COMMUNITIES CAGAYAN, INC., vs. SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS UNDER THEM

COMMUNITIES CAGAYAN, INC., 
vs.
SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS UNDER THEM

Facts:

          Sometime in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to respondent-spouses a house and Lots 17 and 19 located at Block 16, Camella Homes Subdivision, Cagayan de Oro City, for the price of P368,000.00 (P368T). They obtained a loan from Capitol Development Bank (CDB), using the property as collateral. To facilitate the loan, a simulated sale over the property was executed by petitioner in favor of respondent-spouses. Accordingly, titles (TCT Nos. 105202 and 105203) were transferred in the names of respondent-spouses and submitted to CDB for loan processing.  The bank collapsed and closed before it could release the loan.

          On November 30, 1997, respondent-spouses entered into another Contract to Sell with petitioner over the same property for the same price. This time, they availed of petitioner’s in-house financing thus, undertaking to pay the loan over four years, from 1997 to 2001.

          Respondent Arsenio demolished the original house and constructed a three-story house allegedly valued at P3.5 million, more or less. (Respondent Arsenio died, leaving his wife, herein respondent Angeles, to pay for the monthly amortizations.)

          On September 10, 2003, petitioner sent respondent-spouses a notarized Notice of Delinquency and Cancellation of Contract to Sell due to the latter’s failure to pay the monthly amortizations. Petitioner filed before the Municipal Trial Court in Cities, an action for unlawful detainer against respondent-spouses.

          In her Answer, respondent Angeles averred that the Deed of Absolute Sale is valid.

Issues

1) Whether petitioner is obliged to refund to respondent-spouses all the monthly installments paid; and

2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new house minus the cost of the original house.

Ruling

The petition is partly meritorious.

          Respondent-spouses are entitled to the cash surrender value of the payments 
on the property equivalent to 50% of the total payments made under the Maceda Law.

          Respondent-spouses are entitled to reimbursement of the improvements 
made on the property.

           In view of the special circumstances obtaining in this case, we are constrained to rely on the presumption of good faith on the part of the respondent-spouses which the petitioner failed to rebut. Thus, respondent-spouses being presumed builders in good faith, we now rule on the applicability of Article 448 of the Civil Code. Article 448 on builders in good faith does not apply where there is a contractual relation between the parties, such as in the instant case. We went over the records of this case and we note that the parties failed to attach a copy of the Contract to Sell. As such, we are constrained to apply Article 448 of the Civil Code, which provides viz:

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 rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land. The raison d’etre for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.

          In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has two options. It may appropriate the new house by reimbursing respondent Angeles the current market value thereof minus the cost of the old house. Under this option, respondent Angeles would have "a right of retention which negates the obligation to pay rent." In the alternative, petitioner may sell the lots to respondent Angeles at a price equivalent to the current fair value thereof. However, if the value of the lots is considerably more than the value of the improvement, respondent Angeles cannot be compelled to purchase the lots. She can only be obliged to pay petitioner reasonable rent.

         

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO VILLAFLORES, Respondent.

G.R. No. 185020               October 6, 2010 SECOND DIVISION

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO VILLAFLORES, Respondent.

Facts

In 1980, Maria Villaflores (Maria) sold a portion of Lot 2-A to her nephew, respondent Antonio Villaflores (Antonio). Antonio then took possession of the portion sold to him and constructed a house thereon. Twelve (12) years later, or on August 15, 1992, Maria executed in favor of Antonio a Kasulatan ng Bilihang Tuluyan covering the entire Lot 2-A. However, Antonio did not register the sale or pay the real property taxes for the subject land.

On August 31, 1994, Maria sold the same Lot 2-A to Filomena, evidenced by a Kasulatan ng Bilihang Tuluyan. Filomena registered the sale on September 6, 1994. Since then Filomena paid the real property taxes for the subject parcel of land.

After trial, the RTC sustained Filomena’s ownership who was the one who registered the sale in good faith. It rejected Antonio’s allegation of bad faith on the part of Filomena because no sufficient evidence was adduced to prove it. This finding was affirmed by the CA.

Issue

Whether Antonio is a possessor in good faith.

Ruling

The Court sustained the finding that Antonio is a builder in good faith.

Under Article 448, a landowner is given the option to either appropriate the improvement as his own upon payment of the proper amount of indemnity, or sell the land to the possessor in good faith. Anent to this, 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. The objective of Article 546 of the Civil Code is to administer justice between the parties involved. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement.

However, in spite of its finding of good faith on the part of Antonio by the RTC it did not order the reimbursement of the necessary and useful expenses he incurred. Hence, the CA correctly ordered the remand of the case for further proceedings.

TUATIS VS. SPOUSES ELISEO AND VISMINDA ESCOL

TUATIS VS. SPOUSES ELISEO AND VISMINDA ESCOL

G.R. No. 175399               October 27, 2009

FACTS:

Visminda Escol, the seller and Ophelia Tuatis, the buyer entered into a Deed of Sale by Installments, the subject matter of which is a parcel of land in Sindangan. It provided that upon the failure of the buyer to pay the remaining balance within the time stipulated, he shall return the land to the seller, and the seller shall return all the amounts paid by the buyer. Tuatis took possession of the land and constructed a residential building. Tuatis asserted that she paid Visminda the remaining balance of P3000 in the presence of one Erik Selda and thereafter requested Visminda to sign the absolute deed of sale. Visminda refused contending that the purchase price has not been fully paid. The RTC dismissed Tuatis’s complaint and also ruled that Tuatis constructed the building in bad faith for she had knowledge of the fact that Visminda is still the absolute owner of the land and there was also bad faith on the part of Visminda since she allowed the construction of the building without opposition on her part. The rights of the parties must, therefore, be determined as if they both had acted in bad faith. Their rights in such cases are governed by Article 448 of the Civil Code. The Court of Appeals dismissed the appeal by Tuatis which resulted to the finality of the appealed decision. Visminda filed a writ of execution. Tuatis then moved that the RTC issue an order allowing her to buy the subject property and maintained that she has the right to choose between being indemnified for the value of her building or buying from Visminda the parcel of land. During the pendency of the motion, the writ of execution was enforced. Tuatis filed with the CA a petition for certiorari, prohibition and mandamus but the same was denied hence this petition.

ISSUE:

Whether or not Tuatis is entitled to exercise the options granted in Art. 448 of the Civil Code.

RULING:

No, Tuatis is not entitled to exercise the options granted in Article 448 of the Civil Code.

Article 448 provides that 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.

According to the provision, the landowner can choose between appropriating the building by paying the proper indemnity for the same, as provided for in Articles 546 and 548 of the Civil Code; or obliging the builder to pay the price of the land, unless its value is considerably more than that of the structures, in which case the builder in good faith shall pay reasonable rent.

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. Until Visminda appropriately indemnifies Tuatis for the building constructed by the latter, Tuatis may retain possession of the building and the subject property.

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 executed in November 1989, 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.

The Court highlights that the options under Article 448 are available to Visminda, as the owner of the subject property. There is no basis for Tuatis’ demand that, since the value of the building she constructed is considerably higher than the subject property, she may choose between buying the subject property from Visminda and selling the building to Visminda for P502,073.00. Again, the choice of options is for Visminda, not Tuatis, to make. And, depending on Visminda’s choice, Tuatis’ rights as a builder under Article 448 are limited to the following: (a) under the first option, a right to retain the building and subject property until Visminda pays proper indemnity; and (b) under the second option, a right not to be obliged to pay for the price of the subject property, if it is considerably higher than the value of the building, in which case, she can only be obliged to pay reasonable rent for the same.

The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.

The raison d’etre for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.

 Visminda’s Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to recover possession of the subject property under the first option, since the options under Article 448 of the Civil Code and their respective consequences were also not clearly presented to her by the 19 April 1999 Decision of the RTC. She must then be given the opportunity to make a choice between the options available to her after being duly informed herein of her rights and obligations under both.

QUIZ IN CIVIL LAW REVIEW

1. Within what time should an action for reconveyance of registered land based on an implied trust be filed? Why? (p. 545)

2. Give the concept of implied and constructive trusts. How do they arise?

3. Give an example of resulting trust? (535)

4. There was an action for reconveyance of a real property allegedly sold but without consideration. IT WAS contended that the action has prescribed since 16 years have already elapsed. Is the contention correct? Why? Will the action be barred by laches? Explain. (p. 521)

5. A bought a building together with the land upon which it is built from B. One of the conditions is that upon the payment of ½ of its value, B would assign his rights over the lease to which B did not comply. A demanded he refund of this money and since B refused, he filed a suit for collection of a sum of money. B filed a motion to dismiss on the ground that the contract if unenforceable since it is only an oral one. Is the contention correct? Why?(p. 515)

6. X mortgaged his land and building to GSIS as security of the payment of his obligation. Since he failed to pay his obligation, GSIS foreclosed the mortgage.  Centertown Tower  Inc. was the highest bidder. Since the GSIS was not authorized to engage in the real estate business, it organized a corporation known as Towers Inc. The Tenants Association sued the GSIS, Centertown and Towers for the annulment of the title on the ground that it is void because it is ulta vires. Will the action prosper? Why? (p. 509)

7. A is the owner of a house which is being verbally leased to B for five years. A orally promised B that the lease would be renewed only to refuse it later. Can B go to court and enforce his right that the contract be renewed after the expiration of the contract? Why?

(p. 514)

8. The widow, in her own behalf, and that of her children, as natural guardian, sold properties belonging to her husband. After a sister of the husband obtained guardianship over the persons and properties of the minors, an action to annul the sale together with a prayer that they be allowed to redeem the properties of the minor was filed. The trial court rendered judgment in favor of the plaintiffs. On appeal, if you were the ponente, how would you decide? Explain.

9. May a trustee acquire title over a property held in trust? State the general rule. In order that he may acquire title by acquisitive prescription, what requisites must be present? ( 542)

10. Give examples of constructive trusts. (537)

End of the quiz