B2022 REPORTS ANNOTATED
Germiniano v CA Germiniano v CA
I. Recit-ready summary
Paulina Germiniano owned a lot. Within the lot, was an unfinished
bungalow. This was sold to respondents Nicolas for 6k. A portion of the
lot was also lease to Nicolas. The Nicolas’ introduced improvements to
the lots and registered it under their name. Upon expiry of the lease
Germiniano refused to receive rentals from Nicolas and ordered them to
vacate. Nicolas’ refused to vacate and contends that the Germinainos
should reimburse them for the improvements. Geminiano, then, filed with
MTCC Dagupan, a complaint for unlawful detainer against Nicolas.
WON the lessees were builders in good faith and entitled to
reimbursement of the value of the house and improvements. NO
The court held that Art. 448 of the NCC, in relation to Art. 546,
states that full reimbursement is only allowed for possessors/ builders in
good faith. Nicolas’ were not in good faith, thus they can’t be reimbursed
in full. Being mere lessees, the private respondents knew that their
occupation of the premises would continue only for the life of the lease.
Plainly, they cannot be considered as possessors nor builders in good faith
II. Facts of the case
Paulina Amado vda. de Geminiano, mother of petitioner, originally
owned Lot No. 3765-B-1(314 sqm). Within that lot was a 12sqm portion
where the unfinished bungalow of Germinanos are. The bungalow was sold
to respondents Nicolas’ for P6,000 with an alleged promise to sell to the
respondents that portion of the lot occupied by the hosue.
Subsequently, P. Geminiano executed a contract of lease on the lot
(126 sqm—inclusive of where the bungalow stood) to respondents, Nicolas,
for P40/month for 7 years (Nov. 15. 1978-1985). During the lease, Nicolas
introduced improvements to the lot and registered it under their name.
However, after the lease expired, P. Germiniano refused to accept monthly
rentals.
It turned out that the lot was subject of a suit, which resulted in its
being acquired by one Maria Lee in 1972; which was sold to Lilly Salcedo
(1982); which was the later sold to Sps. Dionisio (1984). The Dionisios
executed a Deed of Quitclaim over the property, in favor of the
G.R. NO: 177056
ARTICLE; TOPIC OF CASE: Eminent domain, taking
July 24, 1996
Geminianos, who acquired the title over the land thereafter (1992). (Lee,
however, never sought a writ of possession in order that she gain
possession of the property in question. The petitioners' mother therefore
remained in possession of the lot.)
Upon expiry of the lease, P. Geminiano refused to receive rentals from
the Nicolas’. Geminiano sent a letter to respondents Nicolas, demanding
that they vacate the lot and pay rentals within 20 days from notice. Nicolas
refused to vacate the premises and contends that the Germinianos must first
reimburse them for the improvements they’ve introduced to the land.
Geminiano, then, filed with MTCC Dagupan, a complaint for unlawful
detainer against Nicolas. The main issue (syllabus) is whether the lessees
were builders in good faith and are thus entitled to reimbursement of the
value of the house and improvements.
Points of contention:
Germiniano alleges that as lessees, Nicolas was governed by Art. 1678
of the NCC and is allowed to recover ½ of the value of the improvements;
that Art. 448 does not apply because there was no promise to sell and even
if there was, mere expectancy of ownership from a promise to sell does not
make Nicolas a builder in good faith.
Nicolas, on the other hand, claims they are builders in good faith,
hence, Article 448 of the Civil Code should apply. They rely on the lack of
title of the petitioners' mother at the time of the execution of the contract of
lease, as well as the alleged assurance made by the petitioners that the lot on
which the house stood would be sold to them.
.
III. Issue/s
WON the lessees were builders in good faith and entitled to
reimbursement of the value of the house and improvements. NO
IV. Ratio/Legal Basis
Respondents Nicolas et al., are not entitled the full reimbursement of
the value of the improvements. The court held that Art. 448 of the NCC, in
PONENTE: Chico Nazario, J
DIGEST MAKER: Ash
 B2022 REPORTS ANNOTATED July 24, 1996
Germiniano v CA Germiniano v CA

relation to Art. 546, states that full reimbursement is only allowed for terms of the lease and in case of disagreement, the court shall fix the terms
possessors/ builders in good faith. thereof.

In the case at bar, Nicolas was NOT in good faith. When the Nicolas’s
entered into a lease contract with P. Germiniano, they recognized P.
Germiniano’s title over the land. They cannot anymore deny the title of P.
Germiniano over the lot. They are estopped. As lessees, they knew that their
possession of the land would only be up to the lifetime of P.Germiniano.
Being mere lessees, the private respondents knew that their occupation of
the premises would continue only for the life of the lease. Plainly, they
cannot be considered as possessors nor builders in good faith
In accordance with Art. 1678 of the NCC,  the lessee’s recourse is to
“remove the improvements, even though the principal thing may suffer
damage”. The indemnity of ½ of the value of the improvements may not be
granted since Art. 1678’s right to indemnity only arises if the lessor chooses
to appropriate the improvements—which the petitioners refused.
xxx xxx xxx
Art. 1678. If the lessee makes, in good faith, useful improvements which
are suitable to the use for which the lease is intended, without altering the
form or substance of the property leased, the lessor upon the termination of
the lease shall pay the lessee one-half of the value of the improvements at
that time. Should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may suffer
damage thereby. He shall not, however, cause any more impairment upon
the property leased than is necessary.
With regard to ornamental expenses, the lessee shall not be entitled to any
reimbursement, but he may remove the ornamental objects, provided no
damage is caused to the principal thing, and the lessor does not choose to
retain them by paying their value at the time the lease is extinguished.

V. Disposition

WHEREFORE, judgment is hereby rendered GRANTING the instant

petition; REVERSING and SETTING ASIDE the decision of the Court of
Appeals of 27 January 1995 in CA-G.R. SP No. 34337; and
REINSTATING the decision of Branch 3 of the Municipal Trial Court in
Cities of Dagupan City in Civil Case No. 9214 entitled "Federico
Geminiano, et al. vs. Dominador Nicolas, et al."

VI. Notes

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

G.R. NO: 177056 PONENTE: Chico Nazario, J

ARTICLE; TOPIC OF CASE: Eminent domain, taking DIGEST MAKER: Ash