Case Digest (G.R. No. 222482)
Facts:
Petitioner Princess Rachel Development Corporation (PRDC) owned two contiguous parcels in Kalibo, Aklan—Lot 1-B-7-A-1 (TCT No. T-24348, 10,000 sq m.) and Lot 1-B-7-B-1 (TCT No. T-24349, 20,000 sq m.)—in full compliance with the 1987 Constitution and the Torrens system. PRDC maintained open, continuous possession since 1996 and paid realty taxes. In August 2007, a relocation survey by Engr. Lester Madlangbayan revealed that respondent Hillview Marketing Corporation (Hillview), owner of the adjoining Lot 1-B-7-A-2, had encroached 2,614 sq m. by erecting the Alargo Residences thereon without PRDC’s consent. PRDC’s two demand letters to vacate went unheeded, prompting a January 2008 complaint for acción publiciana and injunction. Hillview countered that it relied in good faith on DENR-approved survey plans and that PRDC had no prior physical possession or clear boundaries. The Regional Trial Court (RTC) appointed a commissioner whose on-site survey confirmed a 2,783 sq m. encroachmeCase Digest (G.R. No. 222482)
Facts:
- Background of the dispute
- In January 2008, Princess Rachel Development Corporation (PRDC) filed a complaint for acción publiciana and damages with prayer for a preliminary injunction against Hillview Marketing Corporation (Hillview) and Stefanie and Robert Dornau. PRDC later expunged its claim for rental damages and additional filing fees.
- PRDC alleged ownership of two lots in Kalibo, Aklan—Lot 1-B-7-A-1 (10,000 sqm) under TCT No. T-24348 and Lot 1-B-7-B-1 (20,000 sqm) under TCT No. T-24349—possession since 1996, and payment of realty taxes.
- Discovery of encroachment
- In August 2007, Engr. Lester Madlangbayan’s relocation survey found Hillview had encroached some 2,614 sqm; a subsequent (erroneous) September 2007 survey showed 4,685 sqm.
- Hillview had built the Alargo Residences on the encroached area without PRDC’s consent; PRDC’s demand letters (September 20 and 27, 2007) were ignored.
- Respondents’ defenses
- Hillview contended PRDC lacked prior physical possession, no visible boundary, and respondents relied on surveys and plans approved by the DENR before construction in 2004.
- Stefanie and Robert Dornau claimed no personal liability absent allegations of specific wrongful acts; Hillview was a buyer and builder in good faith.
- Proceedings before the RTC
- The RTC ordered both parties to submit relocation surveys. PRDC complied; Hillview submitted only a consolidated sketch plan.
- A court-appointed Commissioner’s actual survey revealed encroachment of 383 sqm on Lot 1-B-7-B-1 and 2,400 sqm on Lot 1-B-7-A-1, totaling 2,783 sqm.
- RTC decision (April 30, 2012)
- Found Hillview encroached on 2,783 sqm and acted in bad faith (despite knowledge from Engr. Lopez).
- Ordered Hillview to vacate, demolish improvements at its cost, return possession to PRDC, pay attorney’s fees of P200,000 and litigation expenses of P3,546,163.20.
- CA decision (November 28, 2014)
- Affirmed encroachment but held Hillview a builder in good faith; Engr. Lopez’s testimony was weak and Hillview relied in good faith on approved survey plans.
- Applied Civil Code Articles 448, 546, 548; remanded for valuation of land versus improvements; deleted P3,402,669 rental award; held only Hillview liable; absolved Stefanie and Robert of solidary liability.
- CA resolution (January 15, 2016) and SC petition
- PRDC and Boracay Enclave’s motion for reconsideration denied.
- Petition for review on certiorari filed, challenging the CA’s good-faith ruling, reliance on survey plans, and PRDC’s alleged laches.
Issues:
- Builder’s good faith or bad faith in the encroachment
- Was Hillview aware of a flaw in its title or boundaries when it built on PRDC’s land?
- Does reliance on DENR-approved survey plans preclude a finding of bad faith?
- Landowner’s good faith or bad faith in asserting rights
- Did PRDC’s delay (2004–2007) bar its claim or convert it into bad faith?
- Correctness of awards
- Proper application of Civil Code Articles 448, 546, 548 versus Articles 449–452 and 453.
- Award of actual versus nominal damages.
- Solidary liability of individual respondents
- Basis for piercing the corporate veil and holding Stefanie and Robert liable.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)