G.R. No. L-57288. April 30, 1984.
LEONILA SARMINETO, petitioner, vs. HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh Judicial District, Branch XXVIII, Pasay City, and SPOUSES ERNESTO VALENTINO and REBECCA LORENZO-VALENTINO, respondents.

FACTS

Private respondents, spouses Ernesto and Rebecca Valentino, constructed a residential house on a parcel of land in Parañaque in 1967, believing in good faith that the lot was owned by Rebecca’s mother, who had permitted the construction. It was later discovered that the titled owners were Mr. and Mrs. Jose C. Santo, Jr., who sold the land to petitioner Leonila Sarmiento in September 1974. In January 1975, Sarmiento demanded that the Valentinos vacate the property and subsequently filed an ejectment suit.
During the Municipal Court proceedings, Sarmiento presented the deed of sale showing she purchased the land for P15,000.00. Ernesto Valentino testified that the current value of their house was between P30,000.00 to P40,000.00, which Sarmiento did not contest. The Municipal Court found the Valentinos to be builders in good faith, fixed the house value at P20,000.00, and ordered Sarmiento to pay this amount to the Valentinos as a condition for their ejectment.

ISSUE

Whether the Court of First Instance (CFI) of Pasay City acted with grave abuse of discretion in modifying the Municipal Court’s judgment by applying Article 448 of the Civil Code and ordering Sarmiento to choose between indemnifying the Valentinos for the house or selling the land to them.

RULING

The Supreme Court upheld the CFI’s decision, finding no grave abuse of discretion. The Court affirmed the finding that the Valentinos were builders in good faith, as they constructed the house under the honest belief, induced by the wife’s mother, that they would eventually acquire the lot. Article 448 of the Civil Code governs such situations, granting the landowner the option to appropriate the improvement after indemnifying the builder, or to oblige the builder to purchase the land. The builder cannot be compelled to buy the land if its value is considerably more than the improvement.
The CFI correctly applied this provision. It valued the house at P40,000.00, based on the uncontested testimony of Ernesto Valentino, and the land at P25,000.00, which was not contested by the Valentinos. Given these valuations, the land value (P25,000.00) was not considerably more than the house value (P40,000.00), thus making the option to sell the land to the builder legally permissible. The CFI ordered Sarmiento to choose between paying P40,000.00 for the house or selling the land for P25,000.00. Her failure to exercise either option within the granted period justified the CFI’s subsequent order allowing the Valentinos to consign the purchase price. The Supreme Court emphasized that a landowner cannot refuse both options under Article 448 and simply eject the builder. The CFI’s factual valuations and legal application were supported by evidence and consistent with law and jurisprudence. The petition was dismissed.