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G.R. No. 151815 February 23, 2005 Spouses Juan Nuguid and Erlinda T. Nuguid, Petitioners, Hon. Court of Appeals and Pedro P. Pecson, Respondents

The Supreme Court ruled that the petitioners were liable to pay rent to the respondent Pedro Pecson. Pecson owned a lot with an apartment building that was sold at a public auction due to unpaid taxes. The courts upheld Pecson's ownership of the apartment building even though the lot was auctioned. However, the petitioners took possession of both the lot and building and collected rent for four years before reimbursing Pecson for the building's construction cost, in violation of Pecson's right of retention as the building's owner. The petitioners benefited financially from the rental income during those four years when they had not yet paid Pecson, making them liable for the rent collected.

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357 views1 page

G.R. No. 151815 February 23, 2005 Spouses Juan Nuguid and Erlinda T. Nuguid, Petitioners, Hon. Court of Appeals and Pedro P. Pecson, Respondents

The Supreme Court ruled that the petitioners were liable to pay rent to the respondent Pedro Pecson. Pecson owned a lot with an apartment building that was sold at a public auction due to unpaid taxes. The courts upheld Pecson's ownership of the apartment building even though the lot was auctioned. However, the petitioners took possession of both the lot and building and collected rent for four years before reimbursing Pecson for the building's construction cost, in violation of Pecson's right of retention as the building's owner. The petitioners benefited financially from the rental income during those four years when they had not yet paid Pecson, making them liable for the rent collected.

Uploaded by

Gieann Bustamante
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© © All Rights Reserved
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FIRST DIVISION

G.R. No. 151815 February 23, 2005

SPOUSES JUAN NUGUID AND ERLINDA T. NUGUID, petitioners,


vs.
HON. COURT OF APPEALS AND PEDRO P. PECSON, respondents.

Facts:

Pedro P. Pecson owned a commercial lot located at 27 Kamias Road, Quezon City, on which he built a four-door two-
storey apartment building. For failure to pay realty taxes, the lot was sold at public auction to the spouses Juan and Erlinda
Nuguid.

Pecson challenged the validity of the auction sale before the RTC of Quezon. In its Decision, the RTC upheld the spouses’
title but declared that the four-door two-storey apartment building was not included in the auction sale. The Decision was
affirmed by the CA.

On June 23, 1993, by virtue of the Entry of Judgment of the aforesaid decision in G.R. No. 105360, the Nuguids became
the uncontested owners of the 256-square meter commercial lot.

In its Order, the trial court, relying upon Art. 546 of the Civil Code, ruled that the Spouses Nuguid were to reimburse
Pecson for his construction cost of ₱53,000, following which, the spouses Nuguid were entitled to immediate issuance of
a writ of possession over the lot and improvements.

Records show that the plaintiff was dispossessed of the premises (which are occupied by tenants paying 7,000 amount per
month or P28,000.00 per month for the whole four units or 1, 344, 000 for 48 months) on November 22, 1993 and that he
was fully paid the value of his building (₱53,000) in December 1997. Therefore, he is entitled to the income thereof
beginning on November 22, 1993, the time he was dispossessed, up to the time of said full payment, in December 1997,
or a total of 48 months.

Issue:

Whether or not the petitioners are liable to pay rent.

Held:

Yes. In G.R. No. 115814, the Court declared the rights and obligations of the litigants in accordance with Articles 448 and
546 of the Civil Code. These provisions of the Code are directly applicable to the instant case.

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.

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.

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