Facts:

This case revolves around a dispute concerning 42 square meters of residential land located at Block No. 3, Poinsettia Street, Araneta University Village, Malabon, Metro Manila, involving Eden Ballatan, along with spouses Betty Martinez and Chong Chy Ling as petitioners, and Gonzalo Go, Winston Go, Li Ching Yao, Araneta Institute of Agriculture, and Jose N. Quedding as respondents. The issue arose when, in 1985, Ballatan constructed her house on her property, Lot No. 24, which is 414 square meters and registered under her name. During construction, she observed that the fence and pathway of Winston Go's house on the adjacent Lot No. 25 encroached upon her property. Upon further inspection, her contractor informed her that the area of her lot was smaller than what her title reflected.

Ballatan brought this matter to the attention of Gonzalo Go, the owner of Lot No. 25, who denied any encroachment, arguing that their structures were built according to a survey conducted by Eng

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Facts:

Background and Property Description

• The dispute involves a residential land encroachment over 42 square meters belonging to petitioners Eden Ballatan and spouses Betty Martinez and Chong Chy Ling.
• The properties are located at Block No. 3, Poinsettia Street, Araneta University Village, Malabon, Metro Manila.
• Lot No. 24 (414 square meters) is owned by the petitioners, while Lots Nos. 25 (415 square meters) and 26 (313 square meters) belong to respondent Gonzalo Go, Sr.
• Respondent Winston Go built his house on Lot No. 25, and adjacent Lot No. 27 (417 square meters) is registered in the name of respondent Li Ching Yao.

Discovery of the Discrepancy and Initial Encroachment

• In 1985, while constructing her house on Lot No. 24, petitioner Ballatan observed that the concrete fence and side pathway of respondent Winston Go’s adjacent house encroached on the entire eastern boundary of her property.
• Her contractor indicated that the actual area of her lot was less than that stated in the title.
• Petitioners immediately notified respondent Go about the discrepancy, while respondent Go claimed that his construction was within the boundaries surveyed by Engineer Jose N. Quedding, the authorized surveyor of the Araneta Institute of Agriculture (AIA).

Survey and Subsequent Findings

• Petitioner Ballatan prompted the AIA to conduct another survey after noticing the discrepancy.
• Engineer Quedding’s report dated February 28, 1985, revealed a reduction in the lot area of petitioners and a slight increase in the area of respondent Li Ching Yao’s lot.
• A third relocation survey conducted on June 2, 1985, found that:
• Lot No. 24 lost approximately 25 square meters on its eastern boundary.
• Lot No. 25 encroached on Lot No. 24 but did not lose or gain area.
• Lot No. 26 lost about 3 square meters, which were gained by Lot No. 27.
• As a consequence, Lots Nos. 25, 26, and 27 were repositioned westward relative to the eastern boundary of Lot No. 24.

Legal Proceedings at the Trial Court Level

• On June 10, 1985, petitioner Ballatan demanded that respondents Go remove the improvements encroaching on her Lot No. 24.
• After respondents Go’s refusal and failed amicable negotiations, the issue was elevated to the barangay, where respondent Go did not appear.
• On April 1, 1986, petitioner Ballatan filed Civil Case No. 772-MN before the Regional Trial Court, Malabon, seeking recovery of possession.
• The Go’s answered the complaint with a Third-Party Complaint, impleading respondents Li Ching Yao, AIA, and Engineer Quedding.
• On August 23, 1990, the trial court ruled in favor of petitioners, ordering:
• The Go’s to vacate the encroached area, demolish their improvements, and pay actual damages, attorney’s fees, and costs.
• Dismissal of the third-party complaint against AIA, Engineer Quedding, and Li Ching Yao due to lack of privity, failure to prove wrongdoing, and non-payment of requisite fees.

Appeal to the Court of Appeals and Its Modified Decision

• Respondents Go appealed the trial court decision.
• On March 25, 1996, the Court of Appeals modified the decision:
• It affirmed the dismissal of the third-party complaint against AIA.
• It reinstated the complaint against Li Ching Yao and Engineer Quedding.
• It ordered:
• Respondents Go to pay petitioners the reasonable value (based on 42 square meters) of the encroached land at the time of its taking.

ii. Third-party defendant Li Ching Yao to pay the reasonable value of 37 square meters of the Go’s land. iii. Engineer Quedding to pay P5,000.00 as attorney’s fees to respondents Go.

Petition for Review on Certiorari

• Petitioners allege that the Court of Appeals committed grave abuse of discretion and lacked jurisdiction in:
• Applying equitable remedies by fixing compensation at the time of taking rather than at the time of payment.
• Admitting the third-party complaint despite the non-payment of filing/docket fees.
• Denying recovery of necessary expenses incurred in protecting their property rights.
• The petition challenges the appellate court’s methodology and reliance on the survey conducted by Engineer Quedding.

Issue:

Whether the Court of Appeals erred in applying equity by fixing the compensation for the encroached land at the time of taking (when the improvements were built) instead of at the time of payment.

• The controversy centers on the proper valuation timing in determining just compensation or rent.
• Whether such approach unjustly enriches the respondents while depriving petitioners of the benefit of any increase in property value.

The jurisdictional issue regarding the admission of the third-party complaint

• Whether the Court of Appeals had jurisdiction to consider the third-party complaint filed by respondents Go against AIA, Engineer Quedding, and Li Ching Yao despite non-payment of requisite docket and filing fees.
• The impact of combining a real action with claim for damages without prompt payment of additional fees.

The proper characterization of the encroachment

• Whether the construction and subsequent encroachment were executed in good faith by respondents Go and Li Ching Yao.
• How the survey discrepancies and subsequent relocation of boundaries factor into the determination of rights under property law.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)