CALAGAN V. CFI OF DAVAO- Useful Expense

The HOUSE which private respondent constructed is a useful expense, defined as that which increases the value or augments the income of the property, as contrasted to a necessary expense which is incurred for the preservation of the thing.

FACTS:

Calagan and his wife Takura was granted a homestead application over a parcel of land. Takura died and was survived by her husband and their children. On August 8, 1961, Mangulon and his daughter, Paula sold a portion of 9,230 square meters of their homestead to private respondent, Petra Sandoval in consideration of the sum of P2,340.00. Petitioners title to the land was borrowed by private respondent so that the latter could have the sale annotated thereon.

She was given the title so that the sale could be annotated. Thereafter, Calagan offered to repurchase the land but Sandoval didn't agreed. She continuously refused and was only willing to comply if Calagan would reimburse the value of the house constructed on the parcel of land. This prompted petitioners to file an action for reconveyance, on which the trial court ruled in their favor, given that they pay for the value of the house built on good faith by Sandoval.

CFI ordered the Heirs of Calagan to pay Sandoval the the value of the house constructed in “good faith”. The heirs argue that only necessary expenses are subject to reimbursement. House constructed on a coconut land is not necessary. It is only useful.

ISSUE:

Whether or not the heirs must reimburse Sandoval for the house

HELD:

Under Article 1616, the vendor a retro cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, the expenses of the contract and other legitimate payments, and the necessary and useful expenses made on the thing sold.

[There can be no question but that the house which private respondent constructed is a useful expense, defined as that which increases the value or augments the income of the property, as contrasted to a necessary expense which is incurred for the preservation of the thing.]

However, Article 1616 should be read with Article 456 and 457.

Applying Article 547, the homesteader desiring to repurchase should be given the option to require the vendee a retro to remove the useful improvements on the land subject of the sale a retro, which option is not granted the vendor a retro under Article 1616. Under the latter Article, the vendor a retro must pay for the useful improvements introduced by the vendee a retro, otherwise, the latter may retain possession of the property until reimbursement is made.

To allow a vendee a retro of a homestead, however, the right of retention until payment of useful expenses is made by the redemptioner would be to render nugatory the right of repurchase granted by law to a homesteader because all a vendee a retro can do to prevent repurchase is to build something on the homestead beyond the capacity to pay of the homesteader who seeks to repurchase. Such a situation should not be allowed to pass.

It is obvious that the heirs of Calagan are not exercising the option to refund the amount of the expenses incurred by private respondent for the house that the latter built as provided for in Article 546.

[Note that Sandoval, as the vendee a retro, may remove her house since this can be done without damage to the principal thing - land]

In other words, since the heirs didn't exercise the option to refund the amount of the expenses incurred by Sandoval for the house he built, and not to pay the increase in value acquired by the land by reason of such expenses… Sandoval may remove her house since this can be done without damage. The heirs should not, as opined by the trial Court, be made to refund the value of that house to Sandoval.