GR 157044; (October, 2005) (Digest)
G.R. No. 157044. October 5, 2005.
RODOLFO V. ROSALES (represented by his heirs) and LILY ROSQUETA-ROSALES, Petitioners, vs. MIGUEL CASTELLTORT, JUDITH CASTELLTORT, and LINA LOPEZ-VILLEGAS, assisted by her Attorney-in-Fact, Rene Villegas, Respondents.
FACTS
Petitioners Rodolfo and Lily Rosales are the registered owners of Lot 17 in Laguna. In August 1995, they discovered respondent Miguel Castelltort constructing a house on their lot without their consent. It was revealed that the Castelltorts had purchased the adjacent Lot 16 from respondent Lina Lopez-Villegas through her son, Rene Villegas. However, a geodetic engineer mistakenly pointed to petitioners’ Lot 17 as the property sold. Negotiations for settlement, including an offer of a replacement lot or payment, failed.
Petitioners filed a complaint for recovery of possession and damages. The Castelltorts claimed to be builders in good faith, while intervenor Villegas alleged the Castelltorts relied on the verified technical description. The Regional Trial Court (RTC) ruled for petitioners, finding bad faith due to the Castelltorts’ lack of a well-founded belief of ownership and failure to secure a building permit. It ordered surrender of possession and awarded damages jointly and severally against all respondents.
ISSUE
Whether the Court of Appeals erred in reversing the RTC and ruling that the Castelltorts were builders in good faith entitled to reimbursement under Article 448 of the Civil Code, instead of ordering them to vacate the land.
RULING
The Supreme Court reversed the Court of Appeals and reinstated the RTC decision, ruling the Castelltorts were not builders in good faith. Good faith requires a well-founded belief of ownership. The Castelltorts’ belief was based on a Contract to Sell where the buyer was a different person, Elizabeth Yson Cruz, not themselves. Their subsequent false testimony identifying Cruz as Miguel’s wife further undermined their claim of good faith. Crucially, their failure to secure a building permit before construction was a deliberate violation of the National Building Code, constituting a clear badge of bad faith.
Since the builders are in bad faith, Article 448 of the Civil Code, which governs the rights of a good-faith builder on another’s land, does not apply. Instead, Article 449 applies: “He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.” Therefore, the Castelltorts have no right to reimbursement for the improvements and must surrender possession of the land to its lawful owners, the petitioners. The award of damages for the unlawful use of the property and the parties’ joint liability for negligence was upheld.