96 SCRA 130 February 21, 1980

FLOREZA v EVANGELISTA
FACTS:
The Evangelistas were the owner of a residential lot in Rizal with an area of 204.08 sq. m. assessed at
P410. They borrowed P100 from Floreza. Floreza occupied the residential lot and built a house of light
material (barong-barong) with the consent of the Evangelistas. Additional Loans were made by the
Evangelistas. Floreza demolished the house of light material and constructed one of strong material
assessed. Floreza has not been paying any rentals since the beginning of their transactions. Eventually,
Evangelistas sold, with a right to repurchase within 6 years, their land to Floreza. Seven months before
the expiry of the repurchase period, the Evangelistas were able to pay in full. Floreza refused to vacate the
lot unless he was first reimbursed for the value of the house he built Evangelistas filed a complaint. CFI
ruled based on Art, 448 of the Civil Code saying that Evangelistas have the choice between purchasing
the house or selling the land to Floreza. CA ruled that Art. 448 was inapplicable and that Floreza was
not entiled to the reimbursement of his house and could remove the same at his own expense.

ISSUE:
1. WON Floreza was entitled to reimbursement of the cost of his house.
2. WON he (his heirs who replaced him) should pay rental of the land.
HELD:
1. NO. Issue of reimbursement is not moot because if Floreza has no right of retention, then he must pay
damages in the form of rentals. Agree with CA that Art. 448 is inapplicable because it applies only when
the builder is in good faith (he believed he had a right to build). Art. 453 is also not applicable because it
requires both of the parties to be in bad faith. Neither is Art. 1616 applicable because Floreza is not a
vendee a retro. The house was already constructed in 1945 (light materials) even before the pacto de
retro was entered into in 1949. Floreza cannot be classified as a builder in good faith nor a vendee a
retro, who made useful improvements during the pacto de retro, he has no right to reimbursement of
the value of the house, much less to the retention of the premises until he is paid.
His rights are more akin to a usufructury under Art. 579, who may make on the property useful
improvements but with no right to be indemnified thereof, He may, however, remove such improvements
should it be possible to do so without damage to the property.

2. YES. From the time the redemption price was paid in January 3, 1955, Floreza’s right to use the residential lot
without rent ceased. He should be held liable for damages in the form of rentals for the continued use of the lot for
P10 monthly from January 3, 1955 until the house was removed and the property vacated by Floreza or his heirs.
Judgment affirmed with modification.