BALLATAN v. CA

-Land Owner in Good faith, Builder in Good faith scenario -The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner.

-If the option chooses is to sell the lot, the price must be fixed at the prevailing market value at the time of payment.

FACTS:

Eden Ballatan, together with other petitioners, is living in and registered owners of Lot No. 24. Respondent Winston Go is living in and registered owners of Lot No. 25 and 26. And Li Ching Yao is living in and the registered owner of Lot. 27. The Lots are adjacent to each other.

When Ballatan constructed her house in her lot, she noticed that the concrete fence and side pathway of the adjoining house of respondent Winston Go encroached on the entire length of the eastern side of her property. She was informed by her contractor of this discrepancy, who then told respondent Go of the same. Respondent, however, claims that his house was built within the parameters of his father’s lot; and that this lot was surveyed by engineer Jose Quedding, the authorized surveyor of Araneta Institute of Agriculture (AIA). Petitioner called the attention of AIA on the matter and so the latter authorized another survey of the land by Engineer Quedding. The latter then did the survey twice which led to the conclusion that Lots Nos 25, 26 (owned by respondent Go) and 27 (owned by Li Ching Yao) moved westward to the eastern boundary of Lot 24 (owned by petitioner Ballatan.) –(it was later on discovered by the courts that Go encroached 42 square meters from the property of Ballatan and Yao encroached 37 square meters on Go’s property, all of which were in GOOD FAITH) Ballatan made written demands to the respondent to dismantle and move their improvements and since the latter wasn’t answering the petitioner filed accion publiciana in court. Go’s filed their “Answer with Third-Party Complaint” impleading as third party defendants respondents Li Ching Yao, the AIA and Engineer Quedding.

RTC ruled in favor of the petitioner ordering respondent Go to demolish their improvements and pay damages to Petitioner but dismissing the third-party complaint. CA affirmed the dismissal of the third party-complaint as to AIA but reinstated the the complaint against Yao and the Engineer. CA also affirmed the demolition and damages awarded to petitioner and added that Yao should also pay respondent for his encroachment of respondent Go’s property. Jose Quedding was also ordered to pay attorney’s fees for his negligence which caused all this fuzz.

ISSUE: What is the proper remedy in this situation (everyone was in good faith)?

RULING:

Art 448 is the proper remedy (Lower Courts are wrong in awarding the damages). It was established in the case that the parties had no knowledge of the encroachment until Ballatan noticed it there all of them were builders in Good faith. In that scenario they have two options. 1st option is that the land owner will buy the improvements and the 2nd option is to oblige the builders to buy the land given that the value of the land is not considerably more than the buildings or tree; other wise the owner may remove the improvements thereon.

The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner. If the option chooses is to sell the lot, the price must be fixed at the prevailing market value at the time of payment.

Petitioner was given by SC 30 days to decide on what to do or which right to exercise. Likewise, Go was also given time to do the regarding Yao’s encroachment. Engineer Quedding was still asked to pay attorney’s fees.