Additions, Accessions To Properties, Builders, Trespassers, & Usurpers (Art 445-483)

Additions, Accessions to Properties, Builders, Trespassers, & Usurpers (Art 445-483)
CASE DIGEST FORMAT:
CASE NAME
G.R. No. Date Ponente
Property Doctrine:
Facts:
Issue:
Ruling:
Property and Land Law - G02

Atty. George Exiomo
1. Gaboya v. Cui
G.R. No. L-19614 03/27/1971 J. J.B.L. Reyes
Property Doctrine: A building built on one’s own land using one’s own materials, at one’s own expense is not an accession.
FACTS
- Gaboya (Petitioner) is the administrator of Mariano Cui’s Estate.
- Respondents Antonio, Mercedes, and Rosario are some of Mariano Cui’s children.
- Mariano Cui was the owner of three commercial lots.
- He sold the three of them to three of his children: Antonio, Mercedes, and Rosario. However, since Rosario was unable to pay, the
ownership over her share went back to Mariano. Thus, Mariano, Antionio, and Mercedes became the owners of the the 3
properties.
- In the Deed of Sale, Mariano retained for himself the usufruct of the property declaring that he does hereby sell the land to his
children for “further consideration that I (Mariano) shall enjoy the fruits and rents of the same (the land) for as long as my natural
life should last)”
- Sometime after, Antonio and Mercedes had a commercial building erected on the properties. They took out a loan with the
Rehabilitation and Finance Corporation and mortgaged their shares in the land. Mariano granted them to mortgage his share also,
“provided that the rents of the said land shall not be impaired and shall always be received by me.”
- Note: regarding the building, Mariano did not join in the construction, he was just a guarantor through the mortgage of
his share.
- Prior to the institution of the current case the following events occurred:
- Mariano later died
- The court declared that the properties were validly sold to Antonio and Mercedes, despite claims by the other Cui
children
- The plaintiff (guardian of Mariano while he was alive) brought the case to recover P126,344.91 plus legal interest from Antonio
and Mercedes as fruits due to Mariano based on usufruct.
- Plaintiff alleges the usufructuary right includes the rentals of the building
- The plaintiff sought either rescission of the sale or the amount of rentals.
ISSUE
Whether the usufruct reserved by the Marianoin the deed of sale, over the lots in question that were at the time vacant and unoccupied, gave
the usufructuary the right to receive the rentals of the commercial building constructed by the vendees with funds borrowed from the
Rehabilitation and Finance Corporation, the loan being secured by a mortgage over the lots sold. NO
Whether the building constructed on the land is an accession. NO
RULING
The words of the plaintiff clearly reserved usufruct in favor of himself, but the phrase “Provided, however, that the rents of said land shall
not be impaired and will always be received by me.
Appellants, however, argue that the terms of the deed constituting the usufruct are not determinative of the extent of the right conferred; and
that by law, the enjoyment of the rents of the building subsequently erected passed to the usufructuary, by virtue of Article 571 of the Civil
Code of the Philippines. Which states:
Art. 571. The usufructuary shall have the right to enjoy an increase which the thing in usufruct may acquire through accession, the
servitudes established in its favor and in general all the benefits inherent therein.
However, acc to Art. 445-456 on industrial accession by modification on the principal land, such accession is only limited to either
buildings erected on the land of another or buildings constructed by the owner of the land with materials owned by someone else.
So nowhere in these articles on industrial accession is there any mention of a case of a landowner building on his own land with materials
owned by himself (in this case, Mercedes and Antonio). These rules are quite obviously unnecessary when the ownership of the land and the
materials used to build thereon are one and the same. If you own the land, you own the building built on it at your own expense.
In this respect, plaintiffs are correct because by the words on the deed of sale it is the rents of the LAND and not the building that Mariano
reserved by way of usufruct. So, as the lower court held and adjudged, the amount that should be credited to Mariano’s estate is equivalent
to the rent on the land being occupied by the commercial building that had been constructed and not rent of the commercial building itself.
(P100,088) Further, there is no proof to support that Mariano ever renounced the usufruct as respondents claim, so the usufruct remained
until his death.
Both Issues can be resolved thus: that the building built on the land was not considered an accession and Mariano wasn't entitled to the rents
on the buildings, but he is entitled to the rent on the land occupied by the building by way of usufruct.

Atty. George Exiomo

Atty. George Exiomo
2. Tecnogas Philippines Manufacturing Corporation v. Court of Appeals and Eduardo Uy, [F]
268 SCRA 5, 22 (1997).
· The parties in this case are owners of adjoining lots in Parañaque,Metro Manila. That plaintiff (herein
petitioner) which is a corporation is the registered owner of a parcel of land situated in Parañaque, Metro Manila. The
said land was purchased by plaintiff from Pariz Industries, Inc. in 1970, together with all the buildings and improvements
including the wall existing thereon; It was discovered in a survey, that a portion of a building of petitioner, which was
presumably constructed by its predecessor-in-interest, encroached on a portion of the lot owned by private respondent.
· Upon learning of the encroachment or occupation by its buildings and wall of a portion of defendant's land,
plaintiff offered to buy from defendant that particular portion of defendant's land occupied by portions of its buildings and
wall; but defendant, however, refused the offer.
· In 1973, the parties entered into a private agreement before a certain Col. Rosales in Malacañang, wherein
plaintiff agreed to demolish the wall at the back portion of its land thus giving to defendant possession of a portion of his
land previously enclosed by plaintiff's wall;
· That defendant later filed a complaint against plaintiff in connection with the encroachment or occupation by
plaintiff's buildings and walls of a portion of its land but said complaint did not prosper; that defendant dug or caused to
be dug a canal along plaintiff's wall, a portion of which collapsed in June, 1980, and led to the filing by plaintiff of the
supplemental complaint in the above-entitled case and a separate criminal complaint for malicious mischief against
defendant and his wife which ultimately resulted into the conviction in court of defendant's wife for the crime of
malicious mischief; that while trial of the case was in progress, plaintiff filed in Court a formal proposal for settlement of
the case but said proposal, however, was ignored by defendant.
· After trial on the merits, the RTC rendered a decision in favor of petitioner who was the plaintiff therein and
ordering the defendant to sell to plaintiff that portion of land owned by him and occupied by portions of plaintiff's
buildings and wall at the price of P2,000.00 per square meter and to pay the former:
· Appeal was duly interposed with respondent Court, which reversed and set aside the decision of the RTC
Respondent Court, citing the cases of J.M. Tuason & Co., Inc. vs. Vda. de Lumanlan 17 and J.M. Tuason & Co., Inc. vs.
Macalindong, 18 ruled that petitioner "cannot be considered in good faith" because as a land owner, it is "presumed to
know the metes and bounds of his own property, specially if the same are reflected in a properly issued certificate of
title. One who erroneously builds on the adjoining lot should be considered a builder in (b)ad (f)aith, there being
presumptive knowledge of the Torrens title, the area, and the extent of the boundaries."
ISSUE:
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad faith because it is "presumed to
know the metes and bounds of his property."
RULING:
· No, in Co Tao vs. Chico, “where we held that unless one is versed in the science of surveying, "no one can
determine the precise extent or location of his property by merely examining his paper title."
· There is no question that when petitioner purchased the land from Pariz Industries, the buildings and other
structures were already in existence. The record is not clear as to who actually built those structures, but it may well be
assumed that petitioner's predecessor-in-interest, Pariz Industries, did so. Article 527 of the Civil Code presumes
good faith, and since no proof exists to show that the encroachment over a narrow, needle-shaped portion of
private respondent's land was done in bad faith by the builder of the encroaching structures, the latter should
be presumed to have built them in good faith Good faith consists in the belief of the builder that the land he is
Atty. George Exiomo
building on is his, and his ignorance of any defect or flaw in his title. 23 Hence, such good faith, by law, passed on to
Pariz's successor, petitioner in this case. Further, "(w)here one derives title to property from another, the act,
declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former."
And possession acquired in good faith does not lose this character except in case and from the moment facts
exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. The
good faith ceases from the moment defects in the title are made known to the possessor, by extraneous evidence or by
suit for recovery of the property by the true owner. 26
· Consequently, the builder, if sued by the aggrieved landowner for recovery of possession, could have invoked
the provisions of Art. 448 of the Civil Code, which reads:
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 question, however, is whether the same benefit can be invoked by petitioner who, as earlier stated, is not the builder of the
offending structures but possesses them as buyer.
We answer such question in the affirmative.
In the first place, there is no sufficient showing that petitioner was aware of the encroachment at the time it acquired the
property from Pariz Industries. In any case, contrary proof has not overthrown the presumption of good faith under Article 527 of
the Civil Code, as already stated, taken together with the disputable presumptions of the law on evidence. In fact, private
respondent Eduardo Uy himself was unaware of such intrusion into his property until after 1971 when he hired a
surveyor, following his purchase of another adjoining lot, to survey all his newly acquired lots. Upon being apprised of
the encroachment, petitioner immediately offered to buy the area occupied by its building — a conduct consistent with good
faith.
In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner, as buyer, the latter acquired
ownership of the property. Consequently and as earlier discussed, petitioner is deemed to have stepped into the shoes of the
seller in regard to all rights of ownership over the immovable sold, including the right to compel the private respondent to
exercise either of the two options providedunder Article 448 of the Civil Code.

Atty. George Exiomo
3. Depra v. Dumlao
G.R. No. L-57348 May 16, 1985 MELENCIO-HERRERA, J.
Doctrine: The decision of the municipal court in an unlawful detainer case is limited to issues of possession only. The imposition of a forced
lease, like forced co-ownership, is not favored in law. Jurisdiction over matters involving lease, which is an encumbrance on real property,
belongs to the courts of first instance (now RTC). The decision of the municipal court was null and void and cannot operate as res judicata in
a subsequent action to quiet title. Article 448 of the Civil Code provides the legal framework for cases involving builders and landowners in
good faith.
Facts:
● Depra and Dumlao have adjoining lots. When Dumlao built his house, his kitchen encroached on Depra's property. Unlawful
detainer was filed by Depra but MC ruled that Dumlao was a builder in good faith and Art. 448 creates a forced lease.
Issue: Whether or not the order of forced lease decreed in the unlawful detainer case is valid - NO.
Ruling:
● Both Dumlao and Depra are in good faith.
● A builder in good faith is entitled to retain the possession of the land on which he built in good faith until he is paid the value of the
building he built.
● An owner in good faith has 2 options: (1) pay for the building or (2) sell his land to the builder in good faith but the builder cannot
be forced to buy the land if the same is considerably more than the value of the building.
● Forced rent only comes in if the owner exercises his right to sell the land but the builder rejects it by reason of the price being
considerably more than the value of the building. In this case, Dumlao has yet to exercise his right to sell the land.

Atty. George Exiomo
4. Rosales v. Castelltort
G.R. No. 157044 October 5, 2005 CARPIO MORALES
Property Doctrine:Generally, Article 448 of the Civil Code provides that the payment of reasonable rent should be made only up to the date
Sps Rosales serve notice of their option as provided by law upon the Sps Castelltort and the court a quo; that is, if such option is for Sps
Rosales to appropriate the encroaching structure. In such event, Sps Castelltort would have a right to retain the land on which they have built
in good faith until they are reimbursed the expenses incurred by them. This is so because the right to retain the improvements while the
corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or sown.
However, considering that Sps Castelltort had ceased as builders in good faith at the time that appellant Miguel was notified of Sps Rosales
lawful title over the disputed property, the payment of reasonable rent should accordingly commence at that time since he can no longer avail
of the rights provided under the law for builders in good faith.
Facts: Petitioner Sps. Roldolfo & Lily Rosales are registered owner of parcel of land (LOT 17) with area of 315sqm in Los Baos, Laguna.
Respondent Sps Miguel & Judith Castelltort bought LOT 16 adjacent to LOT 17. However, during a survey, the geodetic engineer pointed
out LOT 17 as LOT 16.
On Aug 16, 1995, Petitioner Sps Rosasles discovered that a house was being constructed without their consent and knowledge by
Respondent Sps Castelltort. On Aug 21 1995, Sps Castelltor was notified of Sps Rosales' rightful claim over Lot 17.Negotiations for
settlement of the case began with Rene Villegas (son-attorney-in-fact of Lina Villegas, who is the vendor of LOT 16). Villegas propose to
iffer a larger lot within the subdivision as a placement, 2nd offer was to pay the purchase price of the lot plus legal interest.
Petitioner spouses rejected the offers through a letter on Aug. 24, 1995. Hence they filed a complaint for recovery of possession and
damages.
RTC ruled in favor of petitioners stating that the respondents were guilty of negligence which led to construction of respondents’ house on
petitioner’s property
CA reversed the petition. Hence this case
Issue: W/N the spouses are builders in good faith? YES
Ruling: A builder in good faith is one who builds with the belief that the land he is building on is his, or that by some title one has the right
to build thereon, and is ignorant of any defect or flaw in his title.
● Here, Lot 16 was sold by Lina, through her attorney-in-fact Villegas, to Castelltort and a certain Elizabeth Cruz for a consideration
of P500,000.00. The records indicate that at the time Castelltort began constructing his house on petitioners' lot, he believed that it
was the Lot 16 he bought and delivered to him by Villegas.
● The confusion in the identification of Lot 16 was eventually traced to the error committed by geodetic engineer Augusto Rivera's
employees in placing stone monuments on petitioners' property, instead of on Lot 16
Under ART 448, the landowner can choose between (1)appropriating the building by paying the proper indemnity or (2)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. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof.
● The choice belongs to the owner of the land, a rule that accords with theprinciple 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
Art 448 provides payment of reasonable rent
● the commencement of Castelltort's payment of reasonable rent should start on August 21, 1995(time they were notified of
petitioner’s ownership over the lot), to be paid until such time that the possession of the property is delivered to petitioners, subject
to the reimbursement of expenses, that is, if such option is for petitioners to appropriate the house.
● If the option chosen by petitioners is compulsory sale, the payment of rent should continue up to the actual transfer of ownership.
petition is DENIED

Atty. George Exiomo
5. Spouses Macasaet v. Spouses Macasaet
154391-92 September 30, 2004 PANGANIBAN
Property Doctrine:
Children who occupied the lot upon the invitation of their parents, and made improvements on the lot are deemed to be in good faith when
they built the structures on those lots. Thus, they are entitled to be indemnified by the owners of the land under Art. 448.
Facts:
● Petitioners Spouses Ismael and Teresita Macasaet were allowed by Ismael’s parents respondent Vicente and Rosario Macasaet into
the two parcels of lots located at Banay-Banay, Lipa city by the latter.
● Things between the two parties turned sour.
Respondents claim:
● They filed an ejectment suit by way of a verbal lease agreement, Ismael and Teresita occupied these lots in March 1992 and used
them as their residence and the situs of their construction business; and that despite repeated demands, petitioners failed to pay the
agreed rental of ₱500 per week.
Petitioner’s claim:
● Ismael and Teresita denied the existence of any verbal lease agreement.
● They claimed that respondents had invited them to construct their residence and business on the subject lots in order that they could
all live near one another, employ Marivic (the sister of Ismael), and help in resolving the problems of the family.
● They added that it was the policy of respondents to allot the land they owned as an advance grant of inheritance in favor of their
children. Thus, they contended that the first lot had been allotted to Ismael as advance inheritance.
● The second land had allegedly been given to petitioners as payment for construction materials used in the renovation of
respondents’ houses.
Issue: Whether the spouses Ismael and Teresita Macasaet are builders in good faith, and therefore have a right to be indemnified by the
landowners contemplated under Art. 448? YES.
Ruling:
Spouses Ismael and Teresita Macasaet are builders in good faith, and have a right to be indemnified by the landowners contemplated under
Art. 448.
While the general rule is that only Art. 448 only applies covers only cases in which the builders, sowers or planters believe themselves to be
owners of the land or, at least, to have a claim of title thereto, and it does not apply when the interest is merely that of a holder, such as a
mere tenant, agent or usufructuary, yet good faith can be a basis for a right be indemnified.
This case parallels that of Javier v. Javier. In that case, it was deemed the son to be in good faith for building the improvement (the house)
with the knowledge and consent of his father, to whom belonged the land upon which it was built. Thus, Article 448 was applied.
However, based on the rule on Useful Expenses under Art. 546, owners of the land only have the right to appropriate the land as their own
after (1) refunding the expenses of spouses Ismael and Teresita Macasaet or (2) paying the increase in value acquired by the properties by
reason thereof. They have the option to oblige the spouses to pay the price of the land, unless its value is considerably more than that of the
structures–in which case, petitioners shall pay reasonable rent.
Dispositive Portion:
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with the following MODIFICATIONS:
1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse one half of the value of the useful improvements, amounting to
₱475,000, and the right of Spouses Ismael and Rosita Macasaet to remove those improvements (if the former refuses to reimburse) is
DELETED.
2. The case is REMANDED to the court of origin for further proceedings to determine the facts essential to the proper application of
Articles 448 and 546 of the Civil Code

Atty. George Exiomo
6. Gaboya v. Cui
G.R. No. L-19614 03/27/1971 J. J.B.L. Reyes
Property Doctrine:
FACTS
- Gaboya (Petitioner) is the administrator of Mariano Cui’s Estate.
- Respondents Antonio, Mercedes, and Rosario are some of Mariano Cui’s children.
- Mariano Cui was the owner of three commercial lots.
- He sold the three of them to three of his children: Antonio, Mercedes, and Rosario. However, since Rosario was unable to pay, the
ownership over her share went back to Mariano. Thus, Mariano, Antionio, and Mercedes became the owners of the the 3
properties.
- In the Deed of Sale, Mariano retained for himself the usufruct of the property declaring that he does hereby sell the land to his
children for “further consideration that I (Mariano) shall enjoy the fruits and rents of the same (the land) for as long as my natural
life should last)”
- Sometime after, Antonio and Mercedes had a commercial building erected on the properties. They took out a loan with the
Rehabilitation and Finance Corporation and mortgaged their shares in the land. Mariano granted them to mortgage his share also,
“provided that the rents of the said land shall not be impaired and shall always be received by me.”
- Note: regarding the building, Mariano did not join in the construction, he was just a guarantor through the mortgage of
his share.
- Prior to the institution of the current case the following events occurred:
- Mariano later died
- The court declared that the properties were validly sold to Antonio and Mercedes, despite claims by the other Cui
children
- The plaintiff (guardian of Mariano while he was alive) brought the case to recover P126,344.91 plus legal interest from Antonio
and Mercedes as fruits due to Mariano based on usufruct.
- Plaintiff alleges the usufructuary right includes the rentals of the building
- The plaintiff sought either rescission of the sale or the amount of rentals.
ISSUE
Whether the usufruct reserved by the Marianoin the deed of sale, over the lots in question that were at the time vacant and unoccupied, gave
the usufructuary the right to receive the rentals of the commercial building constructed by the vendees with funds borrowed from the
Rehabilitation and Finance Corporation, the loan being secured by a mortgage over the lots sold. NO
Whether the building constructed on the land is an accession. NO
RULING
The words of the plaintiff clearly reserved usufruct in favor of himself, but the phrase “Provided, however, that the rents of said land shall
not be impaired and will always be received by me.
Appellants, however, argue that the terms of the deed constituting the usufruct are not determinative of the extent of the right conferred; and
that by law, the enjoyment of the rents of the building subsequently erected passed to the usufructuary, by virtue of Article 571 of the Civil
Code of the Philippines. Which states:
Art. 571. The usufructuary shall have the right to enjoy an increase which the thing in usufruct may acquire through accession, the
servitudes established in its favor and in general all the benefits inherent therein.
However, acc to Art. 445-456 on industrial accession by modification on the principal land, such accession is only limited to either
buildings erected on the land of another or buildings constructed by the owner of the land with materials owned by someone else.
So nowhere in these articles on industrial accession is there any mention of a case of a landowner building on his own land with materials
owned by himself (in this case, Mercedes and Antonio). These rules are quite obviously unnecessary when the ownership of the land and the
materials used to build thereon are one and the same. If you own the land, you own the building built on it at your own expense.
In this respect, plaintiffs are correct because by the words on the deed of sale it is the rents of the LAND and not the building that Mariano
reserved by way of usufruct. So, as the lower court held and adjudged, the amount that should be credited to Mariano’s estate is equivalent
to the rent on the land being occupied by the commercial building that had been constructed and not rent of the commercial building itself.
(P100,088) Further, there is no proof to support that Mariano ever renounced the usufruct as respondents claim, so the usufruct remained
until his death.
Both Issues can be resolved thus: that the building built on the land was not considered an accession and Mariano wasn't entitled to the rents
on the buildings, but he is entitled to the rent on the land occupied by the building by way of usufruct.

Atty. George Exiomo
7. Gaboya v. Cui
GR No. L-19614 March 27, 1971 J. JBL Reyes
DOCTRINE:
Under the CC provisions on industrial accession by edification on the principal land (Arts. 445-456), such accession is limited either to
buildings erected on the land of another, or buildings constructed by the owner of the land with materials owned by someone else.
FACTS: Don Mariano Cui was the owner of 3 lots. He then sold these to 3 of his children, Antonio Cui, Mercedes de Ramas, and Rosario
Encarnacion, pro indiviso, for P64K. Rosario was unable to pay her share, thus, the sale to her was cancelled, and ⅓ of the property was
returned to Don Mariano. Therefore, Don Mariano and his 2 children Antonio and Mercedes became co-owners of the lot in equal portions.
In the DOS, vendor Don Mariano retained for himself the usufruct of the property: “I shall enjoy the fruits and rents of the same, as long as
my natural life shall last. Granting and conveying unto the said buyers the full rights as owners to enjoy the constructive possession of the
same, improve, construct and erect a building in the lot… as long as the same will not impair nor obstruct my right to enjoy the fruits
and rents of the same.”
Later, Antonio & Mercedes applied to the Rehabilitation Finance Corp. (RFC) for a loan of P130K, to construct a commercial building on a
portion of the lot corresponding to their share. To facilitate the granting of the loan, Don Mariano executed an authority to mortgage,
authorizing his 2 children to mortgage his share: “I hereby authorized my said co-owners to mortgage, pledge, my share so that they may be
able to construct a house or building in the said property, provided however, that the rents of the said land shall not be impaired and will
always be received by me.” The loan was granted and secured by a mortgage on the 3 lots.
The commercial building was eventually constructed and the builder-owners, Antonio & Mercedes received and continued to receive rents
thereof amounting to P4.8K/mo, and paying therefrom the installments due to RFC.
Rosario, one of the original vendees, filed a petition to declare her father incompetent and to have a guardian appointed for his property.
This was granted and Don Mariano was declared incompetent, and Victorino Reynes was appointed guardian. Reynes filed a motion
seeking authority to collect the rentals from the 3 lots and asking the Court to order Antonio & Mercedes to deliver to him, as guardian, all
the rentals they had previously collected from the commercial building. This petition was denied.
This case was brought by the guardian of Don Mariano in order to recover P126.3K from Antonio & Mercedes, as it is alleged that these
were the fruits due to his ward by virtue of his usufruct. Don Mariano died 9 months after this case was instituted. Further, it is also argued
that the usufructuary right reserved in favor of Don mariano extends to and includes the rentals of the building constructed by Antonio &
Mercedes on the land sold to them by their father; and that defendants retained the rentals for themselves; that the usufructuary rights of
Don Mariano were the essence of the sale, and a violation of the same entitled rescission of the sale.
The defendants admitted the reserved usufruct and the collection of rentals of the building but denied that the usufructuary rights included
or extended to the said rentals, or that such usufruct was the essence of the sale; that Don Mariano had waived and renounced the usufruct.
The trial court ruled in favor of the defendants and held that the reserved right of usufruct in favor of Don Mariano did not include, nor was
it intended to include, the rentals of the building subsequently constructed on the vacant lots, but it did entitle the usufructuary to receive a
reasonable rental for the portion of the land occupied by the building.
ISSUE: Whether the usufructuary reserved by Don Mariano in the DOS over the lots gave him the right to receive the rentals of the
commercial building constructed by Antonio & Mercedes. NO.
RULING:
The Court affirmed the trial court. The terms of the DOS of the vacant lots made by Don Mariano in favor of his children clearly prove that
the reserved usufruct in favor of Don Mariano was limited to the rentals of the land alone. Had it been designed to also include the rents of
the building intended to be raised on the land, an express provision would have been included.
Appellants argue that the terms of the deed constituting the usufruct does not determine the extent of the right conferred; hence, the law
provides for the enjoyment of the rents of the building subsequently erected passes to the usufructuary under Art. 571 of the CC, “The
usufructuary shall have the right to enjoy any increase which the thing in usufruct may acquire through accession, the servitudes established
in its favor, and in general, all the benefits inherent therein.” Therefore, the building constructed by Antonio & Mercedes is considered an
accession to the land.
Appellants err. Under the CC provisions on industrial accession by edification on the principal land (Arts. 445-456), such accession is
limited either to buildings erected on the land of another, or buildings constructed by the owner of the land with materials owned by
someone else. Art. 445 provides for the basic rule of industrial accession, thus: “Whatever is built, planted or sown on the land of another,
and the improvements or repair made thereon, belong to the owner of the land subject to the provisions of the following articles.” Art. 449
states that: “He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted, or sown without right to
indemnity.” Art. 447 and 445 treat of accession produced by the landowner’s building, planting and sowing “with the materials of another”
and when “the materials, plants, or seeds belong to a third person” other than the landowner or the builder, planter or sower.
Nowhere in these articles on industrial accession is there any mention of a case of a landowner building on his own land with materials
owned by himself, such as the case of Antonio & Mercedes. The reason for the omission is apparent: recourse to the rules of accession is
totally unnecessary and inappropriate where the ownership of land and of the materials used to build thereon are on the same person. Even
if the law did not provide for accession, the landowner necessarily owns the building because he paid for the materials and labor
constructing it.

Atty. George Exiomo
Therefore, the usufructuary rights of the late Don Mariano, reserved in the DOS, was over the land alone and did not entitle him to the rents
of the building later constructed by Antonio & Mercedes; the said usufructuary was entitled only to the reasonable rental value of the land
occupied by the building.

Atty. George Exiomo
8. Rosales v. Castelltort
G.R. No. 157044 October 5, 2005 Carpio Morales, J.
Property Doctrine: A builder in good faith is one who builds with the belief that the land he is building on is his, or that by some title one
has the right to build thereon, and is ignorant of any defect or flaw in his title. Possession acquired in good faith does not lose this character
except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or
wrongfully. The good faith ceases or is legally interrupted from the moment defects in the title are made known to the possessor, by
extraneous evidence or by suit for recovery of the property by the true owner.
The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal
and not the other way around. 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.
Facts:
Petitioners filed a complaint for recovery of possession and damages with prayerfor the issuance of a restraining order and preliminary
injunction against spouses-respondents Miguel and Judith Castelltort when they discovered that a house was beingconstructed on their lot,
without their knowledge and consent, by respondent MiguelCastelltort (Castelltort). It turned out that respondents had purchased a lot, Lot
16 of thesame Subdivision Plan, from respondent Lina Lopez-Villegas (Lina) through her son-attorney-in-fact Rene Villegas (Villegas) but
that after a survey thereof by geodeticengineer Augusto Rivera, he pointed to Lot 17 as the Lot 16 the Castelltorts purchased.
Villegas offered a larger lot near petitioners’ lot in the same subdivision as areplacement thereof or the payment the purchase price of
petitioners’ lot with legal interest which were both rejected by petitioners.
The Castelltorts and Lina both claim that the Castelltorts acted in good faith in constructing the house on petitioners’ lot as they in fact
consulted Lina before commencing any construction thereon, they having relied on the technical description ofthe lot sold to them, Lot 16,
which was verified by her officially designated geodeticengineer.
Ruling out good faith, the RTC, found for petitioners. The CA ruled to set aside RTC’s decision.
Issue: Whether the respondents are builders in good faith. YES.
Ruling:
The records indicate that at the time Castelltort began constructing his house on petitioners’ lot, he believed that it was the Lot 16 he bought
and delivered to him by Villegas. As correctly found by the CA, both parties having acted in good faith at least untilAugust 21, 1995, the
applicable provision in this case is Article 448 of the Civil Code.
Under Art. 448, the landowner can choose between appropriating the building by payingthe proper indemnity or obliging the builder to pay
the price of the land, unless its valueis considerably more than that of the structures, in which case the builder in good faithshall pay
reasonable rent. If the parties cannot come to terms over the conditions of thelease, the court must fix the terms thereof.
In the case at bar, CastelltortÊs good faith ceased on August 21, 1995 whenpetitioners personally apprised him of their title over the
questioned lot. As held by the CA, should petitioners then opt to appropriate the house, they should only be made topay for that part of the
improvement built by Castelltort on the questioned property atthe time good faith still existed on his part or until August 21, 1995
considering thatappellants had ceased as builders in good faith at the time that appellant Miguel wasnotified of appellees’ lawful title over
the disputed property, the payment of reasonablerent should accordingly commence at that time since he can no longer avail of the
rightsprovided under the law for builders in good faith. If the option chosen by petitioners iscompulsory sale, however, the payment of rent
should continue up to the actual transferof ownership.

Atty. George Exiomo
9. Tuatis v. Spouses Escol, et al. 619 Phil. 465, 483 (2009);, 10/27/09
GRN 175399 October 27, 2009 CHICO-NAZARIO, J.
Property Doctrine: 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
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 had 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.
● The CA dismissed the appeal by Tuatis which resulted in 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.
ISSUE
W/N Tuatis is entitled to exercise the options granted in Art. 448 of the Civil Code. - NO.
RATIO
● Tuatis is not entitled to exercise the options granted in Article 448 of the Civil Code.
● 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.
● 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.

Atty. George Exiomo
10. Benedicto v. Villaflores
G.R. No. 185020 Oct 6, 2010 Nachura, J.
Property Doctrine: A landowner is given the option to either appropriate the improvement, or sell the land to the possessor in good
faith. Art 546 also provides that a builder in good faith is entitled to full reimbursement for all the necessary and useful expenses
incurred; it also gives him the right of retention until full reimbursement is made.
Facts: Maria Villaflores was the owner of Lot 2-A, with an area of 277 square meters in Poblacion, Meycuayan, Bulacan covered by a
TCT. Maria sold a portion to her nephew, respondent Antonio. He then took possession of the portion sold to him and constructed a house.
12 years later, Maria executed a Kasulatan ng Bilihang Tuluyan (Deed of Sale) covering the entire Lot 2-A. Antonio did not register the
sale or pay the real property taxes of the land. Maria then sold same lot to petitioner Filomena Benedicto. The sale was registered with
the register of deeds and the TCT in the name of Maria was transferred to Filomena. Filomena then filed an accion publiciana against
Antonio by virtue of the deed of sale and that she was unaware that Antonio had a prior claim over the property. Antonio initially promised
to vacate the property after 5 months but the he offered an extension to 1 year with payment of rentals to which she agreed. Antonio refused
to vacate the property and claimed absolute ownership. Antonio argued that purchased the property from Maria in 1980 and took possession
thereon and claimed that Filomena had prior knowledge of the sale thus it should be rescinded.
RTC: Ruled in favor of Filomena and that Filomena had no bad faith. It also ruled that Antonio was a builder in good faith thus making Art
448 applicable.
CA: Affirmed the lower court that Antonio is a builder in good faith and remanded to the lower court for further proceedings to determine
the respective rights of the parties under Art 448 and 546
Issue: Whether respondent is a builder in good faith (YES)
Ruling: It is not disputed that Antonio constructed the house long before the sale in favor of Filomena; when Filomena bought the property
from Maria, Antonio’s house had already been erected. The Court ruled that Antonio had the belief that he was the owner of premises on
account of the Deed of Sale in his favor despite the inability to register it before the Registry of Deeds. Under Art 448, a landowner is given
the option to either appropriate the improvement, or sell the land to the possessor in good faith. Relatedly, Art 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 the right of retention until
full reimbursement is made.

Atty. George Exiomo
11. Communities Cagayan, Inc. v. Spouses Arsenio and Angeles Nanol, et al.
GRN 176791 November 14, 2012 DEL CASTILLO, J.
Where the property is covered by a contract to sell, Art. 448 may still be applicable when there is: (1) good faith presumed on the part of
the buyer; (2) the seller fails to rebut the presumption; and (3) no evidence is presented to show any objection or opposition to
improvements introduced by the buyers.
Sps. Nanol entered into a Contract to Sell with Communities Cagayan, Inc. whereby the latter agreed to sell to the spouses a house and two
lots in Camella Homes, CDO, for the price of P368,000. The spouses did not avail of the in-house financing due to high interest rates, and
instead obtained a loan from Capitol Development Bank, using the property as collateral. A simulated sale over the property was executed
in favor of the spouses, and titles were transferred and submitted for loan processing. The bank collapsed and closed before it could release
the loan. The spouses entered into another Contract to Sell over the same property for the same price, but opted to avail the in-house
financing. Arsenio later demolished the original house and constructed a three-story house. After Arsenio died, his wife failed to pay the
monthly amortizations and received a notice of delinquency and cancellation of contract.
Communities Cagayan filed a complaint for cancellation of title, recovery of possession, reconveyance and damages, against the spouses. It
alleged that the transfer of title was made only in compliance with the requirements of the bank which the spouses later failed to pay. The
RTC held that the deed of absolute sale was invalid for lack of consideration, and ordered petitioner to reimburse to the spouses the total
monthly installments paid and the value of the new house minus the cost of the original house.
W/n petitioner is obliged to reimburse the value of the new house minus the cost of the original house
The spouses are entitled to reimbursement of the improvements made on the property as the spouses are presumed to be builders in good
faith. As a general rule, Art. 448 on builders in good faith does not apply when there is a contractual relation between the parties. Art. 448
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.
Here, the property was covered by a contract to sell and ownership still remains with the seller. However, Art. 448 is still applicable as: (1)
good faith is presumed on the part of the spouses; (2) the presumption was not duly rebutted; and (3) no evidence was presented to show
any objection or opposition to the improvements introduced by the spouses. Art. 453 provides that it is understood that there is bad faith on
the part of the landowner whenever the act was done with his knowledge and without opposition on his part.
Petitioner, as landowner, has two options under Art. 448: (1) he may appropriate the improvements for himself after reimbursing the buyer
(the builder in good faith) the necessary and useful expenses under Arts. 546 and 548 of the Civil Code, which include the current market
value minus the cost of the hold house and negates the obligation to pay rent; 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 can only be obliged to pay reasonable rent.
The case was remanded for determining matters necessary for the proper application of Art. 448 in relation to Arts. 546 and 548.

Atty. George Exiomo
12. Department of Education v. Delfina C. Casibang, et al.
G.R. No. 192268 January 27, 2016 PERALTA, J.
DOCTRINE: Art. 448 provides a just and equitable solution to the impracticability of creating "forced co-ownership" by giving the owner
of the land 2 options in dealing with a builder in good faith:
a. The landowner may appropriate the improvements, after payment of indemnity representing the value of the improvements introduced
and the necessary and useful expenses defrayed on the subject lots; or
b. Oblige the builder in good faith to pay the price of the land.
EXC TO OPTION B: The builder cannot be obliged to buy the land if its value is considerably more than that of the improvements and
buildings. In which case, a lease is a more proper remedy. The law provides that the parties shall agree on the terms of the lease and, in
case of disagreement, the court shall fix the terms thereof.
The owner of the land is allowed to exercise the said options because his right is older and because, by the principle of accession, he is
entitled to the ownership of the accessory thing.
FACTS:
1. Cepeda (Respondents' father) allowed the construction and operation of a school, Solana North Central School, on the western portion of
his property. The school is operating under the control and supervision of the petitioner DepEd.
2. Despite Cepeda's death, the respondents and other descendants of Cepeda continued to tolerate the use and possession of the property by
the school.
3. One day, respondents entered and occupied a portion of the property and the school officials demanded the respondents to vacate it.
4. DepEd refused to recognize the ownership of the respondents over the property and alleged that (a) it owned the subject property
because it was purchased by civic-minded residents of Solana, Cagayan from Cepeda, (b) that contrary to respondents' claim that the
occupation is by mere tolerance, the property has always been occupied and used adversely, peacefully, continuously and in the concept of
owner for almost years, and (c) that the respondents had lost whatever right they had over the property through laches. DepEd, however,
failed to substantiate these claims with evidence.
5. On the other hand, respondents presented a TCT in their fathers' name to substantiate their claim of ownership.
6. The lower courts were affirmed by the SC that respondents are not guilty of laches since the occupation of the subject lot is by mere
tolerance or permission of the respondents, the DepEd, without any contract between them, is bound by an implied promise that it will
vacate the same upon demand. Hence, until such demand to vacate was communicated, respondents are not required to do any act to
recover the subject land.
7. As owners, Respondents demands DepEd to (a) pay rent, (b) purchase the area occupied, or (c) vacate the premises
ISSUE: [Not the issue in the case, but this is what's relevant to the topic] WON DepEd should (a) pay rent, (b) purchase the area
occupied, or (c) vacate the premises - YES to PAYMENT OF RENT if the value of the property is greater than the value of the
buildings and improvements DepEd constructed. | YES to PURCHASE THE AREA OCCUPIED if the value of the property is less
than the value of the improvements. | No for THE VACATING OF PREMISES since this is not a remedy provided by law.
RULING:
1. In spite of the proven ownership of the Respondents, the Court held that DepEd is a builder in good faith since Cepeda permitted the
construction of building and improvements to conduct classes on his property.
2. As such, the remedy of Respondents would be Art. 448 which provides a just and equitable solution to the impracticability of creating
"forced co-ownership" by giving the owner of the land 2 options in dealing with a builder in good faith:
a. The landowner may appropriate the improvements, after payment of indemnity representing the value of the improvements introduced
and the necessary and useful expenses defrayed on the subject lots; or
b. Oblige the builder in good faith to pay the price of the land.
EXC TO OPTION B: the builder cannot be obliged to buy the land if its value is considerably more than that of the improvements and
buildings. In which case, a lease is a more proper remedy. The law provides that the parties shall agree on the terms of the lease and, in
case of disagreement, the court shall fix the terms thereof. The owner of the land is allowed to exercise the said options because his right is
older and because, by the principle of accession, he is entitled to the ownership of the accessory thing.
3. The Court held that the option a is not feasible since the property is being used as school premises. As such, Respondents are left with
option b as a remedy.
4. Thus, the Court remanded the case to determine the value of the property. It was discussed that the computation of the value of the
property should be fixed at the prevailing market value at the time the landowner elected his choice (option a or b).
5. The ruling of the Court ended with the order that if the value of the property is less than the value of the buildings and improvements,
DepEd is ordered to pay the value of the property. However, if the value of the property is greater than the value of the buildings and
improvements, DepEd is ordered to pay reasonable rent in accordance with the agreement of the parties. In case of disagreement, the trial
court shall fix the amount of reasonable rent.

Atty. George Exiomo
13. Heirs of Sarili v. Lagrosa
G.R. No. 193517 15 JAN 2014 Perlas-Bernabe, J.
Doctrine: General Rule: Every person dealing with registered land may safely rely on the correctness of the certificate of
title issued and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.
Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any
encumbrance, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for
any hidden defects or inchoate right that may subsequently defeat his right.
Exception: A higher degree of prudence is required from one who buys from a person who is not the registered owner,
although the land object of the transaction is registered. The buyer is expected to examine not only the certificate of title but
all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor, the buyer must also
ascertain the identity of the person with whom he is dealing with and the latter’s legal authority to convey the property.
● If the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a
completely legal and valid title in the hands of an innocent purchaser for value.
● When the instrument presented is forged, even if accompanied by the owner’s duplicate certificate of title, the registered owner
does not thereby lose his title, and neither does the assignee in the forged deed acquire any right or title to the property.
● To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he builds and that he be
unaware that there exists in his title or mode of acquisition any flaw which invalidates it.
● Good faith encompasses an honest belief, the absence of malice and the absence of design to defraud or to seek an
unconscionable advantage.
Facts:
● Pedro Lagrosa was the owner of a parcel of land in Caloocan City and had been paying the real estate taxes therefor
since acquisition in 1974.
● Lagrosa was a resident of California, USA and found out during his vacation in the PH that a new certificate of title
for the subject property was issued by the Register of Deeds in the name of Victorino Sarili.
● Sps. Sarili had built a house on the subject property.
● Lagrosa, represented by Lourdes Mojica via SPA, filed a complaint before the RTC against Sps. Sarili and the
Register of Deeds, praying for the annulment of the TCT and delivery of the possession of the subject property, or
alternatively the payment of P1M and moral damages; Lagrosa alleged that the Deed of Absolute Sale, purportedly
executed in 1978 by him and his wife Amelia, was falsified.
● Sps. Sarili maintained that they were innocent purchasers for value, having purchased it from Ramon Rodriguez, who
possessed and presented an SPA to sell/dispose the property, conveying the property in their favor by virtue of a Deed
of Absolute Sale in 1992.
● Victorino died during the pendency of the case and was substituted by his heirs.
● The RTC ruled in favor of the heirs, the CA reversed and ruled in favor of Lagrosa.
● On petition for review on certiorari to the SC, the heirs argued that even if the 1978 deed of sale was fictitious, there
was still a valid conveyance of the property due to the execution of the SPA between Lagrosa and Ramon and the
1992 deed of sale which were authentic and genuine.
Issue: Whether there was a valid conveyance of the subject property to Sps. Sarili? No.
Ruling: The Court held that there was no valid conveyance of the subject property and ruled in favor of Lagrosa. Likewise,
the Could held that the execution and authenticity of Ramon’s SPA were not sufficiently established and the 1992 deed of sale
was void.
Ramon’s SPA which granted him the authority to sell, and which Sps. Sarili relied upon, had a flaw in its notarial
acknowledgement since Lagrosa’s community tax certificate (CTC) number was not indicated. Sec. 163(a) of the Local
Government Code provides that “when an individual subject to the community tax acknowledges any document before a
notary public, it shall be the duty of the administering officer to require such individual to exhibit the community tax
certificate. Despite this, Sps. Sarili failed to show that they conducted an investigation beyond the subject SPA and into the
circumstances of its execution as required by prevailing jurisprudence. Thus, Sps. Sarili cannot be considered as innocent
purchasers for value. Such defective notarization of the SPA also meant that the document should be treated as a private
document and examined under Sec. 20, Rule 132 which provides that “before any private document offered as authentic is
received in evidence, its due execution and authenticity must be proved either: (a) by anyone who saw the document executed
or written; or (b) by evidence of the genuineness of the signature or handwriting of the maker…”. A defective notarization
will strip the document of its public character and reduce it to a private instrument, the evidentiary standards of its validity
shall be based on preponderance of evidence. Here, no evidence was presented to authenticate the signatures of the other
signatories of the SPA other than Lagrosa. Likewise, the notary public who notarized the SPA, Atty. Untalan, failed to justify
why he did not require the presentation of Lagrosa’s CTC. NCC Art. 1874 provides that “when the sale of a piece of land or
any interest therein is through an agent, the authority of the latter shall be in writing; otherwise the sale shall be void.” Thus,
the 1992 sale which Sps. Sarili relied upon to prove their title to the subject property was void.
Besides, as the CA correctly observed, Lagrosa’s signature appearing on the SPA was not similar to his genuine signature.
The Court, however, found a need to remand the case to determine the rights and obligations of the parties with respect to the
house Sps. Sarili had built on the property in bad faith, in accordance with NCC Arts. 449-452 and 546, where the builder in
bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.

Atty. George Exiomo
14. Mendoza v. De Guzman and Solis
G.R. No. L-28721 October 5, 1928 J. Malcolm
Property Doctrine
Facts
A piece of land was adjudicated in favor of Mendoza and Enriquez, but subject to retention in favor of De Guzman until De guzman has
been indemnified for the improvements (coconut trees) which he introduced thereon.
De Guzman was issued a writ of possession for it on June 25, 1924, and Mendoza was removed from the land.
However, since Mendoza and Enriquez v. de Guzman and Solis could not settle on an amount for the improvements made on the land, the
former instituted an action to:
a) Fix the value of the necessary and useful expenses incurred by de Guzman for the improvements
b) Require the defendants to render an accounting of the fruits in order that the value may be applied to the expenses
c) Restitution of the land to the plaintiff
**Note that Solis in this case intervened saying that de Guzman transferred all his rights to the improvements to Solis for 5000.
The relevant issues submitted to the lower court is the amount to be paid by the plaintiffs for the improvements and whether the
accounting of the fruits should be applied to such payment.
The lower court ruled that:

1. The value of indemnizacion should be according to the necessary and useful expenses of the defendant for introducing the
plantation (2,046 pesos, 20% to be paid by Guzman and 80% by Solis + 66.93 pesos per annum from June 25, 1924 [the
occupation period])
2. That the defendant should render an accounting of the fruits and profits received for their application to the payment, and any
excess should be returned to the plaintiffs
Issue
Whether the defendant is entitled to an indemnizacion? YES.
Whether the defendant should apply the accounting of the fruits to the indemnification and return the excess to the plaintiff? YES
Ruling
In accordance with the following Articles of the Civil Code thus:
Art. 361 of the [OLD] Civil Code confers the right, to any owner of land, to take as his own what has been built, to any owner of
land, to take as his own what has been built, sown, or planted on it in good faith by another upon paying the expenses incurred by
the latter. (Notabel: This is now 448.)
Art 453 (This is now Art. 546). Necessary expenses shall be refunded to every possessor but 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 possession having the option of refunding the amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof.
Art 443. He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering,
and preservation.
Art 455 (NowArt 549) The possessor in bad faith shall reimburse the fruits received and those which the legitimate
possessor could have received, and shall have a right only to the expenses mentioned in par 1 of 546 and Art 443. THe
expenses incurred in improvements for pure luxury or mere pleasure shall not be refunded to possessor in bad faith; but he may
remove the bjects for which such expenses have been incurred, provided that the thing suffers no injury thereby, and that the
lawful possessor does not prefer to retain them by paying the value they may have at the time he enters into possession.
Spanish commentators have described “necessary expenses” as:

- Those made for the preservation of the thing
- Those without which the thing would deteriorate or be lost
- Those that augment the income of the things upons which they are expanded
- Those incurred for cultivation, production, upkeep, etc
Here, since Mendoza and Enriquez have chosen to take the improvements introduced on the land, they have to pay the amount of the
necessary and useful expenses.
However, since the defendant is not a possessor in good faith, although he should be reimbursed for the necessary and useful expenditures,
he doesn’t get to keep the fruits, and should apply the same to the reimbursement and the excess should be given to the plaintiff.
Judgment of the lower court must thus be affirmed.

Atty. George Exiomo

Atty. George Exiomo
15.

Atty. George Exiomo
16. Spouses Macasaet v. Spouses Macasaet, 482 Phil. 853, 871-872 (2004)
Re: Useful improvements (building or plants) when landowner is in good faith and builder or planter is in good faith
In a Nutshell:
· The present case involves a dispute between parents and children.
· The children were invited by the parents to occupy the latter’s two lots, out of parental love and a desire to
foster family solidarity.
· Unfortunately, an unresolved conflict terminated this situation.
· Out of pique, the parents asked them to vacate the premises.
· Thus, the children lost their right to remain on the property.
· They have the right, however, to be indemnified for the useful improvements that they constructed
thereon in good faith and with the consent of the parents.
· In short, Article 448 of the Civil Code applies.
FACTS:
· Petitioners Ismael and Teresita Macasaet and Respondents Vicente and Rosario Macasaet are
first-degree relatives.
· Ismael is the son of respondents, and Teresita is his wife.
· On Dec. 10, 1997, the parents filed with the MTCC of Lipa City an ejectment suit against the children.
· Respondents alleged that they were the owners of two (2) parcels of land covered by, situated at
Banay-banay, Lipa City
o By way of a verbal lease agreement, Ismael and Teresita occupied these lots in March 1992 and
used them as their residence and the situs of their construction business
o Despite repeated demands, petitioners failed to pay the agreed rental of P500 per week.
· Ismael and Teresita denied the existence of any verbal lease agreement.
o They claimed that respondents had invited them to construct their residence and business on the
subject lots in order that they could all live near one other, employ Marivic (the sister of Ismael), and
help in resolving the problems of the family.
o They added that it was the policy of respondents to allot the land they owned as an advance grant
of inheritance in favor of their children.
o Thus, they contended that the lot covered by TCT No. T-103141 had been allotted to Ismael as
advance inheritance.
o On the other hand, the lot covered by TCT No. T-78521 was allegedly given to petitioners as
payment for construction materials used in the renovation of respondents’ house.
· MTCC ruled in favor of respondents and ordered petitioners to vacate the premises
· On appeal, the RTC upheld the findings of MTCC.
o However, the RTC allowed respondents to appropriate the building and other improvements
introduced by petitioners, after payment of the indemnity provided for by Article 448 in relation to
Articles 546 and 548 of the Civil Code.
o It added that respondents could oblige petitioners to purchase the land, unless its value was
considerably more than the building.
o In the latter situation, petitioners should pay rent if respondents would not choose to appropriate
the building.
· CA also sustained the findings of the lower courts
o However, it modified the RTC Decision by declaring that Article 448 of the Civil Code was
inapplicable.
o The CA opined that under Article 1678 of the same Code, Ismael and Teresita had the right to be
reimbursed for one half of the value of the improvements made.
· Not satisfied with CA’s ruling, petitioners brought this recourse to SC
ISSUE: Whether Article 448 of the Civil Code is applicable in this case.
RULING:
· Yes. Article 448 is applicable.
· As applied to the present case, accession refers to the right of the owner to everything that is incorporated or
attached to the property.
· Accession industrial—building, planting and sowing on an immovable—is governed by Articles 445 to 456 of
the Civil Code
· When a person builds in good faith on the land of another, the applicable provision is Article 448.
o This Court has ruled that this provision covers only cases in which the builders, sowers or planters believe
themselves to be owners of the land or, at least, to have a claim of title thereto.
· It does not apply when the interest is merely that of a holder, such as a mere tenant, agent or usufructuary.
· From these pronouncements, good faith is identified by the belief that the land is owned; or that—by some
title—one has the right to build, plant, or sow thereon.
· However, in some special cases, this Court has used Article 448 by recognizing good faith beyond this
limited definition.
o Thus, in Del Campo v. Abesia, this provision was applied to one whose house—despite having been built at
the time he was still co-owner—overlapped with the land of another.

Atty. George Exiomo
o This article was also applied to cases wherein a builder had constructed improvements with the
consent of the owner.
o The Court ruled that the law deemed the builder to be in good faith.
o In Sarmiento v. Agana, the builders were found to be in good faith despite their reliance on the consent of
another, whom they had mistakenly believed to be the owner of the land.
· Based on the aforecited special cases, Article 448 applies to the present factual milieu.
Application
· The established facts of this case show that respondents fully consented to the improvements
introduced by petitioners.
· In fact, because the children occupied the lots upon their invitation, the parents certainly knew and approved
of the construction of the improvements introduced thereon.
· Thus, petitioners may be deemed to have been in good faith when they built the structures on those lots.
· The instant case is factually similar to Javier v. Javier.
o In that case, this Court deemed the son to be in good faith for building the improvement (the house) with
the knowledge and consent of his father, to whom belonged the land upon which it was built.
o Thus, Article 448 was applied.
Rule on Useful Expenses

· The structures built by petitioners were “useful” improvements, because they augmented the value or
income of the bare lots.
· Thus, the indemnity to be paid by respondents under Article 448 is provided for by Article 546
o “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.
o 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.”
· Consequently, respondents have the right to appropriate— as their own—the building and other
improvements on the subject lots, but only after:
(1) Refunding the expenses of petitioners, or
(2) Paying the increase in value acquired by the properties by reason thereof.
· They have the option to oblige petitioners to pay the price of the land, unless its value is considerably more
than that of the structures—in which case, petitioners shall pay reasonable rent.
· In accordance with Depra v. Dumlao, this case must be remanded to the trial court to determine matters
necessary for the proper application of Article 448 in relation to Article 546.
· Such matters include the option that respondents would take and the amount of indemnity that they would
pay, should they decide to appropriate the improvements on the lots.
Note:
· In this case, the petitioners were able to establish that respondents had invited them to occupy the subject
lots in order that they could all live near one other and help in resolving family problems.
· By occupying those lots, petitioners demonstrated their acceptance of the invitation.
· Hence, there was a meeting of minds, and an agreement regarding possession of the lots impliedly arose
between the parties.
· The occupancy of the subject lots by petitioners was not merely “something not wholly approved of” by
respondents.
o Neither did it arise from what Tolentino refers to as “neighborliness or familiarity.”
· In point of fact, their possession was upon the invitation of and with the complete approval of
respondents, who desired that their children would occupy the premises.
· However, in this case, the right to use the lots was terminated.
o Based on respondents’ reasons for gratuitously allowing petitioners to use the lots, it can be safely
concluded that the agreement subsisted as long as the parents and the children mutually benefited from the
arrangement.
o Effectively, there is a resolutory condition in such an agreement.
o Having been based on parental love, the agreement would end upon the dissipation of the affection.
· When persistent conflict and animosity overtook the love and solidarity between the parents and the children,
the purpose of the agreement ceased.
· Thus, petitioners no longer had any cause for continued possession of the lots.
· Their right to use the properties became untenable.
· It ceased upon their receipt of the notice to vacate.
· And because they refused to heed the demand, ejectment was the proper remedy against them.

Atty. George Exiomo

Atty. George Exiomo
17. Sarmiento v. Agana
G.R. No. L-57288 April 30, 1984 MELECIO-HERRER, J.
Property Doctrine:
FACTS:
● Ernesto was still courting his wife, the latter's mother had told him the couple could build a residential house whom Ernesto did
construct a residential house on the land at a cost of P8,000.00 to P10,000.00 who probably assumed that the wife's mother was
the owner of the land and that, it would be transferred to the spouses.
● Subsequently turned out that the land had been titled in the name of Mr. & Mrs. Jose C. Santos, Jr. who, sold the same to
petitioner Sarmiento. Sarmiento filed an Ejectment suit against them.
● In the evidentiary hearings before the Municipal Court, Sarmiento submitted the deed of sale of the land in her favor, which
showed the price to be P15,000.00.
● On the other hand, Ernesto testified that the then cost of the residential house would be from P30,000.00 to P40,000.00.
● Sarmiento refuse to pay and give option to buy the property.
ISSUE: 1.Whether or not Ernesto was in good faith

2.Whether or not Sarmiento could exercise both refusal to pay the spouses and give option to purchase.
RULING:
1.Yes. We agree that Ernesto and wife were builders in good faith in view of the peculiar circumstances under which they had constructed
the residential house
As far as they knew, the land was owned by Ernesto's mother-in-law who, having stated they could build on the property, could
reasonably be expected to later on give them the land
This is with regard to Art 448 of CC.
2. NO. The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is
paid the value of his building, under article 453 (now Article 546).
The owner, of the land, upon, the other hand, has the option, under article 361 (now Article 448), either to pay for the building or to sell
his land to the owner of the building.
But he cannot, as respondents here did, refuse both to pay for the building and to sell the land and compel the owner of the building to
remove it from the land where it is erected. He is entitled to such remotion only when, after having chosen to sell his land, the other party
fails to pay for the same.

Atty. George Exiomo
18. Racaza v. Susan Realty
G.R. No. L-20330 December 22, 1966 REGALA
Property Doctrine: Article 448 is only applicable if the possessor of the land is in good faith, allowing him full reimbursement.
Facts: Petitioner was a lessee of a piece of land owned by respondent corporation. In 1952, He started renting the portion when his wife
bought an unfinished house built on the said land. With assurance from respondent that petitioner’s family could stay on the land by paying
monthly rental s of P15, the petitioner finished the construction of the house. In Dec 16, 1955, respondent asked petitioner to to vacate the
land. A complaint for ejectment was filed against petitioners but it was dismissed.
In 1957, petitioner received a demand letter to vacate the premises. Another ejectment suit was filed against petitioner alleging that the
respondent need the lot for purpose of constructing improvements thereon and other uses. But petitioner refused to leave the premises.
Petitioner’s claim: he denied that the lease was on a month-to- month basis and claimed that his understanding with respondent was that he
would be allowed to stay on the premises as long as he paid a monthly rent of P15.
Lower courts: petitioner is ordered evicted; petitioner's illegal possession should be deemed to have started on December 17, 1957, when
the second demand to vacate was made on him, because the complaint in this case was not intended to revive the one previously dismissed
for lack of prosecution.
On appeal, petitioner asked for the dismissal of the complaint on the ground of lack of jurisdiction of the municipal court to try it. He
claimed that the complaint was filed more than one year after the alleged unlawful detainer or from July, 1955 when he stopped paying
rent. The first complaint for ejectment was dismissed on November 23, 1956, while the second was not filed until February 19, 1958.
Issue::W/N the MTC had jurisdiction over the ejectment case though the complaint did not state the date when the
alleged unlawful detainer started? YES
Ruling: Municipal courts shall have jurisdiction over unlawful detainer cases where the party’s possession was originally lawful but
ceased to be so by the expiration of his right to possess and must be brought before it from the date of last demand.
● respondent's action is not based on non-payment of rent coupled with a demand; its action is based on the expiration of the term of
the lease and the demand made by it to vacate the premises merely evidences its determination not to extend the lease.
● Moreover, even if the action were based on non-payment of rent, the one-year period should be reckoned from the second notice,
on the theory that respondent has the right to waive his action based on the first demand and to let the lessee remain in the
premises.
Art. 448 not applicable
- Petitioner claim that he should have been allowed full reimbursement for what he had spent by applying to this case article 448 of
the Civil Code. It is now settled that article 443, in relation to article 546, applies only to possessors in good faith
- Here, petitioner as a lessee is not possessor in good faith, because he know that their occupation of the premises continues only
during the life of the lease, they cannot recover the value of their improvement from the lessor, much less retain the premises until
they are reimbursed.
- Their rights are governed by article 1678 which allows reimbursement of lessees up to one-half of the value of their useful
improvements
WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.

Atty. George Exiomo
19. Moslem v. Soriano
G.R. No. L-36837 August 17, 1983 GUTIERREZ, JR.
Property Doctrine: There is presumption of good faith for a possessor of a property and the burden to prove bad faith rest on who alleges
it.
Facts:
This is an action by respondent Antonio M. Soriano filed a recovery possession against Atal Moslem and Amado Moslem to recover
possession of four (4) hectares of land plus damages.
Petitioners Ata and Amado Moslem Claim:
● The petitioners allege that they have entered, occupied, and were in peaceful possession of the land in question which according
to them was public land, for more than twenty (20) years, and that their legal possession is evidenced by Tax Declaration No.
3068 issued by the Office of the Provincial Assessor on October 1 1, 1960.
● Having introduced considerable improvements on the land in question before anybody laid claim to it, the petitioners state that
they are builders and planters in good faith and are thus entitled to the retention of the improvements pending payment under
Articles 448 and 546 of the Civil Code.
● With this right of retention, the petitioners contend that their refusal to vacate the premises cannot be punished as contempt.
Respondent Claim:
● The respondents have not discussed the builder in good faith argument but have limited themselves to insisting that the refusal to
vacate and to pay costs is contemptuous defiance of the court orders.
The lower court found the petitioner’s claim that they have occupied the land since World War II unsatisfactory.
Issue: Whether petitioners enjoy the presumption of good faith under Art. 427 and cannot be held in contempt in court pending payments
of the improvements in the land under Articles 448 and 546 of the New Civil Code. YES.
Ruling:
The petitioners enjoy the presumption of good faith under Art. 427 and cannot be held in contempt in court pending payments of the
improvements in the land under Articles 448 and 546 of the New Civil Code.
The builder is presumed to be in good faith e insofar as this contempt case is concerned. But, petitioners are not precluded from pursuing
further legal steps to be reimbursed for their improvements if their claim is supported by satisfactory proof.
In this case, there is nothing in the records before us to show whether or not Atal and Amado were mere squatters who entered land
already titled in someone else's name.
It is not also shown whether the two were already working and cultivating land which they thought was public land when the same was
titled by a person more knowledgeable in acquisition of real estate.
Dispositive portion:
WHEREFORE, the orders of the respondent court finding the petitioners guilty of contempt and ordering their arrest and detention are
hereby REVERSED and SET ASIDE. The temporary restraining order earlier issued is made PERMANENT. Costs against the private
respondent.

Atty. George Exiomo

Atty. George Exiomo
20.

Atty. George Exiomo
21. De Laureano v. Adil
GR No. L-43345 July 29, 1976 J. Aquino
DOCTRINE:
Under Art. 448 of the CC, the owner of the land on which anything has been built in good faith may appropriate the building after payment
of indemnity provided in Arts. 546 and 548 of the CC. Art. 448 applies to a case where one builds on land of which he honestly claims to
be the owner and not to lands wherein one’s only interest is that of a lessee under a rental contract. In other words, Art. 448 refers to a
possessor who occupied the land in the belief that he was the owner thereof. It does not apply to the lessee because the lessee knows that he
is not the owner of the land.
FACTS: De Laureano is the registered owner of 2 lots in Iloilo City. These lots were leased to Ong Cu for 15-years which expired in 1974.
Ong Cu failed to vacate, and remove his improvements thereon, thus, De Laureano filed an ejectment suit against him. The trial court
rendered judgment ordering Ong Cu to vacate, to restore possession to De Laureano, and to remove his buildings and improvements
thereon. Ong Cu appealed to CFI Iloilo, and asked the court to approve his supersedeas bond which it later granted. De Laureano filed for a
preliminary mandatory injunction to restore her possession to the said lots, and asked for immediate execution. Later, the trial court ruled
that the mandatory injunction could not be granted because it already sanctioned Ong Cu’s supersedeas bond, which intended to stay
execution pending appeal. Thus, it stated that it would be absurd to stay execution and also restore possession to De Laureano by granting
the injunction. It found Ong Cu as a possessor in good faith entitled to reimbursement of his necessary and usual expenses. De
Laureno filed an action for certiorari imputing to the lower court grave abuse of discretion in denying her motions for execution and
mandatory injunction.
ISSUE: Whether Ong Cu is considered a possessor in good faith, entitling him to a reimbursement of the necessary and useful
expenses incurred by him and to a right of retention. NO.
RULING:
The lower court erred in assuming that Ong Cu, in constructing his building on the leased lots, is a possessor in good faith entitled to
reimbursement of the necessary and usual expenses incurred by him and with a right of retention under Arts. 546 and 547 of the CC.
As a lessee who constructed a building on the leased land, Ong Cu cannot be characterized as a builder in good faith. Under Art. 448
of the CC, the owner of the land on which anything has been built in good faith may appropriate the building after payment of
indemnity provided in Arts. 546 and 548 of the CC. Art. 448 applies to a case where one builds on land of which he honestly claims
to be the owner and not to lands wherein one’s only interest is that of a lessee under a rental contract. In other words, Art. 448
refers to a possessor who occupied the land in the belief that he was the owner thereof. It does not apply to the lessee because the
lessee knows that he is not the owner of the land.
In this case, Ong Cu’s rights with respect to the improvements made by him on the leased land are governed by Art. 1678 of the CC. Under
Art. 1678, it is the lessor who has the option to pay for ½ of the value of the improvements which the lessee has made in good faith, which
are suitable for the use for which the lease is intended and which have not altered the form and substance of the land.
Contrary to the lower court’s decision, the lessee has no right of retention because Art. 546 of the CC does not apply to improvements made
by him. Only the possessor in good faith has a right of retention under Art. 546. Art. 1671 even provides that an overstaying lessee is a
possessor in bad faith.

Atty. George Exiomo
22. MWSS V. CA
G.R. No. L-54526 August 25, 1986 Feria, J.
Property Doctrine:
Facts: The City of Dagupan filed a complaint against the former National Waterworks and Sewerage Authority (NAWASA), now the
Metropolitan Waterworks and Sewerage System (MWSS), for recovery of the ownership and possession of the Dagupan Waterworks
System. NAWASA interposed as one of its special defenses R.A. 1383 which vested upon it the ownership, possession and control of all
waterworks systems throughout the Philippines and as one of its counterclaims the reimbursement of the expenses it had incurred for
necessaryand useful improvements amounting to P255,000.00.
Judgment was rendered by the trialcourt in favor of the Dagupan City on the basis of a stipulation of facts. The trial court found NAWASA
to be a possessor in bad faith and hence not entitled to the reimbursement claimed by it. NAWASA appealed to the then Court of Appeals
and argued in its lone assignment of error that the Dagupan City should have been held liable for the amortization of the balanceof the loan
secured by NAWASA for the improvement of the Dagupan Waterworks System.
Issue: Whether it has the right to remove all the useful improvements introduced by NAWASA to the Dagupan Waterworks System,
notwithstanding the fact that NAWASA was found to be a possessor in bad faith. NO.
Ruling: Article 449 of the Civil Code of the Philippines provides that “he who builds,plants or sows in bad faith on the land of another,
loses what is built, planted or sownwithout right to indemnity.” As a builder in bad faith, NAWASA lost whatever useful improvements it
had made without right to indemnity.
Moreover, under Article 546, only a possessor in good faith shall be refunded for useful expenses with the right of retention until
reimbursed; and under Article 547 thereof, only a possessor in good faith mayremove useful improvements if this can be done without
damage to the principal thing and if the person who recovers the possession does not exercise the option of reimbursing theuseful expenses.
The right given a possessor in bad faith is to remove improvements appliesonly to improvements for pure luxury or mere pleasure, provided
the thing suffers no injurythereby and the lawful possessor does not prefer to retain them by paying the value theyhave at the time he enters
into possession.

Atty. George Exiomo
23. Sabido v. IAC
G.R. No. 73418 September 20, 1988 GUTIERREZ, JR., J.
Property Doctrine: Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad faith on the
land of another, loses what is built, planted or sown without right to indemnity."
Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for useful expenses with the right of
retention until reimbursed; and under Article 547 thereof, only a possessor in good faith may remove useful improvements if this
can be done without damage to the principal thing and if the person who recovers the possession does not exercise the option of
reimbursing the useful expenses.
The right given a possessor in bad faith to remove improvements applies only to improvements for pure luxury or mere pleasure,
provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have
at the time he enters into possession.
Facts:
● In an action for quieting of title, the Petitioner Sabido and Rances were declared by the trial court as owners of Lots
""B"" and ""D"" as opposed to Sps. Dasal and Pecunio.
● Upon execution, the sheriff found 3 persons occupying Lot B, one being private respondent Sta. Ana.
● Sta. Ana claimed ownership by purchase from one Prudencio Lagarto.
● Subsequently, an order of demolition was issued by the RTC against Sta. Ana.
● Upon the challenge of Sta. Ana, the SC set aside the demolition order and remanded the case for reception of evidence to
determine whether Sta. Ana is privy to the Sps. Dasal and Pecunio as the losing parties in the action for quieting of title.
● The RTC Judge issued a resolution finding that there was privity between Sta. Ana and the Sps. Dasal (brother-in-law of
Lagarto) and Pecunio.
● Hence, the RTC issued an order granting demolition of Sta. Ana's building and all other construction within Lot B. The
demolition was effected.
● Sta. Ana appealed to the IAC which set aside the order of demolition.
● It also maintained that Sta. Ana was deprived of the alternative choice of paying the value of the disputed area. Hence, this
petition.
Issue: W/N Private Respondent Sta. Ana is a builder in good faith which entitles him to exercise the option to pay the value of the
land and be reimbursed for the value of the demolished portion? NO.
Ruling:
● The appellate court committed grave abuse of discretion when it granted the private respondent the option of exercising
the alternative choice of staying in the disputed land when it has been established that the private respondent was in privy
with the spouses Victor Dasal and Maria Pecunio and, therefore, he could not be considered a builder in good faith as to
entitle him to the alternative choice of retention;
● The demolition of the private respondent's construction on Lot "B" and on the private road is a logical consequence of the
finding that he was privy to the losing parties who were also the adversaries of the petitioners in the original case.
● It is clear that the private respondent has to remove all his constructions over Lot "B" and vacate the premises. This is his
only option.
● Being adjudged in privy with the spouses Dasals, he cannot avail himself of the rights granted to a builder in good faith.
● He, therefore, must remove all his useful improvements over Lot "B" at his own expense and if the same have already been
removed, he cannot be entitled to the right of retention or to any reimbursement.

Atty. George Exiomo
24. Ysrael v. Madrid
45 OG 2177 May 1949
Facts: Plaintiff is the owner of a lot and building. Defendant is one of the lessees of the building owned by the plaintiff. During the battle
for the liberation of Manila, the building owned by plaintiff was flatly reduced to ashes. However, the defendant, without the consent of the
plaintiff, constructed a “barong-barong” (shack), spending therefore the amount of P20K according to the defendant. Plaintiff filed an
ejectment suit against the defendant. The trial court ruled in favor of the plaintiff ordering the defendant to vacate the premises and to
remove the improvements defendant had introduced on the land.
It appears that at the time defendant erected the present building he was already aware of plaintiff’s refusal to lease to him the lot; he
had already been required to vacate the premises and to remove the shed built thereon; he had been fined by the municipal court for
having constructed the small shed on the lot without the city engineer’s permit and the owner’s consent; and he already had been sentenced
by the municipal court in the proceedings to vacate the premises and to pay back rents.
Issue: Whether defendant is a builder in bad faith (YES)
Ruling: From the preceding facts, it follows that defendant is a builder in bad faith, in that knowing that the land did not belong to him and
he had no right to build thereon, he nevertheless caused the building in question to be erected. As such builder he is not entitled to remove
the structure in question, built in bad faith, nor is he entitled to be reimbursed for the value or cost thereof.

Atty. George Exiomo
25. Bagtas v. CA
G.R. No. 50732 August 10, 1989 PARAS, J.
Petitioner’s mother Felicidad was an applicant in November 1927 for a Sales Patent over the subject land, under CA No. 141. After
fulfilling all the legal requirements, the applicant was issued her OCT covering the land. Three years later, she transferred her ownership and
title to the property to her son, petitioner Bagtas, who was issued a TCT.
Petitioner argues that private respondent entered the land in question since the year 1951 as intruders or trespassers without authority or
consent of the registered owner and continued to do so notwithstanding.
Private respondent Gregorio Cabanela testified before the trial court that the litigated property has been occupied by them since 1947 or
earlier, which was then a forested area without traces of occupation and cultivation, and that it had already been also alienable and
disposable government property since July 28, 1926 under BF-MAP-LC-609. Their portion of the area was covered by the Sales
Application of Felicidad Bagtas, without their knowledge.
ISSUE: Whether private respondent Cabanela was a planter in good faith – YES
It is a condition precedent that at least 1/5 the whole area applied for should be cultivated by the applicant both in homestead as well as in
sales application. The presumption of occupancy of Felicidad after the sales award granted to her and before the issuance of the title on
August 12, 1952 was refuted by the facts established and the findings of the court.
The private respondents occupied the subject land prior to 1947 or earlier which is no less than 5 years before the title was issued on August
12, 1952 in the name of Felicidad. When private respondents entered and occupied the land, Felicidad’s title had not yet been brought under
the operation of the Torrens System and since no title was then existing there is nothing to be verified. Notwithstanding this, private
respondents, in their desire to acquire ownership of the land they were occupying, sent (a) a communication dated June 14, 1959, addressed
to the Director of Lands inquiring whether the land occupied and cultivated by them is actually alienable and disposable and that it should
be subdivided in their favor. However, there was no action taken by the Bureau; neither were private respondents informed that the land that
was occupied was already titled in the name of Felicidad.
Silence or tolerance by Bagtas of the occupation/cultivation by private respondents of the land for a period of years worked against their
favor. It was only in 1964 when Cabanela for the first time was confronted and was shown a document of ownership in the name of Dr. Jose
M. Bagtas, Jr., and it was only in 1965 when the complaint was filed against private respondents. Plaintiff's considerable delay in asserting
his right before a court is strongly persuasive of the lack of merit of his claim, since it is human nature for a person to enforce his right when
the same is threatened or invaded.
Since plaintiffs were in bad faith for having tolerated the defendants in making improvements on his property without positive steps to eject
them and even assuming that defendants were also in bad faith for continuously planting notwithstanding the device of the overseer of the
plaintiff, following Art. 453, Civil Code, the right of one and the other shall be the same as though both had acted in good faith.
WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit, with cost against petitioner.

Atty. George Exiomo
26. Government of the Philippines v. Colegio de San Jose
G.R. No. L-30829 August 28, 1929 VILLA-REAL, J.
DOCTRINE: According to the foregoing definitions of the words"ordinary" and "extraordinary," the highest depth of the waters of Laguna
de Bay during the dry season is the ordinary one, and the highest depth they attain during the rainy season is the extraordinary one.
On the contention that waters of Laguna Lake receded, Art.77 of the laws of waters provide that lands accidentally inundated by the waters
of lakes shall continue to be the property of their respective owners. Art. 367 of the Civil Code does not apply because it pertains to Lagoons
FACTS:
1. The case involves the ownership of two parcels of land that are occasionally inundated by the waters of Laguna de Bay.
2. The Government of the Philippine Islands argues that the land belongs to the public domain as part of the bed of Laguna de Bay. Colegio
de San Jose asserts that the land is part of their Hacienda de San Pedro Tunasan and continues to be their property despite being occasionally
flooded. The two parcels of land are located along the eastern border of Laguna de Bay.
3. During the months of September, October, and November, the waters of the lake cover a strip of land along the eastern border, including
the two parcels of land. The width of the flooded strip varies from 50 to 70 meters.
4. Colegio de San Jose claims that the parcels of land are part of their Hacienda de San Pedro Tunasan and have been in their possession
through tenants and farmers. The Government of the Philippine Islands argues that the parcels of land belong to the public domain and have
always been known as the shores of Laguna de Bay.
5. The Court of First Instance of Laguna ordered the registration of the land in favor of Colegio de San Jose. The Government of the
Philippine Islands appeals the decision, claiming that the lower court erred in not considering the land as part of the bed of Laguna de Bay
and in finding that the land is included in Colegio de San Jose's title.
ISSUE: Whether the two parcels of land belong to the Hacienda de San Pedro Tunasan owned by Colegio de San Jose or if they
belong to the public domain as part of the bed of Laguna de Bay? (Colegio de San Jose)
RULING:
1. The SC relied on the definition of a lake and a lagoon to determine that Laguna de Bay is a lake. According to the law, lakes and their
beds belong to the public domain.
2. However, the SC determined that the highest ordinary depth of the waters of Laguna de Bay during the dry season is the natural bed or
basin of the lake. Since the two parcels of land are outside this natural bed, they do not belong to the public domain.
3. The SC also rejected the argument that the two parcels of land are part of the shores of Laguna de Bay. The SC explained that the
provisions of the Law of Waters regulating the ownership and use of sea waters are not applicable to lakes, which are governed by special
provisions. Therefore, the legal provision regarding the ownership of shores does not apply to the case at hand.
4. The SC held that even if the land was formed by sediment deposits from the waters of Laguna de Bay, it still belongs to Colegio de San
Jose as the owner of the land bordering the lake. The SC the decision of the lower court and ordered the registration of the land in favor of
Colegio de San Jose.

Atty. George Exiomo
27. Daclison v. Baytion
G.R. No. 219811 6 APR 2016 Mendoza, J.
Doctrine:
● Requisites for an accretion to be considered as valid: (1) that the deposit be gradual and imperceptible; (2) that it be made through
the effects of the current of the water; and (3) that the land where accretion takes place is adjacent to the banks of rivers.
● Art. 445 uses the adverb “thereon” which is defined as “on the thing that has been mentioned”. Thus, the supposed improvement
must be made, constructed or introduced within or on the property and not outside so as to qualify as an improvement contemplated
by law.
Facts:
● Eduardo Baytion was a co-owner of a parcel of land which he inherited; as he was made the administrator of the same, he leased
portions of the property to third persons.
● Baytion leased a portion to Antonio dela Cruz.
● A stone walling (“riprap”) was erected by the government at the creek lying beside the property, leaving a deep down-sloping area.
● Antonio had the down-slope filled up until it was leveled with the leased portion; he also paid for the right to possess the same.
● Antonio’s business was taken over by Leonida Dela Cruz, which was later taken over by Ernanie Dela Cruz.
● Rex Daclison entered into a business venture with Ernanie in the leased property, taking over the management of the business.
● Daclison received a letter addressed to Ernanie from Baytion, requesting them to vacate the area.
● After Ernanie and Baytion came into an agreement for the continuation of the lease of the property, Daclison issued a check
(P100k) as payment for rental arrears.
● Baytion eventually returned the check and demanded that Ernanie vacate the property.
● Baytion promised that he would no longer bother them if they would transfer to the filled-up and plane-leveled property, thus the
two moved to the filled-up portion and vacated the leased area.
● Baytion still filed a complaint in the barangay, claiming that the filled-up portion was part of his property.
● Baytion would eventually file a complaint for Forcible Entry before the MeTC.
● On appeal, the RTC ruled that the MeTC lacked jurisdiction to try the case but did not dismiss it and decided to exercise original
jurisdiction over it.
● The RTC and CA ruled in favor of Baytion, that he had the better right of possession over the property; the CA also held that the
action had already ripened into an accion publiciana.
● On a petition for review before the SC, Daclison insisted that what is really in dispute is the filled-up portion between the riprap
and the property of Baytion, therefore outside the land co-owned by Baytion.
● Daclison argued that Antonio, from whom he derived his right over the contested portion, made an open, continuous and adverse
possession and use of the property when he extended his place of business to the filled-up portion.
● Baytion, meanwhile, posits that although the disputed portion was outside the description of the property under the TCT, it forms an
integral part of the latter because it is an accretion, construction, or improvement on the property, and therefore belongs to him.
Issue: Did Baytion have a better right over the contested portion? No.
Ruling: The Court held that Baytion, not being the owner of the contested portion, had no better right to possess the same.
The Court held that Baytion’s contention that he owned the portion by reason of accretion was misplaced. NCC Art. 457 provides “To the
owners of lands adjoining the banks of rivers belongs the accretion which they gradually receive from the ffects of the current of the waters.”
Thus the following requisites must concur for an accretion to be considered: (1) that the deposit be gradual and imperceptible; (2) that it be
made through the effects of the current of the water; and (3) that the land where accretion takes place is adjacent to the banks of rivers.
Here, the contested portion is not an accretion since the deposit was artificial and man-made and not the exclusive result of the current from
the creek adjacent to the property. Alluvion must be the exclusive work of nature and not a result of human intervention.
The disputed property also cannot be considered an improvement or accession. NCC Art. 445 provides that “Whatever is built, planted or
sown on the land of another and the improvements or repairs made thereon, belong to the owner of the land, subject to the provisions of the
following articles.”
Art. 445 uses the adverb “thereon” which is defined as “on the thing that has been mentioned”. Thus, the supposed improvement must be
made, constructed or introduced within or on the property and not outside so as to qualify as an improvement contemplated by law.
Otherwise, it would be very convenient for land owners to expand or widen their properties in the guise of improvements.
The Court noted that in Baytion’s initiatory pleading, he never claimed to have been in prior possession of the disputed property. Hence, his
claim of ownership is without basis and he does not have any cause of action to eject Daclison.
The petition was granted, the decision and resolution of the CA reversed and set aside. The complaint for possession was ordered dismissed.

Atty. George Exiomo
28. Celestial v. Cachopero
G.R. No 142595 October 15, 2003 J. Carpio Morales
Property Doctrine
For dried up riverbed to be obtained via accession, it is necessary that such abandoned riverbed came into existence because of
Facts
Petitioner Celestial is the sister of Respondent Cachopero (Brother)
Cachopero filed a Miscellaneous Sales Application (MSA) covering a parcel of land of 415 sqm in Cotabato which used to form part of the
Salunayan Creek. He alleged that he had been occupying the land since 1968, where he built a house and other improvements.
Petitioner filed a protest to the MSA bec she allegedly had a preferential right to the land since it is the only outlet from her house to the
main road. Petitioner also filed her claim on the land based on (1) her alleged long term adverse possession and that of her
predecessor-in-interest, Marcelina Basadre, even prior to October 22, 1966, when she purchased the adjoining property from the latter, and
(2) the right of accession under Art. 370 of the Spanish Civil Code of 1889 and/or Article 461 of the Civil Code.
Petitioner claims that the subject land was already a dried up riverbed such that1/2 portion of the house was already built and still stood on
the dried up portion of the Salunayan creek bed.
The subject land, when inspected was found to indeed be about 415 sqm and which was a part of the creek that had become dry thanks to
the construction of an irrigation canal constructed by the National Irrigation Administration. Per the certification of the District
Engineer, however, such land might be needed by the government in the future.
The MSA was rejected and case dismissed, with the ruling that the respondent make a 5m right of way, and later transfer their house to
another property where the plaintiff will make for them a 2m right of way.
Respondent then filed another MSA, which was again protested by the plaintiff, who insisted on her 5m right of way. DENR Reg. Director
Macumbal issued an order that the land instead be sold because of the conflict pursuant to law, saying that under the law property of public
domain w/n the 1st to 4th class (cotabato is 3rd) municipalities are only disposable by sale. This was also denied and the previous order was
upheld.
**Petitioner also thru an informal tried to purchase the property
Respondent then filed a case with the RTC for preliminary mandatory injunction and temporary restraining order, which was denied so he
filed for MR. Petitioner tried to MTD, but it was denied and elevated to CA. CA then reversed the RTC order and ordered the DENR to
process the MSA.
Petitioner elevated the case to the SC
Issue
W/N the petitioner is entitled to the subject land? NO
Ruling
Because the case involves land from a dried up river bed, the ff articles of the CC are relevant for the determination of the outcome of this
case
Article 370 (Spanish Civil Code of 1889) which took effect in the Philippines on December 7, 1889, the beds of rivers which
remain abandoned because the course of the water has naturally changed belong to the owners of the riparian lands throughout their
respective lengths. If the abandoned bed divided estates belonging to different owners, the new dividing line shall run at equal
distance therefrom.
(Civil Code, Took effect August 30, 1950)
Art. 461. River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners
whose lands are occupied by the new course in proportion to the area lost. However, the owners of the lands adjoining the bed shall
have the right to acquire the same by paying the value thereof, which value shall not exceed the value occupied by the new bed.
Art. 462. Whenever a river, changing its course by natural causes, opens a new bed thorough a private estate, this bed shall be of
public dominion.
The Salunayan Creek, including its natural bed, is property of the public domain which is not susceptible to private appropriation and
acquisitive prescription. And, absent any declaration by the government, that a portion of the creek has dried-up does not, by itself, alter its
inalienable character.
These articles are not applicable in this case, however, because the river bed was not abandoned through a NATURAL CHANGE. As found
by the DENR (and the Bureau of Lands) the subject land became dry as a result of the irrigation canal made by the NIA. Petitioner did ot
allege otherwise.

Atty. George Exiomo
In the case of Ronquillo v CA (1991), it was held that the rules on alluvion do not apply to manmade or artificial accretions…the dired up
portion shoudl thus be considered as forming part of the public domain which cannot be subject to acquisition by private ownership.
Furthermore, both provisions pertain to situations where there has been a change in the course of a river, not where the river simply dries
up. In the instant Petition, it is not even alleged that the Salunayan Creek changed its course. In such a situation, commentators are of the
opinion that the dry river bed remains property of public dominion.
Additionally petitioner inadvertently acknowledged the subject land as public land because she applied for its purchase. If she really believed
it was hers, she would not have done that.

Atty. George Exiomo
29.

Atty. George Exiomo
30.

Atty. George Exiomo
31.

Atty. George Exiomo
32. Phil-Ville Development & Housing Corp. v. Bonifacio
G.R. No. 167391 June 8, 2011| VILLARAMA JR.
Property Doctrine:
Facts: Phil-Ville Development and Housing Corporation is the registered owner of three parcels of land in Caloocan City.
- The heirs of Eleuteria Rivera Vda. de Bonifacio claim to be the rightful owners of the land.
- Phil-Ville acquired the land from N. Dela Merced and Sons, Inc. in 1984.
- In 1961, the heirs of Eleuteria Rivera filed a petition to be substituted as owners of the land covered by Original Certificate of Title
(OCT) No. 994.
- The Court of First Instance granted their petition in 1962. In 1996, Eleuteria Rivera filed a motion for the partition and segregation
of portions of the land covered by OCT No. 994.
- The Regional Trial Court granted her motion and issued a new certificate of title in her name.
- The Court of Appeals later set aside this order and declared the title null and void.
- In 1997, Phil-Ville filed a complaint for quieting of title and damages against the heirs of Eleuteria Rivera Vda. de Bonifacio.
- The trial court ruled in favor of Phil-Ville, declaring their titles valid and ordering the cancellation of Eleuteria Rivera's title.
- The Court of Appeals reversed this decision and dismissed Phil-Ville's complaint.
Issue: Whether Phil-Ville's titles are valid? YES
Ruling: Phil-Ville had established its ownership over the land. Eleuteria Rivera's title did not cover the same parcels of land. There were
discrepancies in the ages of Eleuteria Rivera and Maria de la Concepcion Vidal, making it physically impossible for Eleuteria Rivera to be
an heir of Vidal. Phil-Ville's titles are valid and Eleuteria Rivera's title is null and void.

Atty. George Exiomo
33. Faja v. CA
L-45045 February 28, 1977 MUNOZ-PALMA
Property Doctrine: An action to quiet title an undisturbed possession of a property is imprescriptible.
Facts:
In April 1975, Frial filed an action against Faja to recover possession of the 235,854 sq.m. lot covered by OCT No. RO-1496 registered
under Frial’s father.
The complaint alleged that Faja has been illegally occupying the lot since 1945 and that despite demand, the former refuses to revert the
same. In his answer, Faja denied the allegation, contending that
(1) the disputed lot was lawfully acquired through succession from his predecessors who were in continuous possession of the same for
more than 60 years,
(2) it was supported by Tax Declaration No 5523, and
(3) they were the current occupants and cultivators of said lot. Faja alleged that Frial’s decree of registration was obtained through fraud
considering that they were neither the actual possessors nor the occupants of the same. As such, Faja by way of counterclaim sought for the
nullity of Frial’s certificate of title in his favor. Frial in defense, claimed that Faja’s right to question the validity of the Certificate has
already been prescribed.
Issue: Whether Faja’s counterclaim of reconveyance is no longer possible considering that more than 10 years has elapsed since the
issuance of Frial’s decree of registration. NO.
Ruling:
Settled is the rule that one who is in actual possession of a piece of land claiming to be owner thereof may wait until his possession is
disturbed or his title is attacked , before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession
gives him a continuing right to the seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party
and its effect on his own title, which right can be claimed only by one who is in possession. Thus, an action to quiet title to property in the
possession of the plaintiff is imprescriptible.
Dispositive Portion:
IN VIEW OF THE FOREGOING, the appealed decision of the Court of Appeals and the disputed Order of the trial court rendering
summary judgment in favor of respondent Levine Frial are hereby set aside, and the Presiding Judge of Branch III, Court of First Instance of
Capiz, is directed to proceed with the trial on the merits of Civil Case No. M-355. With costs against private respondent Levine Frial.

Atty. George Exiomo
34.
G.R. No.
Property Doctrine:
Facts:
Issue:
Ruling:

Atty. George Exiomo
35. Metrobank v. Alejo
GR No. 141970 September 10, 2001 J. Panganiban
DOCTRINE:
An action for quieting of title is filed only when there is a cloud on title to real property or any interest therein. A cloud on title is a
semblance of title which appears in some legal form but which is in fact unfounded.
FACTS:
ISSUE:
RULING:

Atty. George Exiomo
36. Jalandoni v. PNB
G.R. No. L-47579 October 9, 1981 Aquino, J.
Property Doctrine:
Facts:
Eduardo Jalandoni was ordered to pay the Philippine National Bank the sum of P63,297.53 with interest by virtue of a final judgment
rendered by the Court of First Instance of Manila on March 31, 1959. Within five years from the entry of judgment, the sheriff of Silay City
levied upon Jalandoni's property and a Notice of Embargo was annotated on the property. No sale at public auction to satisfy the judgment
was conducted or initiated by the bank.
More than a decade later, on April 22, 1974, Jalandoni filed a petition for the cancellation of the levy on the ground of prescription. The
bank opposed the petition, arguing that the execution sale can be made beyond the ten-year period as long as the levy was effected within
five years from the entry of judgment.
The court directed Jalandoni to ask the Manila court to quash the writ of execution on the ground of prescription and refile his petition.
Jalandoni then filed an action to quiet title or for the cancellation of the notice of embargo, arguing that the levy had become inefficacious
and constituted a cloud on his title.
Issue: Whether the execution sale can be made beyond the ten-year period for enforcing the judgment as long as the levy was effected
within five years from the entry of judgment.
Ruling:
The trial court erred in not applying the ruling in Ansaldo vs. Fidelity Surety Co. of the Phil., which states that properties levied upon by
execution must be sold in public auction within the period of ten years during which the judgment can be enforced by action. The bank's
negligence in not requiring the sheriff to sell the property at public auction within the required period supports the heirs' case. The court
reversed the judgment and directed the Register of Deeds to cancel the Notice of Embargo annotation on the title.
The levy is the essential act by which the property is set apart for the satisfaction of the judgment and taken into the custody of the law.
After a levy has been made, the property levied upon may be sold even after the sixty-day period, which is the term of the writ of execution.
However, the execution sale cannot be held beyond the ten-year period for enforcing the judgment. The court emphasized that the bank's
negligence in not requiring the sheriff to sell the property at public auction within the required period constitutes a case of negligence in the
exercise of rights.

Atty. George Exiomo
37.

Atty. George Exiomo
38.

Atty. George Exiomo

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Atty. George Exiomo

Additions, Accessions To Properties, Builders, Trespassers, & Usurpers (Art 445-483)

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Additions, Accessions To Properties, Builders, Trespassers, & Usurpers (Art 445-483)

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Additions, Accessions to Properties, Builders, Trespassers, & Usurpers (Art 445-483)

CASE DIGEST FORMAT:

G.R. No. Date Ponente

Property and Land Law - G02

G.R. No. L-19614 03/27/1971 J. J.B.L. Reyes

Whether the building constructed on the land is an accession. NO

Property and Land Law - G02

Property and Land Law - G02

268 SCRA 5, 22 (1997).

We answer such question in the affirmative.

Property and Land Law - G02

G.R. No. L-57348 May 16, 1985 MELENCIO-HERRERA, J.

Property and Land Law - G02

G.R. No. 157044 October 5, 2005 CARPIO MORALES

CA reversed the petition. Hence this case

Issue: W/N the spouses are builders in good faith? YES

Property and Land Law - G02

5. Spouses Macasaet v. Spouses Macasaet

154391-92 September 30, 2004 PANGANIBAN

● Things between the two parties turned sour.

Property and Land Law - G02

G.R. No. L-19614 03/27/1971 J. J.B.L. Reyes

Whether the building constructed on the land is an accession. NO

Property and Land Law - G02

GR No. L-19614 March 27, 1971 J. JBL Reyes

Property and Land Law - G02

Property and Land Law - G02

G.R. No. 157044 October 5, 2005 Carpio Morales, J.

Issue: Whether the respondents are builders in good faith. YES.

Property and Land Law - G02

GRN 175399 October 27, 2009 CHICO-NAZARIO, J.

Property and Land Law - G02

10. Benedicto v. Villaflores

G.R. No. 185020 Oct 6, 2010 Nachura, J.

Issue: Whether respondent is a builder in good faith (YES)

Property and Land Law - G02

GRN 176791 November 14, 2012 DEL CASTILLO, J.

Property and Land Law - G02

12. Department of Education v. Delfina C. Casibang, et al.

G.R. No. 192268 January 27, 2016 PERALTA, J.

Property and Land Law - G02

13. Heirs of Sarili v. Lagrosa

G.R. No. 193517 15 JAN 2014 Perlas-Bernabe, J.

Property and Land Law - G02

14. Mendoza v. De Guzman and Solis

G.R. No. L-28721 October 5, 1928 J. Malcolm

The lower court ruled that:

In accordance with the following Articles of the Civil Code thus:

Spanish commentators have described “necessary expenses” as:

Judgment of the lower court must thus be affirmed.

Property and Land Law - G02

Property and Land Law - G02

Property and Land Law - G02

Property and Land Law - G02

Rule on Useful Expenses

Property and Land Law - G02

Property and Land Law - G02

G.R. No. L-57288 April 30, 1984 MELECIO-HERRER, J.

ISSUE: 1.Whether or not Ernesto was in good faith

This is with regard to Art 448 of CC.

Property and Land Law - G02

18. Racaza v. Susan Realty