CASE: Pleasantville v.

Court of Appeals

DOCTRINE: Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the
owner's agent, a builder in good faith? Yes.

The parties liable for the damage to the owner shall be solidarily liable.

FACTS: Edith Robillo purchased Lot 9, Phase II and located at Taculing Road, Pleasantville Subdivision, Bacolod City
from Pleasantville DevCor. Later in 1975, respondent Eldred Jardinico bought the rights to the lot from Robillo.

When Jardinico secured TCT No. 106367 from the Registry of Deeds he found out that Wilson Kee had taken
possession of the land and built improvements there.

Kee purchased Lot 8 from CT Torres Enterprises Inc. in 1974 on installment. However, a CTTEI employee pointed
out Lot 9 instead of 8 to the wife of Kee who inspected the lot, Kee later on built a house and sari-sari store on it.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach an amicable
settlement, but failed.

ISSUES:

a. Is Kee a possessor in bad faith?

b. Who is/are liable for damages on the improvements made on the lot?

RULING:

a. No.

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.

At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from the petitioner. He
was not aware that the lot delivered to him was not Lot 8. Thus, Kee is in good faith.

b. Pleasantville DevCo and CTTEI are solidarily liable for the damages.

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.

CTTEI was acting within its authority as the sole real estate representative of the 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 the petitioner's liability, as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.

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 Court of Appeals 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.
Thus, we delete items 2 (a) and (b) of the dispositive portion of the Court of Appeals' Decision [as reproduced
above] holding petitioner and CTTEI solidarily liable.

DISPOSITIVE:

WHEREFORE, the petition is partially GRANTED. The Decision of the Court of Appeals is hereby MODIFIED as
follows:

(1) Wilson Kee is declared a builder in good faith;

(2) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are declared
solidarily liable for damages due to negligence; however, since the amount and/or extent of such damages was not
proven during the trial, the same cannot now be quantified and awarded;

(3) Petitioner Pleasantville Development Corporation and respondent C.T. Torres Enterprises, Inc. are ordered to
pay in solidum the amount of P3,000.00 to Jardinico as attorney's fees, as well as litigation expenses; and
(4) The award of rentals to Jardinico is dispensed with.