CASE # 7

Filipinas College, Inc. vs Maria Garcia Timbang

Maria Garcia Timbang vs Maria Gervacio Blas

September 29, 1959; J. Barrera

This is an appeal from an order of CFI Manila. In the case at bar, there are three
litigants: (1) Filipinas College, Inc., (2) Maria Garcia Timbang, together with her husband
Marcelino Timbang, and (3) Maria Gervacio Blas. The rights of the litigants, over Lot No.
2-a, have been adjudicated by the Court of Appeals as follows:
F.C.I. was ordered to pay Spouses Timbang P15, 807.90 plus such other
amounts which the latter may have paid to the original vendor of the lot
(Hoskins & Co., an agent of Urban Estates, Inc.). F.C.I. was required to deposit
the total amount within 90 days after decision is final.
M.G. Blas was declared to be a builder in good faith of the school building
constructed on the lot and entitled to be paid the amount of P19, 000 for the
same. F.C.I. was to pay her with: 108 shares of F.C.I with a par value of P10,
800 + P8, 200 for the unpaid balance.
If F.C.I. failed to deposit the value of the land (fixed at P32, 859.84), within
the 90-day period, F.C.I. would lose all its rights to the lands and Spouses
Timbang would then become owners thereof.
- If this happens, Spouses Timbang is to relay to the court the option they
chose under Art. 448.
F.C.I. failed to pay within the 90-day period. The Spouses Timbang then relayed
to the court that they had chosen not to appropriate the building but to compel F.C.I.
to acquire the land and pay them the value thereof (second choice in 448). The Spouses
asked for an order of execution against F.C.I. for the payment of the P32, 859.84. Motion
was granted and the writ of execution was issued. Blas also filed for execution of her
judgment of P8, 200 (unpaid balance). A levy on the house was made by virtue of the
writ of execution, and that was sold in favor of the Spouses Timbang in the amount of
P5,750 for they were the highest bidders. Blas subsequently filed a motion praying that
the Spouses Timbang be ordered to pay and to deliver to her the sum of P5,750,
representing the proceeds of the auction sale of the building of F.C.I. over which she
has a lien of P8, 200.
WHETHER SPOUSES TIMBANG SHOULD PAY BLAS?
Yes.
Article 448 provides that the owner of the land has the right to choose between:
(1) appropriating the building by reimbursing the builder on the value thereof; or (2)
compelling the builder in good faith to pay for his land. This second right cannot be
exercised if the value of the land is considerably more than that of the building. In
addition to the right of the builder to be paid the value of his improvement, Article
546 gives him the corollary right of retention of the property until he is indemnified
by the owner of the land. This is contrary to the novel, albeit ingenious argument of
Timbangs counsel it was argued that because the builder in good faith failed to pay
the price of the land after the owners exercised their option under Art. 448, the builder
lost his right of retention in Art. 546 and by operation of Art. 445, the Timbangs
automatically became the owners of the building.
The Code is silent on the recourse/remedy left to the parties in such eventuality
where the builder fails to pay the value of the land. Guidelines were however provided
in jurisprudence: (1) leave things as they are and assume the relation of lessor-lessee;
payment of rentals Miranda vs Fadullon, Ignacio vs Hilario as cited in Bernardo vs
Bataclan; (2) if they do not want to assume a lessor-lessee relationship, Ignacio vs Hilario
suggest that the owner of the land is entitled to have the improvement removed when
after having chosen to sell his land to the other party i.e. the builder in good faith fails
to pay for the same; and (3) in Bernardo vs Bataclan, the Court approved the sale of the
land and the improvement in a public auction applying the proceeds thereof first to the
payment of the value of the land and the excess, if any, to be delivered to the owner of
the house in payment thereof.
In the case at bar, Spouses Timbang, instead of electing any of the alternatives
mentioned, chose to seek recovery of the value of their land by asking for a writ of
execution; levying on the house of the builder and selling the same in public auction.
And because they are the highest bidder, they now claim that they acquired title to the
building without necessity of paying in cash on account of their bid. In Matias vs
Provincial Sheriff of Nueva Ecija, it was stated that if the successful bidder is the
execution creditor himself, he does not need to pay the amount of the bid if it
does not exceed the amount of his judgment , nevertheless when there is a claim
by a third-party, to the proceeds of the sale superior to his judgment credit, the
execution creditor, as successful bidder must pay in cash the amount of his bid as
a condition precedent to the issuance to him of the certificate of sale.
Blas claim is therefore not a mere preferred credit, but is actually a lien on the
school building as provided in Art. 2242, NCC. It is superior to the claims of the
Spouses insofar as the proceeds of the sale of the school building are concerned.