[G.R. No. 149295.
September 23, 2003] The essence of good faith lies in an honest belief in
PHILIPPINE NATIONAL BANK, petitioner, vs.
GENEROSO DE JESUS
FACTS:
Respondent filed a complaint against petitioner
before the Regional Trial Court of Occidental
Mindoro for recovery of ownership and possession,
with damages, over the questioned property. On
26 March 1993, he had caused a verification survey
of the property and discovered that the northern
portion of the lot was being encroached upon by a
building of petitioner to the extent of 124 square
meters. Despite two letters of demand sent by
respondent, petitioner failed and refused to vacate
the area.
Petitioner asserted that when it acquired the lot
and the building sometime in 1981 from then
Mayor Bienvenido Ignacio, the encroachment
already was in existence and to remedy the
situation, Mayor Ignacio offered to sell the area in
question (which then also belonged to Ignacio) to
petitioner at P100.00 per square meter which offer
the latter claimed to have accepted. The sale,
however, did not materialize when, without the
knowledge and consent of petitioner, Mayor
Ignacio later mortgaged the lot to the
Development Bank of the Philippines.
The trial court decided the case in favor of
respondent declaring him to be the rightful owner.
The Court of Appeals sustained the trial court.
ISSUE: W/N PETITIONER IS A BUILDER IN GOOD
FAITH
HELD:
In reference to Article 448, et seq., of the Civil
Code, a builder in good faith is one who, not being
the owner of the land, builds on that land believing
himself to be its owner and unaware of any defect
in his title or mode of acquisition.
the validity of ones right, ignorance of a superior
claim, and absence of intention to overreach
another. Applied to possession, one is considered
in good faith if he is not aware that there exists in
his title or mode of acquisition any flaw which
invalidates it. Evidently, petitioner was quite
aware, and indeed advised, prior to its acquisition
of the land and building from Ignacio that a part of
the building sold to it stood on the land not
covered by the land conveyed to it.
Equally significant is the fact that the building,
constructed on the land by Ignacio, has in actuality
been part of the property transferred to petitioner.
Article 448, of the Civil Code refers to a piece of
land whose ownership is claimed by two or more
parties, one of whom has built some works (or
sown or planted something) and not to a case
where the owner of the land is the builder, sower,
or planter who then later loses ownership of the
land by sale or otherwise for, elsewise stated,
where the true owner himself is the builder of
works on his own land, the issue of good faith or
bad faith is entirely irrelevant.
In fine, petitioner is not in a valid position to invoke
the provisions of Article 448 of the Civil Code.
Balucanag v Francisco Digest
Facts of the Case:
The petitioner bought a lot owned by Mrs. Charvet
which was then previously leased by the latter to
one Richard Stohner. The said lease contract
provided that the lessee may erect structures and
improvements which shall remain as lessee's
property and he may remove them at any time. It
further provided that should the lessee fail to
remove the same structures or improvements
withing two months after the expiration of the
lease, the lessor may remove them or cause them
to be removed at the expense of the lessee.
Stohner made fillings on the land and constructed a
house. When he failed to pay the rent, the
petitioner, through counsel, sent Stohner a
demand letter ordering him to vacate the lot. The
lessee contended that he is a 'builder in good faith.'
Issue: Is the lessee a builder in good faith?
Ruling: No, the lessee cannot be considered a
builder in good faith. The provision under Art. 448
of the New Civil Code (Philippine) on a builder of
good faith applies only to the owner of the land
who believes he is the rightful owner thereof, but
not to a lessee who's interest in the land is derived
only from a rental contract. Neither can Stohner be
considered a 'possessor in good faith'. A possessor
in good faith is a party who possesses property
believing that he is its rightful owner but discovers
later on a flaw in his title that could indicate that
he might not be its legal owner. It cannot apply to a
lessee because he knows right from the start that
he is merely a lessee and not the owner of the
premises.
As a mere lessee, he introduces improvements to
the property at his own risk such that he cannot
recover from the owner the reimbursements nor
he has any right to retain the premises until
reimbursements. What applies in this case is Art.
1678 (NCC) which provides that, " if the lessee,
makes, in good faith, useful improvements which
are suitable to the use for which the lease is
intended, without altering the form or substance of
the property leased, the lessor upon the
termination of the lease shall pay the lessee 1/2 of
the value of the improvements at the time. Should
the lessor refuse to reimburse said amount, the
lessee may remove the improvements even though
the principal thing may suffer damage thereby. He
shall not. however, cause any more impairment
upon the property leased than is necessary."
PEDRO P. PECSON v. COURT OF APPEALS, SPS.
NUGUID
FACTS:
Pedro Pecson was the owner of a commercial lot
on which he built a 4-door-2-storey apartment
building. He failed to pay realty taxes amounting to
P12k so the lot was sold at public auction to
Mamerto Nepomuceno who later on sold it to the
Sps. Nuguid.
Pecson challenged the validity of the auction
before the RTC but was dismissed but the RTC held
that the apartment bldg was not subject of the
litigation. On appeal, the CA appealed in toto the
decision of the RTC that the apartment bldg was
not included in the auction sale.
After an entry of judgment was made, the Sps.
Nuguid filed a motion with the RTC for a motion for
delivery of possession of the lot and the apartment
bldg citing Art. 546 of the CC. The RTC issued an
order declaring that the owner of the lot and
apartment bldg were the Sps. Nuguid and to pay
the construction cost of the apartment before a
writ of possession would be issued and to pay rent
to the spouses. Pecson moved for reconsideration
but the Trial court did not act on it, instead it
issued a writ of possession. The CA affirmed in part
the decision declaring the cost of construction can
be offset from the amount of rents to be collected
and that since Sps. Nuguid opted to appropriate
the improvement, Pecson is entitled to be
reimbursed the cost of construction at the time it
was built in 1965 which is at P53k and the right the
retain the improvement until full indemnity is paid.
Thus the case at bar.
ISSUE:
Whether or not Art. 448 and 546 applies in the
case at bar
HELD: YES
> With regard to Art. 448, the provision on
indemnity may be applied in analogy. Whoever is
the owner of the land may appropriate whatever
has been built, planted or sown after paying
indemnity. However, it does not apply when the
owner of the land is also the builder of the works
on his own land who later on loses ownership by
sale or donation.
> Art. 546 refers to the necessary and useful
expenses which shall be refunded to the possessor
in good faith with right of retention. However, it
does not state how to determine the value of the
useful improvement. The respondents [court and
private respondents alike] espouses as sufficient
reimbursement the cost of construction in 1965,
however, this is contrary to previous rulings which
declares that the value to the reimbursed should
be the present market value of said improvements
so as not to unjustly enrich either of the parties.
[the trial court erred in ordering Pecson to pay rent
since the Sps. Nuguid has yet to pay the indemnity
therefore Pecson has the right to retain the
improvements and the income thereof. The case
was remanded to the trial court for determination
of the current market value of the apartment bldg
and ordered the Sps to pay Pecson otherwise it
shall be restored to Pecson until payment of
indemnity.]
IGNACIO vs HILARIO
76 Phil 605 – Civil Law – Property – Accession
Industrial – Builder in Good Faith; Owner in Good
Faith
Sometime during the 1940s in Pangasinan, a civil
suit arose between Damian Ignacio and Elias
Hilario. Hilario was the owner of a parcel of land.
He later discovered that Ignacio built some
buildings therein (a granary and a house). After
trial, Judge Antonio Felix of the Court of First
Instance of Pangasinan ruled that both were in
good faith (Hilario was the owner in good faith
while Ignacio was the builder in good faith).
Judge Felix then spelled out the rights of the
parties to wit:
a.) Ignacio can retain possession over the buildings
he erected until after he is paid by Hilario for the
value of the buildings he erected;
b.) Hilario can choose to buy the said buildings or
he can choose to sell Ignacio his land since the
value of his land was only P45.00 while the value of
the buildings erected was P2,000.00.
However, Hilario refused to avail of his options.
Instead, he filed a motion in court to have Ignacio
be ejected and have them destroy the buildings he
erected. Judge Felipe Natividad (he replaced Judge
Felix), granted Hilario’s motion.
ISSUE: Whether or not Hilario, the owner in good
faith, may eject a builder in good faith without
choosing either to appropriate the building for
himself after payment of its value or to sell his land
to the builder in good faith.
HELD: No. The owner in good faith has to make a
choice. He cannot dispense the options under the
law and then eject the builder in good faith. This is
because both are in good faith.
But when can the owner in good faith compel the
builder in good faith to remove the building he
erected?
This is only available if after the owner in good
faith chose to sell his land to the builder in good
faith and the latter fails to pay the value of the land
within the agree period. Only then can the owner
in good faith compel the builder in good faith to
remove the building he erected.
ALEJANDRO QUEMUEL and RUPERTA SOLIS v.
ANGEL S. OLAES and JULIANA PRUDENTE
G.R. No. L-11084 April 29, 1961
Nature
Appeal from the order of the trial court dismissing
the complaint of plaintiffs to compel respondents
to reduce the monthly rental and to sell to the
former the portion of the lot where the plaintiffs’
house was erected.
Facts
The Olaes spouses sued in the CFI of Cavite the
Quemel spouses for recovery of possession of a
parcel of land. The Quemel spouses admitted
plaintiffs’ ownership but contended that their
occupation was gratuitous. In 1954, the trial court
ordered the Quemel spouses to return the
possession of the land to the Olaes spouses and to
pay the latter Php20.00 a month from January
1954, until they shall have vacated the premises.
The Quemel, to forestall execution of the
judgment, filed a complaint against the Olaes
spouses seeking to reduce the monthly rental and
to compel the Olaes spouses to sell to them the
portion of the lot. But the trial court granted the
motion to dismiss filed by Olaes spouses, to which
the Quemel spouses appealed from, and as
certified by the appellate court the appeal went to
the Supreme Court.
Issue
Can the Quemel spouses invoke as their basis of
cause of action Article 448 in connection with
Article 546 of the Civil Code?
Held
No. The decision appealed from is affirmed.
Ratio
A cursory reading of these provisions, however, will
show that they are not applicable to plaintiffs' case.
Under Article 448, the 1) right to appropriate the
works or improvements or 2) to oblige the one
who built or planted to pay the price of the land
belongs to the owner of the land. The only right
given to the builder in good faith is the right to
reimbursement for the improvements; the builder,
cannot compel the owner of the land to sell such
land to the former. This is assuming that the
plaintiffs are builders in good faith.
But the plaintiffs are not builders in good faith.
From the pleadings and the documentary evidence
submitted, it is indisputable that the land in
question originally belonged to the government as
part of the Friar Lands Estate and the title thereto
was in the name of the government, until it was
purchased by Agapita Solis who applied, thru the
Bureau of Lands, to purchase the land by
installments. The
corresponding Sale Certificate No. 531, effective
July 1, 1909 was executed. In defendants'
complaint before the CFI, they alleged that they
are the owners of lot and that plaintiffs, have
been occupying southeastern half portion thereof,
without any right thereto, except the tolerance of
defendants, which were admitted expressly and
under oath, in the answer of plaintiffs herein. It
would, therefore, appear that plaintiffs herein
were not unaware of the flaw in their title, if any,
and that their true relation with the herein
defendants was that of tenant and landlord, and
that their rights are governed by Article 1573 in
relation to article 487 of the old Civil Code.*
It can clearly be inferred that plaintiffs cannot
compel the defendants to pay for the
improvements the former made on the property or
to sell the latter's land. Plaintiffs' only right, is to
remove improvements, if it is possible to do so,
without damage to the land.
*Art. 1573. A lessee shall have with respect to
useful a voluntary improvements, the same right
which are granted the usufructuaries.
Art. 487. The usufructuary may make on the
property in usufruct any improvements, useful or
recreative, which may deem proper, provided he
does not change its form or substance, but he shall
have no right to be indemnified thereof. He may,
however, remove such improvements, should it
possible to do so without injury to the property.
Francisco Depra vs Agustin Dumlao
136 SCRA 475 – Civil Law – Property – Accession
Industrial – Builder in Good Faith; Owner in Good
Faith – Forced Lease
Remedial Law – Res Judicata – Unlawful Detainer
will not bar a subsequent action for Quieting of
Title
The properties of Francisco Depra and Agustin
Dumlao were adjoining each other. In 1972,
Dumlao built his house however, he unwittingly
built the kitchen portion of his house on Depra’s
land. Depra then sued Dumlao for unlawful
detainer. During pre-trial, the parties agreed that
Dumlao was a builder in good faith.
Eventually, the trial court ruled that both parties
were in good faith but then a forced lease was
ordered whereby Dumlao retains the kitchen but
he shall pay a rental to Depra at P5.00 per month.
But Depra refused to receive the rental payments
from Dumlao, instead, Depra filed an action for
quieting of title against Dumlao. In his defense,
Dumlao raised the defense of res judicata
considering that the nature and purpose of the
initial unlawful detainer case and that of
the subsequent quieting of title case is ejectment.
ISSUES:
1. Whether or not the order of forced lease
decreed in the unlawful detainer case is valid.
2. Whether or not the subsequent case of res
judicata is barred by prescription due to the prior
case of unlawful detainer.
HELD:
1. No. The judgment of forced lease is improper. A
forced lease, just like co-ownership is not favored.
It should be considered that the parties themselves
stipulated that Dumlao, the builder, was in good
faith and it was later found that Depra, the owner,
was also in good faith. Hence, what applies is the
provisions of Article 448 of the Civil Code, which
provides in sum that:
a. Builder in good faith – 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 in good faith;
b. Owner in good faith – has the option to either (i)
pay for the building OR (ii) sell his land to the
builder in good faith but builder cannot be forced
to buy said 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 thereof being considerably
more than the value of the building – in such case,
the parties shall agree to the terms of the lease, if
they can’t agree then they may bring the issue to
court.
2. No. The action for quieting of title is not barred
by reason of res judicata. The cause of action in the
unlawful detainer case involves possession while
the cause of action in the quieting of title case
involves ownership. Furthermore, the Rules of
Court explicitly provides that judgment in a
detainer case shall not bar an action between the
same parties respecting title to the land.
REYNANTE v. CA
FACTS:
More than 50 years ago, Reynante was taken as
tenant by the late Don Cosme Carlos over a
fishpond in Meycauayan, Bulacan. Reynante
subsequently built a nipa hut where he and his
family lived and took care of the nipa palms which
they planted on lots 1 and 2, which was located
between the fishpond and Liputan River.
Reynante’s family sold the nipa palms, and
appropriated the fruits as his own, without
interference or complaint from Don Carlos.
Upon Don Carlos’ death, his heirs convinced
Reynante to sign an affidavit, relinquishing his
rights as a caretaker of the fishpond. Reynante,
however, continued to live in the nipa hut he had
built, and he still took care of the nipa palms, which
he continued to sell.
This lead the heirs to file a complaint for forcible
entry with preliminary injunction against Reynante
in the MTC. The MTC found for Reynante, but the
heirs appealed to the RTC, where the decision was
reversed. The CA merely affirmed the decision of
the RTC.
ISSUE:
Whether or not accretion automatically becomes
registered land just because the adjoining lot is
registered in the Torrens System?
HELD:
While it is true that alluvial deposits shall belong to
the owner of the lot adjoining such accretion, it
does not automatically bestow an
imprescriptibility. If the owners of said land have
not registered this with the proper entity, said land
will be subject to acquisition by prescription, which
was what occurred in this case.
Since the affidavits prove that Reynante has been
in possession of these lands for more than 50
years, the SC rightly held that the land belongs to
him.
Sulo sa Nayon Inc vs Nayong Pilipino Foundation
Facts:
On 1975, Respondent leased to petitioner Sulo sa
Nayon a portion of land for the construction and
operation of a hotel building for an initial period of
21 years until May 1996 and renewable for 25
years upon due notice in writing to respondent at
least 6 months prior of the expiration of the lease.
On March 1995, petitioners sent respondent a
letter notifying the latter’s intention to renew the
contract fro another 25 years and that they
executed a Voluntary Addendum to the lease
agreement. Beginning 2001, petitioners defaulted
in the payment of their monthly rental so
respondent demanded petitioner to pay. On
September 2001, respondent filed a complaint for
unlawful detainer. Petitioners insist that they
should be considered builders in good faith who
have the right of retention until reimbursement by
respondent is made and they also argue that to
apply Art 1678 to their case would result to sheer
injustice, as it would amount to giving away the
hotel and its other structures at virtually bargain
prices.
Issue: Is petitioners a builder in good faith?
Ruling: No. 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. His right are governed by
Art 1678 of the Civil Code.
Tan Queto v. CA [G.R. No. L-35648. February 27,
1987.]; Resolution
Jul5
En Banc, Paras (J): 10 concur, 1 votes to deny
reconsideration, 1 dissents, 2 took no part
Facts: Restituta Tagalinar Guangco de Pombuena
received the questioned lot (Lot 304-B of the
Cadastre Survey of the Municipality of Centro,
Misamis Occidental) either as a purported donation
or by way of purchase on 11 February 1927 for
P50.00 as the alleged consideration thereof. The
transaction took place during her mother’s lifetime
(her father having predeceased the mother) and
consummated while Restituta was already married
to her husband Juan Pombuena. On 22 January
1935, Juan filed an application of Torrens title over
the land for himself and his supposed co-owner
Restituta. On 22 November 1938, a decision was
promulgated (GLRC 1638, Cadastral Case 12)
pronouncing Juan (married to Restituto) as the
owner of the land. On 22 September 1949 a
contract of lease over the lot was entered into
between Pershing Tan Queto and Restituta (with
the consent of her husband) for a period of 10
years.
Meanwhile, On 27 December 1960 Restituta sued
Tan Queto for unlawful detainer (the lease contract
having expired) before the Municipal Court of
Ozamis City.
On 22 April 1962, as a consequence of the
cadastral case, an OCT was issued in Juan’s name.
On 10 October 1962, Tan Queto and Juan entered
into a barter agreement whereby Tan Queto
became the owner of the disputed lot, and the
spouses in turn became the owners of a parcel of
land with the house constructed thereon
previously owned (that is, before the barter) by Tan
Queto. Thereafter, Tan Queto constructed on the
disputed land a concrete building, without any
objection on the part of Restituta.
The Municipal court ruled in favor of the spouses in
the unlawful detainer case; but on appeal in the
CFI, the entire case was dismissed because of an
understanding (barter) entered into by Juan and
Tan Queto.
Restituta sued both Juan and Tan Queto for
reconveyance of the title over the registered but
disputed lot, for annulment of the barter, and for
recovery of the land with damages. The CFI and the
Court of Appeals found the disputed lot as
paraphernal and that Tan Queto was a builder in
bad faith. These findings were regarded by the
Supreme Court as findings of facts and thus
ordinarily conclusive upon the Court. Tan Queto
filed for a motion for reconsideration of the
Supreme Court decision dated 16 May 1983.
The Supreme Court set aside its decision
promulgated on 16 May 1983, and rendered a new
one declaring the questioned lot together with the
building thereon, as Tan Queto’s exclusive
property; without costs.
1. Findings of the lower courts ordinary conclusive
upon the Court; exception, if erroneous
The findings of the Court of First Instance and the
Court of Appeals were regarded by the Supreme
Court as findings of facts and thus ordinarily
conclusive upon the Court. Assuming they are
factual findings, still if they are erroneous
inferences from certain facts, they cannot bind the
Court.
2. Land not transferred to Restituta by donation,
for it to be paraphernal
The oral donation of the lot cannot be a valid
donation inter-vivos because it was not executed in
a public instrument (Art. 749, Civil Code), nor as a
valid donation mortis causa for the formalities of a
will were not complied with. The allegation that
the transfer was a conveyance to Restituta of her
hereditary share in the estate of her mother (or
parents) cannot be sustained for the contractual
transmission of future inheritance is generally
prohibited.
3. Land is conjugal, not paraphernal; Ownership
by tradition
The land is conjugal, not paraphernal. Ownership
was acquired by the spouses by tradition (delivery)
as a consequence of the contract of sale (See Art.
712, Civil Code) with P50.00 (then a considerable
amount) as the cause or consideration of the
transaction. The lot is therefore conjugal, having
been acquired by the spouses thru onerous title
(the money used being presumably conjugal, there
being no proof that Restituta had paraphernal
funds of her own).
4. Sale not fictitious nor simulated; Allegation of
simulation cannot prejudice a stranger
The sale cannot be said to be fictitious or simulated
(and therefore void) as there was a valid
consideration therefor. Assuming that there had
indeed been a simulation, the parties thereto
cannot use said simulation to prejudice a stranger
to said strategem (like petitioner herein).
5. Tan Queto recognized Restituta as an owner,
not the owner
Tan Queto admitted Restituta was “an owner” (not
the owner) of the lot in his Answer, and this is true,
for she was a co-owner (with Juan, and therefore
“an owner.”) There is no admission of Restituta’s
exclusive ownership.
6. Assuming Tan Queto recognized Restituta as
the owner; bad faith of one neutralizes the bad
faith of the other
Even assuming that despite registration of the lot
as conjugal, Tan Queto nursed the belief that the
lot was actually Restituta’s (making him in bad
faith), still Restituta’s failure to prohibit him from
building despite her knowledge that construction
was actually being done, makes her also in bad
faith. The net resultant of mutual bad faith would
entitle Tan Qyeto to the rights of a builder in good
faith (Art. 448, Civil Code), ergo, reimbursement
should be given him if Restituta decides to
appropriate the building for herself (Art. 448, Civil
Code).
7. Tan Queto an owner-possessor
Tan Queto having bartered his own lot and small
house with the questioned lot with Juan (who has
been adverted to by a court decision and by the
OCT a conjugal owner) may be said to be the
owner-possessor of the lot. Certainly he is not
merely a possessor or builder in good faith (this
phrase presupposes ownership in another); much
less is he a builder in bad faith. He is a builder-
possessor (jus possidendi) because he is the owner
himself.
8. Jus possessionis, jus possidendi; good faith and
bad faith
The Chapter on Possession (jus possessionis, not
jus possidendi) in the Civil Code refers to a
possessor other than the owner. The difference
between a builder (or possessor) in good faith and
one in bad faith is that the former is not aware of
the defect or flaw in his title or mode of acquisition
while the latter is aware of such defect or flaw (Art.
526, Civil Code). But in either case there is a flaw or
defect. In the present case, there is no such flaw or
defect because it is Tan Queto himself (not
somebody else) who is the owner of the property.
(taken from other source)
Torbela vs. Spouses Rosario GR 140528 Dec. 07,
2011
FACTS: The issue is over a parcel of land inherited
by the Torbela siblings from their parents.
They executed a deed of absolute quitclaim over
the property in favor of Dr. Rosario. Four days
after, a TCT was issued in Dr. Rosario’s name
covering the property.
Another deed of absolute quitclaim was
subsequently executed twelve days after by Dr.
Rosario acknowledging that he only borrowed the
lot from the Torbela siblings and was already
returning the same. This deed was notarized but
not immediately annotated.
Dr. Rosario used the land as mortgage for a loan he
obtain through DBP for P70,000.00. He used the
proceeds of the loan to build a 4 storey building
which was initially used as a hospital but later
converted into a commercial space. Part was
leased to PT&T and the rest to Rosario ’s sister who
operated the Rose Inn Hotel and Restaurant.
Dr. Rosario fully paid the loan from DBP and the
mortgage was cancelled and ratified by a notary
public. However, Dr. Rosario took another loan
from PNB. He later acquired a third loan from
Banco Filipino and bought out the loan from PNB
cancelling the mortgage with PNB. Rosario failed to
pay their loan in Banco Filipino and the property
was extrajudicially foreclosed.
Meanwhile, back in 1965, the Torbela siblings
sought to register their ownership over the lot and
to perfect their title but couldn’t because the title
was still with DBP. They showed as proof the deed
of absolute quitclaim presented executed by
Rosario himself. In 1986, they filed a civil case for
recovery of ownership and possession and
damages. They tried to redeem the lot from Banco
Filipino but failed. TCT was issued to Banco
FIilipino.
The Torbela’s claim they have right over the rents
of the building through accession because they are
the land owners.
ISSUE: Who has right over the improvements made
on the lot and the rents thereof.
RULING: According to Art. 440, the accessory
follows the principal. Ownership of property gives
the right by accession to everything which is
produced thereby, or which is incorporated or
attached thereto, either naturally or artificially.

However, in the case at bar, both Torbela siblings

and Rosario are deemed in bad faith. The Torbelas
knew Rosario built on the land and even allowed
him to use the land to obtain a loan from DBP.
Rosario on the other hand consciously built on land
he knew was not his. They both had knowledge and
did not oppose.

Art. 453 states that when both parties are in bad

faith, the case shall be treated as though both were
in good faith thus the application of Art. 448.

448 allows the Land Owner 2 options in the case at

bar. Either indemnify Rosario and appropriate the
lot to himself or ask Rosario to buy the lot or the
rent rate. This case was remanded to the RTC for
the Torbelas to make such decision.

Still following the rules of accession, civil fruits such

as rent belong to the owner of the building. Rosario
has rights over the rent and improvements and
shall continue until the Torbela siblings have
chosen an option from 448.