Facts:

The case involves petitioners Luciano Briones and Nelly Briones against respondents Jose Macabagdal, Fe D. Macabagdal, and Vergon Realty Investments Corporation. The dispute centers around a parcel of land located in Vergonville Subdivision No. 10, Las Piñas City, Metro Manila. Respondent-spouses Jose and Fe Macabagdal purchased Lot No. 2-R, a 325-square-meter property covered by Transfer Certificate of Title No. 62181 from Vergon Realty Investments Corporation. Meanwhile, petitioners Briones owned the adjacent Lot No. 2-S. In 1984, believing they were constructing their house on Lot No. 2-S, the petitioners obtained a building permit and proceeded with construction after receiving approval from Vergon. However, they were later informed by Vergon’s manager that they had mistakenly built their house on Lot No. 2-R, which belonged to the Macabagdals. Upon receiving this information, the Macabagdals demanded the demolition of the house and the vacation of the property, but the p...

Facts:

1. Ownership of the Lots

   • Respondent-spouses Jose and Fe Macabagdal purchased Lot No. 2-R, a 325-square-meter land in Vergonville Subdivision No. 10, Las Piñas City, covered by Transfer Certificate of Title (TCT) No. 62181.
   • Petitioners Luciano and Nelly Briones owned Lot No. 2-S, which was adjacent to Lot No. 2-R.

2. Construction of the House

   • In 1984, petitioners constructed a house on Lot No. 2-R, believing it to be Lot No. 2-S. They obtained a building permit and approval from Vergon Realty Investments Corporation (Vergon).
   • Vergon's manager later informed petitioners of the mistake, and respondent-spouses demanded the demolition of the house and vacation of the property. Petitioners refused.

3. Legal Action

   • Respondent-spouses filed an action to recover ownership and possession of Lot No. 2-R with the Regional Trial Court (RTC) of Makati City.
   • Petitioners claimed they were buyers in good faith, relying on Vergon's agents who pointed to the wrong lot. They impleaded Vergon as a third-party defendant, seeking indemnity under the warranty against eviction.

4. RTC Decision

   • The RTC ruled in favor of respondent-spouses, declaring them the owners of Lot No. 2-R. It ordered petitioners to demolish the house and vacate the property or pay the prevailing price of the land. The court also awarded moral damages, attorney’s fees, and litigation expenses.

5. CA Decision

   • The Court of Appeals (CA) affirmed the RTC's decision, finding that petitioners built their house on Lot No. 2-R, not Lot No. 2-S. The CA ruled that the warranty against eviction did not apply, as petitioners were not deprived of the lot they purchased from Vergon.

6. Petition to the Supreme Court

   • Petitioners filed a petition for review on certiorari, arguing that they acted in good faith and should not bear the damage alone. They also contested the awards of damages and attorney’s fees.

Issue:

• (Unlock)

Ruling:

• (Unlock)

Ratio:

1. Good Faith Presumption

   • Article 527 of the Civil Code presumes good faith, and petitioners acted without malice or negligence in building their house on Lot No. 2-R.

2. Article 448 of the Civil Code

   • The owner of the land has the option to appropriate the improvements after paying indemnity or to require the builder to pay the price of the land. This rule aligns with the principle of accession, where the accessory follows the principal.

3. Indemnity for Necessary and Useful Expenses

   • Under Articles 546 and 548 of the Civil Code, a builder in good faith is entitled to reimbursement for necessary and useful expenses incurred on the property.

4. Liability of Vergon

   • Petitioners failed to prove Vergon's negligence or fault in the mix-up. The warranty against eviction under Article 1548 does not apply, as petitioners were not deprived of the lot they purchased.

5. Awards of Damages

   • Moral damages are not recoverable when the defendant acts in good faith. Attorney’s fees and litigation expenses must be specifically prayed for and justified, which was not done in this case.

Conclusion:

The Supreme Court affirmed the CA's decision with modifications. The awards of moral damages, compensatory damages, and attorney’s fees were deleted. The case was remanded to the RTC for further proceedings to determine the appropriate application of Articles 448, 546, and 548 of the Civil Code.