DE VERA v MAYANDOC
G.R. No. 211170
This is a Complaint for useful expenses under Articles 448 and 546
of the New Civil Code of the Philippines.
FACTS: A parcel of land originally owned by Eusebio Espinoza was
divided among his heirs, Pastora, Domingo and Pablo, after his
death.
Pastora executed a Deed of Sale conveying her share to
respondents and Leopoldo Espinoza. On that same date, a fictitious
deed of sale was executed by Domingo Espinoza, conveying the 3/4
share in favor of respondent Erlinda Cayabyab. Later on, a fictitious
deed of sale was executed by Nemesio Cayabyab, Candida Cruz, Sps.
Maximo Espinoza and Winifreda De Vera and Leopoldo Espinoza
over the land in favor of Sps. Antonio and Erlinda Mayandoc.
As a result, petitioners filed an action for annulment of document in
which RTC rendered a Decision ordering respondents to reconvey
the land in dispute. CA affirmed the decision with modification and
has become final.
Thus, respondents filed a complaint for reimbursement for useful
expenses, pursuant to Articles 448 and 546 of the New Civil Code,
alleging that the house in question was built on the disputed land in
good faith. The respondents believed themselves to be the owners
of the land with a claim of title thereto and were never prevented
by the petitioners in constructing the house. Petitioners argued that
respondents can never be considered as builders in good faith
because the latter were aware that the deeds of sale over the land
in question were fictitious.
Respondents, manifested their option to buy the land where the
house stood, but petitioners expressed that they were not
interested to sell the land or to buy the house in question.
ISSUE: Whether or not respondents were in bad faith in introducing
improvements on the subject land.
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 the concept of owner, and that he be unaware that
there exists in his title or mode of acquisition any flaw which
invalidates it.
The settled rule is bad faith should be established by clear and
convincing evidence since the law always presumes good faith. In
this particular case, petitioners were not able to prove that
respondents were in bad faith in constructing the house on the
subject land. Bad faith does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral obliquity
and conscious doing of a wrong. It means breach of a known duty
through some motive, interest or ill will that partakes of the nature
of fraud. For anyone who claims that someone is in bad faith, the
former has the duty to prove such. Hence, petitioners err in their
argument that respondents failed to prove that they are builders in
good faith in spite of the findings of the RTC and the CA that they
are.
As such, Article 448 of the Civil Code must be applied. It applies
when the builder believes that he is the owner of the land or that by
some title he has the right to build thereon, or that, at least, he has
a claim of title thereto. InTuatzs v. Spouses Escol, et al., this Court
ruled that the seller (the owner of the land) has two options under
Article 448: (1) he may appropriate the improvements for himself
after reimbursing the buyer (the builder in good faith) the necessary
and useful expenses under Articles 546 and 548 of the Civil Code; or
(2) he may sell the land to the buyer, unless its value is considerably
more than that of the improvements, in which case, the buyer shall
pay reasonable rent, xxx
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.
NARVASA v IMBORNAL
Topic: Accession
RECIT READY: Petitioners are claiming ownership over the property
currently in possession of the Imbornals by reason of (2) accretions
despite not being riparian owners. The Supreme Court held that
only riparian owners may benefit from accretion of a land. Since it
was the Imbornals who were in possession of a land adjacent to that
of the river, they are the rightful owners of the property resulting
from accretion.
FACTS:
● Basilia Imbornal+ (Basilia) had four (4) children, namely,
Alejandra, Balbina, Catalina, and Pablo.Francisco I. Narvasa, Sr.9
(Francisco) and Pedro Ferrer (Pedro) were the children10 of
Alejandra, while petitioner Petra Imbornal (Petra) was the daughter
of Balbina.
● Petitioners are the heirs and successors-in-interest of Francisco,
Pedro, and Petra (Francisco, et al.)
● Respondents are Emiliana, Victoriano, Felipe, Mateo, Raymundo,
Maria, and Eduardo, all surnamed Imbornal, are the descendants of
Pablo.
● Meanwhile, Catalina’s husband, Ciriaco Abrio (Ciriaco), applied for
and was granted a homestead patent over a 31,367-sq. m. riparian
land (Motherland) adjacent to the Cayanga River in San Fabian,
Pangasinan.
● Ciriaco - Northern portion of the Motherland
● Respondents Imbornal - Southern portion of the Motherland
● First Accretion: approximately 59,772 sq. m. in area,
adjoined the southern portion of the Motherland. On August 15,
1952, OCT No. P-318 was issued in the name of respondent
Victoriano, married to Esperanza Narvarte, covering the First
Accretion.
● Second Accretion: an area of 32,307 sq. m., more or less, abutted
the First Accretion on its southern portion. Subsequent OCT was
likewise issued.
● Francisco et al. filed a complaint for reconveyance, partition, and
or damages against respondents Imbornal.
● Francisco et al. argues that:
○ Through deceit, fraud, falsehood, and
misrepresentation, respondent Victoriano, with respect to the First
Accretion, and the respondents collectively, with regard to the
Second Accretion, had illegally registered the said accretions in their
names, notwithstanding the fact that they were not the riparian
owners (as they did not own the Motherland to which the
accretions merely formed adjacent to).
○ Thus, bewailing that respondents have refused them their rights
not only with respect to the Motherland, but also to the subsequent
accretions, Francisco, et al. prayed for the reconveyance ofsaid
properties, or, in the alternative, the payment of their value, as well
as the award of moral damages in the amount of ₱100,000.00,
actual damages in the amount of ₱150,000.00, including attorney’s
fees and other costs.
● RTC: Petitioners
● CA: Reversed, ruled in favor of the Imbornals
ISSUE: Whether or not the Imbornals have the better right over the
property resulting from the FIRST and SECOND accretion
HELD:
● YES, the Imbornals have the better right. Francisco et al. failed to
prove their ownership rights over the Motherland.
Article 457 of the Civil Code states the rule on accretion as follows:
"[t]o the owners of lands adjoining the banks of rivers belong the
accretion which they gradually receive from the effects of the
current of the waters."
● Being the owner of the land adjoining the foreshore area,
respondent is the riparian or littoralowner who has preferential
right to lease the foreshore area as provided under paragraph 32 of
the Lands Administrative Order No. 7-1, dated 30 April 1936, which
reads:
○ 32. Preference of Riparian Owner. – The owner of the property
adjoining foreshore lands, marshylands or lands covered with water
bordering upon shores or banks of navigable lakes or rivers, shall be
given preference to apply for such lands adjoining his property as
may not be needed for the public service, subject to the laws and
regulations governing lands of this nature, provided that he applies
therefor within sixty (60) days from the date he receives a
communication from the Director of Lands advising him of his
preferential right.
● That rule in paragraph 32 is in consonance with Article 4 of the
Spanish Law of Waters of 1866 which provides that, while lands
added to the shore by accretions and alluvial deposits caused by the
action of the sea form part of the public domain, such lands, "when
they are no longer washed by the waters of the sea and are not
necessary for purposes of public utility, or for the established [sic] of
special industries, or for the coast guard service, "shall be declared
by the Government "to be the property of the owners of the estates
adjacent thereto and as increment thereof."
● In other words, article 4 recognizes the preferential right of the
littoral owner (riparian according to paragraph 32) to the
foreshore land formed by accretions or alluvial deposits due
to the action of the sea.
● Accordingly, therefore, alluvial deposits along the banks of a
creek or a river do not form part of the public domain as the alluvial
property automatically belongs to the owner of the estate to which
it may have been added. The only restriction provided for by law is
that the owner of the adjoining property must register the same
under the Torrens system; otherwise, the alluvial property may be
subject to acquisition through prescription by third persons
● In this case, Francisco, et al. and, now, their heirs, i.e., herein pe
titioners are not the riparian owners of the Motherland to which the
First Accretion had attached, hence, they cannot assert ownership
over the First Accretion.
● Consequently, as the Second Accretion had merely attached to
the First Accretion, they also have no right over the Second
Accretion.
WHEREFORE, the petition is DENIED. The Decision dated November
28, 2006 and the Resolution dated May 7, 2008 of the Court of
Appeals in CA-G.R. CV No. 57618 are hereby AFFIRMED, and a new
judgment is entered DISMISSING the Amended Complaint dated
February 27, 1984 filed in said case.
LEVISTE MANAGEMENT SYSTEM v. LEGASPI TOWERS 200 INC., et.
al.
G.R. No. 199353 April 4, 2018
TOPIC: Builder in Good Faith
PONENTE: J. Leonardo-De Castro
CASE LAW/ DOCTRINE:
• Art. 448 and 546 of the Civil Code on builders in good faith
are inapplicable in cases covered by the Condominium Act.
• The land belongs to a condominium corporation wherein
the builder, as a unit owner, is considered a stockholder or member
under Sec. 10 of the Condominium Act. The builder is already in co-
ownership with other unit owners as members or stockholders of
the condominium corporation. The purchaser of a condominium
unit binds himself to a contract with other unit owners.
• A builder must gain the consent of other registered owners
and follow the by-rules of the condominium before amending the
Master Deed.
FACTS:
1. Legaspi Towers is a 7-floor condominium building with a
deck roof and 2 levels above the deck roof, as stated in the Master
Deed, at Paseo De Roxas, Makati City with a unit on the roof deck
and 2 levels above said unit called Concession 2 and Concession 3.
Concession 3 was bought by Leviste Management System
(Petitioner).
2. Petitioner sought to build another unit called Concession 4
on top of Concession 3 and was able to secure a buiding permit for
its construction. However, Legaspi Towers 200 Inc. (Respondent)
sent a notice to Petitioner that its construction was illegal but the
latter did not heed such. Petitioner filed a writ of mandatory
injunction against Respondent.
.
3. The RTC affirmed Respondent wherein it found application
of Art. 448 of the Civil Code and Depra v. Dumlao . The “air space”
above the unit actually belongs to Respondent.
4. Respondent sought to demolish Concession 4 at the
expense of Petitioner. Respondent argued that Petitioner should
first get the consent of the registered owners of the condominium
project before amendment of the Master Deed under Sec. 4 of the
Condominium Act. Petitioner argued that there must be a
determination of the required values under Depra before
Respondent can take action.
5. RTC: Affirmed Respondent.
6. CA: Affirmed RTC Decision.
ISSUE(S): Whether Respondent can build Concession 4 on top of
Petitioner’s condominium building.
HELD: No. Petitioner contravened the Master Deed by adding a 3rd
level above the roof deck and by violating the Condominium Act and
Respondent’s by-laws.
RATIO:
• Instead of procuring the required consent of the registered
owners under Sec. 4 of the Condominium Act or having Concession
4 approved by the members in a regular or special meeting called
for the purpose under Respondent’s by-laws, Petitioner merely had
an internal agreement with the former president of Respondent.
This cannot bind corporations since they can act only through their
Board of Directors.
• Art. 448 of the Civil Code on builders in good faith does not
apply where there is contractual relation between the parties. The
RTC erred in considering Art. 448 and Art. 546 of the Civil Code in
this case.
Article 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)
Article 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. (453a)
The land belongs to a condominium corporation wherein the
builder, as a unit owner, is considered a stockholder or member
under Sec. 10 of the Condominium Act. The builder is already in co-
ownership with other unit owners as members or stockholders of
the condominium corporation. Thus, the purchaser of a
condominium unit binds himself to a contract with other unit
owners.
• Art. 448 and 546 of the Civil Code on builders in good faith
are inapplicable in cases covered by the Condominium Act where
the owner of the land and the builder are already bound by specific
legislation on the subject property and by contract (the Master
Deed and the By-Laws of the condominium corporation).
Lim v. Moldex Land, Inc.
Facts: Condocor (Condominium Corporation) a non-stock,
non-profit corporation, which is the registered condominium
corporation for the Golden Empire Tower held its annual
general membership meeting. Moldex became a member of
Condocor on the basis of its ownership of the 220 unsold units
in the Golden Empire Tower. During the meeting, an existence
of a quorum was declared even though only 29 of the 108 unit
buyers were present. The declaration was based on the
presence of the majority of the voting rights, including those
pertaining to the 220 unsold units held by Moldex through its
representatives. Lim (a registered unit owner), through her
attorney-in-fact, objected to the validity of the meeting. The
objection was denied. Thus, Lim and all the other unit owners
present, except for one, walked out and left the meeting.
Despite the walkout, the individual respondents and the other
unit owner proceeded with the meeting and elected the new
members of the Board of Directors for 2012-2013. All 4
individual respondents (JAMINOLA, MACALINTAL, MILANES,
and ROMAN) were voted as members of the board, together
with other 3 members.
Consequently, Lim filed an election protest before the RTC.
Lim claimed that herein respondents are not entitled to be
members of the Board of Directors because they are non-unit
buyers. However, said court ruled in favor for the
respondents. Not in conformity, Lim filed the present petition.
Issue: Whether only unit buyers are entitled to become
members of Condocor.
Ruling: No. Moldex can be deemed a member of Condocor.
Lim asserted that only unit buyers are entitled to become
members of Condocor. Respondents, for their part, countered
that a registered owner of a unit in a condominium project or
the holders of duly issued condominium certificate of title
(CCT), automatically becomes a member of the condominium
corporation, relying on Sections 2 and 10 of the Condominium
Act, the Master Deed and Declaration of Restrictions, as well
as the By-Laws of Condocor. For said reason, respondents
averred that as Moldex is the owner of 220 unsold units and
the parking slots and storage areas attached thereto, it
automatically became a member of Condocor upon the latter's
creation.
On this point, respondents are correct. Section 2 of the
Condominium Act states:
Sec. 2. A condominium is an interest in real property
consisting of separate interest in a unit in a residential,
industrial or commercial building and an undivided interest in
common, directly or indirectly, in the land on which it is
located and in other common areas of the building. A
condominium may include, in addition, a separate interest in
other portions of such real property. Title to the common
areas, including the land, or the appurtenant interests in
such areas, may be held by a corporation specially formed
for the purpose (hereinafter known as the "condominium
corporation") in which the holders of separate interest shall
automatically be members or shareholders, to the exclusion
of others, in proportion to the appurtenant interest of their
respective units in the common areas.
The Condominium Act does not provide a specific mode of
acquiring ownership of a unit. It is erroneous to argue that the
ownership must result from a sale transaction between the
owner-developer and the purchaser. Such interpretation
would mean that persons who inherited a unit, or have been
donated one, and properly transferred title in their names
cannot become members of a condominium corporation.
JOSEPH HARRY WALTER POOLE-BLUNDEN V.
UNION BANK OF THE PHILIPPINES
G.R. NO. 205838, 29 NOVEMBER 2017
LEONEN, J: 
FACTS:  Poole-Blunden (petitioner) came across an
advertisement for public auction of certain properties
placed by Union Bank in the Manila Bulletin sometime in
March 2001. One of these properties was Unit 2-C of T-
Tower Condominium located at Makati City. The
condominium unit was acquired by UnionBank through
forclosure proceedings.
A week prior to the auction, petitioner visited the
unit for inspection. He found that the unit had an
irregular shape, but didn’t doubt the unit’s area as
advertised, the ceiling in a bad condition, and the unit
needed substantial repairs to be habitable. On the day of
the auction, he also inspected the Master Title of the
project owner to the condominium. Petitioner won the
bid and he entered to a Contract to Sell with UnionBank.
He started occupying the unit in June 2001 and by July
2003, he was able to fully pay for the unit, paying a total
amount of P 3,257,142.49.00.  is 74.18 square meters which was much higher than the
Petitioner decided to construct two additional
bedrooms in the unit. He noticed apparent problems in
its dimensions. He took a rough measurement and found
that the floor area was just 70 sqm, not 95 sqm as
advertised. He got in touch with an officer of UnionBank
to raise the matter, but no action was taken. He then
wrote to Unionbank to inform them of the discrepancy
and asked for the rescission of the Contract to Sell, along
with the refund of the amounts he had paid. UnionBank
replied that upon inquiring with HLURB, the
Homeowners’s Association of T-Tower, and its
appraisers, the unit was confirmed to be 95 sqm inclusive
of the terrace and the comon areas surrounding it. The
petitioner was not satisfied because according to the
Master Title, “boundary of each unit are the interior
surfaces of the perimeter walls, floors, ceilings, windows
and doors thereof." He hired an independent geodetic
engineer, to survey the unit and measure its actual floor.
It was found out that the actual area was only 74.4 sqm
and gave a copy of the certification to Unionbank.
UnionBank explained that the total area of the unit is
based on the  ratio allocation maintenance cost submitted
by the developer to HLURB is 98 square meters (60
square meters as unit area and 38 square meters as share
on open space). On the other hand, the actual area
thereof based on the measurements made by its surveyor
unit area of 60 square meters that was approved by
HLURB. The petitioner was dissatisfied with the said
explanation. 
Petitioner filed for the recission of the Contract to
Sell with Damages with the RTC of Makati and said court
dismissed the complaint. The CA affirmed the ruling of
the RTC stating that the sale was made on a "as-is-where-
is" basis as indicated in their contract. Thus, the petitioner
supposedly waived any errors in the bounds or
description of the unit. With the denial of his Motion for
Reconsideration, he filed for a petition to the Supreme
Court stating that: there is a vitiation of his consent as to
the object of the sale and he charges UnionBank  with
fraud since it failed to disclose to him that the advertised
95 square meters was inclusive of common areas. Thus,
the Contract to Sell may be voided and that UnionBank is
liable for breach of warranty despite the "as-is-where-is"
clause in the Contract to Sell.
ISSUE:  Whether or not UnionBank committed such a
degree of fraud that would entitle the petitoner to the
voiding of the Contract to Sell the said condominium unit
for his failure to disclose that the 95 sqm as advetised
already included common areas.
HELD: Yes. Respondent's insistence on how common
spaces should be included in reckoning the Unit's total
area runs afoul of how Republic Act No. 4726, otherwise
known as the Condominium. Section 3(b) of the
Condominium Act defines a condominium unit, as
follows:
"Unit" means a part of the condominium project intended for
any type of independent use or  ownership, including one or more
rooms or spaces located in one or more floors (or part or parts of
floors) in a building or buildings and such accessories as may be
appended thereto.
Section 6(a) of the Condominium Act specifies the
reckoning of a condominium unit's bounds. It also
specifies that areas of common use "are not part of the
unit":
The boundary of the unit granted are the interior surfaces of
the perimeter walls, floors, ceilings, windows and doors thereof. The
following are not part of the unit bearing walls, columns, floors,
roofs, foundations and other common structural elements of the
building; lobbies, stairways, hallways, and other areas of common
use. 
Thus, the unit sold to petitioner was deficient in
relation to its advertised area. This advertisement having
been made by respondent, it is equally settled there was a
falsity in the declarations made by respondent prior to,
and with the intention of enticing buyers to the sale. 
Petitioner's contention on how crucial the
dimensions and area of the Unit are to his decision to
proceed with the purchase is well-taken. The significance
of space and dimensions to any buyer of real property is
plain to see. This is particularly significant to buyers of
condominium units in urban areas, and even more so in
central business districts, where the scarcity of space
drives vertical construction and propels property values. 
The defense of "as-is-where-is" terms of the
purchase is untenable. First, a stipulation absolving a
seller of liability for hidden defects can only be invoked
by a seller who has no knowledge of hidden defects.
Respondent here knew that the Unit's area, as reckoned
in accordance with the Condominium Act, was not 95
square meters. Second, an as-is-where-is stipulation can
only pertain to the readily perceptible physical state of
the object of a sale. It cannot encompass matters that
require specialized scrutiny, as well as features and traits
that are immediately appreciable only by someone with
technical competence.

Thus, the Court ordered that the Contract to Sell

between petitioner and respondent be annulled, and
petitioner be refunded all the amounts he paid to
respondent in respect of the purchase of the Unit plus
damages.