GR 108894; (February, 1997) (Digest)
G.R. No. 108894 February 10, 1997
TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner, vs. COURT OF APPEALS and EDUARDO UY, respondents.
FACTS
Petitioner Tecnogas and private respondent Eduardo Uy are owners of adjoining lots in Parañaque. A survey revealed that a portion of a building on Tecnogas’s lot, constructed by its predecessor-in-interest, encroached upon a portion of Uy’s land. Tecnogas purchased the land with its improvements in 1970. Upon discovery of the encroachment, Tecnogas offered to buy the affected area, but Uy refused. The parties later entered into a private agreement for the demolition of a rear wall only, but this did not resolve the issue of the encroaching building.
The Regional Trial Court ordered Uy to sell the encroached portion to Tecnogas at a set price. The Court of Appeals reversed this decision, dismissing Tecnogas’s complaint, ordering the removal of the encroaching structures, and holding Tecnogas liable for reasonable rentals. It ruled Tecnogas was a builder in bad faith, presumed to know the metes and bounds of its property from its certificate of title.
ISSUE
The primary issue is whether petitioner Tecnogas is a builder in bad faith, thereby justifying the order for demolition and payment of rentals.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the RTC decision with modification. The Court held that Tecnogas was a builder in good faith. A purchaser of real property is not obliged to conduct a survey before purchase to verify the correctness of the title’s technical description. Good faith consists in the belief that the land purchased is the area covered by the title. Tecnogas’s good faith was evident from its immediate offer to buy the encroached land upon discovery of the error.
The legal logic follows Article 448 of the Civil Code, which governs a landowner’s rights when something is built on his land in good faith. Since Tecnogas was a builder in good faith, Uy, as the landowner, had two options under the law: (1) to appropriate the encroaching building by paying indemnity, or (2) to sell the encroached portion to the builder. Uy could not compel the demolition of the building. The Court thus ordered Uy to exercise his option under Article 448. The award for rentals and attorney’s fees was deleted, as these are not applicable against a builder in good faith.