the improvements he made or let the lessee buy the lot of the lessor.

No agreement was reached, an ejectment suit was filed, the CFI ordered Stohner to pay for back rentals
and vacate the premises, but on appeal, The Court of Appeals set aside the judgment and ordered
Balucanag to reimburse for the improvements made by Stohenr since he was a builder in good faith. He
cannot be ejected unless a reimbursement is made.


Stohner cannot be considered as a builder in good faith as contemplated in Article 448, It does not apply
where one’s interest is that of a lessor and a lessee under a rental contract. It only applies where one
builds in the land in belief that he is the owner of the land.

Article 1678 applies in the case, it gives the lessor an option to appropriate the useful improvements by
paying one half of the land, but the lessor cannot be compelled by the lessee to reimburse. The lessee’s
right is to remove the improvements even if the leased land may suffer damage.


The Evangelistas are owner of a residential lot. Evangelistas borrowed money from Floreza and in turn
Floreza occupied their residential lot without agreement as to payment of the lot. Floreza made an
improvement made of light materials in the lot but later on change it using strong materials. The
Evangelistas sold the lot to Floreza with a right to repurchase within 6 years.
Later on, Evangelistas wrote a letter to let Floreza vacate from the lot, as they would repurchase the land.
Floreza refused to vacate until there will be a reimbursement of the improvements he made. The
Evangelistas prayed that they be declared owner without indemnifying Floreza and also ordering the latter
to pay for the reasonable value of the use of the land until he delivers the lot. CFI rendered a decision
applying Article 448. On appeal, the Court of Appeals said that the provision was inapplicable and ordered
that Floreza is not entitled for reimbursement and may remove the improvements.

Floreza died, Evangelistas filed a motion to dismiss stating that his heirs has vacated the property.


The case was not moot, Floreza’s right of retention of subject property until he is reimbursed is linked
with the question of rentals. Article 448 is inapplicable.


Sps. Nanol entered to a contract of sell with CC, CC will sell them House and Lot. Sps. didn’t avail of their
financing services due to high interest rates. They loaned from Capitol Development Bank, using the
property as collateral. The title was transferred to the Spouses. Unfortunately, the bank collapsed before
the loan was released.

Spouses entered into a same contract with CC but this time availing their financing services. The husband
died leaving her wife. CC sent a notice of delinquency and cancellation of the contract to sell due to the
failure to pay for the amortization. CC filed a case in the RTC for unlawful detainer. The case was later
withdrawn because the title was named to the respondents.

CC filed before the RTC for cancellation of the title, reconveyance and damages. The transfer was only
made in compliance of the loan application for the bank. Nanol said that the title was valid and CC is not
the proper party. RTC rendered a judgment cancelling Nanol’s title and rendered the sale void.

CC’s Contention:

There is no legal basis for them to reimburse since the Nanols were in bad faith in building the
imporvements. Instead of mutual restitution, the Maceda Law should operate, the Nanols should have
paid them rentals for the land.

NANOLS Contention:

The Deed of Absolute Sale is valid


The Maceda law should operate since it is a sale of real estate on installment. Contract to Sell cancels
after 30 days from receipt of the buyer of the notice of cancellation and upon full payment of the cash
surrender to the buyer. CC complied only with the notice and not the return of the cash to the buyer
hence the Contract to Sell is still valid and the respondent can still occupy the land.

Art. 448 applies, Nanols is entitled for reimbursement. General rule, it doesn’t apply to contractual
relation between parties but records show that the Contract to Sell was not attached. There is a
presumption of good faith, because there was a waiver to all factual issues since it was directly filed for
review. The presumption was not rebutted. It is also presumed that CC consented for the construction for
the improvements since they were subdivision developer and must have given the spouses permits to
undertake the construction.

The seller in this case has two options pursuant to Article 448.


Latosa filed a complaint for recovery of ownership against Roxas for encroaching a part of her property
by a concrete fence. Roxas blamed Our Lady, he only occupied the area in order to get the equivalent
area that her lost when Our lady trimmed his property for road. RTC ordered Roxas to return the land to
the plaintiff Latosa and Our Lady to reimburse Roxas. Roxas appealed to the CA but it was denied. An
execution was issued against Our Lady and also a motion to quash was filed because they should pay only
40php per square metre and not 1800php per square meter, but it was denied. A notice of garnishment
was also issued to the bank account of Our Lady’s general manager.

CA nullified the judgment stating that only 40php must be paid because that was the original
consideration and the garnishment because the general manager was not impleaded.


CA is incorrect, the valuation of the property is reckoned at the time that the real owner of the land asked
the builder to vacate. The general manager cannot be impleaded pursuant to the doctrine of separate
juridical personality of corporate entities; Juridical entities has separate legal personality and distinct from
those acting for and on his behalf.


Spouses Parrilla are