FLOREZA v EVANGELISTA [96 SCRA 130 (February 21, 1980)]

Nature: Petition for review on certiorari of the decision of the CA.

Ponente: J. Melencio-Herrera
Facts:
• The Evangelistas were the owner of a residential lot in Rizal with an area of
204.08 sq. m. assessed at P410.
• May 1945: Evangelistas borrowed P100 from Floreza.
• November 1945: Floreza occupied the residential lot and built a house of light
material (barong-barong) with the consent of the Evangelistas.
• Additional Loans made by the Evangelistas: Sept. 1946 – P100, August 1947 –
P200, January 1949 – P200, April 1949 – P140. TOTAL = P740 (including first
loan)
• January 1949: Floreza demolished the house of light material and constructed
one of strong material assessed at P1400. Floreza has not been paying any
rentals since the beginning of their transactions.
• August 1949: Evangelistas sold, with a right to repurchase within 6 years,
their land to Floreza for P1000.
• Seven months before the expiry of the repurchase period, the Evangelistas
were able to pay in full.
• Floreza refused to vacate the lot unless he was first reimbursed for the value
of the house he built.
• Evangelistas filed a complaint. CFI ruled based on Art, 448 of the Civil Code
saying that Evangelistas have the choice between purchasing the house or
selling the land to Floreza.
• CA ruled that Art. 448 was inapplicable and that Floreza was not entiled to
the reimbursement of his house and could remove the same at his own
expense.

Issue:
1. WON Floreza was entitled to reimbursement of the cost of his house. NO.
2. WON he (his heirs who replaced him) should pay rental of the land. YES.

Held/Ratio:
1. Issue of reimbursement is not moot because if Floreza has no right of
retention, then he must pay damages in the form of rentals.

Agree with CA that Art. 448 is inapplicable because it applies only when the
builder is in good faith (he believed he had a right to build).Art. 453 is also
not applicable because it requires both of the parties to be in bad faith.
Neither is Art. 1616 applicable because Floreza is not a vendee a retro. The
house was already constructed in 1945 (light materials) even before the
pacto de retro was entered into in 1949.

Floreza cannot be classified as a builder in good faith nor a vendee a retro,

who made useful improvements during the pacto de retro, he has no right to
reimbursement of the value of the house, much less to the retention of the
premises until he is paid.
 His rights are more akin to a usufructury under Art. 579, who may make on
the property useful improvements but with no right to be indemnified thereof,
He may, however, remove such improvements should it be possible to do so
without damage to the property.

2. From the time the redemption price was paid in January 3, 1955, Floreza’s
right to use the residential lot without rent ceased. He should be held liable
for damages in the form of rentals for the continued use of the lot for P10
monthly from January 3, 1955 until the house was removed and the property
vacated by Floreza or his heirs.

Judgment affirmed with modification.