FIRST DIVISION
[G.R. No. 151815.
SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners, vs. HON. COURT OF APPEALS AND PEDRO P. PECSON, respondents.
D E C I S I O N
QUISUMBING, J.:
This is a petition for review on certiorari of the Decision[1] dated P1,344,000 as
reimbursement of unrealized income for the period beginning November 22, 1993
to December 1997. The appellate court,
however, reduced the trial court’s award in favor of Pecson from the said P1,344,000
to P280,000. Equally assailed by
the petitioners is the appellate court’s Resolution[2]
dated
It may be recalled that relatedly in our Decision dated May 26, 1995, in G.R. No. 115814, entitled Pecson v. Court of Appeals, we set aside the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order dated November 15, 1993, of the RTC of Quezon City, Branch 101 and remanded the case to the trial court for the determination of the current market value of the four-door two-storey apartment building on the 256-square meter commercial lot.
The antecedent facts in this case are as follows:
Pedro P. Pecson owned a
commercial lot located at P103,000
to the spouses Juan and Erlinda Nuguid.
Pecson challenged
the validity of the auction sale before the
On
As a result, the Nuguid spouses moved for delivery of possession of the lot and the apartment building.
In its Order[6] of P53,000,
following which, the spouses Nuguid were entitled to
immediate issuance of a writ of possession over the lot and improvements. In the same order the RTC also directed
Pecson to pay the same amount of monthly rentals to the Nuguids as paid by the
tenants occupying the apartment units or P21,000 per month from June 23,
1993, and allowed the offset of the amount of P53,000 due from the
Nuguids against the amount of rents collected by Pecson from June 23, 1993 to
September 23, 1993 from the tenants of the apartment.[8]
Pecson duly moved for reconsideration,
but on
Aggrieved, Pecson then filed a special civil action for certiorari and prohibition docketed as CA-G.R. SP No. 32679 with the Court of Appeals.
In its decision of
WHEREFORE, while it appears that private respondents [spouses Nuguid] have not yet indemnified petitioner [Pecson] with the cost of the improvements, since Annex I shows that the Deputy Sheriff has enforced the Writ of Possession and the premises have been turned over to the possession of private respondents, the quest of petitioner that he be restored in possession of the premises is rendered moot and academic, although it is but fair and just that private respondents pay petitioner the construction cost of P53,000.00; and that petitioner be ordered to account for any and all fruits of the improvements received by him starting on June 23, 1993, with the amount of P53,000.00 to be offset therefrom.
IT IS SO OR
Frustrated by this turn of events, Pecson filed a petition for review docketed as G.R. No. 115814 before this Court.
On
WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No.
32679 and the Order of
The case is hereby remanded to the trial court for it to determine the current market value of the apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on the current market value of the apartment building. The value so determined shall be forthwith paid by the private respondents [Spouses Juan and Erlinda Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the possession of the apartment building until payment of the required indemnity.
No costs.
SO ORDERED.[12] [Emphasis supplied.]
In so ruling, this Court pointed out that: (1) Article 448 of the Civil Code is not apposite to the case at bar where the owner of the land is the builder, sower, or planter who then later lost ownership of the land by sale, but may, however, be applied by analogy; (2) the current market value of the improvements should be made as the basis of reimbursement; (3) Pecson was entitled to retain ownership of the building and, necessarily, the income therefrom; (4) the Court of Appeals erred not only in upholding the trial court’s determination of the indemnity, but also in ordering Pecson to account for the rentals of the apartment building from June 23, 1993 to September 23, 1993.
On the basis of this Court’s decision in G.R. No. 115814, Pecson filed a Motion to Restore Possession and a Motion to Render Accounting, praying respectively for restoration of his possession over the subject 256-square meter commercial lot and for the spouses Nuguid to be directed to render an accounting under oath, of the income derived from the subject four-door apartment from November 22, 1993 until possession of the same was restored to him.
In an Order[13] dated
With the submission of the parties’ assessment and the reports of
the subject realty, and the reports of the Quezon City Assessor, as well as the
members of the duly constituted assessment committee, the trial court issued
the following Order[14] dated
On P400,000.00 The Court notes that the plaintiff has
already received P300,000.00.
However, when defendant was ready to pay the balance of P100,000.00,
the plaintiff now insists that there should be a rental to be paid by
defendants. Whether or not this should
be paid by defendants, incident is hereby scheduled for hearing on
Meantime, defendants are directed to pay plaintiff the balance of P100,000.00.
SO ORDERED.[15]
On December 1997, after paying the said P100,000 balance
to Pedro Pecson the spouses Nuguid prayed for the
closure and termination of the case, as well as the cancellation of the notice
of lis pendens on the title of the
property on the ground that Pedro Pecson’s claim for rentals was devoid of
factual and legal bases.[16]
After conducting a hearing, the lower court issued an Order dated
P1,344,000 as reimbursement of the
unrealized income of Pecson for the period beginning P28,000/month
rentals of the four-door apartment, thus:
The Court finds plaintiff’s motion valid and meritorious. The decision of the Supreme Court in the aforesaid case [Pecson vs. Court of Appeals, 244 SCRA 407] which set aside the Order of this Court of November 15, 1993 has in effect upheld plaintiff’s right of possession of the building for as long as he is not fully paid the value thereof. It follows, as declared by the Supreme Court in said decision that the plaintiff is entitled to the income derived therefrom, thus –
. . .
Records show that the plaintiff was dispossessed of the premises on
The only question left is the determination of income of the four units of apartments per month. But as correctly pointed out by plaintiff, the defendants have themselves submitted their affidavits attesting that the income derived from three of the four units of the apartment building is P21,000.00 or P7,000.00 each per month, or P28,000.00 per month for the whole four units. Hence, at P28,000.00 per month, multiplied by 48 months, plaintiff is entitled to be paid by defendants the amount of P1,344,000.00.[17]
The Nuguid spouses filed a motion for reconsideration but this was denied for lack of merit.[18]
The Nuguid couple then appealed the trial court’s ruling to the Court of Appeals, their action docketed as CA-G.R. CV No. 64295.
In the Court of Appeals, the order appealed from in CA-G.R. CV
No. 64295, was modified. The CA reduced
the rentals from P1,344,000 to P280,000 in favor of the appellee.[19]
The said amount represents accrued rentals from the determination of the
current market value on
Hence, petitioners state the sole assignment of error now before us as follows:
THE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE TO PAY RENT OVER AND ABOVE THE CURRENT MARKET VALUE OF THE IMPROVEMENT WHEN SUCH WAS NOT PROVIDED FOR IN THE DISPOSITIVE PORTION OF THE SUPREME COURT’S RULING IN G.R. No. 115814.
Petitioners call our attention to the fact that after reaching an
agreed price of P400,000 for the improvements, they only made a partial
payment of P300,000. Thus, they
contend that their failure to pay the full price for the improvements will, at
most, entitle respondent to be restored to possession, but not to collect any
rentals. Petitioners insist that this is
the proper interpretation of the dispositive portion of the decision in G.R.
No. 115814, which states in part that “[t]he
value so determined shall be forthwith paid by the private respondents [Spouses
Juan and Erlinda Nuguid] to the petitioner [Pedro Pecson] otherwise the petitioner shall be restored to the possession of the
apartment building until payment of the required indemnity.”[21]
Now herein respondent, Pecson,
disagrees with herein petitioners’ contention.
He argues that petitioners are wrong in claiming that inasmuch as his
claim for rentals was not determined in the dispositive portion of the decision
in G.R. No. 115814, it could not be the subject of execution. He points out that in moving for an
accounting, all he asked was that the value of the fruits of the property
during the period he was dispossessed be accounted for, since this Court
explicitly recognized in G.R. No. 115814, he was entitled to the property. He points out that this Court ruled that
“[t]he petitioner [Pecson] not having been so paid, he was entitled to retain
ownership of the building and, necessarily, the income therefrom.”[22]
In other words, says respondent, accounting was necessary. For accordingly, he was entitled to rental
income from the property. This should be
given effect. The Court could have very
well specifically included rent (as fruit or income of the property), but could
not have done so at the time the Court pronounced judgment because its value
had yet to be determined, according to him.
Additionally, he faults the appellate court for modifying the order of
the RTC, thus defeating his right as a builder in good faith entitled to rental
from the period of his dispossession to full payment of the price of his
improvements, which spans from
It is not disputed that the construction of the four-door
two-storey apartment, subject of this dispute, was undertaken at the time when
Pecson was still the owner of the lot.
When the Nuguids became the uncontested owner of the lot on
Under Article 448, the landowner is given the option, either to
appropriate the improvement as his own upon payment of the proper amount of
indemnity or to 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.
While the law aims to concentrate in one person the ownership of the land and the improvements thereon in view of the impracticability of creating a state of forced co-ownership,[23] it guards against unjust enrichment insofar as the good-faith builder’s improvements are concerned. The right of retention is considered as one of the measures devised by the law for the protection of builders in good faith. Its object is to guarantee full and prompt reimbursement as it permits the actual possessor to remain in possession while he has not been reimbursed (by the person who defeated him in the case for possession of the property) for those necessary expenses and useful improvements made by him on the thing possessed.[24] Accordingly, a builder in good faith cannot be compelled to pay rentals during the period of retention[25] nor be disturbed in his possession by ordering him to vacate. In addition, as in this case, the owner of the land is prohibited from offsetting or compensating the necessary and useful expenses with the fruits received by the builder-possessor in good faith. Otherwise, the security provided by law would be impaired. This is so because the right to the expenses and the right to the fruits both pertain to the possessor, making compensation juridically impossible; and one cannot be used to reduce the other.[26]
As we earlier held, since petitioners opted to appropriate the improvement for themselves as early as June 1993, when they applied for a writ of execution despite knowledge that the auction sale did not include the apartment building, they could not benefit from the lot’s improvement, until they reimbursed the improver in full, based on the current market value of the property.
Despite the Court’s recognition of Pecson’s right of ownership over the apartment building, the petitioners still insisted on dispossessing Pecson by filing for a Writ of Possession to cover both the lot and the building. Clearly, this resulted in a violation of respondent’s right of retention. Worse, petitioners took advantage of the situation to benefit from the highly valued, income-yielding, four-unit apartment building by collecting rentals thereon, before they paid for the cost of the apartment building. It was only four years later that they finally paid its full value to the respondent.
Petitioners’ interpretation of our holding in G.R. No. 115814 has
neither factual nor legal basis. The
decision of
The text of the decision in G.R. No. 115814 expressly exempted Pecson from liability to pay rentals, for we found that the Court of Appeals erred not only in upholding the trial court’s determination of the indemnity, but also in ordering him to account for the rentals of the apartment building from June 23, 1993 to September 23, 1993, the period from entry of judgment until Pecson’s dispossession. As pointed out by Pecson, the dispositive portion of our decision in G.R. No. 115814 need not specifically include the income derived from the improvement in order to entitle him, as a builder in good faith, to such income. The right of retention, which entitles the builder in good faith to the possession as well as the income derived therefrom, is already provided for under Article 546 of the Civil Code.
Given the circumstances of the instant case where the builder in
good faith has been clearly denied his right of retention for almost half a
decade, we find that the increased award of rentals by the
We need not belabor now the appellate court’s recognition of herein respondent’s entitlement to rentals from the date of the determination of the current market value until its full payment. Respondent is clearly entitled to payment by virtue of his right of retention over the said improvement.
WHEREFORE, the instant
petition is DENIED for lack of merit.
The Decision dated P1,344,000, computed on the basis of Twenty-eight
Thousand (P28,000.00) pesos monthly, for a period of 48 months, is
hereby REI
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.
[1] Rollo, pp. 6-17. Penned by Associate Justice Fermin A. Martin, Jr., with Associate Justices Portia Aliño-Hormachuelos, and Mercedes Gozo-Dadole concurring.
[2]
[3] Records, Vol. 1, pp. 501-510.
[4] Ibid.
[5] 222 SCRA 580-586.
[6] Records, Vol. 2, pp. 578-580.
[7] 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.
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.
[8] Records, Vol. 2, p. 580.
[9]
[10] Art. 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.
[11] Records, Vol. 2, p. 744.
[12] Pecson v. Court of Appeals, G.R. No. 115814,
[13] Records, Vol. 2, pp. 706-707.
[14]
[15] Ibid.
[16]
[17] Rollo, pp. 74-75; CA Rollo, pp. 25-26; Records, Vol. 2, pp. 836-837.
[18] Records, Vol. 2, p. 861.
[19] Rollo, p. 44.
[20] Records, Vol. 2, p. 805.
[21] Rollo, p. 37.
[22] Supra, note 12 at 416.
[23] 2 Edgardo L. Pa
[24] Ortiz v. Kayanan, No. L-32974, 30
July 1979, 92 SCRA 146, 159.
[25]
[26]
2 Arturo M. Tolentino, C
[27]