Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 108894 February 10, 1997
TECNOGAS PHIIPPINES MANUFACTURING CORPORATION, petitioner,
vs.
COURT OF APPEAS !FORMER SPECIA SE"ENTEENTH #I"ISION$ a%&
E#UAR#O U', respondents.


PANGANI(AN, J.:
The parties in this case are oners of ad!oinin" lots in Para#a$ue, Metro Manila. It as
discovered in a surve%, that a portion of a buildin" of petitioner, hich as presu&abl%
constructed b% its predecessor'in'interest, encroached on a portion of the lot oned b%
private respondent. (hat are the ri"hts and obli"ations of the parties) Is petitioner
considered a builder in bad faith because, as held b% respondent *ourt, he is
+presu&ed to ,no the &etes and bounds of his propert% as described in his certificate
of title+) Does petitioner succeed into the "ood faith or bad faith of his predecessor'in'
interest hich presu&abl% constructed the buildin")
These are the $uestions raised in the petition for revie of the Decision
1
dated -u"ust
./, 011., in *-'2.R. *V No. ./.13 of respondent *ourt
)
here the disposition
reads4
*
(H5R56OR5, pre&ises considered, the Decision of the Re"ional
Trial *ourt is hereb% reversed and set aside and another one
entered 7
0. Dis&issin" the co&plaint for lac, of cause of action8
.. Orderin" Tecno"as to pa% the su& of P.,999.99 per &onth as
reasonable rental fro& October :, 01;1 until appellee vacates the
land8
3. To re&ove the structures and surroundin" alls on the
encroached area8
:. Orderin" appellee to pa% the value of the land occupied b% the
to'store% buildin"8
<. Orderin" appellee to pa% the su& of P.9,999.99 for and as
attorne%=s fees8
>. *osts a"ainst appellee.
-ctin" on the &otions for reconsideration of both petitioner and private respondent,
respondent *ourt ordered the deletion of para"raph : of
the dispositive portion in an -&ended Decision dated 6ebruar% 1, 0113, as follos4
4
(H5R56OR5, pre&ises considered, our decision of -u"ust ./,
011. is hereb% &odified deletin" para"raph : of the dispositive
portion of our decision hich reads4
:. Orderin" appellee to pa% the value of the land
occupied b% the to'store% buildin".
The &otion for reconsideration of appellee is hereb% D5NI5D for
lac, of &erit.
The fore"oin" -&ended Decision is also challen"ed in the instant petition.
The Facts
The facts are not disputed. Respondent *ourt &erel% reproduced the factual findin"s
of the trial court, as follos4
+
That plaintiff ?herein petitioner@ hich is a corporation dul% or"aniAed
and eBistin" under and b% virtue of Philippine las is the re"istered
oner of a parcel of land situated in Carrio San Dionisio, Para#a$ue,
Metro Manila ,non as Dot :330'- ?should be :<30'-@ of Dot :<30
of the *adastral Surve% of Para#a$ue, Metro Manila, covered b%
Transfer *ertificate of Title No. :9130> of the Re"istr% of Deeds of
the Province of RiAal8 that said land as purchased b% plaintiff fro&
PariA Industries, Inc. in 01;9, to"ether ith all the buildin"s and
i&prove&ents includin" the all eBistin" thereon8 that the defendant
?herein private respondent@ is the re"istered oner of a parcel of
land ,non as Dot No. :<30'C of Dot :<30 of the *adastral Surve%
of Para#a$ue, DR* ?2DRO@ Rec. No. 01>:< covered b% Transfer
*ertificate of Title No. .;1/3/, of the Re"istr% of Deeds for the
Province of RiAal8 that said land hich ad!oins plaintiff=s land as
1
purchased b% defendant fro& a certain 5nrile -ntonio also in 01;98
that in 01;0, defendant purchased another lot also ad!oinin"
plaintiffs land fro& a certain Mi"uel Rodri"ueA and the sa&e as
re"istered in defendant=s na&e under Transfer *ertificate of Title No.
30319, of the Re"istr% of Deeds for the Province of RiAal8 that
portions of the buildin"s and all bou"ht b% plaintiff to"ether ith the
land fro& PariA Industries are occup%in" a portion of defendant=s
ad!oinin" land8 that upon learnin" of the encroach&ent or occupation
b% its buildin"s and all of a portion of defendant=s land, plaintiff
offered to bu% fro& defendant that particular portion of defendant=s
land occupied b% portions of its buildin"s and all ith an area of
;;9 s$uare &eters, &ore or less, but defendant, hoever, refused
the offer. In 01;3, the parties entered into a private a"ree&ent
before a certain *ol. Rosales in Malaca#an", herein plaintiff
a"reed to de&olish the all at the bac, portion of its land thus "ivin"
to defendant possession of a portion of his land previousl% enclosed
b% plaintiff=s all8 that defendant later filed a co&plaint before the
office of Municipal 5n"ineer of Para#a$ue, Metro Manila as ell as
before the Office of the Provincial 6iscal of RiAal a"ainst plaintiff in
connection ith the encroach&ent or occupation b% plaintiff=s
buildin"s and alls of a portion of its land but said co&plaint did not
prosper8 that defendant du" or caused to be du" a canal alon"
plaintiff=s all, a portion of hich collapsed in Eune, 01/9, and led to
the filin" b% plaintiff of the supple&ental co&plaint in the above'
entitled case and a separate cri&inal co&plaint for &alicious
&ischief a"ainst defendant and his ife hich ulti&atel% resulted
into the conviction in court of defendant=s ife for the cri&e of
&alicious &ischief8 that hile trial of the case as in pro"ress,
plaintiff filed in *ourt a for&al proposal for settle&ent of the case but
said proposal, hoever, as i"nored b% defendant.
-fter trial on the &erits, the Re"ional Trial *ourt
,
of Pasa% *it%, Cranch 00;, in *ivil
*ase No. PF';>30'P, rendered a decision dated Dece&ber :, 01/1 in favor of
petitioner ho as the plaintiff therein. The dispositive portion
reads4
7
(H5R56OR5, !ud"&ent is hereb% rendered in favor of plaintiff and
a"ainst defendant and orderin" the latter to sell to plaintiff that
portion of land oned b% hi& and occupied b% portions of plaintiff=s
buildin"s and all at the price of P.,999.99 per s$uare &eter and to
pa% the for&er4
0. The su& of P::,999.99 to co&pensate for the
losses in &aterials and properties incurred b%
plaintiff throu"h thiever% as a result of the
destruction of its all8
.. The su& of P;,<99.99 as and b% a% of
attorne%=s fees8 and
3. The costs of this suit.
-ppeal as dul% interposed ith respondent *ourt, hich as previousl% stated,
reversed and set aside the decision of the Re"ional Trial *ourt and rendered the
assailed Decision and -&ended Decision. Hence, this recourse under Rule :< of the
Rules of *ourt.
The Issues
The petition raises the folloin" issues4
8
?-@
(hether or not the respondent *ourt of -ppeals erred in holdin" the
petitioner a builder in bad faith because it is +presu&ed to ,no the
&etes and bounds of his propert%.+
?C@
(hether or not the respondent *ourt of -ppeals erred hen it used
the a&icable settle&ent beteen the petitioner and the private
respondent, here both parties a"reed to the de&olition of the rear
portion of the fence, as estoppel a&ountin" to reco"nition b%
petitioner of respondent=s ri"ht over his propert% includin" the
portions of the land here the other structures and the buildin"
stand, hich ere not included in the settle&ent.
?*@
(hether or not the respondent *ourt of -ppeals erred in orderin"
the re&oval of the +structures and surroundin" alls on the
encroached area+ and in ithdrain" its earlier rulin" in its -u"ust
./, 011. decision for the petitioner +to pa% for the value of the land
occupied+ b% the buildin", only because the private respondent has
+&anifested its choice to de&olish+ it despite the absence of
co&pulsor% sale here the builder fails to pa% for the land, and
hich +choice+ private respondent deliberatel% deleted fro& its
Septe&ber 0, 01/9 anser to the supple&ental co&plaint in the
Re"ional Trial *ourt.
In its Me&orandu&, petitioner poses the folloin" issues4
2
-.
The ti&e hen to deter&ine the "ood faith of the builder under
-rticle ::/ of the Ne *ivil *ode, is rec,oned during the period
hen it as actuall% bein" built8 and in a case here no evidence
as presented nor introduced as to the "ood faith or bad faith of the
builder at that ti&e, as in this case, he &ust be presumed to be a
+builder in "ood faith,+ since +bad faith cannot be presu&ed.+
9
C.
In a specific +boundar% overlap situation+ hich involves a builder in
"ood faith, as in this case, it is no ell settled that the lot oner,
ho builds on the ad!acent lot is not char"ed ith +constructive
notice+ of the technical &etes and bounds contained in their torrens
titles to deter&ine the eBact and precise eBtent of his boundar%
peri&eter.
10
*.
The respondent court=s citation of the tin cases of Tuason &
Co. v. Lumanlan and Tuason & Co. v.Macalindong is not the +!udicial
authorit%+ for a boundar% dispute situation beteen ad!acent torrens
titled lot oners, as the facts of the present case do not fall
ithin nor s$uare ith the involved principle of a dissi&ilar case.
11
D.
Fuite contrar% to respondent G%=s reasonin", petitioner Tecno"as
continues to be a builder in "ood faith, even if it subse$uentl%
builtHrepaired the allsHother per&anent structures thereon hile the
case a quo as pendin" and even hile respondent sent the
petitioner &an% lettersHfiled cases thereon.
1)
D.?5.@
The a&icable settle&ent beteen the parties should be interpreted
as a contract and enforced onl% in accordance ith its eBplicit ter&s,
and not over and be%ond that a"reed upon8 because the courts
donot have the poer to create a contract nor eBpand its scope.
1*
5.?6.@
-s a general rule, althou"h the landoner has the option to choose
beteen4 ?0@ +buying the buildin" built in "ood faith+, or ?.@
+selling the portion of his land on hich stands the buildin"+ under
-rticle ::/ of the *ivil *ode8 the first option is not absolute, because
an exception thereto, once it ould be i&practical for the landoner
to choose to eBercise the first alternative, i.e. bu% that portion of the
house standin" on his land, for the hole buildin" &i"ht be rendered
useless. The or,able solution is for hi& to select the second
alternative, na&el%, to sell to the builder that part of his land on
hich as constructed a portion of the house.
14
Private respondent, on the other hand, ar"ues that the petition is +sufferin" fro& the
folloin" flas4
1+
0. It did not "ive the eBact citations of cases decided b% the
Honorable Supre&e *ourt that alle"edl% contradicts the rulin" of the
Hon. *ourt of -ppeals based on the doctrine laid don in Tuason
vs.Lumanlan case citin" also Tuason vs. Macalindong case ?Supra@.
.. -ssu&in" that the doctrine in the alle"ed Co Tao vs. Chico case is
contradictor% to the doctrine inTuason vs. Lumanlan and Tuason
vs. Macalindong, the to cases bein" &ore current, the sa&e should
prevail.
6urther, private respondent contends that the folloin" +un&ista,abl%+ point to the bad
faith of petitioner4 ?0@ private respondent=s purchase of the to lots, +as ahead of the
purchase b% petitioner of the buildin" and lot fro& PariA Industries+8 ?.@ the declaration
of the 2eneral Mana"er of Tecno"as that the sale beteen petitioner and PariA
Industries +as not re"istered+ because of so&e proble&s ith *hina Can,in"
*orporation8 and ?3@ the Deed of Sale in favor of petitioner as re"istered in its na&e
onl% in +the &onth of Ma% 01;3.+
1,
The Courts !u"ing
The petition should be "ranted.
#ood Faith or $ad Faith
Respondent *ourt, citin" the cases of %.M. Tuason & Co., Inc. vs. &da. de
Lumanlan
17
and %.M. Tuason & Co., Inc.vs. Macalindong,
18
ruled that petitioner
+cannot be considered in "ood faith+ because as a land oner, it is +presu&ed to ,no
the &etes and bounds of his on propert%, speciall% if the sa&e are reflected in a
properl% issued certificate of title. One ho erroneousl% builds on the ad!oinin" lot
should be considered a builder in 'b(ad 'f(aith, there bein" presu&ptive ,noled"e of
the Torrens title, the area, and the eBtent of the boundaries.+
19
(e disa"ree ith respondent *ourt. The to cases it relied upon do not support its
&ain pronounce&ent that a re"istered oner of land has presu&ptive ,noled"e of
the &etes and bounds of its on land, and is therefore in bad faith if he &ista,enl%
3
builds on an ad!oinin" land. -side fro& the fact that those cases had factual &oorin"s
radicall% different fro& those obtainin" here, there is nothin" in those cases hich
ould su""est, hoever re&otel%, that bad faith is i&putable to a re"istered oner of
land hen a part of his buildin" encroaches upon a nei"hbor=s land, si&pl% because he
is supposedl% presu&ed to ,no the boundaries of his land as described in his
certificate of title. No such doctrinal state&ent could have been &ade in those cases
because such issue as not before the Supre&e *ourt. Fuite the contrar%, e have
re!ected such a theor% in Co Tao vs. Chico,
)0
here e held that unless one is versed
in the science of surve%in", +no one can deter&ine the precise eBtent or location of his
propert% b% &erel% eBa&inin" his paper title.+
There is no $uestion that hen petitioner purchased the land fro& PariA Industries, the
buildin"s and other structures ere alread% in eBistence. The record is not clear as to
ho actuall% built those structures, but it &a% ell be assu&ed that petitioner=s
predecessor'in'interest, PariA Industries, did so. -rticle <.; of the *ivil *ode presu&es
"ood faith, and since no proof eBists to sho that the encroach&ent over a narro,
needle'shaped portion of private respondent=s land as done in bad faith b% the
builder of the encroachin" structures, the latter should be presu&ed to have built the&
in "ood faith.
)1
It is presu&ed that possession continues to be en!o%ed in the sa&e
character in hich it as ac$uired, until the contrar% is proved.
))
2ood faith consists in
the belief of the builder that the land he is buildin" on is his, and his i"norance of an%
defect or fla in his title.
)*
Hence, such "ood faith, b% la, passed on to PariA=s
successor, petitioner in this case. 6urther, +?@here one derives title to propert% fro&
another, the act, declaration, or o&ission of the latter, hile holdin" the title, in relation
to the propert%, is evidence a"ainst the for&er.+
)4
-nd possession ac$uired in "ood
faith does not lose this character eBcept in case and fro& the &o&ent facts eBist hich
sho that the possessor is not unaare that he possesses the thin" i&properl% or
ron"full%.
)+
The "ood faith ceases fro& the &o&ent defects in the title are &ade
,non to the possessor, b% eBtraneous evidence or b% suit for recover% of the propert%
b% the true oner.
),
Recall that the encroach&ent in the present case as caused b% a ver% sli"ht
deviation of the erected all ?as fence@ hich as supposed to run in a strai"ht line
fro& point 1 to point 0 of petitioner=s lot. It as an error hich, in the conteBt of the
attendant facts, as consistent ith "ood faith. *onse$uentl%, the builder, if sued b%
the a""rieved landoner for recover% of possession, could have invo,ed the provisions
of -rt. ::/ of the *ivil *ode, hich reads4
The oner of the land on hich an%thin" has been built, son or
planted in "ood faith, shall have the ri"ht to appropriate as his on
the or,s, soin" or plantin", after pa%&ent of the inde&nit%
provided for in articles <:> and <:/, or to obli"e the one ho built or
planted to pa% the price of the land, and the one ho soed, the
proper rent. Hoever, the builder or planter cannot be obli"ed to bu%
the land if its value is considerabl% &ore than that of the buildin" or
trees. In such case, he shall pa% reasonable rent, if the oner of the
land does not choose to appropriate the buildin" or trees after proper
inde&nit%. The parties shall a"ree upon the ter&s of the lease and in
case of disa"ree&ent, the court shall fiB the ter&s thereof.
The obvious benefit to the builder under this article is that, instead of bein"
outri"htl% e!ected fro& the land, he can co&pel the landoner to &a,e a
choice beteen the to options4 ?0@ to appropriate the buildin" b% pa%in" the
inde&nit% re$uired b% la, or ?.@ sell the land to the builder. The landoner
cannot refuse to eBercise either option and co&pel instead the oner of the
buildin" to re&ove it fro& the land.
)7
The $uestion, hoever, is hether the sa&e benefit can be invo,ed b% petitioner ho,
as earlier stated, is not the builder of the offendin" structures but possesses the& as
bu%er.
(e anser such $uestion in the affir&ative.
In the first place, there is no sufficient shoin" that petitioner as aare of the
encroach&ent at the ti&e it ac$uired the propert% fro& PariA Industries. (e a"ree ith
the trial court that various factors in evidence ade$uatel% sho petitioner=s lac, of
aareness thereof. In an% case, contrar% proof has not overthron the presu&ption of
"ood faith under -rticle <.; of the *ivil *ode, as alread% stated, ta,en to"ether ith
the disputable presu&ptions of the la on evidence. These presu&ptions state, under
Section 3 ?a@ of Rule 030 of the Rules of *ourt, that the person is innocent of a cri&e
or ron"8 and under Section 3 ?ff@ of Rule 030, that the la has been obe%ed. In fact,
private respondent 5duardo G% hi&self as unaare of such intrusion into his propert%
until after 01;0 hen he hired a surve%or, folloin" his purchase of another ad!oinin"
lot, to surve% all his nel% ac$uired lots. Gpon bein" apprised of the encroach&ent,
petitioner i&&ediatel% offered to bu% the area occupied b% its buildin" 7 a species of
conduct consistent ith "ood faith.
In the second place, upon deliver% of the propert% b% PariA Industries, as seller, to the
petitioner, as bu%er, the latter ac$uired onership of the propert%. *onse$uentl% and as
earlier discussed, petitioner is dee&ed to have stepped into the shoes of the seller in
re"ard to all ri"hts of onership over the i&&ovable sold, includin" the ri"ht to co&pel
the private respondent to eBercise either of the to options provided under -rticle ::/
of the *ivil *ode.
)stoppel
Respondent *ourt ruled that the a&icable settle&ent entered into beteen petitioner
and private respondent estops the for&er fro& $uestionin" the private respondent=s
+ri"ht+ over the disputed propert%. It held that b% underta,in" to de&olish the fence
under said settle&ent, petitioner reco"niAed private respondent=s ri"ht over the
propert%, and +cannot later on co&pel+ private respondent +to sell to it the land since+
private respondent +is under no obli"ation to sell.+
)8
(e do not a"ree. Petitioner cannot be held in estoppel for enterin" into the a&icable
settle&ent, the pertinent portions of hich read4
)9
4
That the parties hereto have a"reed that the rear portion of the fence
that separates the propert% of the co&plainant and respondent shall
be de&olished up to the bac, of the buildin" housin" the
&achineries hich de&olision ?sic@ shall be underta,en b% the
co&plainant at an%ti&e.
That the fence hich serve?s@ as a all housin" the electroplatin"
&achineries shall not be de&olished in the &ean ti&e hich portion
shall be sub!ect to ne"otiation b% herein parties.
6ro& the fore"oin", it is clear that petitioner a"reed onl% to the de&olition of a portion
of the all separatin" the ad!oinin" properties of the parties 7 i.e. +up to the bac, of
the buildin" housin" the &achineries.+ Cut that portion of the fence hich served as
the all housin" the electroplatin" &achineries as not to be de&olished. Rather, it
as to +be sub!ect to ne"otiation b% herein parties.+ The settle&ent &a% have
reco"niAed the onership of private respondent but such ad&ission cannot be e$uated
ith bad faith. Petitioner as onl% tr%in" to avoid a liti"ation, one reason for enterin"
into an a&icable settle&ent.
-s as ruled in *sme+a vs. Commission on ,udit,
*0
- co&pro&ise is a bilateral act or transaction that is eBpressl%
ac,noled"ed as a !uridical a"ree&ent b% the *ivil *ode and is
therein dealt ith in so&e detail. +- co&pro&ise,+ declares -rticle
..9/ of said *ode, +is a contract hereb% the parties, b% &a,in"
reciprocal concessions, avoid a liti"ation or put an end to one
alread% co&&enced.+
BBB BBB BBB
The *ivil *ode not onl% defines and authoriAes co&pro&ises, it in
fact encoura"es the& in civil actions. -rt. .9.1 states that +The
*ourt shall endeavor to persuade the liti"ants in a civil case to a"ree
upon so&e fair co&pro&ise.+ . . .
In the conteBt of the established facts, e hold that petitioner did not lose its ri"hts
under -rticle ::/ of the *ivil *ode on the basis &erel% of the fact that so&e %ears after
ac$uirin" the propert% in "ood faith, it learned about 7 and aptl% reco"niAed 7 the
ri"ht of private respondent to a portion of the land occupied b% its buildin". The
supervenin" aareness of the encroach&ent b% petitioner does not &ilitate a"ainst its
ri"ht to clai& the status of a builder in "ood faith. In fact, a !udicious readin" of said
-rticle ::/ ill readil% sho that the landoner=s eBercise of his option can onl% ta,e
place after the builder shall have co&e to ,no of the intrusion 7 in short, hen both
parties shall have beco&e aare of it. Onl% then ill the occasion for eBercisin" the
option arise, for it is onl% then that both parties ill have been aare that a proble&
eBists in re"ard to their propert% ri"hts.
*ptions of -rivate !espondent
(hat then is the applicable provision in this case hich private respondent &a% invo,e
as his re&ed%4 -rticle ::/ or -rticle :<9
*1
of the *ivil *ode)
In vie of the "ood faith of both petitioner and private respondent, their ri"hts and
obli"ations are to be "overned b% -rt. ::/. The essential fairness of this codal
provision has been pointed out b% M&e. Eustice -&eurfina Melencio'Herrera, citin"
Manresa and applicable precedents, in the case of .epra vs. .umlao,
*)
to it4
(here the builder, planter or soer has acted in "ood faith, a conflict
of ri"hts arises beteen the oners, and it beco&es necessar% to
protect the oner of the i&prove&ents ithout causin" in!ustice to
the oner of the land. In vie of the i&practicalit% of creatin" a state
of forced co'onership, the la has provided a !ust solution b% "ivin"
the oner of the land the option to ac$uire the i&prove&ents after
pa%&ent of the proper inde&nit%, or to obli"e the builder or planter to
pa% for the land and the soer to pa% the proper rent. It is the oner
of the land ho is authoriAed to eBercise the option, because his
ri"ht is older, and because, b% the principle of accession, he is
entitled to the onership of the accessor% thin". ?3 Manresa .038
Cernardo vs. Cataclan, 3; Off. 2aA. 03/.8 *o Tao vs. *han *hico,
2.R. No. :10>;, -pril 39, 01:18 -rticle applied8 see *abral, et al. vs.
IbaneA IS.*.J <. Off. 2aA. .0;8 Marfori vs. Velasco, I*.-.J <. Off.
2aA. .9<9@.
The private respondent=s insistence on the re&oval of the encroachin" structures as
the proper re&ed%, hich respondent *ourt sustained in its assailed Decisions, is thus
le"all% flaed. This is not one of the re&edies bestoed upon hi& b% la. It ould be
available onl% if and hen he chooses to co&pel the petitioner to bu% the land at a
reasonable price but the latter fails to pa% such price.
**
This has not ta,en place.
Hence, his options are li&ited to4 ?0@ appropriatin" the encroachin" portion of
petitioner=s buildin" after pa%&ent of proper inde&nit%, or ?.@ obli"in" the latter to bu%
the lot occupied b% the structure. He cannot eBercise a re&ed% of his on li,in".
Neither is petitioner=s pra%er that private respondent be ordered to sell the land
*4
the
proper re&ed%. (hile that as dubbed as the +&ore or,able solution+ in #rana and
Torralba vs. The Court of ,ppeals, et al.,
*+
it as not the relief "ranted in that case as
the landoners ere directed to eBercise +ithin 39 da%s fro& this decision their option
to either bu% the portion of the petitioners= house on their land or sell to said petitioners
the portion of their land on hich it stands.+
*,
Moreover, in #rana and Torralba, the
area involved as onl% /; s$uare &eters hile this case involves <.9 s$uare &eters
*7
.
In line ith the case of .epra vs. .umlao,
*8
this case ill have to be re&anded to the
trial court for further proceedin"s to full% i&ple&ent the &andate of -rt. ::/. It is a rule
of procedure for the Supre&e *ourt to strive to settle the entire controvers% in a sin"le
proceedin" leavin" no root or branch to bear the seeds of future
liti"ation.
*9
5
Petitioner, hoever, &ust also pa% the rent for the propert% occupied b% its buildin" as
prescribed b% respondent *ourt fro& October :, 01;1, but onl% up to the date private
respondent serves notice of its option upon petitioner and the trial court8 that is, if such
option is for private respondent to appropriate the encroachin" structure. In such
event, petitioner ould have a ri"ht of retention hich ne"ates the obli"ation to pa%
rent.
40
The rent should hoever continue if the option chosen is co&pulsor% sale, but
onl% up to the actual transfer of onership.
The aard of attorne%=s fees b% respondent *ourt a"ainst petitioner is unarranted
since the action appears to have been filed in "ood faith. Cesides, there should be no
penalt% on the ri"ht to liti"ate.
41
(H5R56OR5, pre&ises considered, the petition is hereb% 2R-NT5D and the
assailed Decision and the -&ended Decision are R5V5RS5D and S5T -SID5. In
accordance ith the case of .epra vs. .umlao,
4)
this case is R5M-ND5D to the
Re"ional Trial *ourt of Pasa% *it%, Cranch 00;, for further proceedin"s consistent ith
-rticles ::/ and <:>
4*
of the *ivil *ode, as follos4
The trial court shall deter&ine4
a@ the present fair price of private respondent=s <.9 s$uare'&eter
area of land8
b@ the increase in value ?+plus value+@ hich the said area of <.9
s$uare &eters &a% have ac$uired b% reason of the eBistence of the
portion of the buildin" on the area8
c@ the fair &ar,et value of the encroachin" portion of the buildin"8
and
d@ hether the value of said area of land is considerabl% &ore than
the fair &ar,et value of the portion of the buildin" thereon.
.. -fter said a&ounts shall have been deter&ined b% co&petent evidence, the re"ional
trial court shall render !ud"&ent as follos4
a@ The private respondent shall be "ranted a period of fifteen ?0<@ da%s ithin hich to
eBercise his option under the la ?-rticle ::/, *ivil *ode@, /hether to appropriate the
portion of the buildin" as his on b% pa%in" to petitioner its fair &ar,et value, or to
obli"e petitioner to pa% the price of said area. The a&ounts to be respectivel% paid b%
petitioner and private respondent, in accordance ith the option thus eBercised b%
ritten notice of the other part% and to the court, shall be paid b% the obli"or ithin
fifteen ?0<@ da%s fro& such notice of the option b% tenderin" the a&ount to the trial
court in favor of the part% entitled to receive it8
b@ If private respondent eBercises the option to obli"e petitioner to pa% the price of the
land but the latter re!ects such purchase because, as found b% the trial court, the value
of the land is considerabl% &ore than that of the portion of the buildin", petitioner shall
"ive ritten notice of such re!ection to private respondent and to the trial court ithin
fifteen ?0<@ da%s fro& notice of private respondent=s option to sell the land. In that
event, the parties shall be "iven a period of fifteen ?0<@ da%s fro& such notice of
re!ection ithin hich to a"ree upon the ter&s of the lease, and "ive the trial court
for&al ritten notice of the a"ree&ent and its provisos. If no a"ree&ent is reached b%
the parties, the trial court, ithin fifteen ?0<@ da%s fro& and after the ter&ination of the
said period fiBed for ne"otiation, shall then fiB the ter&s of the lease provided that the
&onthl% rental to be fiBed b% the *ourt shall not be less than to thousand pesos
?P.,999.99@ per &onth, pa%able ithin the first five ?<@ da%s of each calendar &onth.
The period for the forced lease shall not be &ore than to ?.@ %ears, counted fro& the
finalit% of the !ud"&ent, considerin" the lon" period of ti&e since 01;9 that petitioner
has occupied the sub!ect area. The rental thus fiBed shall be increased b% ten percent
?09K@ for the second %ear of the forced lease. Petitioner shall not &a,e an% further
constructions or i&prove&ents on the buildin". Gpon eBpiration of the to'%ear period,
or upon default b% petitioner in the pa%&ent of rentals for to ?.@ consecutive &onths,
private respondent shall be entitled to ter&inate the forced lease, to recover his land,
and to have the portion of the buildin" re&oved b% petitioner or at latter=s eBpense. The
rentals herein provided shall be tendered b% petitioner to the trial court for pa%&ent to
private respondent, and such tender shall constitute evidence of hether or not
co&pliance as &ade ithin the period fiBed b% the said court.
c@ In an% event, petitioner shall pa% private respondent an a&ount co&puted at to
thousand pesos ?P.,999.99@ per &onth as reasonable co&pensation for the
occupanc% of private respondent=s land for the period counted fro& October :, 01;1,
up to the date private respondent serves notice of its option to appropriate the
encroachin" structures, otherise up to the actual transfer of onership to petitioner
or, in case a forced lease has to be i&posed, up to the co&&ence&ent date of the
forced lease referred to in the precedin" para"raph8
d@ The periods to be fiBed b% the trial court in its decision shall be non'eBtendible, and
upon failure of the part% obli"ed to tender to the trial court the a&ount due to the
obli"ee, the part% entitled to such pa%&ent shall be entitled to an order of eBecution for
the enforce&ent of pa%&ent of the a&ount due and for co&pliance ith such other
acts as &a% be re$uired b% the prestation due the obli"ee.
No costs. SO ORD5R5D.
6