Doctrine

While it is a hornbook doctrine that the accessory follows the principal, that is, the
ownership of the property gives the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either naturally or artificially, such
rule is not without exception. In cases where there is a clear and convincing evidence to
prove that the principal and the accessory are not owned by one and the same person or
entity, the presumption shall not be applied and the actual ownership shall be upheld. In a
number of cases, we recognized the separate ownership of the land from the building and
brushed aside the rule that accessory follows the principal.

MAGDALENA T. VILLASI, Petitioner, vs. FILOMENO GARCIA, substituted by his heirs,

namely, ERMELINDA H. GARCIA, LIZA GARCIA-GONZALEZ, THERESA GARCIA-TIANGSON,
MARIVIC H. GARCIA, MARLENE GARCIA-MOMIN, GERARDO H. GARCIA, GIDEON H. GARCIA
and GENEROSO H. GARCIA, and ERMELINDA H. GARCIA, Respondents. G.R. No. 190106              
January 15, 2014

PEREZ, J.

Facts

Petitioner Magdalena T. Villasi engaged the services of respondent Fil-Garcia Construction,

Inc. to construct a seven-storey condominium building located at Aurora Boulevard corner
N. Domingo Street, Cubao, Quezon City. For failure of Villasi to fully pay the contract price
despite several demands, FGCI initiated a suit for collection of sum of money before the
RTC of Quezon City, Branch 77. In its action docketed as Civil Case No. Q-91-8187, FGCI
prayed, among others, for the payment of the amount of ₱2,865,000.00, representing the
unpaid accomplishment billings. Served with summons, Villasi filed an answer specifically
denying the material allegations of the complaint. Contending that FGCI has no cause of
action against her, Villasi averred that she delivered the total amount of ₱7,490,325.10 to
FGCI but the latter accomplished only 28% of the project. After the pre-trial conference was
terminated without the parties having reached an amicable settlement, trial on the merits
ensued.

Finding that FGCI was able to preponderantly establish by evidence its right to the unpaid
accomplishment billings, the RTC rendered a Decision in FGCI’s favor. While the trial court
brushed aside the allegation of Villasi that an excess payment was made, it upheld the claim
of FGCI to the unpaid amount of the contract price.

The Court of Appeals reversed the disquisition of the RTC. The appellate court ruled that an
overpayment was made by Villasi and thereby directed FGCI to return the amount that was
paid in excess.

The RTC issued an Order directing the Sheriff to hold in abeyance the conduct of the sale on
execution.
FGCI filed a Petition for Review on Certiorari before the Supreme Court.

Issue

WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN

UPHOLDING THE DECISION OF THE TRIAL COURT TO SUSPEND AND HOLD IN ABEYANCE
THE SALE ON EXECUTION OF THE BUILDINGS LEVIED UPON ON THE BASIS OF
RESPONDENTS’ AFFIDAVIT OF THIRD-PARTY CLAIM;

Ruling

It is a basic principle of law that money judgments are enforceable only against the
property incontrovertibly belonging to the judgment debtor, and if the property belonging
to any third person is mistakenly levied upon to answer for another man’s indebtedness,
such person has all the right to challenge the levy through any of the remedies provided for
under the Rules of Court. 

Indeed, the power of the court in executing judgments extends only to properties
unquestionably belonging to the judgment debtor alone. An execution can be issued only
against a party and not against one who did not have his day in court. The duty of the
sheriff is to levy the property of the judgment debtor not that of a third person. For, as the
saying goes, one man's goods shall not be sold for another man's debts.

Claiming that the sheriff mistakenly levied the building that lawfully belongs to them, the
Spouses Garcia availed themselves of the remedy of terceria under Section 16, Rule 39 of
the Revised Rules of Court. To fortify their position, the Spouses Garcia asserted that as the
owners of the land, they would be deemed under the law as owners of the building
standing thereon. The Spouses Garcia also asserted that the construction of the building
was financed thru a loan obtained from Metrobank in their personal capacities, and they
merely contracted FGCI to construct the building. Finally, the Spouses Garcia argued that
the tax declaration, based on an erroneous assessment by the City Assessor, cannot be
made as basis of ownership.

For her part, Villasi insists that the levy effected by the sheriff was proper since the subject
property belongs to the judgment debtor and not to third persons. To dispute the
ownership of the Spouses Garcia, Villasi pointed out that the levied property was declared
for tax purposes in the name of FGCI. A Certification issued by the Office of the City
Engineering of Quezon City likewise showed that the building permit of the subject
property was likewise issued in the name of FGCI. We grant the petition.

Our perusal of the record shows that, as the party asserting their title, the Spouses Garcia
failed to prove that they have a bona fide title to the building in question. Aside from their
postulation that as title holders of the land, the law presumes them to be owners of the
improvements built thereon, the Spouses Garcia were unable to adduce credible evidence
to prove their ownership of the property. In contrast, Villasi was able to satisfactorily
establish the ownership of FGCI thru the pieces of evidence she appended to her
opposition. Worthy to note is the fact that the building in litigation was declared for
taxation purposes in the name of FGCI and not in the Spouses Garcias’. While it is true that
tax receipts and tax declarations are not incontrovertible evidence of ownership, they
constitute credible proof of claim of title over the property.

It likewise failed to escape our attention that FGCI is in actual possession of the building
and as the payment of taxes coupled with actual possession of the land covered by tax
declaration strongly supports a claim of ownership. Quite significantly, all the court
processes in an earlier collection suit between FGCI and Villasi were served, thru the
former’s representative Filomeno Garcia, at No. 140 Kalayaan Avenue, Quezon City, where
the subject property is located. This circumstance is consistent with the tax declaration in
the name of FGCI.

The explanation proffered by the Spouses Garcia, that the City Assessor merely committed
an error when it declared the property for taxation purposes in the name of FGCI, appears
to be suspect in the absence of any prompt and serious effort on their part to have it
rectified before the onset of the instant controversy. The correction of entry belatedly
sought by the Spouses Garcia is indicative of its intention to put the property beyond the
reach of the judgment creditor. Every prevailing party to a suit enjoys the corollary right to
the fruits of the judgment and, thus, court rules provide a procedure to ensure that every
favorable judgment is fully satisfied. It is almost trite to say that execution is the fruit and
end of the suit. Hailing it as the "life of the law,"
ratio legis est anima, this Court has zealously guarded against any attempt to thwart the
rigid rule and deny the prevailing litigant his right to savour the fruit of his victory. A
judgment, if left unexecuted, would be nothing but an empty triumph for the prevailing
party.

While it is a hornbook doctrine that the accessory follows the principal, that is, the
ownership of the property gives the right by accession to everything which is produced
thereby, or which is incorporated or attached thereto, either naturally or artificially, such
rule is not without exception.

In cases where there is a clear and convincing evidence to prove that the principal and the
accessory are not owned by one and the same person or entity, the presumption shall not
be applied and the actual ownership shall be upheld. In a number of cases, we recognized
the separate ownership of the land from the building and brushed aside the rule that
accessory follows the principal.

The rule on accession is not an iron-clad dictum. On instances where this Court was
confronted with cases requiring judicial determination of the ownership of the building
separate from the lot, it never hesitated to disregard such rule.

The case at bar is of similar import. When there are factual and evidentiary evidence to
prove that the building and the lot on which it stands are owned by different persons, they
shall be treated separately. As such, the building or the lot, as the case may be, can be made
liable to answer for the obligation of its respective owner.
The petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in
CA-G.R. SP No. 92587 are hereby REVERSED and SET ASIDE. The Deputy Sheriff is hereby
directed to proceed with the conduct of the sale on execution of the levied building. SO
ORDERED.
DOCTRINE

Article 448 may not generally apply to a co-owner who builds, plants, or sows on a
property owned in common, "for then he [(the co-owner)] did not build, plant or sow upon
land that exclusively belongs to another but of which he is a co-owner.

SPS. JULIAN BELVIS, SR., AND CECILIA BELVIS, SPS. JULIAN E. BELVIS, JR., AND JOCELYN
BELVIS, SPS. JULIAN E. BELVIS III AND ELSA BELVIS, AND JOUAN E. BELVIS, vs. SPS.
CONRADO V. EROLA AND MARILYN EROLA, AS REPRESENTED BY MAUREEN * FRIAS, G.R.
No. 239727,

CAGUIOA, J

FACTS

Respondents alleged in their compliant for unlawful detainer that they are owners of a
29,772 sq. m. lot situated in Pontevedra, Capiz.

Petitioners claimed that the subject property was purchased by the late Rosario V. Erola
(Rosario), the mother of petitioner Cecilia and respondent Conrado. For over 34 years,
petitioners alleged that they possessed and cultivated the lot in the concept of an owner,
believing in good faith that they were co-owners of the subject lot. In the course of their
possession, petitioners allegedly introduced various improvements thereon by planting
bamboos, nipa palms and coconut trees, and by constructing fishponds. Petitioners further
claimed that respondents failed to personally appear during the barangay conciliation
proceedings and that their representative, Maureen, had no authority to appear on their
behalf.

The MCTC granted the complaint. Thus, petitioners filed an appeal with the RTC of Roxas
City. In denying the appeal, the RTC relaxed the technical rules of procedure and held that a
remand of the case would be unnecessarily circuitous.

Unfazed, petitioners filed a petition for review before the CA. The CA denied the petition.

Issue

Whether petitioners are builders in good faith under Article 448 and thus have a right to
retain the subject lot until payment of necessary useful and luxurious expenses.

Held

No. When a person builds in good faith on the land of another, the applicable provision is
Article 448, which reads:
"Article 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in Articles 546 and
548, or to oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter cannot be obliged
to buy the land if its value is considerably more than that of the building or trees. In
such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree
upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof."

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.
In the case at bar, petitioners have no right to retain possession of the property under
Article 448 as they were aware that their tolerated possession could be terminated at any
time. Thus, they could not have built on the subject property in the concept of an owner.

Even assuming that petitioner Cecilia was a co-owner of the subject property, Article 448
would still be inapplicable. The Court held that Article 448 may not generally apply to a co-
owner who builds, plants, or sows on a property owned in common, "for then he [(the co-
owner)] did not build, plant or sow upon land that exclusively belongs to another but of
which he is a co-owner. The co-owner is not a third person under the circumstances, and
the situation is governed by the rules of co-ownership."

The reason for this rule is clear. Under Article 445 of the Civil Code rights of accession with
respect to immovable property apply to "[w]hatever' is built, planted or sown on the land
of another." A co-owner of a parcel of land, however, builds on his own land and not that of
another as "[a] co-owner of an undivided parcel of land is an owner of the whole, and over
the whole he exercises the right of dominion[;] but he is at the same time the owner of a
portion which is truly ABSTRACT." More importantly, co-ownerships are governed by
Articles 484-501 of the Civil Code, which already specify the rights and obligations of a co-
owner who builds, plants, and sows on a co owned property and the rules for the
reimbursement thereof.

While petitioners cannot be deemed to be builders in good faith, it being undisputed that
the land in question is titled land in the name of respondents, the CA and the lower courts
overlooked the fact that petitioners constructed improvements on the subject lot with the
knowledge and consent of respondents. In exceptional cases, the Court has applied Article
448 to instances where a builder, planter, or sower introduces improvements on titled land
if with the knowledge and consent of the owner.
Doctrine

The options under Article 448 of the Civil Code, 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.

Pablo M. Padilla vs. Leopoldo Malicsi G. R. No. 201354 September 21, 2016

Leonen, J.

Facts

Sometime in 1998, Spouses Padilla discovered that Leopoldo Malicsi, Lito Casino, and
Agrifino Guanes (Malicsi, et al.) constructed houses on their lot. Spouses Padilla made
repeated verbal and written demands for Malicsi, et al. to vacate the premises and pay a
monthly rental of P2,000.00, but Malicsi, et al. refused to heed Spouses Padilla's demands.
Hence, Spouses Padilla filed in the RTC a complaint for recovery of possession against
Malicsi, et al., along with three (3) others: Larry Marcelo, Diosdado dela Cruz, and Rolando
Pascua.

In their Answer with Compulsory Counterclaim, Malicsi, et al. alleged that they believed in
all honesty and good faith that the lot belonged to Toribia Vda. De Mossessgeld (De
Mossessgeld). They claimed that they possessed the land and built their houses on the lot
only after receiving De Mossessgeld's permission.

Spouses Padilla, exercising their option to sell the land to Malicsi, et al. under Article 448 of
the Civil Code in the amount of P5,000.00 per square meter, filed a Motion and
Manifestation with Offer to Sell. In their Comment, Malicsi, et al. stated that by filing the
Motion and Manifestation, Spouses Padilla had, in effect, recognized Malicsi, et al.'s
standing as builders in good faith. They did not accept the offer to sell.

RTC ruled that Malicsi, et al. cannot be considered as builders in good faith.

Malicsi, et al. appealed to the Court of Appeals. Court of Appeals reversed and set aside the
Regional Trial Court Decision. The Court of Appeals gave credence to Malicsi, et al.'s
allegation that they relied on De Mossessgeld's representation that she owned the lot and
gave them permission to build their houses on it. Hence, this case.
Issue

Whether or not respondents are builders in good faith.

Ruling

No, respondents are not builders in good faith.

A builder in good faith is a builder who was not aware of a defect or flaw in his or her title
when he or she introduced improvements on a lot that turns out to be owned by another.

A check with the Office of the Register of Deeds will show that the property in question had
already been registered in the name of the mother of Pablo M. Padilla, Jr. way back in 1963
under TCT-T-8303 such that Malicsi, et al. "cannot claim good faith when they constructed
their residential houses thereon in 1980 and 1983. Said Mrs. Mossessgeld had never been
an owner thereof to sell the same to them.

Pablo M. Padilla, Jr. is merely giving Malicsi, et al.some liberalities by allowing them to buy
the lots they occupy but the latter adamantly refused.

Respondents likewise failed to adduce evidence that they entered into an agreement to sell
with De Mossessgeld, or that they paid her P40.00 per month as rent, pending full payment
of the areas they were occupying.

Furthermore, respondents neither presented De Mossessgeld herself nor submitted proof

on which she might have based her purported ownership of the lot. If De Mossessgeld
proved elusive, respondents could then have presented statements from disinterested
third parties who could testify that it was so well-known in the community that De
Mossessgeld owned the lot that they had to believe her claim of ownership. Respondents
likewise failed to prove that they exercised the necessary diligence required by their
situation. They did not examine the tax declarations or the title to the property before they
built on it.

Failing to substantiate their claim, respondents cannot be considered as builders in good

faith. Therefore, the benefits and rights provided under Article 448 of the Civil Code do not
apply.

Article 448 of the1 Civil Code gives a builder in good faith the right to compel the
landowner to choose between two (2) options: (1) to appropriate the building by paying
the indemnity required by law; or (2) to sell the land to the builder. Ignacio v. Hilario
summarized the respective rights of the landowner and builder in good faith as follows:
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 546.
The owner of the land, upon the other hand, has the option, under 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.

Rosales v. Castelltort has emphasized that the choice belongs to the landowner, but the
landowner must choose from the two (2) available options. 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. 

As builders in bad faith, respondents have no right to recover their expenses over the
improvements they have introduced to petitioners' lot under Article 449 of the Civil Code,
which provides:
Article 449. 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.

Under Article 452 of the Civil Code, a builder in bad faith is entitled to recoup the necessary
expenses incurred for the preservation of the land. However, respondents neither alleged
nor presented evidence to show that they introduced improvements for the preservation of
the land.

Heirs of Durano v. Spouses Uy has summarized the remedies available to the landowner:
The Civil Code provides:

Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is
built, planted or sown without right of indemnity.

Art. 450. The owner of the land on which anything has been built, planted or sown in bad
faith may demand the demolition of the work, or that the planting or sowing be removed, in
order to replace things in their former condition at the expense of the person who built,
planted or sowed; or he may compel the builder or planter to pay the price of the land, and
the sower the proper rent.

Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages
from the builder, planter or sower.
Based on, these provisions, the owner of the land has three alternative rights: (1) to
appropriate what has been built without any obligation to pay indemnity therefor, or (2) to
demand that the builder remove what he had built, or (3) to compel the-builder to pay the
value of the land. In any case, the landowner is entitled to damages under Article 451,
abovecited.

Considering that petitioners pray for the reinstatement of the Regional Trial Court Decision
ordering respondents to vacate the lot and surrender its possession to them, petitioners
are deemed to have chosen to appropriate the improvements built on their lot without any
obligation to pay indemnity to respondents.

Wherefore, the Decision of CA is reversed and set aside. The decision of RTC is reinstated in
toto. So ordered.
DOCTRINE
Articles 448 and 546 of the Civil Code on builders in good faith are therefore inapplicable in
cases covered by the Condominium Act where the owner of the land and the builder are
already bound by specific legislation on the subject property (the Condominium Act), and
by contract (the Master Deed and the Bylaws of the condominium corporation)
Leviste Management System Inc. vs. Legazpi Towers 200, Inc. GR. No. 199353; April 4,
2018,

J. LEONARDO-DE CASTRO

FACTS
Legaspi Towers is a condominium building consists of seven (7) floors, with a unit on the
roof deck and two levels above said unit called Concession 2 and Concession 3. The use and
occupancy of the condominium building is governed by the Master Deed with Declaration
of Restrictions of Legaspi Towers (hereafter "Master Deed") annotated on the transfer
certificate of title of the developer, Legaspi Towers Development Corporation.

Concession 3 was originally owned by Leon Antonio Mercado. On 9 March 1989, Leviste
Management System, Inc. (LEMANS), through Mr. Conrad Leviste, bought Concession 3
from Mercado. LEMANS decided to build another unit (Concession 4) on the roof deck of
Concession 3. Despite Legaspi Corporation's notice that the construction of Concession 4
was illegal, Lemans refused to stop its construction. Due to this, Legaspi Corporation
forbade the entry of LEMANS' construction materials to be used in Concession 4 in the
condominium.

Lemans filed a Complaint with the Regional Trial Court (RTC), praying among others that a
writ of mandatory injunction be issued to allow the completion of the construction of
Concession 4. On 3 April 1991, the RTC issued the writ prayed for by Lemans.

After the parties had presented and formally offered their respective pieces of evidence,
but before the rendition of a judgment on the main case, the RTC, in its Order dated May 24,
2002, found the application of Article 448 of the Civil Code and the ruling in the Depra vs.
Dumlao case (hereafter "Depra Case") to be proper.

Lemans moved for the reconsideration of the order. The RTC denied this and further ruled
that LEMANS is not the owner of the air space above its unit. Their claim of ownership is
without basis in fact and in law. The air space which they claim is not on top of its unit but
also on top of the condominium itself, owned and operated by defendant Legaspi Towers.

Both elevated the matter to the Court of Appeals. the Court of Appeals, acting on the
consolidated appeals of LEMANS and Legaspi Towers, rendered its Decision affirming the
decision of the RTC of Makati City. the Court of Appeals held that while Concession 4 is
indeed a nuisance, LEMANS has been declared a builder in good faith, and noted that
Legaspi Towers failed to contest this declaration. Since Concession 4 was built in good
faith, it cannot be demolished. The Court of Appeals likewise affirmed the validity of the
building permit for Concession 4, holding that if the application and the plans appear to be
in conformity with the requirements of governmental regulation, the issuance of the permit
may be considered a ministerial duty of the building official.

Consequently, LEMANS and Legaspi Towers filed separate Petitions for Review on
Certiorari. Hence this petition.

ISSUE
Whether Article 448 of the Civil Code and our ruling in Depra v. Dumlao are applicable to
the parties' situation
HELD
The Supreme Court denied the Petition of LEMANS in view of our ruling that the doctrine in
Depra and Articles 448 and 546 of the Civil Code were improperly applied in these cases.

Firstly, it is recognized in jurisprudence that, as a general rule, Article 448 on builders in

good faith does not apply where there is a contractual relation between the parties.

Morever, in several cases, this Court has explained that the raison d’etre for Article 448 of
the Civil Code is to prevent the impracticability of creating a state of forced co-ownership:

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

In the case at bar, however, the land belongs to a condominium corporation, wherein the
builder, as a unit owner, is considered a stockholder or member in accordance with Section
10 of the Condominium Act, the builder is therefore already in a co-ownership with other
unit owners as members or stockholders of the condominium corporation, whose legal
relationship is governed by a special law, the Condominium Act.

It is a basic tenet in statutory construction that between a general law and a special law, the
special law prevails. Generalia specialibus non derogant. The provisions of the Civil Code, a
general law, should therefore give way to the Condominium Act, a special law, with regard
to properties recorded in accordance with Section 4 of said Act. Special laws cover distinct
situations, such as the necessary co-ownership between unit owners in condominiums and
the need to preserve the structural integrity of condominium buildings; and these special
situations deserve, for practicality, a separate set of rules.

Articles 448 and 546 of the Civil Code on builders in good faith are therefore inapplicable in
cases covered by the Condominium Act where the owner of the land and the builder are
already bound by specific legislation on the subject property (the Condominium Act), and
by contract (the Master Deed and the By-Laws of the condominium corporation). This
Court has ruled that upon acquisition of a condominium unit, the purchaser not only affixes
his conformity to the sale; he also binds himself to a contract with other unit owners.

In accordance therefore with the Master Deed, the By-Laws of Legaspi Towers, and the
Condominium Act, the relevant provisions of which were already set forth above, Legaspi
Towers is correct that it has the right to demolish Concession 4 at the expense of LEMANS.
Indeed, the application of Article 448 to the present situation is highly iniquitous, in that an
owner, also found to be in good faith, will be forced to either appropriate the illegal
structure (and impliedly be burdened with the cost of its demolition) or to allow the
continuance of such an illegal structure that violates the law and the Master Deed, and
threatens the structural integrity of the condominium building upon the payment of rent.
The Court cannot countenance such an unjust result from an erroneous application of the
law and jurisprudence.
DOCTRINE
To be deemed a builder in good faith, it is essential that a person asserts title to the land on
which he builds, i.e., that he be a possessor in the concept of owner, and that he be unaware
that there exists in his title or mode of acquisition any flaw which invalidates it.
Sps. Espinoza v. Sps. Mayandoc G.R. No. 211170, July 3, 2017

Peralta, J.

FACTS
A parcel of land located in Dagupan City was originally owned by Eusebio Espinoza. After
the death of Eusebio, the said parcel of land was divided among his heirs.
Thereafter, Pastora Espinoza, one of the heirs, executed a Deed of Sale conveying her share
of the same property to respondents and Leopoldo Espinoza. However, on that same date, a
fictitious deed of sale was executed by petitioner Maximo's father, Domingo Espinoza,
conveying the three-fourth (3/4) share in the estate in favor of respondent Erlinda
Cayabyab Mayandoc's parents; thus, TCT No. 28397 was issued in the names of the latter. A
fictitious deed of sale was executed by Nemesio Cayabyab, Candida Cruz, petitioners-
spouses Maximo Espinoza and Winifreda De Vera and Leopoldo Espinoza over the land in
favor of respondents- spouses Antonio and Erlinda Mayandoc; thus, TCT No. 37403 was
issued under the names of the latter.
Petitioners filed an action for annulment of document with prayer for the nullification of
TCT No. 37403 before RTC, Branch 40, Dagupan City which rendered a Decision in favor of
petitioners and ordering respondents to reconvey the land in dispute and to pay attorney's
fees and the cost of the suit.
Respondents appealed, but the CA, in its Decision dated February 6, 2004, affirmed the RTC
with modifications that the award of attorney's fees and litigation expenses be deleted for
lack of factual basis. The said CA Decision became final and executory on March 8, 2004.
Thus, respondents filed a complaint for reimbursement for useful expenses, pursuant to
Articles 448 and 546 of the New Civil Code, alleging that the house in question was built on
the disputed land in good faith sometime in 1995 and was finished in 1996. According to
respondents, they then believed themselves to be the owners of the land with a claim of
title thereto and were never prevented by the petitioners in constructing the house. They
added that the new house was built after the old house belonging to respondent Erlinda
Mayandoc's father was torn down due to termite infestation and would not have
reconstructed the said house had they been aware of the defect in their title. As such, they
claimed that they are entitled to reimbursement of the construction cost of the house in the
amount of ₱800,000.00. They further asserted that at the time that their house was
constructed, they were possessors in good faith, having lived over the land in question for
many years and that petitioners questioned their ownership and possession only in 1997
when a complaint for nullity of documents was filed by the latter.
RTC rendered its decision requiring the defendants to sell the land, where the plaintiffs'
house stands, to the latter at a reasonable price based on the zonal value determined by the
Bureau of Internal Revenue (BIR). CA affirmed RTC decision. The motion for
reconsideration of petitioners were subsequently denied by the CA. Hence, the present
petition.
ISSUE
Whether or not the respondent is a builder in good faith.
HELD

To be deemed a builder in good faith, it is essential that a person asserts title to the land on
which he builds, i.e., that he be a possessor in the concept of owner, and that he be unaware
that there exists in his title or mode of acquisition any flaw which invalidates it.

The settled rule is bad faith should be established by clear and convincing evidence since
the law always presumes good faith. In this particular case, petitioners were not able to
prove that respondents were in bad faith in constructing the house on the subject land. Bad
faith does not simply connote bad judgment or negligence. It imports a dishonest purpose
or some moral obliquity and conscious doing of a wrong. It means breach of a known duty
through some motive, interest or ill will that partakes of the nature of fraud. For anyone
who claims that someone is in bad faith, the former has the duty to prove such. Hence,
petitioners err in their argument that respondents failed to prove that they are builders in
good faith in spite of the findings of the RTC and the CA that they are.

As such, Article 448 of the Civil Code must be applied. It applies when the builder believes
that he is the owner of the land or that by some title he has the right to build thereon,  or
that, at least, he has a claim of title thereto. In Tuatzs v. Spouses Escol, et al., this Court
ruled that the seller (the owner of the land) has two options under Article 448: (1) he may
appropriate the improvements for himself after reimbursing the buyer (the builder in good
faith) the necessary and useful expenses under Articles 546 and 548 of the Civil Code; or
(2) he may sell the land to the buyer, unless its value is considerably more than that of the
improvements, in which case, the buyer shall pay reasonable rent, thus:

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

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

As a rule, a party may raise only questions of law in an appeal by certiorari under Rule 45
of the Rules of Court. The Supreme Court is not duty bound to analyze and weigh again the
evidence considered in the proceedings below. This Court is not a trier of facts and does not
embark on a reexamination of the evidence introduced by the parties during trial. This rule
assumes greater force in the instant case where the CA affirmed the factual findings of the
trial court.

Under Article 448, a landowner is given the option to either appropriate the improvement
as his own upon payment of the proper amount of indemnity, or sell the land to the
possessor in good faith. Relatedly, Article 546 provides that a builder in good faith is
entitled to full reimbursement for all the necessary and useful expenses incurred; it also
gives him right of retention until full reimbursement is made.

The objective of Article 546 of the Civil Code is to administer justice between the parties
involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic
Archbishop of Manila [40 Phil. 717 (1920)] that the said provision was formulated in trying
to adjust the rights of the owner and possessor in good faith of a piece of land, to
administer complete justice to both of them in such a way as neither one nor the other may
enrich himself of that which does not belong to him. Guided by this precept, it is therefore
the current market value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the private respondents who
would otherwise be allowed to acquire a highly valued income-yielding four-unit
apartment building for a measly amount. Consequently, the parties should therefore be
allowed to adduce evidence on the present market value of the apartment building upon
which the trial court should base its finding as to the amount of reimbursement to be paid
by the landowner.

In Villaflores v. RAM System Services, Inc., we had occasion to state that issues or errors not
raised by the parties may be resolved by this Court when it is necessary to arrive at a just
decision, and the resolution of the issues raised by the parties depend upon the
determination of the unassigned issue or error, or is necessary to give justice to the parties.
"It is settled that the award of attorney’s fees is the exception rather than the rule and
counsel’s fees are not to be awarded every time a party wins suit. The power of the court to
award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and
equitable justification; its basis cannot be left to speculation or conjecture. Where granted,
the court must explicitly state in the body of the decision, and not only in the dispositive
portion thereof, the legal reason for the award of attorney’s fees."

Moreover, a recent case ruled that "in the absence of stipulation, a winning party may be
awarded attorney’s fees only in case plaintiff’s action or defendant’s stand is so untenable
as to amount to gross and evident bad faith."

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO VILLAFLORES, Respondent. G.R. No.

185020               October 6, 2010

NACHURA, J.

Facts

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

In 1994, Maria sold the same Lot 2-A to Filomena, evidenced by a Kasulatan ng Bilihang
Tuluyan. Filomena registered the sale with the Registry of Deeds. Consequently, TCT in the
name of Maria was cancelled and a new TCT was issued in the name of Filomena. Since then
Filomena paid the real property taxes for the subject parcel of land.

In 2000, Filomena filed a case for Accion Publiciana with Cancellation of Notice of Adverse
Claim, Damages and Attorney’s Fees against Antonio. She alleged that she acquired Lot 2-A
in 1994 from her grandaunt Maria by virtue of the Kasulatan ng Bilihang Tuluyan. At the
time of the sale, she was not aware that Antonio had any claim or interest over the subject
property. Antonio assured her that there was no impediment to her acquisition of the land,
and promised to vacate the property five (5) years after the sale. In August 1999, Antonio
requested an extension of one (1) year, and offered to pay a monthly rental of ₱2,000.00,
which she granted. However, in 2000, Antonio refused to vacate the property and, instead,
claimed absolute ownership of Lot 2-A.

Antonio traversed the complaint, asserting absolute ownership over Lot 2-A. He alleged
that he purchased the subject property from Maria in 1980; and that he took possession of
the same and constructed his house thereon. He came to know of the sale in favor of
Filomena only in 2000 when the latter demanded that he vacate the property. He averred
that Filomena was aware of the sale; hence, the subsequent sale in favor of Filomena was
rescissible, fraudulent, fictitious, or simulated.

After trial, the RTC rendered a decision sustaining Filomena’s ownership. According to the
RTC, Filomena was the one who registered the sale in good faith; as such, she has better
right than Antonio. It rejected Antonio’s allegation of bad faith on the part of Filomena
because no sufficient evidence was adduced to prove it. Likewise, the RTC found Antonio’s
evidence of ownership questionable. Nevertheless, it declared Antonio a builder in good
faith.

Both parties moved for reconsideration of the decision, but the RTC denied the motions for
lack of merit.

Filomena and Antonio then filed their separate appeals with the CA. Filomena assailed the
RTC pronouncement that Antonio was a builder in good faith, and the denial of her claim
for damages. Antonio, on the other hand, faulted the RTC for sustaining Filomena’s
ownership of the subject lot.

In 2008, the CA rendered the now challenged Decision affirming with modification the RTC
decision. The CA affirmed the RTC for upholding Filomena’s ownership of Lot 2-A and for
declaring Antonio a builder in good faith. However, it remanded the case to the RTC for
further proceedings to determine the respective rights of the parties under Articles 448
and 546 of the Civil Code, and the amount due Antonio.1awphi1Hence this petition.

Issue
Whether the CA erred in holding that Antonio was a builder in good faith and was entitled
to reimbursement for the necessary and useful expenses incurred, with right of retention
until reimbursement of the said expenses in full.
Ruling
The appeal lacks merit.

It is not disputed that the construction of Antonio’s house was undertaken long before the
sale in favor of Filomena; that when Filomena bought the property from Maria, Antonio’s
house which he used as residence had already been erected on the property. As explained
by the CA:

[Antonio] claims not being aware of any flaw in his title. He believed being the owner of the
subject premises on account of the Deed of Sale thereof in his favor despite his inability to
register the same. The improvement was, in fact, introduced by Antonio prior to Filomena’s
purchase of the land. x x x.

Thus, we sustain the finding that Antonio is a builder in good faith.

Under Article 448, a landowner is given the option to either appropriate the improvement
as his own upon payment of the proper amount of indemnity, or sell the land to the
possessor in good faith. Relatedly, Article 546 provides that a builder in good faith is
entitled to full reimbursement for all the necessary and useful expenses incurred; it also
gives him right of retention until full reimbursement is made.

The RTC found good faith on the part of Antonio. Yet, it did not order the reimbursement of
the necessary and useful expenses he incurred.

The pronouncement of this Court in Pecson v. CA, which was reiterated in Tuatis v. Escol, is
instructive, viz.:

The objective of Article 546 of the Civil Code is to administer justice between the parties
involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic
Archbishop of Manila [40 Phil. 717 (1920)] that the said provision was formulated in trying
to adjust the rights of the owner and possessor in good faith of a piece of land, to
administer complete justice to both of them in such a way as neither one nor the other may
enrich himself of that which does not belong to him. Guided by this precept, it is therefore
the current market value of the improvements which should be made the basis of
reimbursement. A contrary ruling would unjustly enrich the private respondents who
would otherwise be allowed to acquire a highly valued income-yielding four-unit
apartment building for a measly amount. Consequently, the parties should therefore be
allowed to adduce evidence on the present market value of the apartment building upon
which the trial court should base its finding as to the amount of reimbursement to be paid
by the landowner.

Thus, the CA correctly ordered the remand of the case to the RTC for further proceedings.

Filomena then argues that the CA overstepped its bounds when it ruled on Antonio’s right
to reimbursement and retention. She asserts that this issue was not raised in the
proceedings a quo.

Indeed, the issue of Antonio’s right to reimbursement and retention was not specifically
raised during the pre-trial because Antonio insisted on his claim of ownership. However,
Filomena is now estopped from questioning the CA for ruling on this issue because she was
the one who raised it in her appeal before the CA.

More importantly, the CA had to rule on the issue because it is essential and indispensable
for the just resolution of the case.

In Villaflores v. RAM System Services, Inc., we had occasion to state that issues or errors not
raised by the parties may be resolved by this Court when it is necessary to arrive at a just
decision, and the resolution of the issues raised by the parties depend upon the
determination of the unassigned issue or error, or is necessary to give justice to the parties.