C I V R E V.

P R O P E RT Y

SARMIENTO vs AGANA
1. Before Ernesto Valentino and Rebecca Lorenzo wed,
Rebecca's mother had told Ernesto that they could build a
residential house on a lot of 145 sqm in Paranaque. In
1967, Ernesto did construct a residential house on the
land at a cost of P8,000.00 - P10,000.00on the
assumption that the wife's mother was the owner of the
land and that somehow it would be transferred to the
spouses.
2. It subsequently turned out that the land had been titled
in the name of Mr. & Mrs. Jose C. Santo, Jr. who, on
September 1974 sold the same to petitioner Sarmiento.

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. (Paragraphing supplied)

3. January 1975, Sarmiento asked Ernesto and wife to

vacate and later on filed an Ejectment suit against them.
Before the Municipal Court, SARMIENTO submitted the
deed of sale of the land in her favor, which showed the
price to be P15,000.00. On the other hand, Ernesto
testified that the then cost of the residential house would
be from P30,000.00 to P40,000.00.

9. The value of the land, purchased for P15,000.00 on

September 1974, could not have been very much more
than that amount during the following January when
Ernesto and wife were asked to vacate. However, Ernesto
and wife have not questioned the P25,000.00 valuation
determined by the CFI.

4. Municipal Court found that private respondents had built

the residential house in good faith, and, disregarding the
testimony of Ernesto, that it had a value of P20,000.00. It
then ordered ERNESTO and wife to vacate the LAND
after SARMIENTO has paid them the mentioned sum of
P20,000.00.

10. In regards to the valuation of the residential house, the

only evidence presented was the testimony of Ernesto that
its worth at the time of the trial should be from P30,000.00
- P40,000.00. The Municipal Court chose to assess its
value at P20,000.00, or below the minimum testified by
ERNESTO, while the CFI chose the maximum of
P40,000.00.

5. CFI Pasay modified the decision under Article 448 of

the Civil Code. Sarmiento was required, within 60 days, to
exercise the option to:
reimburse Ernesto and wife the sum of 40,000.00
as the value of the residential house, or
to allow them to purchase the land for
P25,000.00.
6. Sarmiento did not exercise any of the two options within
the indicated period, and ERNESTO was then allowed to
deposit the sum of P25,000.00 with the Court as the
purchase price for the LAND. SARMIENTO then instituted
the instant certiorari proceedings.
ISSUE: WON Sarmiento (landowner) is compelled to
exercise either option, to buy the building or to sell
the land to the builder. YES
7. We agree that Ernesto and wife were builders in good
faith wherein they had constructed the residential house.
As far as they knew, the land was owned by Ernesto's
mother-in-law who, having stated they could build on the
property, could reasonably be expected to later on give
them the land.
8. In regards to builders in good faith, Article 448 of the
Code provides:
ART. 448. The owner of the land on which anything has been
built, sown or planted in good faith,

11. The provision for the exercise by petitioner of either

the option to indemnify private respondents in the amount
of P40,000.00, or the option to allow private respondents
to purchase the land at P25,000.00 was a correct
decision.
12. The owner of the building erected in good faith on a
land owned by another, is entitled to retain the possession
of the land until he is paid the value of his building, under
article 453 (now Article 546).
13. The owner, of the land. upon, the other hand, has the
option, under article 361 (now Article 448), either to pay
for the building or to sell his land to the owner of the
building. But he cannot, as respondents here did, refuse
both to pay for the building and to sell the land and compel
the owner of the building to remove it from the land where
it is erected. He is entitled to such remotion only when,
after having chosen to sell his land, the other party fails to
pay for the same.

Sps. DEL CAMPO vs ABESIA

1. This case involves a parcel of land, Lot No. 1161 in
Cebu, with an area of only about 45sqm. 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.

C I V R E V. P R O P E RT Y

2. The trial court appointed a commissioner in accordance

with the agreement of the parties who recommended that
the property be divided into two lots: Lot 1161-A with an
area of 30sqm for plaintiffs and Lot No. 1161-B with an
area of 15sqm for the defendants.
3. It was shown in the survey that the house of defendants
occupied the portion with an area of 5sqm of Lot 1161-A of
plaintiffs. The parties asked the trial court to finally settle
and adjudicate who among the parties should take
possession of the 5sqm of the land in question.
4. TC - believed that the plaintiffs cannot be obliged to pay
for the value of the portion of the defendants' house which
has encroached an area of 5sqm of the land alloted to
them. The defendants cannot also be obliged to pay for
the price of the said 5sqm.
- The rights of a builder in good faith under
Art.448CC does not apply to a case where one co-owner
has built, planted or sown on the land owned in common.
5. CA - considering that the defendants have expressed
their conformity to the partition that was made by the
commissioner as shown in the sketch plan attached, said
defendants have no other alternative except to remove
and demolish part of their house that has encroached an
area of 5sqm of the land allotted to the plaintiffs.
- assigning Lot 1161-A with an area of 30sqm to
the plaintiffs spouses Abesia. Further, the defendants are
hereby ordered at their expense to remove and demolish
part of their house which has encroached an area of 5sqm
from Lot 1161-A of the plaintiffs; within sixty (60) days from
date hereof and to deliver the possession of the same to
the plaintiffs.
ISSUE: WON Art. 448 of the CC is applicable to a
builder in good faith when the property involved is
owned in common. YES
6. The court a quo correctly held that Article 448 of the
Civil Code cannot apply where a co-owner builds, plants
or sows on the land owned in common for then he did not
build, plant or sow upon land that exclusively belongs to
another but of which he is a co-owner. The co-owner is not
a third person under the circumstances, and the situation
is governed by the rules of co-ownership.
7. However, when, as in this case, the co-ownership is
terminated by the partition and it appears that the house of
defendants overlaps or occupies a portion of 5sqm 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.
8. 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.
9. 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.
10. SC - plaintiff to indemnify defendants for the value of
the Id portion of the house of defendants in accordance
with Art.546 CC, if plaintiffs elect to appropriate the same.
Otherwise, the defendants shall pay the value of the 5sqm
of land occupied by their house at such price as may be
agreed upon with plaintiffs and if its value exceeds the
portion of the house that defendants built thereon, the
defendants may choose not to buy the land but
defendants must pay a reasonable rental for the use of the
portion of the land of plaintiffs As may be agreed upon
between the parties.
11. In case of disagreement, the rate of rental shall be
determined by the trial court. Otherwise, defendants may
remove or demolish at their own expense the said portion
of their house.

IGNAO vs IAC
1. Petitioner Florencio Ignao and his uncles private
respondents Juan Ignao and Isidro Ignao were co-owners
of a parcel of land with an area of 534sqm situated in
Kawit, Cavite. Pursuant to an action for partition filed by
petitioner the then CFI directed the partition of the
aforesaid land, alloting 133.5sqm to private respondents
Juan and Isidro, and giving the remaining portion with a
total area of 266.5sqm to petitioner Florencio. However,
no actual partition was ever effected.
2. On July 1978, petitioner instituted a complaint for
recovery of possession of real property against private
respondents Juan and Isidro, alleging that the area
occupied by the two houses built by private respondents
exceeded the 133.5sqm previously alloted to them by the
TC.
3. LC found that the houses of Juan and Isidro actually
encroached upon a portion of the land belonging to
Florencio. Upon agreement of the parties, TC conducted a
survey which disclosed that the house of Juan occupied
42sqm while that of Isidro occupied 59sqm of Florencio's
land or a total of 101sqm.
4. TC ruled that although private respondents occupied a
portion of Florencio's property, they should be considered

C I V R E V. P R O P E RT Y

builders in good faith. The TC took into account the

decision of the CFI Cavite in the action for partition that
the defendants had, before partition, been in possession
of more than what rightfully belongs to them, their
possession of what is in excess of their rightful share can
at worst be possession in good faith which exempts them
from being condemned to pay damages by reason
thereof.
5. TC stated that pursuant to Art.448CC, the owner of the
land (Florencio) should have the choice to either
appropriate that part of the house standing on his land
after payment of indemnity or oblige the builders in good
faith (Juan and Isidro) to pay the price of the land.
However, the trial court observed that based on the facts
of the case, it would be useless and unsuitable for
Florencio to exercise the first option thus, it ordered
Florencio to sell to Juan and Isidro those portions of his
land respectively occupied by the latter.
6. Petitioner Florencio Ignao appealed to the IAC which
affirmed the decision of the TC.
ISSUE: WON Art. 448 CC should apply to a builder in
good faith on a property held in common. YES
7. Petitioner Florencio, in his first assignment of error,
asseverates that the court a quo erred in applying Article
448 of the Civil Code, since this article contemplates a
situation wherein the land belongs to one person and the
thing built, sown or planted belongs to another. In the
instant case, the land in dispute used to be owned in
common by the contending parties.
Article 448 provides:
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.

However, when, as in this case, the ownership is

terminated by the partition and it appears that the
home 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 is a
co-ownership if good faith has been established.
9. In other words, when the co-ownership is terminated by
a partition and it appears that the house of an erstwhile
co-owner has encroached upon a portion pertaining to
another co-owner which was however made in good faith,
then the provisions of Article 448 should apply to
determine the respective rights of the parties.
10. Both the trial court and the Appellate Court erred when
they peremptorily adopted the "workable solution" in the
case of Grana vs. Court of appeals, and ordered the
owner of the land, petitioner Florencio, to sell to private
respondents, Juan and Isidro, the part of the land they
intruded upon, thereby depriving petitioner of his right to
choose. Such ruling contravened the explicit provisions of
Article 448 to the effect that "the owner of the land . . .
shall have the right to appropriate . . .or to oblige the one
who built . . . to pay the price of the land . . . ." The law is
clear and unambiguous when it confers the right of choice
upon the landowner and not upon the builder and the
courts.
11. SC - petitioner Florencio Ignao is directed within 30
days from entry of judgment to exercise his option to
either appropriate as his own the portions of the houses of
Juan and Isidro Ignao occupying his land upon payment of
indemnity or sell to private respondents the 101sqm
occupied by them at such price as may be agreed upon.
- Should the value of the land exceed the value of
the portions of the houses that private respondents have
erected thereon, private respondents may choose not to
buy the land but they must pay reasonable rent for the use
of the portion of petitioner's land as may be agreed upon
by the parties. In case of disagreement, the rate of rental
and other terms of the lease shall be determined by the
trial court. Otherwise, private respondents may remove or
demolish at their own expense the said portions of their
houses encroaching upon petitioner's land.

8. In the case of Spouses del Campo vs. Abesia, wherein

the Court ruled that:
The court a quo correctly held that Article 448 of
the Civil Code cannot apply where a co-owner
builds, plants or sows on the land owned in
common for then he did not build, plant or sow
upon land that exclusively belongs to another but
of which he is a co-owner. The co-owner is not a
third person under the circumstances, and the
situation is governed by the rules of coownership.

TECHNOGAS PHILS vs CA
1. Plaintiff-Technogas Phils (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 Paraaque, Metro Manila known as Lot
4531-A of Lot 4531. The said land was purchased by
plaintiff from Pariz Industries, Inc, together with all the
buildings and improvements thereon.

C I V R E V. P R O P E RT Y

2. Defendant-Eduardo Uy (herein private respondent) is

the registered owner of a parcel of land known as Lot No.
4531-B of Lot 4531 which adjoins plaintiffs land, was
purchased by defendant from a certain Enrile Antonio also
in 1970. In 1971, defendant purchased another lot also
adjoining plaintiffs land from a certain Miguel Rodriguez
and the same was registered in defendants name.
3. Portions of the buildings and wall bought by plaintiff
together with the land from Pariz Industries are occupying
a portion of defendants adjoining land and upon learning
of the encroachment or occupation by its buildings and
wall of a portion of defendants land, plaintiff offered to buy
from defendant that particular portion of defendants land
occupied by portions of its buildings and wall with an area
of 770sqm but defendant, however, refused the offer.
4. In 1973, the parties entered into a private agreement
before a certain Col. Rosales in Malacaang, wherein
plaintiff agreed to demolish the wall at the back portion of
its land thus giving to defendant possession of a portion of
his land previously enclosed by plaintiffs wall. Defendant
later filed a complaint before the office of Municipal
Engineer of Paraaque, and before the Office of the
Provincial Fiscal of Rizal against plaintiff in connection
with the encroachment or occupation by plaintiffs buildings
and walls of a portion of its land but said complaint did not
prosper.
5. Defendant dug a canal along plaintiffs wall, a portion of
which collapsed in June 1980, and led to the filing by
plaintiff of the supplemental complaint and a separate
criminal complaint for malicious mischief against
defendant and his wife which ultimately resulted into the
conviction in court of defendants wife for the crime of
malicious mischief.
6. RTC Pasay - in favor of petitioner who was the plaintiff
therein ordering the respondent to sell to plaintiff that
portion of land owned by him and occupied by portions of
plaintiffs buildings and wall at the price of P2,000/sqm
7. Appeal was duly interposed with CA - reversed and set
aside the decision of the RTC. Hence this petition.
ISSUES: A. WON the petitioner is a builder in bad faith
because of a presumptive knowledge of the metes
and bounds of his property. NO.
B. WON the benefit of a builder in good faith
under Art. 448 can be invoked by the petitioner. YES.
8. There is no question that when petitioner purchased the
land from Pariz Industries, the buildings and other
structures were already in existence. The record is not
clear as to who actually built those structures, but it may
well be assumed that petitioners predecessor-in-interest,
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, needle-shaped

portion of private respondents land was done in bad faith

by the builder of the encroaching structures, the latter
should be presumed to have built them in good faith.
9. It is presumed that possession continues to be enjoyed
in the same character in which it was acquired, until the
contrary is proved. 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. Hence, such
good faith, by law, passed on to Parizs successor,
petitioner in this case. Further, (w)here one derives title to
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.
10. And possession acquired in good faith does not lose
this character except in case and from the moment facts
exist which show that the possessor is not unaware that
he possesses the thing improperly or wrongfully. 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 the property by the true owner.
11. Recall that the encroachment in the present case was
caused by a very slight deviation of the erected wall (as
fence) which was supposed to run in a straight line from
point 9 to point 1 of petitioners lot. It was an error which, in
the context of the attendant facts, was consistent with
good faith. Consequently, the builder, if sued by the
aggrieved landowner for recovery of possession, could
have invoked the provisions of Art. 448 of the Civil Code.
12. The obvious benefit to the builder under this article is
that, instead of being outrightly ejected from the land, he
can compel the landowner to make a choice between the
two options: (1) to appropriate the building by paying the
indemnity required by law, or (2) sell the land to the
builder. The landowner cannot refuse to exercise either
option and compel instead the owner of the building to
remove it from the land.
13. B. 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 TC that various factors in evidence adequately show
petitioners 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.
14. These presumptions state, under Section 3 (a) of Rule
131 of the Rules of Court, that the person is innocent of a
crime or wrong; and under Section 3 (ff) of Rule 131, that
the law has been obeyed. In fact, private respondent
Eduardo Uy himself was unaware of such intrusion into his
property until after 1971 when he hired a surveyor,
following his purchase of another adjoining lot, to survey
all his newly acquired lots. Upon being apprised of the
encroachment, petitioner immediately offered to buy the
area occupied by its building -- a species of conduct
consistent with good faith.

C I V R E V. P R O P E RT Y

15. 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
stepped into the shoes of the seller in regard to all rights
of ownership over the immovable sold, including the right
to compel the private respondent to exercise either of the
two options provided under Article 448 of the Civil Code.
Estoppel
Petitioner cannot be held in estoppel for entering into the
amicable settlement, the pertinent portions of which read:
That the parties hereto have agreed that the rear portion
of the fence that separates the property of the complainant
and respondent shall be demolished up to the back of the
building housing the machineries which demolision (sic)
shall be undertaken by the complainant at anytime.
That the fence which serve(s) as a wall housing the
electroplating machineries shall not be demolished in the
mean time which portion shall be subject to negotiation by
herein parties.
It is clear that petitioner agreed only to the demolition of a
portion of the wall separating the adjoining properties of
the parties -- i.e. up to the back of the building housing the
machineries. But that portion of the fence which served as
the wall housing the electroplating machineries was not to
be demolished. Rather, it was to be subject to negotiation
by herein parties. The settlement may have recognized
the ownership of private respondent but such admission
cannot be equated with bad faith. Petitioner was only
trying to avoid a litigation, one reason for entering into an
amicable settlement.
Options of Private Respondent
In view of the good faith of both petitioner and private
respondent, their rights and obligations are to be governed
by Art. 448.
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, the law has provided a just 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. 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
entitled to the ownership of the accessory thing. (3
Manresa 213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382;
Co Tao vs. Chan Chico, G. R. No. 49167, April 30, 1949;
Article applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off.
Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050).
His options are limited to: (1) appropriating the
encroaching portion of petitioners building after payment
of proper indemnity, or (2) obliging the latter to buy the lot

occupied by the structure. He cannot exercise a remedy of

his own liking.
Petitioner, however, must also pay the rent for the property
occupied by its building as prescribed by respondent
Court from October 4, 1979, but only up to the date private
respondent serves notice of its option upon petitioner and
the trial court; that is, if such option is for private
respondent to appropriate the encroaching structure. In
such event, petitioner would have a right of retention
which negates the obligation to pay rent. The rent should
however continue if the option chosen is compulsory sale,
but only up to the actual transfer of ownership.

PLEASANTVILLE DEVELOPMENT CORPORATION vs

CA
1. Edith Robillo purchased from petitioner a parcel of land
designated as Lot 9, Phase II at Pleasantville Subdivision,
Bacolod City. In 1975, respondent Eldred Jardinico bought
the rights to the lot from Robillo. At that time, Lot 9 was
vacant.
2. Upon completing all payments, Jardinico secured from
the RD Bacolod City TCT in his name and he discovered
that improvements had been introduced on Lot 9 by
respondent Wilson Kee, who had taken possession
thereof.
3. It appears that on March 1974, Kee bought on
installment Lot 8 of the same subdivision from C.T. Torres
Enterprises, Inc., 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. Kee paid CTTEI the relocation fee,
taking actual possession of Lot for the preparation of the
lot plan. CTTEI through its employee, Zenaida Octaviano,
accompanied Kee's wife, Donabelle Kee, to inspect Lot 8.
Unfortunately, the parcel of land pointed by Octaviano was
Lot 9. Thereafter, Kee proceeded to construct his
residence, a store, an auto repair shop and other
improvements on the lot.
4. After discovering that Lot 9 was occupied by Kee,
Jardinico confronted him. The parties tried to reach an
amicable settlement, but failed.
5. Jardinico's lawyer wrote Kee, demanding that the latter
remove all improvements and vacate Lot 9 but Kee
refused to do so, Jardinico filed with the MTCC Bacolod
City a complaint for ejectment with damages against Kee.
6. Kee, in turn, filed a third-party complaint against
petitioner and CTTEI.
7. MTCC - the erroneous delivery of Lot 9 to Kee was
attributable to CTTEI.

C I V R E V. P R O P E RT Y

- petitioner had already rescinded its contract with

Kee over Lot 8 for the latter's failure to pay the
installments due, and that Kee had not contested the
rescission. The rescission was effected in 1979, before the
complaint was instituted.
- that Kee no longer had any right over the lot
subject of the contract between him and petitioner.
Consequently, Kee must pay reasonable rentals for the
use of Lot 9, and, furthermore, he cannot claim
reimbursement for the improvements he introduced on
said lot.
8. On appeal, the RTC Bacolod City - petitioner and
CTTEI were not at fault or were not negligent, there being
no preponderant evidence to show that they directly
participated in the delivery of Lot 9 to Kee.
- Kee a builder in bad faith. It further ruled that
even assuming arguendo that Kee was acting in good
faith, he was, nonetheless, guilty of unlawfully usurping
the possessory right of Jardinico over Lot 9 from the time
he was served with notice to vacate said lot, and thus was
liable for rental.
9. Upon denial of the MR, Kee appealed directly to the
Supreme Court, which referred the matter to the CA:
- Kee was a builder in good faith, as he was
unaware of the "mix-up" when he began construction of
the improvements on Lot 8. It further ruled that the
erroneous delivery was due to the negligence of CTTEI,
and that such wrong delivery was likewise imputable to its
principal, petitioner herein. The appellate court also ruled
that the award of rentals was without basis.
ISSUES: a. Was Kee a builder in good faith? YES
b. What is the liability, if any, of petitioner and
its agent, C.T. Torres Enterprises, Inc.?
Solidary liable for damages due to negligence
10. a. We agree with the following observation of the CA:
The roots of the controversy can be traced directly
to the errors committed by CTTEI, when it pointed
the wrong property to Wilson Kee and his wife. It
is highly improbable that a purchaser of a lot
would knowingly and willingly build his residence
on a lot owned by another, deliberately exposing
himself and his family to the risk of being ejected
from the land and losing all improvements
thereon, not to mention the social humiliation that
would follow.
Under the circumstances, Kee had acted in the
manner of a prudent man in ascertaining the
identity of his property. Under the Torrens system
of land registration, Kee is presumed to have

knowledge of the metes and bounds of the

property with which he is dealing.
Upon Kee's receipt of the map, his wife went to
the subdivision site accompanied by CTTEI's
employee,
Octaviano,
who
authoritatively
declared that the land she was pointing to was
indeed Lot 8. Having full faith and confidence in
the reputation of CTTEI, and because of the
company's positive identification of the property,
Kee saw no reason to suspect that there had
been a misdelivery. The steps Kee had taken to
protect his interests were reasonable. There was
no need for him to have acted ex-abundantia
cautela, such as being present during the
geodetic engineer's relocation survey or hiring an
independent geodetic engineer to countercheck
for errors, for the final delivery of subdivision lots
to their owners is part of the regular course of
everyday business of CTTEI. Because of CTTEI's
blunder, what Kee had hoped to forestall did in
fact transpire. Kee's efforts all went to naught.
11. 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 .
12. 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, Kee's good faith. Petitioner failed to prove
otherwise.
13. Violations of Contract of Sale on Installment have no
bearing whatsoever on whether Kee was a builder in good
faith, that is, on his state of mind at the time he built the
improvements on Lot 9.
14. The subject matter of this provision of the contract is
the change of the location, contour and condition of the lot
due to erosion. It merely provides that the vendee, having
examined the property prior to the execution of the
contract, agrees to shoulder the expenses resulting from
such change.
15. We do not agree with the interpretation of petitioner
that Kee contracted away his right to recover damages
resulting from petitioner's negligence. Such waiver would
be contrary to public policy and cannot be allowed. "Rights
may be waived, unless the waiver is contrary to law, public
order, public policy, morals, or good customs, or
prejudicial to a third person with a right recognized by
law."
16. b. The rule is that the principal is responsible for the
acts of the agent, done within the scope of his authority,
and should bear the damage caused to third persons. On
the other hand, the agent who exceeds his authority is
personally liable for the damage.

C I V R E V. P R O P E RT Y

17. CTTEI was acting within its authority as the sole real
estate representative of petitioner when it made the
delivery to Kee. In acting within its scope of authority, it
was, however, negligent. It is this negligence that is the
basis of petitioner's liability, as principal of CTTEI, per
Articles 1909 and 1910 of the Civil Code.

5. TC finally adjudged defendants Pedro and Lising jointly

and severally liable for encroaching on plaintiffs land and
ordered them to solidarily pay the plaintiff Tandang Sora
Dev. Corp. actual and to remove all construction, including
barbed wires and fences, illegally constructed by
defendants on plaintiffs property at defendants expense.

18. Obviously, the deed of sale can have no effect on the

liability of petitioner. As we have earlier stated, petitioner's
liability is grounded on the negligence of its agent. On the
other hand, what the deed of sale regulates are the
reciprocal rights of Kee and Jardinico; it stressed that they
had reached an agreement independent of the outcome of
the case.

6. As a result, in February 1998, the Deputy Sheriff of

Quezon City directed petitioners, through an alias writ of
execution, to remove the house they constructed on the
land they were occupying.

19. Petitioner' s liability lies in the negligence of its agent

CTTEI. For such negligence, the petitioner should be held
liable for damages. Now, the extent and/or amount of
damages to be awarded is a factual issue which should be
determined after evidence is adduced. However, there is
no showing that such evidence was actually presented in
the trial court; hence no damages could flow be awarded.
20. The rights of Kee and Jardinico vis-a-vis each other,
as builder in good faith and owner in good faith,
respectively, are regulated by law (i.e., Arts. 448, 546 and
548 of the Civil Code). It was error for the CA to make a
"slight modification" in the application of such law, on the
ground of "equity". At any rate, as it stands now, Kee and
Jardinico have amicably settled through their deed of sale
their rights and obligations with regards to Lot 9.

ORQUIOLA vs CA
1. Pura Kalaw Ledesma was the registered owner of Lot
689 in Tandang Sora, Quezon City. This parcel of land
was adjacent to certain portions of Lot 707 of the Piedad
Estates, namely, Lot 707-A and 707-B, registered in the
name of Herminigilda Pedro.
2. Herminigilda sold Lot 707-A and 707-B to Mariano
Lising who then registered both lots and Lot 707-C in the
name of M.B. Lising Realty and subdivided them into
smaller lots.
3. Certain portions of the subdivided lots were sold to third
persons including herein petitioners, spouses Victor and
Honorata Orquiola, who purchased a portion of Lot 707-A2, Lot 5, which is now #33 Doa Regina St., Regina
Village, Tandang Sora, Quezon City.
4. Sometime in 1969, Pura Kalaw Ledesma filed a
complaintin RTC Quezon City against Herminigilda Pedro
and Mariano Lising for allegedly encroaching upon Lot
689. During the pendency of the action, Tandang Sora
Development Corporation replaced Pura Kalaw Ledesma
as plaintiff by virtue of an assignment of Lot 689 made by
Ledesma in favor of said corporation.

7. Petitioners filed with the CA a petition for prohibition

with prayer for a restraining order and preliminary
injunction alleging that they bought the subject parcel of
land in good faith and for value, hence, they were parties
in interest.
8. CA - dismissed the petition; that as buyers and
successors-in-interest of Mariano Lising, petitioners were
considered privies who derived their rights from Lising by
virtue of the sale and could be reached by the execution
order.
ISSUES: a. WON the petitioners were innocent
purchasers for value and builders in good faith. YES
b. WON the alias writ of execution may be
enforced against petitioners. NO
9. a. A buyer in good faith is one who buys the property of
another without notice that some other person has a right
to or interest in such property. He is a buyer for value if he
pays a full and fair price at the time of the purchase or
before he has notice of the claim or interest of some other
person in the property.
10. The determination of whether one is a buyer in good
faith is a factual issue which generally is outside the
province of this Court to determine in a petition for review.
Except when CA failed to take into account certain
relevant facts which, if properly considered, would justify a
different conclusion.
11. The instant case is covered by this exception to the
general rule. As found by the CA and not refuted by
private respondent, petitioners purchased the subject land
in 1964 from Mariano Lising. Civil Case No. Q-12918 was
commenced sometime in 1969. CA overlooked the fact
that the purchase of the land took place prior to the
institution of civil case.
12. In other words, the sale to petitioners was made
before Pura Kalaw Ledesma claimed the lot. Petitioners
could reasonably rely on Mariano Lisings Certificate of
Title which at the time of purchase was still free from any
third party claim. Hence, considering the circumstances of
this case, we conclude that petitioners acquired the land
subject of this dispute in good faith and for value.

C I V R E V. P R O P E RT Y

13. We find that petitioners are indeed builders in good

faith. Petitioner spouses acquired the land in question
without knowledge of any defect in the title of Mariano
Lising. Shortly afterwards, they built their conjugal home
on said land. It was only in 1998, when the sheriff of
Quezon City tried to execute the judgment civil case, that
they had notice of private respondents adverse claim. The
institution of civil case cannot serve as notice of such
adverse claim to petitioners since they were not
impleaded therein as parties.
14. As builders in good faith and innocent purchasers for
value, petitioners have rights over the subject property
and hence they are proper parties in interest in any case
thereon. Consequently, private respondents should have
impleaded them in Civil Case No. Q-12918. Since they
failed to do so, petitioners cannot be reached by the
decision in said case. In our view, the spouses Victor and
Honorata Orquiola have valid and meritorious cause to
resist the demolition of their house on their own titled lot,
which is tantamount to a deprivation of property without
due process of law.
15. b. CA wrongfully relied on the case of Medina vs Cruz.
Medina markedly differs from the present case on major
points. First, the petitioner in Medina acquired the right
over the houses and lot subject of the dispute after the
original action was commenced and became final and
executory. In the present case, petitioners acquired the
lot before the commencement of civil case. Second, the
right over the disputed land of the predecessors-in-interest
of the petitioner in Medina was based on a title of doubtful
authenticity, issued by the Spanish Government in favor of
one Don Mariano San Pedro y Esteban, while the right
over the land of the predecessors-in-interest of herein
petitioners is based on a fully recognized Torrens
title. Third, petitioners in this case acquired the registered
title in their own names, while the petitioner
in Medina merely relied on the title of her predecessor-ininterest and tax declarations to prove her alleged
ownership of the land.
16. We must stress that where a case like the present one
involves a sale of a parcel of land under the Torrens
system, the applicable rule is that a person dealing with
the registered property need not go beyond the certificate
of title; he can rely solely on the title and he is charged
with notice only of such burdens and claims as are
annotated on the title.
17. It is our view here that the petitioners, spouses Victor
and Honorata Orquiola, are fully entitled to the legal
protection of their lot by the Torrens system, unlike the
petitioner in the Medina case who merely relied on a
mere Titulo de Composicion.