SPOUSES RAFAEL BENITEZ AND AVELINA BENITEZ VS.

CA,SPOUSES RENATO
MACAPAGAL AND ELIZABETH MACAPAGAL
GR NO. 104828; JANUARY 16,1997
PONENTE: J. PANGANIBAN
FACTS: Petitioners Rafael and Avelina Benitez purchased a 303-square-meter parcel of land with
improvement from the Cavite Development Bank. Subsequently, private respondents Renato and Elizabeth
Macapagal bought a 361-square-meter lot, wherein part of the said 361 sqm lot was encroached by the
petitioner. The parties were able to reach a compromise in which private respondents sold the encroached
portion to petitioners at the acquisition cost of One Thousand Pesos (P1,000.00) per square meter.
Respondents purchased still another property (yaman!) adjacent to that of petitioners, later on they
discovered that some parts of their property were occupied by petitioners’ house. Despite verbal and written
demands, petitioners refused to vacate. Respondents then filed with the MTC of San Juan a civil case for
ejectment. MTC ruled in favor of respondents.
RTC affirmed MTC’s decision, ruling that the controversy in this case is not an encroachment or
overlapping of two (2) adjacent properties owned by the parties. It is a case where a part of the house of the
defendants is constructed on a portion of the property of the plaintiffs. So that as new owner of the real
property, who has a right to the full enjoyment and possession of the entire parcel covered by Transfer
Certificate of Title No. 41961, plaintiffs have the right to demand that defendants remove the portion of the
house standing on plaintiff's realty.
ISSUES:
1. MAY POSSESSION OF A LOT ENCROACHED UPON BY A PART OF ANOTHER'S
HOUSE BE RECOVERED IN AN ACTION FOR EJECTMENT?
2. WON PRIVATE RESPONDENTS ARE ENTITLED TO COMPENSATON FOR
PETITIONERS OCCUPANCY OF THE ENCROAHED LAND;
3. WON OPTION TO SELL THE LAND BELONGS TO THE OWNER.
RULING:
1. YES. Petitioners occupied the land prior to private respondents' purchase thereof does not negate the
latter's case for ejectment. Prior possession is not always a condition sine qua non in ejectment. This
is one of the distinctions between forcible entry and unlawful detainer. In forcible entry, the plaintiff
is deprived of physical possession of his land or building by means of force, intimidation, threat,
strategy or stealth; thus, he must allege and prove prior possession. But in unlawful detainer, the
defendant unlawfully withholds possession after the expiration or termination of his right thereto
under any contract, express or implied. In such a case, prior physical possession is not required.
2. YES. Technically, such award is not rental, but damages. Damages are recoverable in ejectment
cases under Section 8, Rule 70 of the Revised Rules of Court. These damages arise from the loss of
the use and occupation of the property, and not the damages which private respondents may have
suffered but which have no direct relation to their loss of material possession. Damages in the
context of Section 8, Rule 70 is limited to "rent" or "fair rental value" for the use and occupation of
the property. No one shall enrich himself at the expense of another.
3. The option is to sell, not to buy, and it is the landowner's choice. Not even a declaration of the
builder, planter, or sower's bad faith shifts this option to him per Article 450 of the Civil
Code. 18 This advantage in Article 448 is accorded the landowner because "his right is older, and
because, by the principle of accession, he is entitled to the ownership of the accessory thing." 19 There
can be no pre-emptive right to buy even as a compromise, as this prerogative belongs solely to the
landowner. No compulsion can be legally forced on him, contrary to what petitioners asks from this
Court. Such an order would certainly be invalid and illegal. Thus, the lower courts were correct in
rejecting the petitioners' offer to buy the encroached land.
 SPOUSES JUAN NUGUID AND ERLINDA NUGUID VS. HON. CA AND PEDRO PECSON
GR NO. 151815; FEBRUARY 23, 2005
PONENTE: J. QUISUMBING
FACTS: Pedro Pecson, herein respondent, owned a commercial lot located at 27 Kamias Road, QC, on
which he bult a 4 door two-storey apartment building. For failure to pay realty taxes, the lot was sold at
public auction by the City Treasurer of Quezon City to Mamerto Nepomuceno, who in turn sold it for
₱103,000 to the spouses Juan and Erlinda Nuguid,herein petitioners.
Pecson challenged the validity of the auction sale before the RTC of QC. RTC, however, upheld the
title of Spouses Nuguid but declared that the 4 door two-storey apartment building was not included in the
auction sale. CA affirmed the decision.
In a motion filed by the Spouses Nuguid for delivery of possession of the lot and the apartment
building, the trial court ruled that Spouses Nuguid were to reimburse Pecson for his construction cost of
53K, following which, the spouses Nuguid were entitled to immediate issuance of a writ of possession over
the lot and improvements. At the same order, Pecson was directed to pay Spouses Nuiguid the amount of
rents he collected from June 23, 1993 to September 23, 1993 from the tenants of the apartment.
Plaintiff however was dispossessed of the premises on November 22, 1993 and that he was fully paid
the value of his building only in December 1997. Therefore, he is entitled to the income thereof beginning
on November 22, 1993, the time he was dispossessed, up to the time of said full payment, in December
1997, or a total of 48 months.
ISSUE: WON PETITIONERS ARE LIABLE TO REIMBURSE RESPONDENT OF THE
FRUITS/INCOME THEY RECEIVED DURING THE PERIOD RESPONDENT WAS
DISPOSSESSED OF HIS PROPERTY;
RULING: Yes. Considering the fact that private respondent, Pecson, was the still the owner of the lot when
the construction of the apartment took place, it is only correct to reimburse him the number of rentals of
such property, until he be fully indemnified by the landowner of the value of his improvements to the land.

Under Article 448, the landowner is given the option, either to appropriate the improvement as his
own upon payment of the proper amount of indemnity or to sell the land to the possessor in good faith.
Relatedly, Article 546 provides that a builder in good faith is entitled to full reimbursement for all the
necessary and useful expenses incurred; it also gives him right of retention until full reimbursement is made.

While the law aims to concentrate in one person the ownership of the land and the improvements
thereon in view of the impracticability of creating a state of forced co-ownership, it guards against unjust
enrichment insofar as the good-faith builder’s improvements are concerned. The right of retention is
considered as one of the measures devised by the law for the protection of builders in good faith. Its object is
to guarantee full and prompt reimbursement as it permits the actual possessor to remain in possession while
he has not been reimbursed (by the person who defeated him in the case for possession of the property) for
those necessary expenses and useful improvements made by him on the thing possessed. Accordingly, a
builder in good faith cannot be compelled to pay rentals during the period of retention nor be disturbed in his
possession by ordering him to vacate. In addition, as in this case, the owner of the land is prohibited from
offsetting or compensating the necessary and useful expenses with the fruits received by the builder-
possessor in good faith. Otherwise, the security provided by law would be impaired. This is so because the
right to the expenses and the right to the fruits both pertain to the possessor, making compensation
juridically impossible; and one cannot be used to reduce the other.

As we earlier held, since petitioners opted to appropriate the improvement for themselves as early as
June 1993, when they applied for a writ of execution despite knowledge that the auction sale did not include
the apartment building, they could not benefit from the lot’s improvement, until they reimbursed the
improver in full, based on the current market value of the property.

Despite the Court’s recognition of Pecson’s right of ownership over the apartment building, the petitioners
still insisted on dispossessing Pecson by filing for a Writ of Possession to cover both the lot and the
building. Clearly, this resulted in a violation of respondent’s right of retention. Worse, petitioners took
advantage of the situation to benefit from the highly valued, income-yielding, four-unit apartment building
by collecting rentals thereon, before they paid for the cost of the apartment building. It was only four years
later that they finally paid its full value to the respondent.

SPOUSES NUGUID HAS TO ACCOUNT FOR THE RENTAL INCOME OF THE 4 DOOR TWO-
STOREY APARTMENT BUILDING, IN THE AMOUNT OF 1, 344, 000.00.
 JOHNNY JOSEFA VS. LOURDES SAN BUENAVENTURA. TERESITA SAN BUENAVENTURA
AND/PR RAUL SAN BUENAVENTURA
GR NO. 164329; MARCH 3, 2006
PONENTE: J. CALLEJO SR.
FACTS: Lourdes San Buenaventura is the owner of a 364-square meter parcel of land in Pasig City. On the
other hand, Johnny Josefa, herein petitioner, entered into a Contract of Lease with respondent wherein they
agreed to have it leased for a period of 5 years.
Upon expiration of the contract, San Buenaventura wrote Josefa that he will not be extending the
contract, unless he agreed with the new rental rate of 30k a month from 15.4k. Despite notice to vacate,
Josefa continued to occupy the property. Therefore, San Buenaventura filed a complaint for unlawful
detainer against Josefa. In his answer, Josefa averred that San Buenaventura was obliged to renew the lease
under their contract and that because of this commitment to renew, he had made renovations and
improvements on the land amounting to not less than 3 million.
ISSUE: WON PETITIONER IS ENTITLED TO REIMBURSEMENT FOR HIS IMPROVEMENTS
ON THE LEASED PREMISES
RULING: NO. The Court stressed that the private respondents therein, being mere lessees, knew that their
occupation of the premises would continue only for the life of the lease, and as such, could not be
considered as possessors nor builders in good faith.
Article 448 of the Civil Code, in relation to Article 546 of the same Code, which allows full
reimbursement of useful improvements and retention of the premises until reimbursement is made, applies
only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It
does not apply where one’s only interest is that of a lessee under a rental contract; otherwise, it would
always be in the power of the tenant to "improve" his landlord out of his property.
In this case, there is no question that petitioner was initially a lawful possessor because his entry into
the property is by virtue of a lease contract with respondent. However, as a mere lessee whose possession
after the expiration of the contract is at the sufferance of the owner of the property, he cannot claim to be a
builder in good faith. Under Article 1678 of the New Civil Code, petitioner is entitled to one-half of the
value of the improvements only if respondent, as the owner, decides to appropriate the improvements. Since
respondent refused to appropriate the improvements, petitioner cannot compel her to reimburse to him one-
half their value. The sole right of petitioner under Article 1678 is to remove the improvements without
causing any more damage upon the property leased than is necessary.
 HEIRS OF VICTORINO SARILI, NAMELY: ISBEL A. SARILI, MELENCIA S. MAXIMO,
ALBERTO A. SARILI, IMELDA HIDALGO, REPRESENTED BY CELSO SARILI vs. PEDRO
LAGROSA represented by LOURDES MOJICA
GR NO. 193517; JANUARY 15, 2014
PONENTE: J. PERLAS-BERNABE
FACTS: Private Respondent, through his counsel, filed a complaint against herein petitioner Victorino
Sarili, who was later on substituted by his heirs, alleging he was the true owner of a land in Caloocan City
which he was later on found out that, another TCT was issued under the name of petitioners by virtue of a
falsified deed of absolute sale. Wherein, he averred that the falsification of the said deed of sale was a result
of the fraudulent, illegal, and malicious acts committed by Sps. Sarili and the RD in order to acquire the
subject property and, as such, prayed for the annulment of the new TCT.
In their answer, Sps. Sarili maintained that they are innocent purchasers for value having purchased
the subject property from one Ramon Rodriguez, who possessed and presented an SPA.
RTC ruled in favor of Sps. Sarili, finding respondents signature on the subject SPA as the same exact
replica of his signature in his SPA in favor of Lourdes.
CA reversed RTC’s decision.
ISSUE: WON THERE WAS A VALID CONVEYANCE OF THE SUBJECT PROPERTY TO SPS.
SARILI; AND WON SPS. SARILI MAY BE CONSIDERED AS BUILDER IN GOOD FAITH;
RULING: THERE IS NO VALID CONVEYANCE. Since Sps. Sarili’s claim over the subject property is
based on forged documents, no valid title had been transferred to them (and, in turn, to petitioners). Verily,
when the instrument presented is forged, even if accompanied by the owner’s duplicate certificate of title,
the registered owner does not thereby lose his title, and neither does the assignee in the forged deed acquire
any right or title to the property.
The Court, however, finds a need to remand the case to the court a quo in order to determine the
rights and obligations of the parties with respect to the house Sps. Sarili had built on the subject property in
bad faith in accordance with Article 449 in relation to Articles 450, 451, 452, and the first paragraph of
Article 546 of the Civil Code.
To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he
builds, i.e. , that he be a possessor in concept of owner, and that he be unaware that there exists in his title or
mode of acquisition any flaw which invalidates it. Good faith is an intangible and abstract quality with no
technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the
absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies
honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon
inquiry. As for Sps. Sarili, they knew – or at the very least, should have known – from the very
beginning that they were dealing with a person who possibly had no authority to sell the subject
property considering the palpable irregularity in the subject SPA’s acknowledgment. Yet, relying
solely on said document and without any further investigation on Ramos’s capacity to sell Sps. Sarili
still chose to proceed with its purchase and even built a house thereon. Based on the foregoing it cannot
be seriously doubted that Sps. Sarili were actually aware of a flaw or defect in their title or mode of
acquisition and have consequently built the house on the subject property in bad faith under legal
contemplation. The case is therefore remanded to the court a quo for the proper application of the above-
cited Civil Code provisions.