Civil Law Review: Property-Atty.

Marian

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1. Sarmiento (LO) v. Agana, Valentino (BinGF)

Facts: Ernesto and Rebecca (herein private respondents) constructed a residential house on the
land of petitioner Sarmiento when Ernesto thought that Rebeccas mother owned the lot on which
it was built. It turns out that the subject land was titled in the names of Santo Jr. who later sold it
to Sarmiento. Sarmiento filed for ejectment. The price of the land was P15,000.00 while the
residential house was ranging from P30-40K as testified by Ernesto.
MTC found Ernesto to be builders in good faith and ordered them to vacate the land after
Sarmiento has paid them P20K
RTC modified the decision by requiring Sarmiento to
Issue: WON the RTC ruling was correct
Held: Ernesto is a builder IN GOOD FAITH. Art. 448 applies. The landowner shall have the right to:
1. Appropriate for his own the works, sowing or planting after payment of the indemnity
provided in article 546 and 548 or
2. To oblige the one who built of planted to pay the price of the land, and the one who sowed
the proper rent.
3. However, the builder or planted cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such a case, he shall pay
reasonable rent, if the owner does not choose to appropriate the building or trees after
indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Based on the valuations of P25,000 for the land (as determined by the RTC which was not
contested by Ernesto) and P40,000 for the residential house cannot be viewed as not supported
by evidence. RTC was correct in giving petitioner the option to chose between paying for the
house or selling the lot was.

2. Del Campo v. Abesia

Facts: Plaintiffs and defendants are co-owners pro indiviso of the subject lot of 1/3 each. Action
for partition was filed by plaintiffs. The house of the defendant occupied the portion with an area
of 5 square meters of plaintiffs.
The trial court held that plaintiffs cannot be obliged to pay for the value of the portion of the
defendants house and the defendants cannot also be obliged to pay for the price of the land
because Art. 448 will not apply in case a co-owner has built, planted or sown on the land owned
in common. Also, the court ruled that the defendants had no other alternative but to remove the
part of the house that has encroached an area of 5 sq.m.
Issue: WON the trial court erred
Held: General rule, Art. 448 cannot be applied to co-owners.
But in this case, the co-ownership was terminated by partition and it appears that the house
overlapped the land of the plaintiffs IN GOOD FAITH. So Art. 448 will apply. Either the plaintiff will
exercise:
1. Right to appropriate the portion upon indemnity to defendants or
2. Oblige the defendants to pay for the 5 sq.m.
But if the lot is higher than the building, the BPS cannot be obliged to pay for the land.
The defendants will now pay rent and in case of disagreement, the court will fix the terms
thereof.

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3. Ignao (LO) v. IAC (BPS)

Facts: Petitioner and private respondents were co-owners of the property. Petitioner filed for
partition. CFI granted the same. Petitioner filed for recover of possession of real property against
private respondents alleging that the area occupied by the two houses built by private
respondents exceeded 133.5 sq.m. previously allotted to them.
When the court conducted and ocular inspection they found the encroachment, but considered
them builders in good faith, stating further that Art. 448 should apply. However, it proclaim that it
would be useless for petitioner to exercise the first option since it would render the entire house
as worthless. It ordered petitioner to sell to the private respondents.
The court of appeals affirmed the ruling of the trial court upon appeal.
Issue: WON trial court and appellate court were correct in disposing the case
Held: Negative. Both courts peremptorily adopted a workable solution in this case when it
ordered what the petitioner should have done. The right to appropriate the works or oblige the
builder to pay the price of the land BELONGS TO THE OWNER OF THE LAND.
Petitioner is now directed within 30 days to exercise his option under Art. 448.

3. Tecnogas PMC (BPS) v. CA and Eduardo Uy (LO)

Facts: Parties are owners of adjacent lots. A portions of the buildings and wall bought by the
petitioner encroached on a part of the land owned by respondent. Plaintiff offered to but that
portion but the offer was refused. Defendant (Uy) dug or caused to be dug a canal along the
plaintiff;s wall, a portion of which collapsed in June, 1980. A criminal complaint for malicious
mischief was filed against the defendant.
RTC ruled in favor of petitioner and ordered the defendant to sell to the plaintiff the portion of the
lan owned by him and occupied.
CA reversed the decision of RTC.
Issue: WON CA erred in holding the petitioner a builder in bad faith
Held: Affirmative. When petitioner purchased the land from Pariz Industries, the buildings and
other structures were already in existence. The civil code presumes good faith if there is no
evidence to the contrary. It is presumed that possession continues to be enjoyed in the same
character in which it was acquired until the contrary is proved.
Possession acquired in good faith does not lose this character except in case and from the
moment facts exist which shoe the possessor is not unaware that he possesses the thing properly
or wrongful.
Encroachment in the present case was caused by slight deviation of the erected wall as fence
which was supposed to run in a straight line in petitioners lot.
Issue: WON Art. 448 can be invoked by petitioner who is not the builder of the offensive
structures byt possesses the same as buyer
Held: Affirmative. There is no sufficient showing that the petitioner was aware of the
encroachment at the time he bought the property. Upon being informed of the encroachment, he
offered to by the area occupied conduct consistent with good faith.

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The landowners exercise of his option under Art. 448 can only take place after the builder shall
have come to know of the intrusion only when both parties have become aware of it.
Private respondents insistence on the removal of the encroaching structures as the
proper remedy, which respondent court sustained in its assailed decisions is legally
flawed. This is not one of the remedies bestowed upon him by law. It would be
available only if and when he chooses to compel the petitioner to buy the land at a
reasonable price but the latter fails to pay such price. This has not taken place.
Petitioner must also pay for the rent for the property occupied by its building from Oct. 1979 up
to the date private respondent serves notice of its option upon petitioner and the trial court, if
such option is for private respondent to appropriate the encroaching structure. In such event, the
petitioner would have the right of retention which negates the obligation to pay the rent. The rent
should however continue of the option chosen as compulsory sale but only up to the actual
transfer of ownership.
The case is remanded to the RTC to determine the fair price of the land and building.

5. Pleasantville Dev. Corp v. CA and Wilson Kee (BPS) et.al.

Facts: Robillo purchased lot 9, respondent Jardinico bought the rights from Robillo. Jardinico
founds out that improvements were introduced on lot 9 by respondent Wilson Kee who bought Lot
8 from the same subdivision from the exclusive real estate agent of the petitioner. But what the
employee of the REA (CTTEI) pointed out to Kee was Lot 9 instead of Lot 8. Jardinico filed an
ejectment case with damages against Kee in the MTC.
MTC ordered Kee to vacate and pay rentals.
RTC found Kee as a builder in bad failth and unlawfully usurping possessory rights of Jardinico.
CA ruled that Kee was a builder in good faith and it was the REA who was negligent in the
delivery and that the amount of rentals was without basis.
Issue: WON Kee was a builder in good faith
Held: Afirmative. At the time the improvements were built, Kee believed that the lot was the one
he bought. He was unaware that the Lot delivered to him was not Lot 8. Petitioner failed to prove
that Kee was not a builder in good faith.
The CTTEI was acting within its authority as sole REA of petitioner when it made delivery but was
negligent. It is this negligence that is the basis of petitioners liability.
The rights of Kee and Jardinico are regulated by Art. 448, 546 and 548 of the NCC as builders and
owners of land both in good faith. But the parties have amicably settled via deed of sale with
regard to Lot 9. There is no more need to remand this case to the lower court to determine actual
value of the improvements and lot.

6. Orquila (BPS) v. CA, Pura Kalaw and Tandang Sora Dev. Cor. (LO)
Facts: Kalaw owned Lot 689 which was adjacent to Lot 707 of Piedad Estates which was
subdivided. Certain portions of the subdivided lots of 707 were sold to third persons, herein
petitioners spouses Orquila and other third persons. Kalaw filed a complaint against Lising
alleging that he was encroaching upon her lot.
Trial court found defendants laible and ordered them to pay for damages as well as removal of
the barbed wires and fences.

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Petitioners filed a petitioner for prohibition alleging that they bought the land in good faith and
for value and are parties in interest. Since they were not impleaded in the civil case, the decision
amounted to deprivation of property without due process of law. CA held that as buyers and
successors-in-interest of Lising, they were privies to the judgment.
Issue: WON petitioners were innocent purchasers for value and builders in good faith
Held: Affirmative. CA overlooked the fact that the purchase of the land took place prior to the
institution of the civil case. The sale to petitioners was made before Kalaw claimed the lot.
Petitioners could reasonably rely on Lisings Certificate of Title which at the time was still free
from any third party claim. Petitioners acquired the subject land in GOOD FAITH and FOR VALUE.
Petitioners are BUILDERS IN GOOD FAITH. A builder in good faith is one who builds with the belief
that the land he is building on is his and is ignorant of any defect or flaw in his title. Petitioner
spouses acquired the land without knowledge of any defect in the title of Lising.
The institution of Civil Case cannot serve as notice of such adverse claim to the petitioners since
they were not impleaded as parties. Failure to implead means that the petitioner cannot be
reached by the decision. Strangers to the case are not bound by any judgment rendered by the
court. A writ of execution can be issued only against a party and not against one who did not
have his day in court.
Petition is granted.

7. Ballatan (LO) v. CA and Go (BPS)

Facts: Parties herein are owners of adjacent lots. On lot 25, respondent Winston Go constructed
his house. Lot 26 was owned by respondent Yao. Ballatan constructed her house on Lot 24 but
noticed a concrete fense and side pathway adjoining the house of Go. Ballatan informed him of
the encroachment but Go claimed was built within the parameters of his fathers lot. Engineer
Quedding found that the lot area of Balltan was less by few meters and that the lot of Yao which
was three lots ways was increased by two meters. He found that Lot 24 lost about 25 sq.m. and
that Lot 25 although encroached on 24s area did not gain or lose any area. Lot 26 lost 3 sq.m.
Ballatan demanded from Go to dismantle the improvements. Failing to agree amicably, Ballatan
instituted a complaint for recovery of possession.
RTC ordered Go to vacate the property and pay Ballatan damages.
Upon appeal, the CA instead of ordering Go to remove the improvements, ordered respondents to
pay the reasonable amount of the portion of the load encroached upon. The appellate court found
that it was the erroneous survey of Quedding that triggered the discrepancies.

Held: Respondents had no knowledge that they encroached petitioners lot. They are deemed
builders in good faith until the time petitioner Ballatan informed them of their encroachment.
Yao huilt his house before any of the parties did. There is no evidence or any allegation that Yao
was aware of the encroachment. Good faith is always presumed and he who alleges bad faith has
the burden of proof.
Petitioner as owner of Lot 24 may exercise the rights under Art. 448. In the event that he chooses
sale, the price must be fixed at the prevailing market value at the time of payment.

8. Nuguid (LO) v. CA and Pecson (BPS)

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Facts: Pecson owned a commercial lot with 2 storey apartment. For his failure to pay taxes the
LOT was sold at public auction to herein petitioners.
RT upheld the spouses title but declared the apartment was not included in the auction sale.
Nuguid moved for delivery of possession of the lot and apartment building. Trial court ruled that
Nuguid shouls reimburse Pecson for his construction. It also directed Pecson to pay Nuguid
monthly rentals. It allowed to offset the amount of the apartment with the amount of rents.
Appellate court affirmed the order of payment of construction costs.
Held: A builder in good faith cannot be compelled to pay rentals during the period of retention nor
be disturbed in his possession by ordering him to vacate. The owner of the land is prohibited from
offsetting or compensating the necessary and useful expense with the fruits received by the
builder-possessor in good faith. Otherwise, the security provided by law would be impaired. Right
to the expenses and the right to the fruits both pertain to the possessor, making compensation
juridically impossible and one cannot be used to reduce the other.
Since petitioners opted to appropriate the improvement as early a June 1993, they could not
benefit from the improvement until they reimburse the improver in full based on the current
market value of the property.
The right of retention which entitle the builder in good faith to possession as well as income
derived therefrom is provided under Art. 546.

9. Rosales (LO) vs. Castelltort (BPS)

Facts: Petitioner is the owner of lot 17 who discovered that a house was being constructed
thereon without their knowledge and consent by respondent. It turns out that respondent
purchased lot 16 but geodetic engineer Rivera pointed out lot 17 as lot 16.
Negotiations proved futile so petitioners filed for recovery of possession and damages.
Respondents allege their good faith having relied on the description of the lot sold to them. RTC
ruled in favor of petitioners. CA reversed this decision.
Issue: WON Respondents are BIGF?
Held: Affirmative. Both parties having acted in good faith at least until August 21, 1995, Art. 448
should apply. Respondents good faith ceased when petitioner personally appraised him of the
title over the questioned lot. Should petitioner opt to appropriate the house they should only be
made to pay for the part of the improvement built by respondent until Aug. 21. Said part should
be pegged at its current fair market value. The commencement of respondents payment of
reasonable rent should start on Aug. 21, 1995 as well to be paid until such time that the
possession of the property is delivered to the petitioners subject to reimbursement of expenses.
Generally, payment of reasonable rent should be made only up to the date appellees serve notice
of their option to appropriate. In such event, appellants would have the right to retain the land on
which they have been built in good faith until they are reimbursed the expenses incurred by
them. The right to retain improvements while the indemnity is not paid implies tenancy or
possession in fact of the land on which it was built. (Possession of building with the BPS)
However, appellants ceased as builders in good faith at the time appellant was notified of the
appellees lawful title over the property. The payment of the reasonable rent should accordingly
commence at that time (notice was given) since he can no longer avail of the rights for builders
in good faith.
If the option chosen by the land owner is compulsory sale, the payment of rent should continue
up to the actual transfer of ownership.

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10. Macasaet (son) v. Macasaet (lo-father)

Facts: Petitioner is the son of the respondent. The parents filed ejectment suit against their
children as owners of 2 parcels of land in Lipa City. They alleged that they had a verbal lease
agreement and that petitioners failed to pay the agreed rental per week. This was denied by the
petitioners and said that they owned the land as advance grant of inheritance.
MTCC ruled in favor of the parents and ordered their children to vacate the property.
RTC upheld the MTCC ruling, adding that respondets could either oblige the petitioners to
purchase the land unless the value is considerable more than the building. In such a case, the
petitioner should pay rent if respondes would not choose to appropriate the building.
CA sustained both MTCC and RTC and held that the possession of the lots by the petitioner
becase illegal upon their receipt of respondents letter to vacate.
Held: Petitioners failed to justify their right to retention over the lots. Petitioners had right to
occupancy but the issue is with regard to duration. Their right to retention ceased upon their
receipt of the notice to vacate. And because they refused to heed the demand, ejectment was
the proper remedy against them.
The right of petitioners to inherit from their parents is merely inchoate. Rights of succession are
transmitted only from the moment of death of the decedent.
Art. 447 I not applicable because it only applies when the owner of the property uses materials of
another. It does not refer to the instance when the possessor builds on the property of another.
Art. 448 is applicable. (But this does not apply when the interest is merely that of a holder, like a
tenant, agent or usufructuary). Respondents fully consented to the improvements introduced by
petitioner, thus petitioners are deemed in good faith when they built structures thereon.
The court gives the parents the option under Art. 448, remanding this to the trial court to
determine the amount of indemnity and the option of the respondent-lot owners.

11. Sia (tenant/builder) v. CA and Torre De Oro Dev. Corp. (LO)

Facts: Pelaez was the owner of the land who leased it to Sia who constructed a building with his
consent. Pelaez then sold the lot to private respondent corporation. Herein parties entered into a
lease agreement for one year. One of the stipulations to the contract was that sublease should be
entered into with consent from the company. The latter sent a letter informing petitioner that it
was not renewing the contract on the ground of sublease without consent from them. They later
on filed for ejectment.
MTC ruled that petitioners were builders in good faith and he cannot be ejected without being
paid the fair market value of the building.
RTC reversed. CA agreed with RTC.
Held: Arts. 448 and 546 of the NCC vests the right of retention and right to reimbursement in a
possessor of a parcel of land who believed himself to be the owner of the said land and as such
built thereon and incurred expenses in doing so. A lessee being conclusively presumed to
know that he is not the owner of the land that he is leasing is not a possessor-builder
contemplated by Art. 448 and 546 of the NCC; and a lessee who constructs a house or
building or any other improvement or structure on the leased land, only has the right
granted by him by Art. 1678 of the NCC to remove the same in case the lessor elects
not to appropriate the building and pay 50% of its value.

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