G.R. NO.

170923 JANUARY 20, 2009

SULO SA NAYON, INC. VS NAYONG PILIPINO FOUNDATION
FACTS:
In 1975, respondent leased a portion of the Nayong Pilipino Complex, to
petitioner Sulo sa Nayon, Inc. for the construction and operation of a hotel building,
to be known as the Philippine Village Hotel. The lease was for an initial period of 21
years, or until May 1996. It is renewable for a period of 25 years under the same
terms and conditions upon due notice in writing to respondent of the intention to
renew.
In 1995, petitioners sent respondent a letter notifying the latter of their
intention to renew the contract for another. July of the same year, parties agreed to
the renewal of the contract for another 25 years, or until 2021. Under the new
agreement, petitioner PVHI was bound to pay the monthly rentals
Beginning January 2001, petitioners defaulted in the payment of their monthly
rental. Respondent repeatedly demanded petitioners to pay the arrears and vacate
the premises.
MeTC rendered its decision in favor of respondent
RTC which modified the ruling of the MeTC.
CA which held that the RTC erroneously applied the rules on accession, as
found in Articles 448 and 546 of the Civil Code
ISSUE:
WON Sulo sa Nayon as builders have acted in good faith in order for Art. 448
in relation to Art. 546 of the Civil Code may apply with respect to their rights over
improvements.
HELD:
Article 448 is manifestly intended to apply only to a case where one builds,
plants, or sows on land in which he believes himself to have a claim of title, and not
to lands where the only interest of the builder, planter or sower is that of a holder,
such as a tenant.
In the case at bar, petitioners have no adverse claim or title to the land. In
fact, as lessees, they recognize that the respondent is the owner of the land. What
petitioners insist is that because of the improvements, which are of substantial value,
that they have introduced on the leased premises with the permission of respondent,
they should be considered builders in good faith who have the right to retain
possession of the property until reimbursement by respondent.
We affirm the ruling of the CA that introduction of valuable improvements on
the leased premises does not give the petitioners the right of retention and
reimbursement which rightfully belongs to a builder in good faith. Otherwise, such a
situation would allow the lessee to easily "improve" the lessor out of its property. We
reiterate the doctrine that a lessee is neither a builder in good faith nor in bad faith
that would call for the application of Articles 448 and 546 of the Civil Code. His rights

are governed by Article 1678 of the Civil Code.

96 SCRA 130 February 21, 1980

FLOREZA v EVANGELISTA
FACTS:
The Evangelistas were the owner of a residential lot in Rizal with an area of
204.08 sq. m. assessed at P410. They borrowed P100 from Floreza. Floreza
occupied the residential lot and built a house of light material (barong-barong) with
the consent of the Evangelistas. Additional Loans were made by the Evangelistas.
Floreza demolished the house of light material and constructed one of strong
material assessed. Floreza has not been paying any rentals since the beginning of
their transactions. Eventually, Evangelistas sold, with a right to repurchase within 6
years, their land to Floreza. Seven months before the expiry of the repurchase
period, the Evangelistas were able to pay in full. Floreza refused to vacate the lot
unless he was first reimbursed for the value of the house he built
Evangelistas filed a complaint. CFI ruled based on Art, 448 of the Civil Code
saying that Evangelistas have the choice between purchasing the house or selling
the land to Floreza. CA ruled that Art. 448 was inapplicable and that Floreza was not
entiled to the reimbursement of his house and could remove the same at his own
expense.
ISSUE:
1. WON Floreza was entitled to reimbursement of the cost of his house.
2. WON he (his heirs who replaced him) should pay rental of the land.
HELD:
1. NO.
Issue of reimbursement is not moot because if Floreza has no right of retention, then
he must pay damages in the form of rentals. Agree with CA that Art. 448 is
inapplicable because it applies only when the builder is in good faith (he believed he
had a right to build). Art. 453 is also not applicable because it requires both of the
parties to be in bad faith. Neither is Art. 1616 applicable because Floreza is not a
vendee a retro. The house was already constructed in 1945 (light materials) even
before the pacto de retro was entered into in 1949. Floreza cannot be classified as a
builder in good faith nor a vendee a retro, who made useful improvements during the
pacto de retro, he has no right to reimbursement of the value of the house, much
less to the retention of the premises until he is paid.
His rights are more akin to a usufructury under Art. 579, who may make on
the property useful improvements but with no right to be indemnified thereof, He
may, however, remove such improvements should it be possible to do so without
damage to the property.

2. YES.
From the time the redemption price was paid in January 3, 1955, Florezas right to
use the residential lot without rent ceased. He should be held liable for damages in
the form of rentals for the continued use of the lot for P10 monthly from January 3,
1955 until the house was removed and the property vacated by Floreza or his heirs.
Judgment affirmed with modification.
G.R. No. 169129 March 28, 2007
SPS. VIRGILIO F. SANTOS & ESPERANZA LATI SANTOS, SPS.VICTORINO F.
SANTOS, & LAGRIMAS SANTOS, ERNESTO F. SANTOS, and TADEO F.
SANTOS, Petitioners,
vs.
SPS. JOSE LUMBAO and PROSERFINA LUMBAO, Respondents.
FACTS:
Rita sold to respondents Spouses Lumbao denominated as Bilihan ng Lupa
the subject property which is a part of her share in the estate of her deceased
mother Maria. After acquiring the subject property, respondents Spouses Lumbao
took actual possession thereof and erected thereon a house which they have been
occupying as exclusive owners up to the present. As the exclusive owners of the
subject property, respondents Spouses Lumbao made several verbal demands upon
Rita, during her lifetime, and thereafter upon herein petitioners, for them to execute
the necessary documents to effect the issuance of a separate title in favor of
respondents Spouses Lumbao insofar as the subject property is concerned.
Respondents Spouses Lumbao alleged that prior to her death, Rita informed
respondent Proserfina Lumbao she could not deliver the title to the subject property
because the entire property inherited by her and her co-heirs from Maria had not yet
been partitioned. Spouses Lumbao claimed that petitioners, acting fraudulently and
in conspiracy with one another, executed a Deed of Extrajudicial Settlement, 6
adjudicating and partitioning among themselves and the other heirs, the estate left
by Maria, which included the subject property already sold to respondents Spouses
Lumbao.
Respondents Spouses Lumbao, through counsel, sent a formal demand
letter8 to petitioners but despite receipt of such demand letter, petitioners still failed
and refused to reconvey the subject property to the respondents Spouses Lumbao.
Consequently, the latter filed a Complaint for Reconveyance with Damages 9 before
the RTC of Pasig City. Petitioners filed their Answer denying the allegations that the
subject property had been sold to the respondents Spouses Lumbao. Petitioners
filed their Answer denying the allegations that the subject property had been sold to

the respondents Spouses Lumbao. They likewise denied that the Deed of
Extrajudicial Settlement had been fraudulently executed because the same was duly
published as required by law. The RTC rendered a decision in favor of the
petitioners. Aggrieved, respondents Spouses Lumbao appealed to the Court of
Appeals. Which reversed the ruling of the trial court and ordered the reconveyance
of the property to the respondents. The petitioners questioned the decision, hence
this petition.
ISSUE:
Whether or not a co-owner can alienate, mortgage or assign his aliquot or
undivided share in the property.
RULING:
It is noteworthy that at the time of the execution of the documents
denominated as "Bilihan ng Lupa," the entire property owned by Maria, the mother of
Rita, was not yet divided among her and her co-heirs and so the description of the
entire estate is the only description because the exact metes and bounds of the
subject property sold to respondents Spouses Lumbao could not be possibly
determined at that time. Nevertheless, that does not make the contract of sale
between Rita and respondents Spouses Lumbao invalid because both the law and
jurisprudence have categorically held that even while an estate remains undivided,
co-owners have each full ownership of their respective aliquots or undivided shares
and may therefore alienate, assign or mortgage them. 28 The co-owner, however, has
no right to sell or alienate a specific or determinate part of the thing owned in
common, because such right over the thing is represented by an aliquot or ideal
portion without any physical division. In any case, the mere fact that the deed
purports to transfer a concrete portion does not per se render the sale void. The sale
is valid, but only with respect to the aliquot share of the selling co-owner.
Furthermore, the sale is subject to the results of the partition upon the termination of
the co-ownership.29
In the case at bar, when the estate left by Maria had been partitioned on 2 May 1986
by virtue of a Deed of Extrajudicial Settlement, the 107- square meter lot sold by the
mother of the petitioners to respondents Spouses Lumbao should be deducted from
the total lot, inherited by them in representation of their deceased mother, which in
this case measures 467 square meters. The 107-square meter lot already sold to
respondents Spouses Lumbao can no longer be inherited by the petitioners because
the same was no longer part of their inheritance as it was already sold during the
lifetime of their mother.