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Facts: Edith Robillo purchased from petitioner a parcel of land located at , Pleasantville
Subdivision, . respondent Eldred Jardinico bought the rights to the lot from Robillo. Upon
completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on
Transfer Certificate of Title in his name. It was then that he discovered that improvements had
been introduced on 9 by respondent Wilson Kee, who had taken possession thereof.
It appears that on , Kee bought on installment 8 of the same subdivision from C.T. Torres
Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner. Under the Contract to
Sell on Installment, Kee could possess the lot even before the completion of all installment
payments. On , Kee paid CTTEI the relocation fee of P50.00 and another P50.00 on , for the
preparation of the lot plan. These amounts were paid prior to Kees taking actual possession of
8. After the preparation of the lot plan and a copy thereof given to Kee, CTTEI through its
employee, Zenaida Octaviano, accompanied Kees wife, Donabelle Kee, to inspect 8.
Unfortunately, the parcel of land pointed by Octaviano was 9. Thereafter, Kee proceeded to
construct his residence, a store, an auto repair shop and other improvements on the lot.After
discovering that 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach
an amicable settlement, but failed. Jardinicos lawyer wrote Kee, demanding that the latter
remove all improvements and vacate 9. When Kee refused to vacate 9, Jardinico filed with the
Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment
with damages against Kee.
Kee, in turn, filed a thirdparty complaint against petitioner and CTTEI for the erroneous
delivery of 9 to Kee was attributable to CTTEI.
Issue:
WON a lot buyer who constructs improvements on the wrong property erroneously delivered
by the owners agent, a builder in good faith?
Ruling: NO
Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of
Appeals that Kee was a builder in good faith. Good faith consists in the belief of the builder
that the land he is building on is his and his ignorance of any defect or flaw in his title. And as
good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee. At
the time he built improvements on Lot 8, Kee believed that said lot was what he bought from
petitioner. He was not aware that the lot delivered to him was not Lot 8. Thus, Kees good
faith. Petitioner failed to prove otherwise.
Good faith consists in the belief of the builder that the land he is building on is his and his
ignorance of any defect or flaw in his title. And as good faith is presumed, petitioner has the
burden of proving bad faith on the part of Kee
At the time he built improvements on 8, Kee believed that said lot was what he bought from
petitioner. He was not aware that the lot delivered to him was not 8. Thus, Kees good faith.
Petitioner failed to prove otherwise.
Banco Espanol Filipino v Peterson (1907)
Facts: On March 4, 1905, Banco Espanol Filipino (BEP) executed a contract of loan infavor of Francisco
Reyes for P141 702.00. Reyes was already indebted to the bank for P84 415.00. His total debt was therefore
P226 117.38. To secure payment of the P141k and the P84k, Reyes executed a public instrument.
Mortgaging several of his properties. Pledging part of his personal property to BEP (P90 591.75 worth of
wines,liquors and canned goods), which were stored at a warehouse he rented inManilaBEP and Reyes
agreed that the goods should be delivered to Ramon Garcia(depositary) for safekeeping. Reyes turned over
the goods to R. Garcia by giving him the warehouse keys.On September 29, 1905, BEP and Reyes substituted
Luis Sierra in place of R.Garcia as the depositary.On October 19, 1905, Juan Garcia (yes, related to Ramon)
brought an action against Francisco Reyes and Ramon Agtarat. CFI Manila ruled against Reyesand Agtarat for
P15 000.00.On the same day, Sheriff James Peterson entered the warehouse where the goods pledged to BEP
were stored under the custody of the depositary, Sierra.Peterson levied upon P30 000 worth of the goods
pledged to the bank,depriving the latter of possession of the same, as stipulated in the March contract of loan.
Issues:
WON Reyes still in possession of the pledged property, thereby making thecontract defective?
Held: The contract was valid. Reyes was no longer in possession of the pledgedproperty. BEP
had symbolic possession of the same.The contract complies with all the requisites of a valid pledge
contract, asprescribed by the Civil Code:
1. The property was pledged to secure a debt
2. The date of execution, the terms of the pledge, and the property pledgedappeared in a public
instrument
3. The property pledged was placed in the hands of a third person (in thiscase, Sierra) by common
consent of the debtor and creditor, under thesupervision of an agent (in this case, Rodriguez) of the
bank
Reyes, after the pledge, parted with the possession of his personal property, which was delivered to a
third person (R. Garcia, and subsequently, Sierra)who would take care of them for BEP.
Sierra was the third person appointed by common consent of BEP (creditor)and Reyes (debtor), to
hold possession over the goods pledged in favor of thebank under the direct supervision of Rodriguez,
an agent specificallyappointed by the bank.
The contract in question was, therefore, a perfect contract of pledge underarticles 1857
and 1863 of the Civil Code, it having been conclusively shownthat the pledgee (BEP) took charge and
possession of the goods pledgedthrough a depositary (Sierra) and a special agent (Rodriguez)
appointed by it,each of whom had a duplicate key to the warehouse wherein the said goodswere
stored, and that the pledgee (BEP), itself, received and collected theproceeds of the goods as they were
sold.
The legality of the pledge was not affected by the fact that the goodsremained in the
warehouse formerly rented by Reyes the pledgor. This isbecause after the pledge had been agreed
upon, and after the depositoryappointed with common consent of the parties had taken possession of
thesaid property, Reyes could no longer dispose of the same because BEP wasthe only party allowed
to do so through Sierra and Rodriguez.
The symbolic transfer of the goods through delivery of the keys to thewarehouse where
the goods were stored was sufficient evidence to show thatSierra, the depositary appointed by both
BEP and Rodriguez, was legallyplaced in possession of the goods.Since the contract of pledge was
valid, BEP had a better right to the goodscompared to J. Garcia. The Court ordered either the return of
the improperlylevied goods, or the payment of their value, P30 000.