G.R. No. L-49219. April 15, 1988.
SPOUSES CONCEPCION FERNANDEZ DEL CAMPO and ESTANISLAO DEL CANTO, plaintiffs-appellees, vs. BERNARDA FERNANDEZ ABESIA, defendant-appellant.

FACTS

The plaintiffs and defendant are co-owners of a 45-square-meter lot in Cebu City. An action for partition was filed. A commissioner recommended dividing the lot into two portions: 30 square meters for the plaintiffs and 15 square meters for the defendant. The parties agreed to this partition. However, it was found that the defendant’s house encroached upon 5 square meters of the portion allocated to the plaintiffs.
The trial court ordered the defendant to demolish the encroaching part of her house at her own expense. It ruled that Article 448 of the Civil Code, governing the rights of a builder in good faith, was inapplicable because the defendant built while she was still a co-owner of the undivided property. The defendant appealed, arguing that Article 448 should apply to her as a builder in good faith concerning the encroached area after partition.

ISSUE

Whether Article 448 of the Civil Code on builders in good faith applies when a co-owner’s construction, built in good faith on the common property, encroaches upon the specific portion allotted to another co-owner after partition.

RULING

Yes, Article 448 applies under these specific circumstances. The Supreme Court clarified the legal logic in two stages. First, it affirmed the general rule cited by the trial court: Article 448 does not apply while the co-ownership exists. A co-owner who builds on the common property does not build on land belonging exclusively to another; thus, the rules on co-ownership govern, not accession.
However, the Court held that this general rule ceases upon termination of the co-ownership by partition. Once the property is divided and specific portions are adjudicated to individual owners, the relationship changes. The builder then stands as a builder on land owned by another. If the builder constructed in good faith—meaning without knowledge that the building encroached upon another’s specific share—the equitable provisions of Article 448 must apply to prevent unjust enrichment and provide fair solutions.
Consequently, the trial court’s order for demolition was modified. The plaintiffs, as owners of the encroached-upon land, were given the options under Article 448: (1) to appropriate the encroaching part of the house upon payment of indemnity to the defendant under Article 546, or (2) to oblige the defendant to pay the price of the 5-square-meter land. If the land value is considerably more than the building’s value, the defendant cannot be forced to buy but must pay reasonable rent, with the court fixing terms if parties disagree. Alternatively, the defendant retains the right to demolish the encroachment at her own expense. The case was remanded for implementation based on the parties’ election under this framework.