TECNOGAS Philippines Manufacturing Corporation, Petitioner,

Vs.
COURT O APPEA!S "or#er Special Se$enteenth %i$ision& an'
E'uar'o U(, Respondents.
Ponente) *ustice Pangani+an
acts)
Petitioner which is the registered owner of a parcel of land situated in Barrio San Dionisio, Paraaque, Metro
Manila known as Lot 453!"# $he land was purchased %& plaintiff fro' Pari( )ndustries, )nc# in *+,, together
with all the %uildings and i'pro-e'ents thereon#
Pri-ate respondent is the registered owner of a parcel of land known as Lot .o# 453!B of Paraaque# $he said
land which ad/oins plaintiff0s land was purchased %& defendant fro' a certain 1nrile "ntonio# $hereafter,
defendant purchased another lot also ad/oining plaintiff0s land fro' a certain Miguel 2odrigue( and the sa'e was
registered in defendant0s na'e#
$he portions of the %uildings and wall %ought %& plaintiff fro' Pari( )ndustries are occup&ing a portion of
defendant0s ad/oining land# 3pon learning encroach'ent of a portion of defendant0s land, plaintiff offered to %u&
particular portion of defendant0s land %ut defendant, refused#
)n *+3, the parties entered into a pri-ate agree'ent wherein plaintiff agreed to de'olish the wall which ser-ed as
fence di-iding their properties# $hus gi-ing to defendant possession of a portion of his land pre-iousl& enclosed %&
the wall#
Defendant later filed a co'plaint %efore the office of Municipal 1ngineer of Paraaque, Metro Manila as well as
%efore the 4ffice of the Pro-incial 5iscal of 2i(al against plaintiff in connection with the encroach'ent or
occupation %& plaintiff0s %uildings and walls %ut co'plaint did not prosper
$hereafter, defendant dug a canal along plaintiff0s wall# " portion of which collapsed and led to the filing %&
plaintiff of supple'ental co'plaint and a separate cri'inal co'plaint for 'alicious 'ischief against defendant and
his wife#
$he 2egional $rial 6ourt thereafter rendered a in fa-or of plaintiff# Defendant was ordered to sell to plaintiff
portion of land owned %& hi'#
"ppeal was interposed with the 6ourt of "ppeals which re-ersed and set aside the decision of the 2egional $rial
6ourt#
,ssue-s)
7hether or not the 6ourt of "ppeals erred in holding the petitioner a %uilder in %ad faith
7hether or not the 6ourt of "ppeals erred when it used the a'ica%le settle'ent %etween the petitioner and the
pri-ate respondent, as estoppel a'ounting to recognition %& petitioner of respondent0s right o-er his propert&#
7hether or not the 6ourt of "ppeals erred in ordering the re'o-al of the 8structures and surrounding walls
Ruling)
On the .uestion of the petitioner/s goo' faith
7hen petitioner purchased the land fro' Pari( )ndustries, the structures were alread& in e9istence# )t is
assu'ed that petitioner0s predecessor!in!interest, %uilt the structures# Moreo-er, "rticle 5:+ of the 6i-il 6ode
presu'es good faith, and since no proof e9ists to show that the encroach'ent was done in %ad faith %& the %uilder,
the latter should %e presu'ed to ha-e %uilt the' in good faith#
;ood faith consists in the %elief of the %uilder that the land he is %uilding on is his# <ence, such good faith, %&
law, passed on to Pari(0s successor, petitioner in this case# $he good faith ceases fro' the 'o'ent defects in the
title are 'ade known to the possessor, %& e9traneous e-idence or %& suit for reco-er& of the propert& %& the true
owner#
1ncroach'ent in the present case was caused %& a -er& slight de-iation of wall used as fence# )t was an error
with good faith# 6onsequentl&, the %uilder, if sued %& the landowner for reco-er& of possession, the landowner
could ha-e in-oked "rt# 44= of the 6i-il 6ode, which reads>
The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his
own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or
planted to pay the price of the land, and the one who sowed, the proper rent. owever, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. !n such case, he shall pay reasonable rent, if the owner of the land
does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fi" the terms thereof.
The .uestion, ho0e$er, is 0hether the sa#e +enefit can +e in$o1e' +( petitioner, 0ho is not the +uil'er
of the offen'ing structures +ut possesses the# as +u(er. $he Supre'e 6ourt answered in the affir'ati-e#
5irst of all, there is no sufficient showing that petitioner was aware of the encroach'ent at the ti'e it acquired
the propert&# )n fact, pri-ate respondent 1duardo 3& hi'self was unaware of such intrusion until after *+ when
he hired a sur-e&or# 3pon %eing apprised of the encroach'ent, petitioner i''ediatel& offered to %u& the area a
conduct consistent with good faith#
On Estoppel
Petitioner cannot %e held in estoppel for entering into the a'ica%le settle'ent# Petitioner was onl& tr&ing to
a-oid a litigation#
Super-ening awareness of the encroach'ent %& petitioner does not 'ilitate against its right to clai' the status
of a %uilder in good faith# " reading of "rticle 44= will show that the landowner0s e9ercise of his option can onl&
take place after the %uilder shall ha-e co'e to know of the intrusion# 4nl& when %oth parties shall ha-e %eco'e
aware their ad-erse clai's is onl& then will the occasion for e9ercising the option of the landowner arise#
Options of the !an'o0ner "Pri$ate Respon'ent&
)n -iew of the good faith of %oth parties, their rights and o%ligations are to %e go-erned %& "rt# 44= of the 6i-il
6ode ?above stated@# )n which case, the owner of the land is the one authori(ed to e9ercise the option, %ecause his
right is older, and %ecause, %& the principle of accession#
$he pri-ate respondent0s insistence on the re'o-al of the encroaching structures, is thus legall& flawed# $his is
not one of the re'edies %estowed upon hi' %& law# )t would %e a-aila%le onl& if and when he chooses to co'pel
the petitioner to %u& the land at a reasona%le price %ut the latter fails to pa& such price# $his has not taken place#
<is options are li'ited to> ?@ appropriating the encroaching portion of petitioner0s %uilding after pa&'ent of
proper inde'nit&, or ?:@ o%liging the latter to %u& the lot occupied %& the structure# <e cannot e9ercise a re'ed& of
his own liking#
.either is petitioner0s pra&er that pri-ate respondent %e ordered to sell the land the proper re'ed&#
Petitioner, was ordered to pa& the rent for the propert& occupied %& its %uilding as prescri%ed %& respondent
6ourt fro' 4cto%er 4, *+*, %ut onl& up to the date pri-ate respondent ser-es notice of its option upon petitioner
and the trial courtA that is, if such option is for pri-ate respondent to appropriate the encroaching structure#
$he petition was there%& granted and the assailed Decision are re-ersed and set aside# $he case was re'anded
to the 2egional $rial 6ourt#