Technogas Philippines Manufacturing Corporation v.
Court of Appeals
G.R. No. 108894, February, 10, 1997, 268 SCRA 5
Panganiban, J.
FACTS:
Technogas purchased a parcel of land from Pariz Industries, Inc. In the same
year, Eduardo Uy purchased the land adjacent to it. The following year, Uy bought another lot
adjoining the lot of Technogas. It was discovered in a survey, that a portion of a building of
Technogas, which was presumably constructed by its predecessor-in-interest, encroached on a
portion of the lot owned by private respondent Edward Uy.
Upon learning of the encroachment or occupation by its buildings and wall of a portion of private
respondent’s land, the petitioner offered to buy from defendant that particular portion of Uy’s
land occupied by portions of its buildings and wall with an area of 770 sqm, more or less, but the
latter, however, refused the offer
The parties entered into a private agreement before a certain Col. Rosales in Malacañang, wherein
petitioner agreed to demolish the wall at the back portion of its land thus giving to the private
respondent possession of a portion of his land previously enclosed by petitioner’s wall.
Uy later filed a complaint before the office of Municipal Engineer of Parañaque, Metro Manila
as well as before the Office of the Provincial Fiscal of Rizal against Technogas in connection with
the encroachment or occupation by plaintiff’s buildings and walls of a portion of its land but said
complaint did not prosper; so Uy dug or caused to be dug a canal along Technogas’ wall, a portion
of which collapsed in June, 1980, and led to the filing by the petitioner of the supplemental
complaint in the above-entitled case and a separate criminal complaint for malicious
mischief against Uy and his wife which ultimately resulted into the conviction in court Uy’s wife
for the crime of malicious mischief;
ISSUES:
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad
faith because it is “presumed to know the metes and bounds of his property.”
HELD:
No. No one can determine the precise extent or location of his property by merely examining his
paper title unless one is versed in the science of surveying. There is no question in that when
Technogas purchased the land from Pariz Industries, the buildings and other structures were
already in existence. Furthermore, it is not clear as to who actually built these structures but it can
b d h h d i i fT h P i I d i did
be assumed that the predecessor-ininterest of Technogas, Pariz Industries, did so.
Article 527 of the New Civil Code presumes good faith. Since no proof exists to show that the
builder built the encroaching structures in bad faith, the structures should be presumed to have
been built in good faith. Good faith consists in the belief of the builder that the land he is building
on is his, and his ignorance of any defect or flaw in his title. Furthermore, possession acquired in
good faith does not lose this character except in case and from the moment facts exist which show
that the possessor is not aware that he possesses the thing improperly or wrongfully. The good
faith ceases from the moment the defects in the title are made known to the possessor, by
extraneous evidence or by suit for recovery of the property of the true owner.
In view of the good faith of both petitioner and private respondent, their rights and obligations are
to be governed by Art. 448. The essential fairness of this codal provision has been pointed out by
Mme. Justice Ameurfina Melencio-Herrera, citing Manresa and applicable precedents, in the case
of Depra vs. Dumlao, to wit:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between
the owners, and it becomes necessary to protect the owner of the improvements without
causing injustice to the owner of the land. In view of the impracticality of creating a state of
forced co-ownership, the law has provided a just solution by giving the owner of the land the
option to acquire the improvements after payment of the proper indemnity, or to oblige the
builder or planter to pay for the land and the sower to pay the proper rent. It is the owner of
the land who is authorized to exercise the option, because his right is older, and because, by
the principle of accession, he is entitled to the ownership of the accessory thing. (3 Manresa
213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.R. No. 49167,
April 30, 1949; Article applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori
vs. Velasco, [C.A.] 52 Off. Gaz. 2050).
The private respondent’s insistence on the removal of the encroaching structures as the proper
remedy, which respondent Court sustained in its assailed Decisions, is thus legally flawed. This is
not one of the remedies bestowed upon him by law. It would be available only if and when he
chooses to compel the petitioner to buy the land at a reasonable price but the latter fails to pay
such price. This has not taken place. Hence, his options are limited to: (1) appropriating the
encroaching portion of petitioner’s building after payment of proper indemnity, or (2) obliging the
latter to buy the lot occupied by the structure. He cannot exercise a remedy of his own liking.
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