G.R. No. L-29748. August 29, 1969
PHILIPPINE NATIONAL BANK, PLAINTIFF-APPELLEE, VS. FERNANDO PINEDA, DEFENDANT-APPELLANT.
BARREDO, J.:
This is an appeal from
the decision of the Court of First
Instance of Manila in its Civil Case No. 69929,[1] ordering Fernando Pineda (lessee of a
certain residential lot in Paco, Manila) to vacate the premises in question and
to pay to the lessor, appellee Philippine National Bank (as trustee of the
property referred to) back rentals, attorney’s fees and costs and the lone
question of law posed for resolution concerns the right of a lessee to
reimbursement by the lessor of one half (1/2) of the value of useful improvements made, after the termination of a lease under
Article 1678 of the Civil Code.
As found by the trial
court, the facts are as follows:
“Elisa Quiogue Palma owns parcels of land in Paco, Manila,
a portion of which known as 1163-D Meding Street,
has been leased by the defendant since 1945 at a monthly rentals of
P18.00. The contract of lease is verbal,
on a month-to-month basis and of indefinite duration. The defendant has introduced useful
improvements in the premises in good faith and with the knowledge and consent
of the owner’s predecessor in interest, Remedios Quiogue Silverio. The improvements consists of a concrete
residential house and the filling of
the lot with gravel, sand and flastillas’, all with an actual value of P18,
000.00.
“The plaintiff is the trustee of Elisa Quiogue Palma’s properties. Because the owner wants to use the property
for the construction of her own building, the plaintiff, on July 1, 1966, sent
to the defendant a notice terminating the lease as of August 31, 1966, asking
the defendant to vacate the premises and to remove all the improvements therein
on or before August 31, 1966. Despite
repeated demands, however, the defendant refused to vacate the premises. Hence, the action for ejectment.
“The parties agree that these are the only issues: (1) Whether or not the defendant is entitled
to a reimbursement by the plaintiff of one-half (1/2) of the useful
improvements introduced by him; and (2) Whether or not the Court has the power
to fix a longer period for the stay of the defendant in the premises,
considering that the defendant has occupied the premises since 1945″.
Appellant’s sole
assignment of error is to the effect that “the trial court erred in
holding that defendant-appellant is not entitled to reimbursement of one-half
of the value of the improvements” made by him in the premises in
question. And the gist of his argument
is stated thus:
“x x x We take the position that since all the above-named
improvements were made in good faith, what with the written consent of the
lessor, the reasonable interpretation of Art. 1678 would be that the improvements
being permanent in nature the lessee should be reimbursed as a builder in good
faith. But if the improvements were made
without the knowledge of the lessor, then the lessee takes the risk of losing
them if they are permanent improvements.
It is in the latter case where the option of appropriating the
improvements and paying one-half of their value, or requiring the lessee to
remove them is given to the lessor. This
is more in consonance with justice and equity as intended by the Congress. As this Honorable Court so held: that in constructing a doubt or ambiguity in
a contract of lease, the doubt is always resolved in favor of the lessee and
against the landlord (Cosmopolitan Ballet
& Dancing School
vs. Teodoro, G.R. Nos. L-7838-39, Nov.
10, 1942, 2 0. G. (1943) 56.)
“Defendant-appellant’s residential house valued at P18, 000.00
is an improvement within the legal contemplation of Art. 1678. It was held so by this Honorable Court in
Aringo v. Asenas, 14 Phil. 263, because it adds value to the property. In Robles et al. vs. Lizarraga Hermanos, 42
Phil. 584, even a garage had been held to add value to a property to bring it
within the legal meaning of ‘improvement’ as contemplated by Art. 1678 of the
New Civil Code”. (Pp. 8-9,
Appellant’s brief)
Appellant’s contention is plainly untenable. The legal provision involved provides:
“Art. 1678. 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 to the
lessee one-half of the value of the improvements at that 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.
“x x x x”
(Underscoring supplied)
The language of this provision is so clear, it needs no further
elucidation. Indeed, the flaw in
appellant’s posture is two-fold. He
attempts to read into the law what is not there while he ignores precisely the portions
thereof applicable to his case. For
instance, on page 5 of his brief, he quotes Article 1678 as follows:
“‘Art. 1678 – If the lessee makes in good faith useful
improvements which are suitable to the use for which the lease is intended, the
lessor upon the termination of the lease shall pay the lessee one-half of the
value of the improvements at that time x
x x'”.
At
once it can be seen that he has omitted two very pertinent parts of the
provision. First, the provision, as can be seen earlier above, refers to
improvements made by the lessee “without altering the form or substance of
the property leased”. Second, the
latter part of the said article provides very explicitly that “should the
lessor refuse to reimburse said amount, the lessee may remove the improvements,
even though the principal thing may suffer damage thereby”. And further, that the lessee “shall not,
however, cause any more impairment upon the property leased than is
necessary”. As these parts are
precisely the ones that concern the case at bar, in a manner adverse to appellant’s position, their
omission cannot be considered less than malicious and does not speak well of
appellant’s faith in his cause. Indeed,
it must be emphasized that this Court does not look with favor at this kind of
argumentation.
This Court has already held in Lapeña and Pineda v. Morfe et al.,
101 Phil. 997, that “article 1678 of the new Civil Code gives the lessor
and not the lessee the option provided therein”. Besides, the qualification which appellant
wants to introduce regarding the permanent character of the improvements has no basis in the provision. Nor is the supposed good faith of appellant
of any moment. It is well settled that
the concept of possessor in good faith for purposes of entitling a possessor
to reimbursement for improvements made by him on the property possessed does
not apply to a lessee’s right regarding such improvements upon the termination
of the contract of lease. In Lopez Inc.
vs. Phil. & Eastern Trading Co., Inc.,[2] this Court held:
“Before we conclude, we believe it not only advisable but
necessary to clear and resolve the misconception about the scope and extent of
the rule or law on a possessor in good
faith, under which the defendant and in a way even the trial court had
labored. As we have already said, they
both thought that a lessee may be considered a possessor in good faith and that
improvements introduced by him on the leased premises are to be regarded as made in good faith. This rule or principle contained in the civil
law refers only to party who occupies or possess property in the belief that he
is the owner thereof and said good faith ends only when he discovers a flaw in
his title so as to reasonably advise or inform him that after all he may not be
the legal owner of said property. This
principle of possessor in good faith naturally cannot apply to a lessee see he knows that he is not the owner of the leased property. Neither
can he deny the ownership or title of his lessor. Knowing that his occupation of the
premises continues, only during the life of the lease contract and that he must
vacate the property upon termination of the lease or upon the violation by him
of any of its terms, he introduces improvements on said property at his own
risk in the sense that he cannot recover their value from the lessor, much such reimbursement. His right to improvements introduced by him
is expressly governed by Articles 1573 and 487 of the old Civil Code which
reads as follows:
“‘Article 1573. A
lessee shall have, with respect to useful and voluntary improvements, the same
rights which are granted to usufructuaries'”.
“‘Article 487. The
usufruactuary may make on the property held in usufruct any improvements,
useful, or recreative, which he may deem proper, provided he does not change
its form or substance; but he shall have no right to be indemnified
therefor. He may, however, remove such
improvements should it be possible to do so without injury to the property’.
“In the case of Fojas vs. Velasco, 51
Phil., 520, this Court said:
“‘The case is governed not by articles 361 and 453 of the
Civil Code as contended by appellants but by articles 1573 and 487 of the same
Code, as indicated by appellees. In this
connection it need only be recalled that
the lessees have been holding the land under a rental contract. Accordingly, upon termination of the lease,
the right of the lessees with respect to improvements placed by them on the
leased property is determined by article 487, which entitles them to remove
the improvements, provided they leave the property in substantially the same
condition as when they entered upon it.
(Alburo vs. Villanueva, 7 Phil., 277; Cortes vs. Ramos, 46 Phil., 184
Rivera vs. Trinidad, 48 Phil., 396.)’
“Then in the case of Rivera vs. Trinidad,
48 Phil., 396 this Court ruled:
“‘While a tenant was in possession of property under a verbal
agreement for occupation for an indefinite time upon payment of a fixed
compensation per month the property was sold and the purchaser filed an action
for unlawful detainer. Held: That the defendant must be considered as
tenant from month-to-month and upon a lease terminable without the necessity of
special notice upon the expiration of any month and that the plaintiff was
entitled to recover possession.
“‘The rights of the defendant with respect to the
improvements made on the property by him must be governed by Article 487 in
relation with Article 1573 of the Civil Code.
Under Article 487 the defendant is entitled to remove improvements made
by himself so far as it is possible to do so without injury to the property; and this means that he may
remove the improvements provided he leaves the property in substantially the
same condition as when he entered upon it.
Articles 361 and 453 of the Civil Code, which define the rights
between the owner of land and builders of improvements thereon in good faith,
are not applicable as between landlord and tenant, since the Code supplies
specific provisions designed to cover their rights. Besides the tenant cannot be said to be a
builder in good faith as he has no pretension to be owner. (Manresa Com. ed., Vol. 4, p. 445)’.
“In view of the foregoing, the decision appealed from is
hereby modified to the effect that defendant-appellant is not entitled to reimbursement
for the value of the improvements introduced by it; that it is ordered to pay
to plaintiff-appellant the amount of P2, 200, with interest at the legal rate
from the date of the filing of the complaint; and to pay the
amount of P300 per month until it actually vacates
the premises. Defendant-appellant is however given the
right to remove the improvements introduced by it without injury to the
property, under the provisions of Article 487 of the old Civil Code. x x x‘”.
(Underscoring Ours)
It is not here overlooked
that the above cases were decided under the old Civil Code provisions, and that
Article 1678 here invoked is a new provision of the present Civil Code; but it
will be noted that the only difference in respect of the right of removal of
the improvements by the lessee is that while under the old law, he was under
obligation to remove his improvements without doing damage or injury to the
property leased, under the provisions of the new Civil Code, the lessee may so
remove the improvements he has introduced even though the principal thing may
suffer damage thereby. It is worthy of
note, however, that both under the old and the new provisions of the Civil Code
the lessee has no right to be indemnified of the value of his improvements,
except that, under Article 1678, the lessor should pay one-half of their value,
if he opts to appropriate them.
It
is the judgment of this Court that appellant’s appeal is absolutely
without merit and purely dilatory. The
judgment of the trial court is affirmed, with triple costs against appellant.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro,
Fernando, Capistrano and Teehankee, JJ.,
concur.
Reyes, J., is on official leave
of absence.
[1]
Civil Case No. 69929 of the CFI of Manila is an appeal by herein appellee from
the judgment of the City Court of Manila ordering his ejectment from the
premises in question, etc.
[2]
98 Phil. 348, 353-355. See also Racasa vs. Susana Realty,
Inc., G.R. No. L-20330, December 22,
1966, 18 SCRA 1172, 1177-1178.