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150666 VILLARAMA, JR., J FACTS: Respondent-spouses purchased from Vergon Realty Investments Corporation (Vergon) Lot No. 2-R, a 325-square-meter land petitioners are the owners of Lot No. 2-S, which is adjacent to respondents land After obtaining the necessary building permit and the approval of Vergon, petitioners constructed a house on Lot 2-R which they thought was Lot No. 2-S Respondent-spouses immediately demanded petitioners to demolish the house and vacate the property Respondent-spouses filed an action to recover ownership and possession CA affirmed the RTCs finding contracts to sell, and the survey report made by the geodetic engineer, petitioners house was built on the lot of the respondent-spouses. CA further ruled that petitioners cannot use the defense of allegedly being a purchaser in good faith for wrongful occupation of land

ISSUE: Whether CA was correct in affirming the decision of the trial court ordering the petitioner to demolish their only house and vacate the lot and pay damages HELD: The petition is partly meritorious. Trial court and ca erred Article 527[14] of the Civil Code presumes good faith, and since no proof exists to show that the mistake was done by petitioners in bad faith, the latter should be presumed to have built the house in good faith. When a person builds in good faith on the land of another, Article 448 of the Civil Code governs The builder in good faith can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around.

He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option. It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land. The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may have made on the subject property This case must be remanded to the RTC which shall conduct the appropriate proceedings to assess the respective values of the improvement and of the land