Friday, February 10, 2012

Builder in good faith; how Civil Code provision implemented

LUCIANO BRIONES and NELLY BRIONES vs.
JOSE MACABAGDAL, FE D. MACABAGDAL and
VERGON REALTY INVESTMENTS CORPORATION,
G.R. No. 150666
August 3, 2010


However, the conclusiveness of the factual findings notwithstanding, we find that the trial court nonetheless erred in outrightly ordering petitioners to vacate the subject property or to pay respondent spouses the prevailing price of the land as compensation. Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the mistake was done by petitioners in bad faith, the latter should be presumed to have built the house in good faith.

When a person builds in good faith on the land of another, Article 448 of the Civil Code governs. Said article provides,

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.

The above-cited article covers cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, to have a claim of title thereto. The builder in good faith can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. However, even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option. It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.

Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may have made on the subject property. Articles 546 and 548 of the Civil Code provide,

ART. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.

ART. 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.

Consequently, the respondent-spouses have the option to appropriate the house on the subject land after payment to petitioners of the appropriate indemnity or to oblige petitioners to pay the price of the land, unless its value is considerably more than the value of the structures, in which case petitioners shall pay reasonable rent.

In accordance with Depra v. Dumlao, this case must be remanded to the RTC which shall conduct the appropriate proceedings to assess the respective values of the improvement and of the land, as well as the amounts of reasonable rentals and indemnity, fix the terms of the lease if the parties so agree, and to determine other matters necessary for the proper application of Article 448, in relation to Articles 546 and 548, of the Civil Code.

X x x.

WHEREFORE, the Decision dated December 11, 2000 of the Court of Appeals in CA-G.R. CV No. 48109 is AFFIRMED WITH MODIFICATION. The award of moral damages in favor of respondent-spouses Jose and Fe Macabagdal and the award of compensatory damages and attorney’s fees to respondent Vergon Realty Investments Corporation are DELETED. The case is REMANDED to the Regional Trial Court of Makati City, Branch 135, for further proceedings consistent with the proper application of Articles 448, 546 and 548 of the Civil Code, as follows:

1. The trial court shall determine:

a. the present fair price of the respondent-spouses’ lot;

b. the amount of the expenses spent by petitioners for the building of their house;

c. the increase in value (“plus value”) which the said lot may have acquired by reason thereof; and

d. whether the value of said land is considerably more than that of the house built thereon.

2. After said amounts shall have been determined by competent evidence, the Regional Trial Court shall render judgment, as follows:

a. The trial court shall grant the respondent-spouses a period of fifteen (15) days within which to exercise their option under Article 448 of the Civil Code, whether to appropriate the house as their own by paying to petitioners either the amount of the expenses spent by petitioners for the building of the house, or the increase in value (“plus value”) which the said lot may have acquired by reason thereof, or to oblige petitioners to pay the price of said land. The amounts to be respectively paid by the respondent-spouses and petitioners, in accordance with the option thus exercised by written notice of the other party and to the Court, shall be paid by the obligor within fifteen (15) days from such notice of the option by tendering the amount to the Court in favor of the party entitled to receive it;

b. The trial court shall further order that if the respondent-spouses exercises the option to oblige petitioners to pay the price of the land but the latter rejects such purchase because, as found by the trial court, the value of the land is considerably more than that of the house, petitioners shall give written notice of such rejection to the respondent-spouses and to the Court within fifteen (15) days from notice of the respondent-spouses’ option to sell the land. In that event, the parties shall be given a period of fifteen (15) days from such notice of rejection within which to agree upon the terms of the lease, and give the Court formal written notice of such agreement and its provisos. If no agreement is reached by the parties, the trial court, within fifteen (15) days from and after the termination of the said period fixed for negotiation, shall then fix the terms of the lease, payable within the first five (5) days of each calendar month. The period for the forced lease shall not be more than two (2) years, counted from the finality of the judgment, considering the long period of time since petitioners have occupied the subject area. The rental thus fixed shall be increased by ten percent (10%) for the second year of the forced lease. Petitioners shall not make any further constructions or improvements on the house. Upon expiration of the two (2)-year period, or upon default by petitioners in the payment of rentals for two (2) consecutive months, the respondent-spouses shall be entitled to terminate the forced lease, to recover their land, and to have the house removed by petitioners or at the latter’s expense. The rentals herein provided shall be tendered by petitioners to the Court for payment to the respondent-spouses, and such tender shall constitute evidence of whether or not compliance was made within the period fixed by the Court.

c. In any event, petitioners shall pay the respondent-spouses reasonable compensation for the occupancy of the respondent-spouses’ land for the period counted from the year petitioners occupied the subject area, up to the commencement date of the forced lease referred to in the preceding paragraph;

d. The periods to be fixed by the trial court in its Decision shall be inextendible, and upon failure of the party obliged to tender to the trial court the amount due to the obligee, the party entitled to such payment shall be entitled to an order of execution for the enforcement of payment of the amount due and for compliance with such other acts as may be required by the prestation due the obligee.

No costs.

SO ORDERED.

sample problem

Tuatis bought a 300-square meter land from Visminda for P10,000 on installment basis. She paid only P4,000. The condition of the sale is that she will pay a down payment of P3,000 and the balance shall be paid on monthly installment until the whole consideration is paid.

Meanwhile, Tuatis built a P500,000 worth of house on said strip.

As Tuatis did not pay the whole amount, Visminda the owner of the lot, demanded that Tuatis should vacate the land, and remove her concrete house thereon.

Tuatis on the other hand, demanded that she will pay the balance price of P6,000 but Visminda refused to receive the amount, as another buyer is willing to buy the land at P300,000.

Accordingly, Vizminda has two options. What are these two options under the law? Discuss each option.


ANSWER:

Taking into consideration the provisions of the Deed of Sale by Installment and Article 448 of the Civil Code, Visminda has the following options:

Under the first option, Visminda may appropriate for herself the building on the subject property after indemnifying Tuatis for the necessary and useful expenses the latter incurred for said building, as provided in Article 546 of the Civil Code.

Under the second option, Visminda may choose not to appropriate the building and, instead, oblige Tuatis to pay the present or current fair value of the land. The P10,000.00 price of the subject property, as stated in the Deed of Sale on Installment , shall no longer apply, since Visminda will be obliging Tuatis to pay for the price of the land in the exercise of Visminda’s rights under Article 448 of the Civil Code, and not under the said Deed. Tuatis’ obligation will then be statutory, and not contractual, arising only when Visminda has chosen her option under Article 448 of the Civil Code.

Still under the second option, if the present or current value of the land, the subject property herein, turns out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to pay for the subject property, but she must pay Visminda reasonable rent for the same. Visminda and Tuatis must agree on the terms of the lease; otherwise, the court will fix the terms.

TIPS

JIMMY CO, doing business under the name & style DRAGON METAL MANUFACTURING, petitioner, vs.COURT OF APPEALS and BROADWAY MOTOR SALES CORPORATION, respondents. G.R. No. 124922 June 22, 1998

COLITO T. PAJUYO, petitioner, vs.COURT OF APPEALS and EDDIE GUEVARRA, respondents. G.R. No. 146364 June 3, 2004

MARCELINO KIAMCO, petitioner-movant, vs.THE HONORABLE COURT OF APPEALS, JUANA DEGUILMO-GRAPE, QUIRINA DEGUILMO-MANINGO, ANTONIA DEGUILMO, and JUAN DEGUILMO, respondents. G.R. No. 96865 July 3, 1992

IN RE: PETITION FOR ADOPTION OF MICHELLE P. LIM,MONINA P. LIM, Petitioner.x - - - - - - - - - - - - - - - - - - - - - - -xIN RE: PETITION FOR ADOPTION OF MICHAEL JUDE P. LIM,MONINA P. LIM, Petitioner. G.R. Nos. 168992-93 May 21, 2009

LEONILO ANTONIO Petitioner, vs.MARIE IVONNE F. REYES, Respondent. G.R. No. 155800 March 10, 2006

LUZAN SIA, petitioner, vs.COURT OF APPEALS and SECURITY BANK and TRUST COMPANY, respondents. G.R. No. 155800 March 10, 2006

Double sale

Ledesma v. CA, 1992

PARI DELICTO

ARCABA V. TABANCURA,2001

SALVATIERRA V. CA, 1996

Friday, February 3, 2012

tips for civil law mock bar

civil law mock bar exam consists of 20 case problems
found in this blog.

no mcq this time. Good luck

Tips will be released a day before the exam.