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G.R.No.108894

TodayisWednesday,July08,2015

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION

G.R.No.108894February10,1997
TECNOGASPHILIPPINESMANUFACTURINGCORPORATION,petitioner,
vs.
COURTOFAPPEALS(FORMERSPECIALSEVENTEENTHDIVISION)andEDUARDOUY,respondents.

PANGANIBAN,J.:
ThepartiesinthiscaseareownersofadjoininglotsinParaaque,MetroManila.Itwasdiscoveredinasurvey,
that a portion of a building of petitioner, which was presumably constructed by its predecessorininterest,
encroached on a portion of the lot owned by private respondent. What are the rights and obligations of the
parties?Ispetitionerconsideredabuilderinbadfaithbecause,asheldbyrespondentCourt,heis"presumedto
knowthemetesandboundsofhispropertyasdescribedinhiscertificateoftitle"?Doespetitionersucceedinto
thegoodfaithorbadfaithofhispredecessorininterestwhichpresumablyconstructedthebuilding?
ThesearethequestionsraisedinthepetitionforreviewoftheDecision1datedAugust28,1992,inCAG.R.CVNo.
28293ofrespondentCourt2wherethedispositionreads:3

WHEREFORE,premisesconsidered,theDecisionoftheRegionalTrialCourtisherebyreversedand
setasideandanotheroneentered
1.Dismissingthecomplaintforlackofcauseofaction
2.OrderingTecnogastopaythesumofP2,000.00permonthasreasonablerentalfromOctober4,
1979untilappelleevacatestheland
3.Toremovethestructuresandsurroundingwallsontheencroachedarea
4.Orderingappelleetopaythevalueofthelandoccupiedbythetwostoreybuilding
5.OrderingappelleetopaythesumofP20,000.00forandasattorney'sfees
6.Costsagainstappellee.
Actingonthemotionsforreconsiderationofbothpetitionerandprivaterespondent,respondentCourtorderedthe
deletionofparagraph4of
thedispositiveportioninanAmendedDecisiondatedFebruary9,1993,asfollows:4
WHEREFORE, premises considered, our decision of August 28, 1992 is hereby modified deleting
paragraph4ofthedispositiveportionofourdecisionwhichreads:
4.Orderingappelleetopaythevalueofthelandoccupiedbythetwostoreybuilding.
ThemotionforreconsiderationofappelleeisherebyDENIEDforlackofmerit.
TheforegoingAmendedDecisionisalsochallengedintheinstantpetition.
TheFacts
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Thefactsarenotdisputed.RespondentCourtmerelyreproducedthefactualfindingsofthetrialcourt,asfollows:
5

That plaintiff (herein petitioner) which is a corporation duly organized and existing under and by
virtue of Philippine laws is the registered owner of a parcel of land situated in Barrio San Dionisio,
Paraaque, Metro Manila known as Lot 4331A (should be 4531A) of Lot 4531 of the Cadastral
Survey of Paraaque, Metro Manila, covered by Transfer Certificate of Title No. 409316 of the
Registry of Deeds of the Province of Rizal that said land was purchased by plaintiff from Pariz
Industries,Inc.in1970,togetherwithallthebuildingsandimprovementsincludingthewallexisting
thereon that the defendant (herein private respondent) is the registered owner of a parcel of land
knownasLotNo.4531BofLot4531oftheCadastralSurveyofParaaque,LRC(GLRO)Rec.No.
19645coveredbyTransferCertificateofTitleNo.279838,oftheRegistryofDeedsfortheProvince
ofRizalthatsaidlandwhichadjoinsplaintiff'slandwaspurchasedbydefendantfromacertainEnrile
Antonioalsoin1970thatin1971,defendantpurchasedanotherlotalsoadjoiningplaintiffslandfrom
a certain Miguel Rodriguez and the same was registered in defendant's name under Transfer
CertificateofTitleNo.31390,oftheRegistryofDeedsfortheProvinceofRizalthatportionsofthe
buildings and wall bought by plaintiff together with the land from Pariz Industries are occupying a
portion of defendant's adjoining land that upon learning of the encroachment or occupation by its
buildings and wall of a portion of defendant's land, plaintiff offered to buy from defendant that
particular portion of defendant's land occupied by portions of its buildings and wall with an area of
770 square meters, more or less, but defendant, however, refused the offer. In 1973, the parties
entered into a private agreement before a certain Col. Rosales in Malacaang, wherein plaintiff
agreedtodemolishthewallatthebackportionofitslandthusgivingtodefendantpossessionofa
portionofhislandpreviouslyenclosedbyplaintiff'swallthatdefendantlaterfiledacomplaintbefore
the office of Municipal Engineer of Paraaque, Metro Manila as well as before the Office of the
Provincial Fiscal of Rizal against plaintiff in connection with the encroachment or occupation by
plaintiff'sbuildingsandwallsofaportionofitslandbutsaidcomplaintdidnotprosperthatdefendant
dugorcausedtobedugacanalalongplaintiff'swall,aportionofwhichcollapsedinJune,1980,and
ledtothefilingbyplaintiffofthesupplementalcomplaintintheaboveentitledcaseandaseparate
criminalcomplaintformaliciousmischiefagainstdefendantandhiswifewhichultimatelyresultedinto
the conviction in court of defendant's wife for the crime of malicious mischief that while trial of the
case was in progress, plaintiff filed in Court a formal proposal for settlement of the case but said
proposal,however,wasignoredbydefendant.
Aftertrialonthemerits,theRegionalTrialCourt6ofPasayCity,Branch117,inCivilCaseNo.PQ7631P,rendereda
decisiondatedDecember4,1989infavorofpetitionerwhowastheplaintifftherein.Thedispositiveportion
reads:7

WHEREFORE,judgmentisherebyrenderedinfavorofplaintiffandagainstdefendantandordering
the latter to sell to plaintiff that portion of land owned by him and occupied by portions of plaintiff's
buildingsandwallatthepriceofP2,000.00persquaremeterandtopaytheformer:
1. The sum of P44,000.00 to compensate for the losses in materials and properties
incurredbyplaintiffthroughthieveryasaresultofthedestructionofitswall
2.ThesumofP7,500.00asandbywayofattorney'sfeesand
3.Thecostsofthissuit.
Appeal was duly interposed with respondent Court, which as previously stated, reversed and set aside the
decision of the Regional Trial Court and rendered the assailed Decision and Amended Decision. Hence, this
recourseunderRule45oftheRulesofCourt.
TheIssues
Thepetitionraisesthefollowingissues:8
(A)
WhetherornottherespondentCourtofAppealserredinholdingthepetitionerabuilderinbadfaith
becauseitis"presumedtoknowthemetesandboundsofhisproperty."
(B)
WhetherornottherespondentCourtofAppealserredwhenitusedtheamicablesettlementbetween
the petitioner and the private respondent, where both parties agreed to the demolition of the rear
portionofthefence,asestoppelamountingtorecognitionbypetitionerofrespondent'srightoverhis
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propertyincludingtheportionsofthelandwheretheotherstructuresandthebuildingstand,which
werenotincludedinthesettlement.
(C)
WhetherornottherespondentCourtofAppealserredinorderingtheremovalofthe"structuresand
surroundingwallsontheencroachedarea"andinwithdrawingitsearlierrulinginitsAugust28,1992
decisionforthepetitioner"topayforthevalueofthelandoccupied"bythebuilding,onlybecausethe
privaterespondenthas"manifesteditschoicetodemolish"itdespitetheabsenceofcompulsorysale
wherethebuilderfailstopayfortheland,andwhich"choice"privaterespondentdeliberatelydeleted
fromitsSeptember1,1980answertothesupplementalcomplaintintheRegionalTrialCourt.
InitsMemorandum,petitionerposesthefollowingissues:
A.
ThetimewhentodeterminethegoodfaithofthebuilderunderArticle448oftheNewCivilCode,is
reckonedduring the period when it was actually being built and in a case where no evidence was
presentednorintroducedastothegoodfaithorbadfaithofthebuilderatthattime,asinthiscase,
hemustbepresumedtobea"builderingoodfaith,"since"badfaithcannotbepresumed."9
B.

Inaspecific"boundaryoverlapsituation"whichinvolvesabuilderingoodfaith,asinthiscase, it is
nowwellsettledthatthelotowner,whobuildsontheadjacentlotisnot charged with "constructive
notice"ofthetechnicalmetesandboundscontainedintheirtorrenstitlestodeterminetheexactand
preciseextentofhisboundaryperimeter.10
C.

Therespondentcourt'scitationofthetwincasesofTuason&Co.v.LumanlanandTuason&Co.v.
Macalindongisnotthe"judicialauthority"foraboundarydisputesituationbetweenadjacenttorrens
titled lot owners, as the facts of the present case do not fall within nor square with the involved
principleofadissimilarcase.11
D.

QuitecontrarytorespondentUy'sreasoning,petitionerTecnogascontinuestobeabuilderingood
faith, even if it subsequently built/repaired the walls/other permanent structures thereon while the
case a quo was pending and even while respondent sent the petitioner many letters/filed cases
thereon.12
D.(E.)

Theamicablesettlementbetweenthepartiesshouldbeinterpretedasacontractandenforcedonly
inaccordancewithitsexplicitterms,andnotoverandbeyondthatagreeduponbecausethecourts
donothavethepowertocreateacontractnorexpanditsscope.13
E.(F.)

Asageneralrule,althoughthelandownerhastheoptiontochoosebetween:(1)"buyingthebuilding
builtingoodfaith",or(2)"sellingtheportionofhislandonwhichstandsthebuilding"underArticle
448oftheCivilCodethefirstoptionisnotabsolute,becauseanexceptionthereto,onceitwouldbe
impractical for the landowner to choose to exercise the first alternative, i.e. buy that portion of the
housestandingonhisland,forthewholebuildingmightberendereduseless.Theworkablesolution
isforhimtoselectthesecondalternative,namely,toselltothebuilderthatpartofhislandonwhich
wasconstructedaportionofthehouse.14
Privaterespondent,ontheotherhand,arguesthatthepetitionis"sufferingfromthefollowingflaws:15
1.ItdidnotgivetheexactcitationsofcasesdecidedbytheHonorableSupremeCourtthatallegedly
contradicts the ruling of the Hon. Court of Appeals based on the doctrine laid down in Tuason vs.
LumanlancasecitingalsoTuasonvs.Macalindongcase(Supra).
2.AssumingthatthedoctrineintheallegedCoTaovs.Chicocaseiscontradictorytothedoctrinein
Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases being more current, the same
shouldprevail.
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Further, private respondent contends that the following "unmistakably" point to the bad faith of petitioner: (1)
private respondent's purchase of the two lots, "was ahead of the purchase by petitioner of the building and lot
fromParizIndustries"(2)thedeclarationoftheGeneralManagerofTecnogasthatthesalebetweenpetitioner
andParizIndustries"wasnotregistered"becauseofsomeproblemswithChinaBankingCorporationand(3)the
DeedofSaleinfavorofpetitionerwasregisteredinitsnameonlyin"themonthofMay1973."16
TheCourt'sRu1ing
Thepetitionshouldbegranted.
GoodFaithorBadFaith
RespondentCourt,citingthecasesofJ.M.Tuason&Co.,Inc.vs.Vda.deLumanlan17andJ.M.Tuason&Co.,Inc.
vs.Macalindong,18ruled that petitioner "cannot be considered in good faith" because as a land owner, it is "presumed to
knowthemetesandboundsofhisownproperty,speciallyifthesamearereflectedinaproperlyissuedcertificateoftitle.
One who erroneously builds on the adjoining lot should be considered a builder in (b)ad (f)aith, there being presumptive
knowledgeoftheTorrenstitle,thearea,andtheextentoftheboundaries."19

WedisagreewithrespondentCourt.Thetwocasesitreliedupondonotsupportitsmainpronouncementthata
registeredowneroflandhaspresumptiveknowledgeofthemetesandboundsofitsownland,andisthereforein
badfaithifhemistakenlybuildsonanadjoiningland.Asidefromthefactthatthosecaseshadfactualmoorings
radically different from those obtaining here, there is nothing in those cases which would suggest, however
remotely,thatbadfaithisimputabletoaregisteredowneroflandwhenapartofhisbuildingencroachesupona
neighbor'sland,simplybecauseheissupposedlypresumedtoknowtheboundariesofhislandasdescribedin
hiscertificateoftitle.Nosuchdoctrinalstatementcouldhavebeenmadeinthosecasesbecausesuchissuewas
notbeforetheSupremeCourt.Quitethecontrary,wehaverejectedsuchatheoryinCoTaovs.Chico, 20 where
weheldthatunlessoneisversedinthescienceofsurveying,"noonecandeterminethepreciseextentorlocationofhis
propertybymerelyexamininghispapertitle."

There is no question that when petitioner purchased the land from Pariz Industries, the buildings and other
structureswerealreadyinexistence.Therecordisnotclearastowhoactuallybuiltthosestructures,butitmay
well be assumed that petitioner's predecessorininterest, Pariz Industries, did so. Article 527 of the Civil Code
presumes good faith, and since no proof exists to show that the encroachment over a narrow, needleshaped
portionofprivaterespondent'slandwasdoneinbadfaithbythebuilderoftheencroachingstructures,thelatter
shouldbepresumedtohavebuiltthemingoodfaith.21Itispresumedthatpossessioncontinuestobeenjoyedinthe
samecharacterinwhichitwasacquired,untilthecontraryisproved. 22Goodfaithconsistsinthebeliefofthebuilderthat
the land he is building on is his, and his ignorance of any defect or flaw in his title. 23 Hence, such good faith, by law,
passedontoPariz'ssuccessor,petitionerinthiscase.Further,"(w)hereonederivestitletopropertyfromanother,theact,
declaration, or omission of the latter, while holding the title, in relation to the property, is evidence against the former." 24
Andpossessionacquiredingoodfaithdoesnotlosethischaracterexceptincaseandfromthemomentfactsexistwhich
show that the possessor is not unaware that he possesses the thing improperly or wrongfully. 25 The good faith ceases
from the moment defects in the title are made known to the possessor, by extraneous evidence or by suit for recovery of
thepropertybythetrueowner.26

Recall that the encroachment in the present case was caused by a very slight deviation of the erected wall (as
fence)whichwassupposedtoruninastraightlinefrompoint9topoint1ofpetitioner'slot.Itwasanerrorwhich,
in the context of the attendant facts, was consistent with good faith. Consequently, the builder, if sued by the
aggrievedlandownerforrecoveryofpossession,couldhaveinvokedtheprovisionsofArt.448oftheCivilCode,
whichreads:
Theownerofthelandonwhichanythinghasbeenbuilt,sownorplantedingoodfaith,shallhavethe
righttoappropriateashisowntheworks,sowingorplanting,afterpaymentoftheindemnityprovided
forinarticles546and548,ortoobligetheonewhobuiltorplantedtopaythepriceoftheland,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
properindemnity.Thepartiesshallagreeuponthetermsoftheleaseandincaseofdisagreement,
thecourtshallfixthetermsthereof.
Theobviousbenefittothebuilderunderthisarticleisthat,insteadofbeingoutrightlyejectedfromtheland,
hecancompelthelandownertomakeachoicebetweenthetwooptions:(1)toappropriatethebuildingby
paying the indemnity required by law, or (2) sell the land to the builder. The landowner cannot refuse to
exerciseeitheroptionandcompelinsteadtheownerofthebuildingtoremoveitfromtheland.27
Thequestion,however,iswhetherthesamebenefitcanbeinvokedbypetitionerwho,asearlierstated,isnotthe
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builderoftheoffendingstructuresbutpossessesthemasbuyer.
Weanswersuchquestionintheaffirmative.
In the first place, there is no sufficient showing that petitioner was aware of the encroachment at the time it
acquired the property from Pariz Industries. We agree with the trial court that various factors in evidence
adequately show petitioner's lack of awareness thereof. In any case, contrary proof has not overthrown the
presumption of good faith under Article 527 of the Civil Code, as already stated, taken together with the
disputable presumptions of the law on evidence. These presumptions state, under Section 3 (a) of Rule 131 of
theRulesofCourt,thatthepersonisinnocentofacrimeorwrongandunderSection3(ff)ofRule131,thatthe
law has been obeyed. In fact, private respondent Eduardo Uy himself was unaware of such intrusion into his
propertyuntilafter1971whenhehiredasurveyor,followinghispurchaseofanotheradjoininglot,tosurveyallhis
newly acquired lots. Upon being apprised of the encroachment, petitioner immediately offered to buy the area
occupiedbyitsbuildingaspeciesofconductconsistentwithgoodfaith.
In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner, as buyer, the
latter acquired ownership of the property. Consequently and as earlier discussed, petitioner is deemed to have
steppedintotheshoesofthesellerinregardtoallrightsofownershipovertheimmovablesold,includingtheright
to compel the private respondent to exercise either of the two options provided under Article 448 of the Civil
Code.
Estoppel
Respondent Court ruled that the amicable settlement entered into between petitioner and private respondent
estops the former from questioning the private respondent's "right" over the disputed property. It held that by
undertakingtodemolishthefenceundersaidsettlement,petitionerrecognizedprivaterespondent'srightoverthe
property,and"cannotlateroncompel"privaterespondent"toselltoitthelandsince"privaterespondent"isunder
noobligationtosell."28
We do not agree. Petitioner cannot be held in estoppel for entering into the amicable settlement, the pertinent
portionsofwhichread:29
Thatthepartiesheretohaveagreedthattherearportionofthefencethatseparatesthepropertyof
the complainant and respondent shall be demolished up to the back of the building housing the
machinerieswhichdemolision(sic)shallbeundertakenbythecomplainantatanytime.
That the fence which serve(s) as a wall housing the electroplating machineries shall not be
demolishedinthemeantimewhichportionshallbesubjecttonegotiationbyhereinparties.
Fromtheforegoing,itisclearthatpetitioneragreedonlytothedemolitionofaportionofthewallseparatingthe
adjoiningpropertiesofthepartiesi.e."uptothebackofthebuildinghousingthemachineries."Butthatportion
ofthefencewhichservedasthewallhousingtheelectroplatingmachinerieswasnottobedemolished.Rather,it
wasto"besubjecttonegotiationbyhereinparties."Thesettlementmayhaverecognizedtheownershipofprivate
respondentbutsuchadmissioncannotbeequatedwithbadfaith.Petitionerwasonlytryingtoavoidalitigation,
onereasonforenteringintoanamicablesettlement.
AswasruledinOsmeavs.CommissiononAudit,30
A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical
agreementbytheCivilCodeandisthereindealtwithinsomedetail."Acompromise,"declaresArticle
2208 of said Code, "is a contract whereby the parties, by making reciprocal concessions, avoid a
litigationorputanendtoonealreadycommenced."
xxxxxxxxx
The Civil Code not only defines and authorizes compromises, it in fact encourages them in civil
actions. Art. 2029 states that "The Court shall endeavor to persuade the litigants in a civil case to
agreeuponsomefaircompromise."...
Inthecontextoftheestablishedfacts,weholdthatpetitionerdidnotloseitsrightsunderArticle448oftheCivil
Codeonthebasismerelyofthefactthatsomeyearsafteracquiringthepropertyingoodfaith,itlearnedabout
and aptly recognized the right of private respondent to a portion of the land occupied by its building. The
superveningawarenessoftheencroachmentbypetitionerdoesnotmilitateagainstitsrighttoclaimthestatusof
a builder in good faith. In fact, a judicious reading of said Article 448 will readily show that the landowner's
exerciseofhisoptioncanonlytakeplaceafterthebuildershallhavecometoknowoftheintrusioninshort,
whenbothpartiesshallhavebecomeawareofit.Onlythenwilltheoccasionforexercisingtheoptionarise,forit
isonlythenthatbothpartieswillhavebeenawarethataproblemexistsinregardtotheirpropertyrights.
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OptionsofPrivateRespondent
Whatthenistheapplicableprovisioninthiscasewhichprivaterespondentmayinvokeashisremedy:Article448
orArticle45031oftheCivilCode?
Inviewofthegoodfaithofbothpetitionerandprivaterespondent,theirrightsandobligationsaretobegoverned
by Art. 448. The essential fairness of this codal provision has been pointed out by Mme. Justice Ameurfina
MelencioHerrera,citingManresaandapplicableprecedents,inthecaseofDepravs.Dumlao,32towit:
Where the builder, planter 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 the land. In view of the impracticality of creating a state of forced co
ownership,thelawhasprovidedajustsolutionbygivingtheownerofthelandtheoptiontoacquire
theimprovementsafterpaymentoftheproperindemnity,ortoobligethebuilderorplantertopayfor
the land and the sower to pay the proper rent. It is the owner of the land who is authorized to
exercise the option, because his right is older, and because, by the principle of accession, he is
entitledtotheownershipoftheaccessorything.(3Manresa213Bernardovs.Bataclan,37Off.Gaz.
1382CoTaovs.ChanChico,G.R.No.49167,April30,1949ArticleappliedseeCabral,etal.vs.
Ibanez[S.C.]52Off.Gaz.217Marforivs.Velasco,[C.A.]52Off.Gaz.2050).
The private respondent's insistence on the removal of the encroaching structures as the proper remedy, which
respondent Court sustained in its assailed Decisions, is thus legally flawed. This is not one of the remedies
bestoweduponhimbylaw.Itwouldbeavailableonlyifandwhenhechoosestocompelthepetitionertobuythe
landatareasonablepricebutthelatterfailstopaysuchprice. 33 This has not taken place. Hence, his options are
limitedto:(1)appropriatingtheencroachingportionofpetitioner'sbuildingafterpaymentofproperindemnity,or(2)obliging
thelattertobuythelotoccupiedbythestructure.Hecannotexercisearemedyofhisownliking.

Neitherispetitioner'sprayerthatprivaterespondentbeorderedtoselltheland34theproperremedy.Whilethatwas
dubbed as the "more workable solution" in Grana and Torralba vs. The Court of Appeals, et al., 35 it was not the relief
grantedinthatcaseasthelandownersweredirectedtoexercise"within30daysfromthisdecisiontheiroptiontoeitherbuy
the portion of the petitioners' house on their land or sell to said petitioners the portion of their land on which it stands." 36
Moreover,inGranaandTorralba,theareainvolvedwasonly87squaremeterswhilethiscaseinvolves520squaremeters
37.InlinewiththecaseofDepravs.Dumlao, 38thiscasewillhavetoberemandedtothetrialcourtforfurtherproceedings
to fully implement the mandate of Art. 448. It is a rule of procedure for the Supreme Court to strive to settle the entire
controversyinasingleproceedingleavingnorootorbranchtobeartheseedsoffuture
litigation.39

Petitioner,however,mustalsopaytherentforthepropertyoccupiedbyitsbuildingasprescribedbyrespondent
CourtfromOctober4,1979,butonlyuptothedateprivaterespondentservesnoticeofitsoptionuponpetitioner
andthetrialcourtthatis,ifsuchoptionisforprivaterespondenttoappropriatetheencroachingstructure.Insuch
event, petitioner would have a right of retention which negates the obligation to pay rent. 40 The rent should
howevercontinueiftheoptionchoseniscompulsorysale,butonlyuptotheactualtransferofownership.

Theawardofattorney'sfeesbyrespondentCourtagainstpetitionerisunwarrantedsincetheactionappearsto
havebeenfiledingoodfaith.Besides,thereshouldbenopenaltyontherighttolitigate.41
WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed Decision and the
Amended Decision are REVERSED and SET ASIDE. In accordance with the case of Depravs. Dumlao, 42 this
caseisREMANDEDtotheRegionalTrialCourtofPasayCity,Branch117,forfurtherproceedingsconsistentwithArticles
448and54643oftheCivilCode,asfollows:

Thetrialcourtshalldetermine:
a)thepresentfairpriceofprivaterespondent's520squaremeterareaofland
b)theincreaseinvalue("plusvalue")whichthesaidareaof520squaremetersmayhaveacquired
byreasonoftheexistenceoftheportionofthebuildingonthearea
c)thefairmarketvalueoftheencroachingportionofthebuildingand
d) whether the value of said area of land is considerably more than the fair market value of the
portionofthebuildingthereon.
2. After said amounts shall have been determined by competent evidence, the regional trial court shall render
judgmentasfollows:
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a)Theprivaterespondentshallbegrantedaperiodoffifteen(15)dayswithinwhichtoexercisehis
optionunderthelaw(Article448,CivilCode),whethertoappropriatetheportionofthebuildingashis
ownbypayingtopetitioneritsfairmarketvalue,ortoobligepetitionertopaythepriceofsaidarea.
The amounts to be respectively paid by petitioner and private respondent, in accordance with the
optionthusexercisedbywrittennoticeoftheotherpartyandtothecourt,shallbepaidbytheobligor
within fifteen (15) days from such notice of the option by tendering the amount to the trial court in
favorofthepartyentitledtoreceiveit
b)Ifprivaterespondentexercisestheoptiontoobligepetitionertopaythepriceofthelandbutthe
latterrejectssuchpurchasebecause,asfoundbythetrialcourt,thevalueofthelandisconsiderably
more than that of the portion of the building, petitioner shall give written notice of such rejection to
privaterespondentandtothetrialcourtwithinfifteen(15)daysfromnoticeofprivaterespondent's
optiontoselltheland.Inthatevent,thepartiesshallbegivenaperiodoffifteen(15)daysfromsuch
noticeofrejectionwithinwhichtoagreeuponthetermsofthelease,andgivethetrialcourtformal
writtennoticeoftheagreementanditsprovisos.Ifnoagreementisreachedbytheparties,thetrial
court,withinfifteen(15)daysfromandaftertheterminationofthesaidperiodfixedfornegotiation,
shallthenfixthetermsoftheleaseprovidedthatthemonthlyrentaltobefixedbytheCourtshallnot
belessthantwothousandpesos(P2,000.00)permonth,payablewithinthefirstfive(5)daysofeach
calendarmonth.Theperiodfortheforcedleaseshallnotbemorethantwo(2)years,countedfrom
the finality of the judgment, considering the long period of time since 1970 that petitioner has
occupied the subject area. The rental thus fixed shall be increased by ten percent (10%) for the
secondyearoftheforcedlease.Petitionershallnotmakeanyfurtherconstructionsorimprovements
onthebuilding.Uponexpirationofthetwoyearperiod,orupondefaultbypetitionerinthepayment
ofrentalsfortwo(2)consecutivemonths,privaterespondentshallbeentitledtoterminatetheforced
lease,torecoverhisland,andtohavetheportionofthebuildingremovedbypetitioneroratlatter's
expense.Therentalshereinprovidedshallbetenderedbypetitionertothetrialcourtforpaymentto
private respondent, and such tender shall constitute evidence of whether or not compliance was
madewithintheperiodfixedbythesaidcourt.
c)Inanyevent,petitionershallpayprivaterespondentanamountcomputedattwothousandpesos
(P2,000.00)permonthasreasonablecompensationfortheoccupancyofprivaterespondent'sland
fortheperiodcountedfromOctober4,1979,uptothedateprivaterespondentservesnoticeofits
optiontoappropriatetheencroachingstructures,otherwiseuptotheactualtransferofownershipto
petitioneror,incaseaforcedleasehastobeimposed,uptothecommencementdateoftheforced
leasereferredtointheprecedingparagraph
d)Theperiodstobefixedbythetrialcourtinitsdecisionshallbenonextendible,anduponfailureof
thepartyobligedtotendertothetrialcourttheamountduetotheobligee,thepartyentitledtosuch
paymentshallbeentitledtoanorderofexecutionfortheenforcementofpaymentoftheamountdue
andforcompliancewithsuchotheractsasmayberequiredbytheprestationduetheobligee.
Nocosts.
SOORDERED.
Narvasa,C.J.,Davide,Jr.,MeloandFrancisco,JJ.,concur.
Footnotes
1Rollo,pp.1017.
2SpecialSeventeenthDivisioncomposedofJ.AntonioM.Martinez,ponente,andJJ.SerafinV.C.
GuingonaandSalomeA.Montoya,concurring.
3Rollo,pp.1617.
4Ibid.,pp.2021.
5Ibid.,pp.1112.
6PresidedbyJudgeLeonardoM.Rivera.
7Rollo,p.10.
8Ibid.,pp.106107.
9Ibid.,p.392.
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10Ibid.,p.399.
11Ibid.,p.402.
12Ibid.,p.410.
13Ibid.,p.416.
14Ibid.,p.423.
15Ibid.,p.247.
16Ibid.,pp.25355.
1723SCRA230,April26,1968.
186SCRA938,December29,1962.
19Rollo,p.14.
2083Phil.543(1949).
21U.S.vs.Rapian,1Phil.294,296(1902)CityofManilavs.delRosario,5Phil.227,231(1905)
Gabriel,etal.vs.Bartolome,etal.,7Phil.699,706(1907)Sidecovs.Pascua,13Phil.342,344
(1909)Arriolavs.GomezDelaSerna,14Phil.627,629(1909)Ceavs.Villanueva,18Phil.538,
542(1911)Bondadvs.Bondad,34Phil.232,233(1916)Serravs.NationalBank,45Phil.907
(1924)Escritorvs.IntermediateAppellateCourt,155SCRA577,583,November12,1987.
22Article529oftheCivilCode.
23PleasantvilleDevelopmentCorporationvs.CourtofAppeals,253SCRA10,18,February1,1996.
24Roblezavs.CourtofAppeals,174SCRA354,365,June28,1989citingSection28,Rule130,
RulesofCourt.
25Article528oftheCivilCode.
26Ortizvs.Kayanan,92SCRA146,159,July30,1979citingArticle528,CivilCode.
27Ignaciovs.Hilario,76Phil.605(1946)Sarmientovs.Agana,129SCRA122,April30,1984.
28Rollo,p.14.
29OriginalRecords,p.179.
30238SCRA463,470471,November29,1994.
31Article450.Theownerofthelandonwhichanythinghasbeenbuilt,plantedorsowninbadfaith
maydemandthedemolitionofthework,orthattheplantingorsowingberemoved,inorderto
replacethingsintheirformerconditionattheexpenseofthepersonwhobuilt,plantedorsowedor
hemaycompelthebuilderorplantertopaythepriceoftheland,andthesowertheproperrent.
32136SCRA475,483,May16,1985.
33Ignaciovs.Hilano,supra.InSarmientovs.Agana(129SCRA122,126,April30,1984),itwas
heldthat:
Theownerofthebuildingerectedingoodfaithonalandownedbyanother,isentitledtoretainthe
possessionofthelanduntilheispaidthevalueofhisbuilding,underArticle453(nowArticle546)
Theowneroftheland,upontheotherhand,hastheoption,underArticle361(nowArticle448),
eithertopayforthebuildingortosellhislandtotheownerofthebuilding.Buthecannot,as
respondentsheredid,refusebothtopayforthebuildingandtosellthelandandcompeltheowner
ofthebuildingtoremoveitfromthelandwhereitiserected.Heisentitledtosuchremotiononly
when,afterhavingchosentosellhisland,theotherpartyfailstopayforthesame.
34Rollo,pp.423426.
35109Phil.260,264(1960).
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36atp.265.
37Inviewofthecompromiseagreement,theencroachingwallwastorndown.Asexplainedin
privaterespondent'sMemorandum,theareaencroachedbypetitioner'sbuildingisonly520square
meters,nolongertheoriginal770referredtointhestatementoffactsnarratedbythetwolower
courts.(Rollo,p.467).
38Supra.
39HeirsofCrisantaY.GabrielAlmoradievs.CourtofAppeals,229SCRA15,29,January4,1994.
40Granavs.CourtofAppeals,supra.
41Castillovs.CourtofAppeals,205SCRA529,537,January27,1992,citingIlocosNorteElectric
Companyvs.CourtofAppeals,179SCRA5,November6,1989andEspirituvs.CourtofAppeals,
137SCRA50,June19,1985.
42Supra,atpp.483486.
43Article546.Necessaryexpensesshallberefundedtoeverypossessorbutonlythepossessorin
goodfaithmayretainthethinguntilhehasbeenreimbursedtherefor.
Usefulexpensesshallberefundedonlytothepossessoringoodfaithwiththesamerightof
retention,thepersonwhohasdefeatedhiminthepossessionhavingtheoptionofrefundingthe
amountoftheexpensesorofpayingtheincreaseinvaluewhichthethingmayhaveacquiredby
reasonthereof.
TheLawphilProjectArellanoLawFoundation

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