Sulo sa Nayon v Nayong Piipino Piipino Foundation G.R. No. 170923 | 2009 PUNO, C.J. Art. 448. The owner of the ln! on wh"#h n$th"n% h& 'een '("lt, &own or )lnte! "n %oo! f"th, &hll h*e the r"%ht to ))ro)r"te & h"& own the wor+&, &ow"n% or )lnt"n%, fter )$ent of the "n!en"t$ )ro*"!e! for "n Art"#le& -4 n! -48, or to o'l"%e the one who '("lt or )lnte! to )$ the )r"#e of the ln!, n! the one who &owe!, the )ro)er rent. /owe*er, the '("l!er or )lnter #nnot 'e o'l"%e! to '($ the ln! "f "t& *l(e "& #on&"!er'l$ ore thn tht of the '("l!"n% or tree&. n &(#h #&e, he &hll )$ re&on'le rent, "f the owner of the ln! !oe& not #hoo&e to ))ro)r"te the '("l!"n% or tree& fter )ro)er "n!en"t$. ACT On June 1975, the respondent leased a portion of the Nayong Pilipino Complex to Sulo sa Nayon In! for the onstrution and operation of a hotel "uilding #Philippine $illage $illage %otel In& P$%I'! (he lease )as for an initial period of *1 years, rene)a"le for a period of *5 years! On +arh 7, 1995, petitioners rene)ed the ontrat until **1!
Parties exeuted a $oluntary -ddendum to the .ease -greement )hih "ound P$%I to pay the monthly rental of P* per s/m su"0et to an interest rate of * at the end of e2ery 3 year period! -t the time of the rene)al of the lease onstrat, the monthly rental amounted to P7*5,74 On Jan *1, *1, petiti petition oners ers defaul defaulted ted in the paymen paymentt of the the monthl monthly y rental rental!! espon esponden dentt repeat repeatedl edly y demanded petitioners to pay arrears and 2aate the premises! Sept *1, respondent filed a omplaint for unla)ful detainer in the +e(C of Pasay! (he arrears of the petitioners or omputed in the amount of P*6 +illion as of July 31, *1! +e(C ruled in fa2or of the respondent ordering the petitioners to 2aate the premises and to pay rentals, rentals, damages, and attys attys fees! Petiti Petitione oners rs appeal appealed ed to the (C )hih )hih still still ruled ruled in fa2or fa2or of respon responden dents, ts, ho)e2e ho)e2err )ith )ith a fe) modifiations on the +e(C deision8 1!
Consideri Considering ng that the petitioner petitionerss impro2ements impro2ements on that land land are permanent permanent and of su"stantial su"stantial 2alue, 2alue, these immensely engender the appliation of -rt!4 of the CC *! (he only remaini remaining ng and most ruial ruial issue issue to "e resol2ed resol2ed is )hether or not the appella appellants nts #petitio #petitioners' ners' ha2e ha2e ated in good faith in order for -!4 in relation to 56 may apply! 3! -rt! 4 in in relation relation to -rt!5 -rt!56 6 : plaintiff plaintiff appellee appellee has has the sole option option or hoie, hoie, either either to appropriat appropriatee the "uilding, upon payment of proper indemnity or ompel the appellants to purhase the land )hereon the "uilding )as ereted! ;ntil suh time that plaintiff
espondents appealed to C- )hih held that the (C erroneously applied the rules on aession #-rt! 4 and 56' )hen it held that the petitioners )ere "uilders in good faith and, thus, ha2e the right to indemnity! (he introdution of 2alua"le impro2ements on te leased premises does not strip the petitioner of its right to a2ail of reourses under the la) and the lease ontrat itself in ase of "reah thereof! Neither does it depri2e the petitioner of its right under -rt! 1674 to exerise its option to a/uire the impro2emnts or to let the respondents remo2e the same!
U /56 =hether the rules on aession, as found in -rtiles 4 and 56 of the Ci2il Code, apply to the instant ase! No.
-rt! 4! (he o)ner of the land on )hih anything has "een "uilt, so)n or planted in good faith, shall ha2e the right to appropriate as his o)n the )or>s, so)ing or planting, after payment of the indemnity pro2ided for in -rtiles 56 and 54, or to o"lige the one )ho "uilt or planted to pay the prie of the land, and the one )ho so)ed, the proper rent! %o)e2er, the "uilder or planter annot "e o"liged to "uy the land if its 2alue is onsidera"ly more than that of the "uilding or trees! In suh ase, he shall pay reasona"le rent, if the o)ner of the land does not hoose to appropriate the "uilding or trees after proper indemnity! (he parties shall agree upon the terms of the lease and in ase of disagreement, the ourt shall fix the terms thereof! -rt! 56! Neessary expenses shall "e refunded to e2ery possessor? "ut only the possessor in good faith may retain the thing until he has "een reim"ursed therefor!
;seful expenses shall "e refunded only to the possessor in good faith )ith the same right of retention, the person )ho has defeated him in the possession ha2ing the option of refunding the amount of the expenses or of paying the inrease in 2alue )hih the thing may ha2e a/uired "y reason thereof! (he SC upholds the ruling of the C-! -rtile 4 is manifestly intended to apply only to a ase )here one "uilds, plants, or so)s on land in )hih he "elie2es himself to ha2e a laim of title, and not to lands )here the only interest of the "uilder, planter or so)er is that of a holder, suh as a tenant! In the ase at "ar, petitioners ha2e no ad2erse laim or title to the land! In fat, as lessees, they reogni@e that the respondent is the o)ner of the land! =hat petitioners insist is that "eause of the impro2ements, )hih are of su"stantial 2alue, that they ha2e introdued on the leased premises )ith the permission of respondent, they should "e onsidered "uilders in good faith )ho ha2e the right to retain possession of the property until reim"ursement "y respondent! (he ourt affirms the ruling of the C- that introdution of 2alua"le impro2ements on the leased premises does not gi2e the petitioners the right of retention and reim"ursement )hih rightfully "elongs to a "uilder in good faith! Other)ise, suh a situation )ould allo) the lessee to easily Aimpro2eA the lessor out of its property! =e reiterate the dotrine that a lessee is neither a "uilder in good faith nor in "ad faith that )ould all for the appliation of -rtiles 4 and 56 of the Ci2il Code! %is rights are go2erned "y -rtile 1674 of the Ci2il Code, )hih reads8 -rt! 1674! If the lessee ma>es, in good faith, useful impro2ements )hih are suita"le to the use for )hih the lease is intended, )ithout altering the form or su"stane of the property leased, the lessor upon the termination of the lease shall pay the lessee one
=ith regard to ornamental expenses, the lessee shall not "e entitled to any reim"ursement, "ut he may remo2e the ornamental o"0ets, pro2ided no damage is aused to the prinipal thing, and the lessor does not hoose to retain them "y paying their 2alue at the time the lease is extinguished! ;nder -rtile 1674, the lessor has the option of paying one
