1. GEMINIANO V. CA Lessor in good faith and Builders in Good faith are not synonymous.

Article 1678 may apply to the formers case and Art 448 may apply to the latters case. If a person knew that his stay would likely end or that he knew somehow that he is not the owner of the land then he is not a BPS in good faith. FACTS: The lot in question was originally owned by the mother of the petitioner. Petitioner sold their unfinished bungalow to the respondents for P6,000, with a promise to sell the lot to the latter. The property was later leased to the respondents for 7 years starting November 1978 for P40 a month as evidenced by their written lease contract. The respondents built their house and introduced some improvements in the lot. In 1985 petitioners mother refused receiving monthly rentals. It turned out that the lot in question was subject to litigation which resulted to its acquisition by Maria Lee which was sold to Salcedo, who further sold to Dionisio spouses. The property eventually came back to the petitioner when the Dinisio spouses executed a Deed of Quitclaim over the said property in favor of the petitioners. As such, the lot was registered in the latters names. (petitioners never lost possession of the land because Lee and company never issued a writ of possession against them). In 1993, petitioners wrote a letter to respondents demanding them to vacate the premises and when the latter refused, petitioners filed in court. Respondents claim that they should be entitled to buy the land because of the promise of the petitioners to sell them the land and because they were builders in Good faith. The courts now are deciding which one to use: Art. 448 regarding builders and land owners in good faith or Art. 1678 regarding lessee in good faith who can be reimbursed half of the expenses of the improvements if the LO chooses to appropriate them and that such lessee have the right to retain in the premises until fully reimbursed. ISSUES: 1) Whether or not the respondents were builders in Good faith? 2) Whether Art 448 or 1678 should be applied?

RULING: 1) No, they were not builders in good faith. The respondents knew that their stay would end after the lease contract expires. They cant bank on the promise, which was not in writing, of the petitioners that the latter will sell the land to them. According to 1403, an agreement for the sale of real property or an interest therein is unenforceable, unless some note or memorandum thereof be produced. Other than the alleged promise by petitioner, respondents had no other evidence to prove their claim. 2) They are mere lessees in good faith; therefore Art 1678 may apply if the lessor chooses to appropriate the improvements. But since the petitioners refused to exercise that option, the private respondents cant compel them to reimburse the one-half value of the house and improvements. Neither can they retain the premises until reimbursement is made. The private respondents sole right then is to remove the improvements without causing any more impairment upon the property leased than is necessary. 2. PLEASANTVILLE DEVELOPMENT CORPORATION VS. COURT OF APPEALS Doctrine: Good faith consists in the belief of the builder that he land he is building on is his and his ignorance of any defect or flaw in his title. The burden of proving bad faith belongs to the one asserting it. Facts: Edith Robillo purchased from Pleasantville Development Corporation, herein petitioner a parcel of land at Pleasantville Subdivision, Bacolod City. The property was designated as Lot 9, Phase II. In 1975, herein respondent Eldred Jardinico bought the said subject lot from the former purchaser. Eldred later discovered that the property he purchased had improvements introduced therein by respondent Wilson Kee. Kee on the other hand bought on installments Lot 8 of the same subdivision from C.T. Torres Enterprises, Inc. (CTTEI) which is the exclusive real estate agent of the petitioner. Under the contract Kee was allowed to take possession of the property even before full

payment of the price. CTTEI through an employee, Zenaida Octaviano accompanied Kees wife Donabelle to inspect Lot No. 8. Octaviano however mistakenly pointed towards Lot 9. Hence spouses Kee had their residence, an auto repair shop, a store and other improvements constructed on the wrong lot. Upon discovery of the blunder both Kee and Jardinico tried to reach an amicable settlement but they failed. Jardinico demanded that the improvements be removed but as Kee refused, Jardinico filed a complaint for ejectment with damages against Kee at the Municipal Trial Court in Cities (MTCC) of Bacolod City. Kee filed a third-party complaint against herein petitioner and CTTEI. The MTCC found that the error was attributable to CTTEI also since at present the contract with Kee has rescinded for Kees failure to pay installments. Kee no longer had any right over the subject property and must pay rentals for its use. The Regional Trial Court (RTC) of Bacolod City ruled that petitioner and CTTEI were not at fault or were not negligent. It argued that Kee was a builder in bad faith. Even if assuming that he was in good faith, he was no longer so and must pay rentals from the time that he was given notice to vacate the lot. The Court of Appeals ruled that Kee was a builder in good faith as he was unaware of the mix-up when he constructed the improvements. It was in fact due to the negligence and wrongful delivery of CTTEI which included its principal the herein petitioner. It further ruled that the award of rental was without basis. Pending the resolution of the case at the Court of Appeals Jardinico and Kee entered into a deed of sale, wherein Lot 9 was sold to Kee. In the said deed a provision stating that regardless of the outcome of the decision, such shall not be pursued by the parties and shall be considered dismissed and without effect. The appellate court was not informed of this deal. Issue: Whether or not a lot buyer who constructs improvements on the wrong property erroneously delivered by the owners agent, a builder in good faith? Held: Yes. Article 527 of the Civil Code provides the presumption that petitioner has the burden of proving that Kee was a builder in bad faith. Kee may be made liable for the violation of the contract with CTTEI but this may not be used as a basis of bad faith and as a sufficient ground to negate the presumption of good faith. Jardinico is presently only allowed to file a complaint for unlawful detainer. Good faith is based on the belief of the

builder that the land he is building on is his and his ignorance of any flaw or defect in is title. Since at the time when Kee constructed his improvements on Lot 8, he was not aware that it was actually Lot 9 that was delivered to him. Petitioner further contends that Kee was negligent as a provision in the Contract of Sale on Installment stated that the vendee must have personally examined the property and shall bear on his own the consequential expenses in the changes that may happen thereon. The court held that such provision cannot be interpreted as a waiver of the vendees right to recover damages resulting from petitioners negligence. Such interpretation of the waiver is contrary to law and public policy and cannot be allowed. Petitioner cannot claim and excuse itself from liability by claiming that it was not directly involved in the delivery of the property. The principal must be responsible for the acts of the agent done within the scope of his authority. CTTEI was the sole real estate representative of the petitioner when the delivery was made. Wilson Kee is therefore declared a builder in good faith. Petitioner and respondent CTTEI are declared solidarily liable for damages due to negligence. The award of rentals to Jardinico is dispensed with.

3. TECHNOGAS PHIL. V. CA FACTS Petitioner bought a lot together with the building and improvements including the wall which encroached that of the defendant. Upon learning of such encroachment, petitioner offered to buy the land but defendant refused. Defendant dug a canal along the wall which caused a portion of it to collapse. Petitioner filed a supplemental complaint re the action and a separate criminal action of malicious mischief (which the wife was convicted of) RTC decided for the petitioners and the CA reversed. Note that respondent wants to have

the wall demolished. ISSUES: A. Whether or not petitioner is a builder in bad faith because it is 'presumed to know the metes and bounds of his property.' B. Whether or not amicable settlement was a proper remedy C. Whether or not respondent can opt to demolish the structure without exercising the option to sell the land to the petitioner and the latter cannot do buy the same RULING: Petition was granted. Good faith or Bad Faith No such doctrinal statement that supports that the knowledge of metes and bounds of a land due to the Torrens system would amount to bad faith if there was encroachment on the land of another. A. When the petitioner purchased the lot, the wall was already built. Even the respondent did not knew about the encroachment until he has hired a surveyor. B. Where one derives title to the property from another, the act, declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former. And possession in good faith does not lose this character except when the possessor is aware of this impropriety. C. The encroachment was very narrow which can be considered as a mere error. Remedy the petitioner, despite being a purchaser of the original builder, can compel the landowner to either buy the property or sell the piece of land because:

1 2

He was really unaware of the encroachment basing on the fact presented by When the petitioner bought the land, he has stepped into the rights of the

both sides.

original owner (hence, the right to compel the LO to buy or sell is also transferred) Estoppel Petitioner is not considered in estoppel only because it has previously agreed to demolish a part of the wall. Rather, it was to be negotiated by the parties concern. In the meantime, petitioner has to pay the rent for the property occupied by its building only up to the date when respondent serves notice of their option. Case remanded back to the trial court for determination of the value of the land and the number of days to allot for the respondent to choose an option.
4. PEDRO P. PECSON V. COURT OF APPEALS, SPS. NUGUID FACTS: Pedro Pecson was the owner of a commercial lot on which he built a 4-door-2-storey apartment building. He failed to pay realty taxes amounting to P12k so the lot was sold at public auction to Mamerto Nepomuceno who later on sold it to the Sps. Nuguid. Pecson challenged the validity of the auction before the RTC but was dismissed but the RTC held that the apartment bldg was not subject of the litigation. On appeal, the CA appealed in toto the decision of the RTC that the apartment bldg was not included in the auction sale. After an entry of judgment was made, the Sps. Nuguid filed a motion with the RTC for a motion for delivery of possession of the lot and the apartment bldg citing Art. 546 of the CC. The RTC issued an order declaring that the owner of the lot and apartment bldg were the Sps. Nuguid and to pay the construction cost of the apartment before a writ of possession would be issued and to pay rent to the spouses. Pecson moved for reconsideration but the Trial court did not act on it, instead it issued a writ of possession. The CA affirmed in part the decision declaring the cost of construction can be offset from the amount of rents to be collected and that since Sps. Nuguid opted to appropriate the improvement, Pecson is entitled to be reimbursed the cost of construction at the time it was built in 1965 which is at P53k and the right the retain the improvement until full indemnity is paid. Thus the case at bar. ISSUE:

Whether or not Art. 448 and 546 applies in the case at bar HELD: YES > With regard to Art. 448, the provision on indemnity may be applied in analogy. Whoever is the owner of the land may appropriate whatever has been built, planted or sown after paying indemnity. However, it does not apply when the owner of the land is also the builder of the works on his own land who later on loses ownership by sale or donation. > Art. 546 refers to the necessary and useful expenses which shall be refunded to the possessor in good faith with right of retention. However, it does not state how to determine the value of the useful improvement. The respondents [court and private respondents alike] espouses as sufficient reimbursement the cost of construction in 1965, however, this is contrary to previous rulings which declares that the value to the reimbursed should be the present market value of said improvements so as not to unjustly enrich either of the parties. [the trial court erred in ordering Pecson to pay rent since the Sps. Nuguid has yet to pay the indemnity therefore Pecson has the right to retain the improvements and the income thereof. The case was remanded to the trial court for determination of the current market value of the apartment bldg and ordered the Sps to pay Pecson otherwise it shall be restored to Pecson until payment of indemnity.]

5.BALLATAN V. CA -Land Owner in Good faith, Builder in Good faith scenario -The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner. -If the option chooses is to sell the lot, the price must be fixed at the prevailing market value at the time of payment. FACTS: Eden Ballatan, together with other petitioners, is living in and registered owners of Lot No. 24. Respondent Winston Go is living in and registered owners of Lot No. 25 and 26. And Li Ching Yao is living in and the registered owner of Lot. 27. The Lots are adjacent to each other. When Ballatan constructed her house in her lot, she noticed that the concrete fence and side pathway of the adjoining house of respondent Winston Go encroached on the entire

length of the eastern side of her property. She was informed by her contractor of this discrepancy, who then told respondent Go of the same. Respondent, however, claims that his house was built within the parameters of his fathers lot; and that this lot was surveyed by engineer Jose Quedding, the authorized surveyor of Araneta Institute of Agriculture (AIA). Petitioner called the attention of AIA on the matter and so the latter authorized another survey of the land by Engineer Quedding. The latter then did the survey twice which led to the conclusion that Lots Nos 25, 26 (owned by respondent Go) and 27 (owned by Li Ching Yao) moved westward to the eastern boundary of Lot 24 (owned by petitioner Ballatan.) (it was later on discovered by the courts that Go encroached 42 square meters from the property of Ballatan and Yao encroached 37 square meters on Gos property, all of which were in GOOD FAITH) Ballatan made written demands to the respondent to dismantle and move their improvements and since the latter wasnt answering the petitioner filed accion publiciana in court. Gos filed their Answer with Third-Party Complaint impleading as third party defendants respondents Li Ching Yao, the AIA and Engineer Quedding. RTC ruled in favor of the petitioner ordering respondent Go to demolish their improvements and pay damages to Petitioner but dismissing the third-party complaint. CA affirmed the dismissal of the third party-complaint as to AIA but reinstated the the complaint against Yao and the Engineer. CA also affirmed the demolition and damages awarded to petitioner and added that Yao should also pay respondent for his encroachment of respondent Gos property. Jose Quedding was also ordered to pay attorneys fees for his negligence which caused all this fuzz. ISSUE: What is the proper remedy in this situation (everyone was in good faith)? RULING: Art 448 is the proper remedy (Lower Courts are wrong in awarding the damages). It was established in the case that the parties had no knowledge of the encroachment until Ballatan noticed it there all of them were builders in Good faith. In that scenario they have two options. 1st option is that the land owner will buy the improvements and the 2nd option is to oblige the builders to buy the land given that the value of the land is not considerably more than the buildings or tree; other wise the owner may remove the improvements thereon.

The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner. If the option chooses is to sell the lot, the price must be fixed at the prevailing market value at the time of payment. Petitioner was given by SC 30 days to decide on what to do or which right to exercise. Likewise, Go was also given time to do the regarding Yaos encroachment. Engineer Quedding was still asked to pay attorneys fees. 6. SPOUSES DEL CAMPO V. ABESIA 160 SCRA 379
Facts: This case involves a parcel of land, situated at the corner of F. Flores and Cavan Streets, Cebu City. An action for partition was filed by plaintiffs in the CFI of Cebu. Plaintiffs and defendants are co-owners pro indiviso of this lot in the proportion of and 1/3 share each, respectively. The trial court appointed a commissioner in accordance with the agreement of the parties. ,the Id commissioner conducted a survey, prepared a sketch plan and submitted a report to the trial court on May 29, 1976, recommending that the property be divided into two lots: Lot 1161-A with an area of 30 square meters for plaintiffs and Lot No. 1161-B with an area of 15 square meters for the defendants. The houses of plaintiffs and defendants were surveyed and shown on the sketch plan. The house of defendants occupied the portion with an area of 5 square meters of Lot 1161-A of plaintiffs. The parties manifested their conformity to the report and asked the trial court to finally settle and adjudicate who among the parties should take possession of the 5 square meters of the land in question. Issue: Whether or Not Article 448 of the Civil Code is applicable to a builder in good faith when the property involved is owned in common. Held: When the co-ownership is terminated by the partition and it appears that the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448

of the new Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when there was co-ownership if good faith has been established. Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said portion of the house of defendants upon payment of indemnity to defendants as provided for in Article 546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the house of defendants built thereon, then the latter cannot be obliged to buy the land. The defendants shall then pay the reasonable rent to the plaintiff upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, defendants may demolish or remove the said portion of their house, at their own expense, if they so decide. Article 448 of the New Civil Code provides as follows: Art. 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. 7. Bernardo vs Bataclan FACTS: Plaintiff Vicente Bernardo acquired a parcel of land from Pastor Samonte thru a contract of sale. Thereafter, Bernardo instituted a case against said vendor to secure possession of the land. Bernardo was able to obtain a favorable decision from the court. The plaintiff found the defendant herein, Catalino Bataclan, in the said premises. It appears that he has been authorized by former owners, as far back as 1922, to clear the land and make improvements thereon. Thus, plaintiff instituted a case against Bataclan in the Court of First Instance of Cavite. In this case, plaintiff was declared the owner of the land but the defendant was held

to bea possessor in good faith, entitled to reimbursement in the total sum of P1,642, for work done and improvements made. Both parties appealed the decision. The court thereafter made some modifications by allowing the defendant to recover compensation amounting to P2,212 and by reducing the price at which the plaintiff could require the defendant to purchase the land in question from P300 down to P200 per hectare. Plaintiff was likewise given 30 days from the date when the decision became final to exercise his option,either to sell the land to the defendant or to buy the improvements from him .On January 9, 1934, the plaintiff conveyed to the court his desire "to require the defendant to pay him the value of the land at the rate of P200 per hectare or a total price of P18,000 for the whole tract of land." The defendant indicated that he was unable to pay the land and, on January 24, 1934, an order was issued giving the plaintiff 30 days within which to pay the defendant the sum of P2,212.Subsequently, on April 24, 1934, the court below, at the instance of the plaintiff and without objection on the part of the defendant,ordered the sale of the land in question at public auction. The landwas sold on April 5, 1935 to Toribio Teodoro for P8,000. ISSUE: WON DEFENDANT BATACLAN IS STILL ENTITLED TORECOVER THE COURT MANDATED COMPENSATION ARISINGFROM THE SALE OF THE PROPERTY TO TORIBIO HELD: NO. Manresa, basing on Art 448 of the NCC, where the planter,builder or sower has acted in good faith, a conflict of rights arises between the owners and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of theland. The law provided a just and equitable solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity or to oblige the builder or planter to pay for the land and the sower to pay the proper rent. In this case,the plaintiff, as owner of the land, chose to require the defendant, as owner of the improvements to pay for the land. The defendant avers that he is a possessor in good faith and that the amount of P2,212 to which he is entitled has not yet been paid to him. Defendant further claims that he has a right to retain the land in accordance with the provisions of article 453 of theCivil Code. While the said argument is legally tenable, the same must perforce be denied because defendant Bataclan has lost his right of retention as he failed to pay for the land. The law, as we have already said, requires no more than that the owner of the land should choose between indemnifying the owner of the improvements or requiring the latter to pay for

the land