Art. 447.

The owner of the land who makes thereon, personally or through another, plantings, constructions or
works with the materials of another, shall pay their value; and, if he acted in bad faith, he shall also be obliged to
the reparation of damages. The owner of the materials shall have the right to remove them only in case he can do
so without injury to the work constructed, or without the plantings, constructions or works being destroyed.
However, if the landowner acted in bad faith, the owner of the materials may remove them in any event, with a
right to be indemnified for damages. (360a)

Rights of the Owner of the Materials Used

a) When the owner of the land acted in good faith in using the materials, the owner of the materials is entitled to:
1. Reimbursement so long as he does not remove the materials from the worls; or
2. Removal of the materials used so long as no injury would be caused to the works done.
b) When the owner of the land acted in bad faith, the owner of the materials is entitled:
1. To remove the materials in any event (whether the works would be damagedor not) plus damages
when warranted; or
2. Reimbursement (if he does not remove the materials) plus damages when wararnted. (Pineda, 1999)

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. (361a)

Builder, Planter, or Sower in Good Faith, When not Liable to Pay Rentals
 During the time that the builder, planter, sower (BPS) is retaining the possession of the land, he
cannot be requiered to pay rentals. Otherwise, the right of retention will be rendered nugatory
(Grana v. CA, 109 Phil 260). The right of retention is merely for the payment of the improvements.
Hence, possessor in good faith need not pay rentals (Diego v. Montesa, 116 Phil 512).

Remedy if BPS fails or refuses to Pay Rentals

 In case the option chosen by the landowner is compulsory sale, the latter does not automatically
acquire ownership of the building or trees upon failure of the builder or planter to pay the value of
the land. The Court ruled in the case of Filipinas Colleges, Inc. v. Garcia Timbang, 106 Phil 247, to wit:
Under the terms of these articles, it is true that the owner of the land has the right to choose
between approproating the building by reimbursing the builder of the value thereof or
compelling the builder in good faith to pay for his land. Even this second right cannot be
exercised if the value of the land is considerably more than that of the building. In addition to
the right of the builder to be paid of the vaue of his improvement, Article 546 gives him the
corollary right of retention of the property until he is indemnified by the owner of the land.
There is nothing in the language of these two articles 448 and 546, which would justify the
conclusion of appellants that, upon failure of the builder to pay the value of the land, when such
is demanded by the landowner, the latter becomes automatically the owner of the improvement
under Article 445. (Rabuya, 2006)

1
EN BANC
[G.R. No. L-17985. September 29, 1962.]
GIL SAN DIEGO and RUFINA SAN DIEGO, Petitioners, v. THE HON. AGUSTIN P. MONTESA, Judge, Court of First Instance of Bulacan, Et Al.,
Respondents.
Isidro T. Almeda, for Petitioners.
Jose P. Osorio for Respondents.

SYLLABUS
1. PROPERTY; RIGHT OF RETENTION OF BUILDER IN GOOD FAITH PENDING PAYMENT BY LANDOWNER OF INDEMNITY FOR IMPROVEMENTS;
OBLIGATION TO PAY RENT. — The right of retention granted to possessors in good faith by Article 546 of the Civil Code, which is applicable
to builders in good faith (Article 448), is merely a security for their right to be indemnified for the improvements made on the land; hence,
they are not bound to pay rent during the period of retention.

2. PROPERTY; ACCESSION; WHEN LANDOWNER’S OPTION TO APPROPRIATE IMPROVEMENTS OR TO SELL LAND TO POSSESSOR IN GOOD FAITH
MAY NO LONGER BE EXERCISED. — Although normally the landowner has the option to either appropriate the improvement or to sell the land
to the possessor in good faith, this option is no longer open to the landowners in the present case, because the judgment in question, which
limits them to the first alternative is already final.

DECISION
REYES, J.B.L., J.:

Presented before us in this petition for mandamus is the peculiar case of party-defendants insisting on, and prevailing party-plaintiffs resisting,
the execution of a final and executory decision.

To understand this peculiarity, we will state briefly the facts leading to the controversy.

After trial in Civil Case No. 770 of the Court of First Instance of Bulacan, on complaint of Jose, Maria, and Urbano, all surnamed "de la Cruz", to
recover a parcel of land and damages from Gil San Diego and Rufina San Diego, the Court (Hon. Jesus Y. Perez, presiding) rendered a decision,
the dispositive portion of which reads as follows:jgc:chanrobles.com.ph

"IN VIEW OF THE FOREGOING, the court hereby renders judgment as follows:jgc:chanrobles.com.ph

"(a) Declaring the deed of sale, Exhibit 3, null and void;

"(b) Ordering the defendants and third-party plaintiffs to vacate the Land in question upon payment to them by the plaintiffs and third-
party defendants, within thirty (30) days after this decision has become final, of the sum of THREE THOUSAND FIVE HUNDRED PESOS
(P3,500.00);

"(c) Dismissing the counterclaim of the third party defendants; and

"(d) No pronouncement as to costs."cralaw virtua1aw library

The court found that the disputed portion of a parcel of land belonged to the plaintiffs through hereditary succession; that the defendants built
a house on the land in good faith, having acquired the land from Catalina Anastacio, mother of the plaintiffs, by purchase for P1,000.00. During
the proceedings, the defendants filed a third-party complaint against said vendor. The vendor (mother of plaintiffs) subsequently died; hence,
herein respondents, who were the plaintiffs, became at the same time third-party defendants in substitution of their deceased mother. The
court voided the sale on the ground that the vendor had no right to the land, but upheld the defense of defendants as builders in good faith.

On appeal by the plaintiffs and third-party defendants, the Court of Appeals affirmed in toto the lower court’s decision, and the same,
thereafter, became final and executory. Over two years later, the defendants and third-party plaintiffs, who were in possession of the parcel of
land in litigation, moved to execute paragraph (b) of the aforequoted dispositive portion of the decision in order to collect the sum of P3,500.00
and thereafter to vacate the premises. The motion was denied by the court (Hon. Agustin P. Montesa, presiding), and a motion for
reconsideration was likewise of no avail. Hence, the instant petition for mandamus was filed to compel the respondent judge to issue the writ
applied for.

Petitioners’ argument is that the pertinent part of the dispositive portion of the decision ordains, first, that they vacate the land, and second,
that the plaintiff pay P3,500.00 within 30 days after this decision becomes final,.

"with the connecting preposition ‘upon’ unmistakably denoting that the second (payment of indemnity) is a condition precedent to the first
(vacation of the premises)." (Memorandum for Petitioners, p. 5)

They hold the view that the respondents should pay them first before they vacate, and not vice-versa; and that they are entitled now to insist
on the payment through a writ of execution.

Respondents, upon the other hand, contend:chanrob1es virtual 1aw library

2
(1) That petitioners have no right to the writ of execution, because as absolute owners of the land, the respondents have the right,
under Article 448 to exercise the option to either pay the value of improvements or demand reasonable rent if respondents do not choose to
appropriate the building;

(2) That in fact respondents have elected to demand payment of rentals on land actually occupied by petitioner’s building at TEN PESOS
a month, and made a demand therefor immediately after the finality of the Court of Appeals decision, because the amount of P3,500.00 is
exorbitant, so that the land owners chose to allow petitioners to remain on the land;

(3) That respondents have long suggested to petitioners that a commissioner be appointed to assess the present fair market value of
the building, taking depreciation into account; and

(4) That the denial of the motion for execution is justified because it is premature and has no legal basis.

We find the petition meritorious. The judgment affirmed by the Court of Appeals, and now final, explicitly ordains the payment by the
respondents de la Cruz of the amount of P3,500.00 "within 30 days after this decision becomes final" to petitioners San Diego. If it also orders
petitioners to vacate only upon such payment, it did so in recognition of the right of retention granted to possessors in good faith by Article 546
of the Civil Code of the Philippines. This provision is expressly made applicable to builders in good faith (Article 448). The right of retention thus
granted is merely a security for the enforcement of the possessor’s right to indemnity for the improvements made by him. As a result, the
possessor in good faith, in retaining the land and its improvements pending reimbursement of his useful expenditure, is not bound to pay any
rental during the period of retention; otherwise, the value of his security would be impaired (cf. Tufexis v. Chunaco (C.A.) 36 O.G. 2455).

Normally, of course, the landowner has the option to either appropriate the improvement or to sell the land to the possessor. This option is no
longer open to the respondent landowners because the decision in the former suit limits them to the first alternative by requiring the
petitioners to vacate the land (and surrender the improvements) upon payment of P3,500.00. Evidently, the Courts of First Instance and of
Appeals opined that the respondents’ suit to recover the property was an exercise of their right to choose to appropriate the improvements
and pay the indemnity fixed by law. The respondents acquiesced in this view, since they did not ask for the modification of the judgment and
allowed it to become final. Consequently, they can no longer insist on selecting another alternative; nor can they be heard now to urge that the
value of the indemnity, set at P3,500.00, is exorbitant, for the same reason that the judgment fixing that amount is no longer subject to
alteration.

The judgment ordering payment to petitioners of P3,500.00, by way of indemnity, having become final, and the 30 days for its payment having
elapsed, the court of first instance has the ministerial duty to order its execution (Zulueta v. Paredes, 62 Phil. 5; Buenaventura v. Garcia, 78 Phil.
759; Amor v. Jugo, 17 Phil. 703; Viquiera v. Baraña, 78 Phil. 456). That duty is compellable by mandamus; and the execution is leviable on any
property of respondents de la Cruz, including the land now in question and its improvements.

WHEREFORE, the writ prayed for is granted, and the Court of First Instance of Bulacan is ordered to issue the writ of execution in favor of
petitioners. Costs against respondents de la Cruz.

3
EN BANC
[G.R. No. L-12486. August 31, 1960.]
LEONOR GRANA and JULIETA TORRALBA, Petitioners, v. THE COURT OF APPEALS, AURORA BONGATO and JARDENIO SANCHEZ, Respondents.
Tranquilino O. Calo, Jr., for Petitioners.
E. D. Mercado, J. V. Ong and J. T. Gonzales for Respondents.

SYLLABUS

1. TORRENS TITLES; RULE ON INDEFEASIBILITY. — Well settled is the rule that a Torrens certificate of title becomes conclusive and indefeasible
after the lapse of the period within which it may be impugned.

2. ID.; RESURVEY PLAN, TITLE NOT ALTERED OF MODIFIED BY PLAN. — If a subsequent certificate of title can not be permitted to prevail over a
previous Torrens title, with more reason should a resurvey plan not be allowed to alter or modify such title so as to make the area of the land
therein described agree with that given in the plan.

3. PROPERTY; BUILDER IN GOOD FAITH; RIGHTS OF OWNER OF THE LAND; RULE WHERE IT IS IMPRACTICAL TO BUY PORTION OF LEASE
BECOMES NECESSARY. — Under Article 361 of the old Civil Code (Article 448 of the new), the owner of the land on which anything has been
built in good faith shall have the right to appropriate as his own the building, after payment to the builder of necessary and useful expenses,
and in the proper case, expenses for pure luxury or mere pleasure, or to oblige the builder to pay the price of the land. If, however, it would be
impractical for the owner of the land to buy that portion of the building standing on his land, as where the whole building might be rendered
useless, the solution would be for the owner of the land to sell to the builder in good faith that part of the land on which was constructed a
portion of the latter’s building. If the builder is unwilling or unable to buy, then he must vacate the land and pay rentals until he does. Of course
the owner of the land cannot oblige the builder to buy the land if its value is considerably more than that of the portion of the building standing
on the former’s land. In that event, the builder must pay reasonable rent. The parties must come to an agreement as to the conditions of the
lease, and should they fail to do so, the court shall fix the same. (Articles 361, old Civil Code; Article 448 of the new).

4. ID.; ID.; RIGHT TO RETAIN THE LAND. — A builder in good faith may not be required to pay rentals. He has a right to retain the land on
which he has built in good faith until he is reimbursed the expenses incurred by him.

5. APPEAL AND ERROR; QUESTION NOT RAISED IN COURT BELOW; ESTOPPEL. — The defendant who, in his answer to the complaint, asserted
ownership over the lend in dispute, is estopped from alleging otherwise on appeal if the question was not raised in the trial court.

DECISION
GUTIERREZ DAVID, J.:

This is a petition to review on certiorari a decision of the Court of Appeals.

Leonor Grana and Julieta Torralba, defendants below and herein petitioners, were on April 13, 1951 sued by Aurora Bongato and Jardenio
Sanchez, respondents herein, before the Court of First Instance of Agusan, for the recovery of 87 square meters of residential land. After trial,
the court rendered judgment declaring the plaintiffs, herein respondents, owners of the land in controversy and ordering petitioners to vacate
and deliver it to said respondents and to pay a monthly rental of P10.00 from the filing of the complaint until they actually vacate the same,
plus attorney’s fees and costs. The decision, on appeal, having been affirmed by the Court of Appeals with the only modification of disallowing
the award for attorney’s fees, petitioners brought the case to this Court through the present petition for review.

The record discloses that sometime in 1909 a cadastral survey of Butuan, Agusan, was made by the Bureau of Lands. In that survey, the parcel
of land here in question was included as part of the lot belonging to Gregorio Bongato and Clara Botcon for which Original Certificate of Title
No. RO-72 (138) was issued in their favor on February 12, 1923. On November 25, 1933, this lot was purchased by the spouses Marcos Bongato
and Eusebia More, and upon their death, the land was inherited by the respondents Aurora Bongato and Jardenio Sanchez, the former being
the daughter of Marcos Bongato by his first marriage while the latter is the son of Eusebia More also by her first marriage.

Petitioners claim that the lands in Butuan were subsequently resurveyed due to conflicts and overlapping of boundaries. In that resurvey (TS-65
Butuan Cadastre), Gregorio Bongato’s lot, according to petitioners, was identified as Lot No. 311 and that of Isidaria Trillo, their predecessor in
interest, as Lot No. 310. Citing the fact that Original Certificate of Title No. RO-72 (138) covers 295 square meters of land, while the sketch plan
of the second cadastral survey of Butuan shows that Lot No. 311 has only 230 square meters, petitioners maintain that it is the latter area that
properly belongs to respondents and that the land in question is part of the adjoining land, Lot No. 310, which belonged to their predecessor in
interest.

Petitioners’ stand is untenable. No proof was presented to show that the first survey was erroneous or that it included part of the contiguous
land of petitioners’ predecessor in interest as part of the lot now covered by Original Certificate of Title No. RO-72 (138). Note that the
difference in area between the land covered by said title and Lot No. 311 of the resurvey plan is 65 square meters while the area of the land in
dispute is 87 square meters. And what is more, the alleged sketch plan of the resurvey was not presented in evidence.

Upon the other hand, it is not disputed that the land in question is part of the lot covered by the Torrens title issued way back in 1923 in the
name of respondents’ predecessors in interest. Said title has not been contested up to the present, and, therefore, has become
incontrovertible evidence of the ownership of the land covered by it. Well settled is the rule that a Torrens certificate of title becomes

4
conclusive and indefeasible after the lapse of the period within which it may be impugned (Reyes, Et. Al. v. Borbon, Et Al., 50 Phil., 791; Yumul v.
Rivera, Et Al., 64 Phil., 13).

Petitioners’ contention that the Court of Appeals erred in not granting their motion for new trial on the ground of newly discovered evidence,
likewise, cannot be sustained. The new evidence sought to be introduced was the sketch plan of the second survey, which, with the
employment of reasonable diligence would have easily been discovered and produced at the trial. Anyway, even if presented at the trial, it
would not have altered the result of the case. If a subsequent certificate of title cannot be permitted to prevail over a previous Torrens title
(Reyes, et al, v. Borbon, Et Al., supra) with more reason should a resurvey plan not be allowed to alter or modify such title so as to make the
area of the land therein described agree with that given in the plan. (See Government of the Philippines v. Arias, 36 Phil., 195).

Although without any legal and valid claim over the land in question, Petitioners, however, were found by the Court of Appeals to have
constructed a portion of their house thereon in good faith. Under Article 361 of the old Civil Code (Article 448 of the new), the owner of the
land on which anything has been built in good faith shall have the right to appropriate as his own the building, after payment to the builder of
necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure, or to oblige the builder to pay the price of
the land. Respondents, as owners of the land, have therefore the choice of either appropriating the portion of petitioners’ house which is on
their land upon payment of the proper indemnity to petitioners, or selling to petitioners that part of their land on which stands the
improvement. It may here be pointed out that it would be impractical for respondents to choose to exercise the first alternative, i.e., buy that
portion of the house standing on their land, for in that event the whole building might be rendered useless. The more workable solution, it
would seem, is for respondents to sell to petitioners that part of their land on which was constructed a portion of the latter’s house. If
petitioners are unwilling or unable to buy, then they must vacate the land and must pay rentals until they do so. Of course, respondents cannot
oblige petitioners to buy the land if its value is considerably more than that of the aforementioned portion of the house. If such be the case,
then petitioners must pay reasonable rent. The parties must come to an agreement as to the conditions of the lease, and should they fail to do
so, then the court shall fix the same. (Article 361, old Civil Code; Article 448 of the new).

In this connection, the appellate court erred in ordering petitioners to pay monthly rentals of P10.00 from the date of filing of the complaint
until they actually vacate said land. A builder in good faith may not be required to pay rentals. He has a right to retain the land on which he has
built in good faith until he is reimbursed the expenses incurred by him. (Miranda v. Fadullon, Et Al., 97 Phil., 801; 51 Off. Gaz., 6226, see also
Martinez v. Baganus, 28 Phil., 500; De Guzman v. De la Fuente, 55 Phil., 501; Kasilag v. Rodriguez, Off. Gaz., Supp., August 16, 1941, p. 247).

Petitioners further contend that the complaint should have been dismissed for nonjoinder of an indispensable party, it being alleged that their
mother Maria Cupin, who owns the land in question as part of her Lot No. 310, has not been made a party defendant in the case. This
contention, which was not raised in the trial court, deserves scant consideration. Petitioners clearly asserted ownership over the land in dispute
as well as over Lot No. 310 in their answer to the complaint. They are consequently estopped from alleging otherwise.

As to petitioners’ assertion that they should have been awarded damages alleged to have been suffered by them in their counterclaim because
of respondents’ bad faith in filing their complaint, suffice it to say that petitioners failed to prove that they suffered any damage at all by reason
of the filing of the complaint. Indeed, in the light of the view we have taken of the case, they could not have substantiated their claim for
damages.

In view of the foregoing, the appealed decision is modified in the sense that respondents are hereby directed to exercise within 30 days from
this decision their option to either buy the portion of the petitioners’ house on their land or sell to said petitioners the portion of their land on
which it stands. If respondents choose to sell the land and petitioners are unwilling or unable to buy, then they must vacate the same and must
pay reasonable rent of P10.00 monthly from the time respondents made their choice up to the time they actually vacate the premises. But if
the value of the land is considerably more than the value of the improvement, then petitioners may elect to rent the land, in which case the
parties shall agree upon the terms of a lease. Should they disagree, the court of origin is hereby instructed to intervene and fix the terms
thereof. Petitioners shall pay reasonable rent of P10.00 monthly from the moment respondents exercised their option up to the time the
parties agree on the terms of the lease or until the court fixes such terms.

So ordered without pronouncement as to costs.

5
EN BANC
[G.R. No. L-12812. September 29, 1959.]
FILIPINAS COLLEGES, INC., Plaintiff-Appellee, v. MARIA GARCIA TIMBANG, ET AL., Defendants.
[G.R. No. L-12813. September 29, 1959.]
MARIA GARCIA TIMBANG, ET AL., plaintiffs. MARIA GARCIA TIMBANG, Plaintiff-Appellant, v. MARIA GERVACIO BLAS, Defendant-Appellee.
De Guzman & Fernandez for appellee Filipinas Colleges, Inc.
San Juan, Africa & Benedicto for appellant Maria Garcia Timbang.
Nicanor S. Sison for appellee Maria Gervacio Blas.

SYLLABUS
1. ACCESSION; RIGHTS OF LANDOWNER AND BUILDER; FAILURE OF BUILDER IN GOOD FAITH TO PAY VALUE OF LAND WHEN SUCH IS
DEMANDED BY THE LANDOWNER. — Under the terms of Articles 448 and 546 of the Civil Code, it is true that the owner of the land has the
right to choose between appropriating the building by reimbursing the builder of the value thereof or compelling the builder in good faith to
pay for his land. Even this second right cannot be exercised if the value of the land is considerably more than that of the building. In addition to
the right of the builder to be paid the value of his improvement, Article 546 gives him the corollary right of retention of the property until he is
indemnified by the owner of the land. There is nothing in the language of these two articles which would justify the conclusion that, upon the
failure of the builder to pay the value of the land, when such is demanded by the landowner, the latter becomes automatically the owner of the
improvement under Article 445 of the Civl Code.

2. ID.; ID.; ID.; REMEDY OF PARTIES. — Where, as in the present case, the builder in good faith fails to pay the value of the land when such is
demanded by the landowner, the parties may resort to the following remedies: (1) The parties may decide to leave things as they are and
assume the retention of lessor and lessee, and should they disagree as to the amount of rental, then they can go to the court to fix that amount
(Miranda v. Fadullon, Et Al., 51 Off. Gazz., 6226; (2) Should the parties not agree to assume the relation of lessor and lessee, the owner of the
land is entitled to have the improvement removed (Ignacio v. Hilario, 76 Phil., 605); and (3) The land and the improvement may be sold at
public auction, applying the proceeds thereof first to the payment of the value of the land and the excess, if any to be delivered to the owner of
the improvement in payment thereof (Bernardo v. Bataclan, 66 Phil., 590)

3. ID.; ID.; ID.; EXECUTION SALE; WHERE PURCHASER IS THE JUDGMENT CREDITOR; CASH PAYMENT OF BID, WHEN REQUIRED. — Appellants,
owners of the land, instead of electing any of the alternatives above indicated, chose to seek recovery of the value of their land by asking for a
writ of execution; levying on the house of the builder; selling the same in public auction. And because they are the highest bidder, they now
claim they acquired title to the building without necessity of paying in cash on account of their bid. Held: While it is the invariable that where
the successful bidder is the execution creditor himself, he need not pay down the amount of the bid if it does not exceed the amount of his
judgment, nevertheless, when there is a claim by a third-party, to the proceeds of the sale superior to his judgment credit, the execution
creditor, as successful bidder, must pay in cash the amount of his bid as a condition precedent to the issuance to him of the certificate of sale.
In the instant case, the Court of Appeals has already adjudged that appellee is entitled to the payment of the unpaid balance of the purchase
price of the school building. Appellee’s claim is, therefore not a mere preferred credit, but is actually a lien on the school building as specifically
provided in Article 2242 of the new Civil Code. As such, it is superior to the claim of the appellants, insofar as the proceeds of the sale of said
school building are concerned. The order of the lower court directing the appellants, as successful bidders, to pay in cash the amount of their
bid is, therefore, correct.

DECISION
BARRERA, J.:

This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a) declaring the Sheriff’s certificate of sale
covering a school building sold at public auction null and void unless within 15 days from notice of said order the successful bidders,
defendants-appellants spouses Maria Garcia Timbang and Marcelino Timbang, shall pay to appellee Maria Gervacio Blas directly or through the
Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the building at the Sheriff’s sale; (b) declaring the other appellee
Filipinas Colleges, Inc. owner of 24,500/3,285,934 undivided interest in Lot No. 2-a covered by certificate of title No. 45970, on which the
building sold in the auction sale is situated; and (c) ordering the sale in public auction of the said undivided interest of the Filipinas Colleges, Inc.
in lot No. 2-a aforementioned to satisfy the unpaid portion of the judgment in favor of appellee Blas and against Filipinas Colleges, Inc. in the
amount of P8,200.00 minus the sum of P5,750.00 mentioned in (a) above.

The order appealed from is the result of three motions filed in the court a quo in the course of the execution of a final judgment of the Court of
Appeals rendered in 2 cases appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc. and Maria Gervacio Blas were the parties.
In that judgment of the Court of Appeals, the respective rights of the litigants have been adjudicated as follows:chanrob1es virtual 1aw library

(1) Filipinas Colleges, Inc. was declared to have acquired the rights of the spouses Timbang in and to lot No. 2-a mentioned above and in
consideration thereof, Filipinas Colleges, Inc. was ordered to pay the spouses Timbang the amount of P15,807.90 plus such other amounts
which said spouses might have paid or had to pay after February, 1953, to Hoskins & Co., Inc., agent of the Urban Estates, Inc., original vendor
of the lot. Filipinas Colleges, Inc. was required to deposit the total amount with the court within 90 days after the decision shall have become
final.

(2) Maria Gervacio Blas was declared to be a builder in good faith of the school building constructed on the lot in question and entitled
to be paid the amount of P19,000.00 for the same. Filipinas Colleges, Inc., purchaser of the said building was ordered to deliver to Blas stock
certificate (Exh. C) for 108 shares of Filipinas Colleges, Inc. with a par value of P10,800.00 and to pay Blas the sum of P8,200.00 representing the
unpaid balance of the purchase price of the house.

6
(3) In case Filipinas Colleges, Inc. failed to deposit the value of the land, which after liquidation was fixed at P32,859.34, within the 90-
day period set by the court, Filipinas Colleges would lose all its rights to the land and the spouses Timbang would then become the owners
thereof. In that eventuality, the Timbangs would make known to the court their option under Art. 448 of the Civil Code whether they would
appropriate the building in question, in which even they would have to pay Filipinas Colleges, Inc. the sum of P19,000.00, or would compel the
latter to acquire the land and pay the price thereof.

Filipinas Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time prescribed, the spouses Timbang, in compliance
with the judgment of the Court of Appeals, on September 28, 1956, made known to the court their decision that they had chosen not to
appropriate the building but to compel Filipinas Colleges, Inc., to acquire the land and pay them to value thereof. Consequently, on December
29, 1956, the Timbang spouses asked for an order of execution against Filipinas Colleges, Inc. for the payment of the sum of P32,859.34. The
motion having been granted, a writ of execution was issued on January 8, 1957.

On January 16, 1957, appellee Blas in turn filed a motion for execution of her judgment of P8,200.00 representing the unpaid portion of the
price of the house sold to Filipinas Colleges, Inc. Over the objection of the Timbangs, the court granted the motion and the corresponding writ
of execution was issued on January 30, 1957. Even before the actual issuance of this writ, or on January 19, 1957, date of the granting of the
motion for execution, Blas through counsel, sent a letter to the Sheriff of Manila advising him of her preferential claim or lien on the house to
satisfy the unpaid balance of the purchase price thereof under Article 2242 of the Civil Code, and to withhold from the proceed of the auction
sale the sum of P8,200.00. Levy having been made on the house in virtue of the writs of execution, the Sheriff of Manila on March 5, 1957, sold
the building in public auction in favor of the spouses Timbang, as the highest bidders, in the amount of P5,750.00. Personal properties of
Filipinas Colleges, Inc. were also auctioned for P245.00 in favor of the spouses Timbang.

As a result of these actuations, three motions were subsequently filed before the lower court:chanrob1es virtual 1aw library

(1) By appellee Blas, praying that the Sheriff of Manila and/or the Timbang spouses be ordered to pay and deliver to her the sum of
P5,750.00 representing the proceeds of the auction sale of the building of Filipinas Colleges, Inc. over which she has a lien of P8,200.00 for the
unpaid balance of the purchase price thereof;

(2) Also by the appellee Blas, praying that there being still two unsatisfied executions, one for the sum of P32,859.34 in favor of the
Timbang spouses, and another, for the sum of P8,200.00 in her favor, the land involved, Lot No. 2-a, be sold at public auction; and

(3) By Filipinas Colleges, Inc., praying that because its properties, the house and some personal properties, have been auctioned for
P5,750.00 and P245.00 respectively in favor of the Timbang spouses who applied the proceeds to the partial payment of the sum of P32,859.34,
value of the land, Lot No. 2-a, it (Filipinas Colleges, Inc.) be declared part owner of said lot to the extent of the total amount realized from the
execution sales of its properties.

The Timbang spouses presented their opposition to each and all of these motions. After due hearing the lower court rendered its resolution in
the manner indicated at the beginning of this decision, from which the Timbangs alone have appealed.

In assailing the order of the Court a quo directing the appellants to pay appellee Blas the amount of their bid (P5,750.00) made at the public
auction, appellants’ counsel has presented a novel, albeit ingenious, argument. It is contended that because the builder in good faith has failed
to pay the price of the land after the owners thereof exercised their option under Article 448 of the Civil Code, the builder lost his right of
retention provided in Article 546 and by operation of Article 445, the appellants as owners of the land automatically became the owners of the
building. And since they are the owners ipso facto, the execution sale of the house in their favor was superflous. Consequently, they are not
bound to make good their bid of P5,750.00 as that would be to compel them to pay for their own property. By the same token, Blas’ claim for
preference on account of the unpaid balance of the purchase price of the house does not apply because preference applies only with respect to
the property of the debtor, and the Timbangs, owners of the house, are not the debtors of Blas.

This Court cannot accept this oversimplification of appellants’ position. Articles 448 and 546 of the Civil Code, defining the rights of the parties
in case a person in good faith builds, sows or plants on the land of another, respectively provides:chanrob1es virtual 1aw library

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 planted cannot be obliged to buy the land if its
value id 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.

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.

Under the terms of these articles, it is that the owner of the land has the right to choose between appropriating the building by reimbursing the
builder of the value thereof or compelling the builder in good faith to pay for his land. Even this second right cannot be exercised if the value of

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the land is considerably more than that of the building. In addition to the right of the builder to be paid the value of his improvement, Article
546 gives him the corollary right of retention of the property until he is indemnified by the owner of the land. There is nothing in the language
of these two articles, 448 and 546, which would justify the conclusion of appellants that, upon the failure of the builder to pay the value of the
land, when such is demanded by the land-owner, the latter becomes automatically the owner of the improvement under Article 445. The case
of Bernardo v. Bataclan, 66 Phil., 590 cited by appellants is no authority for this conclusion. Although it is true it was declared therein that in the
event of the failure of the builder to pay the land, after the owner thereof has chosen this alternative, the builder’s right of retention provided
in Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder loses entirely all rights over his own
building. The question is: what is the recourse or remedy left to the parties in such eventuality where the builder fails to pay the value of the
land? While the Code is silent on this point, guidance may be derived from the decisions of this Court in the cases of Miranda v. Fadullon, Et Al.,
97 Phil., 801; 51 Off. Gaz., [12] 6226; Ignacio v. Hilario, 76 Phil., 605 and the cited case of Bernardo v. Bataclan, supra.

In the first case, this Court has said:jgc:chanrobles.com.ph

"A builder in good faith may not be required to pay rentals. He has a right to retain the land on which he has built in good faith until he is
reimbursed the expenses incurred by him. Possibly he might be made to pay rental only when the owner of the land chooses not to
appropriate the improvement and requires the builder in good faith to pay for the land but that the builder is unwilling or unable to pay the
land, and then they decide to leave things as they are and assume the relation of lessor and lessee, and should they disagree as to the
amount of rental then they can go to the court to fix that amount." (Emphasis supplied).

Should the parties not agree to leave things as they are and to assume the relation of lessor and lessee, another remedy is suggested in the
case of Ignacio v. Hilario, supra, wherein the court has ruled that the owner of the land is entitled to have the improvement removed when
after having chosen to sell his land to the other party, i.e., the builder in good faith fails to pay for the same.

A further remedy is indicated in the case of Bernardo v. Bataclan, supra, where this Court approved the sale of the land and the
improvement in a public auction applying the proceeds thereof first to the payment of the value of the land and the excess, if any, to be
delivered to the owner of the house in payment thereof.

The appellants herein, owners of the land, instead of electing any of the alternatives above indicated chose to seek recovery of the value of
their land by asking for a writ of execution; levying on the house of the builder; and selling the same in public auction. And because they are the
highest bidder in their own auction sale, they now claim they acquired title to the building without necessity of paying in cash on account of
their bid. In other words, they in effect pretend to retain their land and acquire the house without paying a cent therefor.

This contention is without merit. This Court has already held in Matias v. The Provincial Sheriff of Nueva Ecija (74 Phil., 326) that while it is the
invariable practice, dictated by common sense, that where the successful bidder is the execution creditor himself, he need not pay down the
amount of the bid if it does not exceed the amount of his judgment, nevertheless, when there is a claim by a third-party, to the proceeds of the
sale superior to his judgment credit, the execution creditor, as successful bidder, must pay in cash the amount of his bid as a condition
precedent to the issuance to him of the certificate of sale. In the instant case, the Court of Appeals has already adjudged that appellee Blas is
entitled to the payment of the unpaid balance of the purchase price of the school building. Blas’ claim is therefore not a mere preferred credit,
but is actually a lien on the school building as specifically provided in Article 2242 of the new Civil Code. As such, it is superior to the claim of the
Timbangs insofar as the proceeds of the sale of said school building are concerned. The order of the lower court directing the Timbang spouses,
as successful bidders, to pay in cash the amount of their bid in the sum of P5,750.00 is therefore correct.

With respect to the order of the court declaring appellee Filipinas Colleges, Inc. part owner of the land to the extent of the value of its personal
properties sold at public auction in favor of the Timbangs, this Court likewise finds the same as justified, for such amount represents, in effect, a
partial payment of the value of the land. If this resulted in the continuation of the so-called involuntary partnership questioned by the
appellants, it was due to their own action. As appellee Blas still has an unsatisfied judgment representing the difference between P8,200.00 -
the unpaid balance of the purchase price of the building and the sum of P5,750.00 - amount to be paid by the Timbangs, the order of the court
directing the sale of such undivided interest of the Filipinas Colleges, Inc. is likewise justified to satisfy the claim of the appellee Blas.

Considering that the appellant spouses Marcelino Timbang and Maria Garcia Timbang may not voluntarily pay the sum of P5,750.00 as ordered,
thereby further delaying the final termination of this case, the first part of the dispositive portion of the order appealed from is modified in the
sense that upon failure of the Timbang spouses to pay to the sheriff or to Maria Gervacio Blas said sum of P5,750.00 within fifteen (15) days
from notice of the final judgment, an order of execution shall issue in favor of Maria Gervacio Blas to be levied upon all properties of the
Timbang spouses not exempt from execution for the satisfaction of the said amount.

In all other respects, the appealed order of the court a quo is hereby affirmed, with costs against the appellants.

It is so ordered.