Case Summary (G.R. No. 125683)
Property Details & Background
- Lot 24 (414 m²): Registered to petitioners Ballatan et al.; house built by Ballatan in 1985
- Lot 25 (415 m²) and Lot 26 (313 m²): Registered to Gonzalo Go Sr.; house and boundary wall by Winston Go on Lot 25
- Lot 27 (417 m²): Registered to Li Ching Yao; house constructed in 1982
Survey Reports & Encroachment Discrepancies
- 1985 initial survey by Quedding (upon AIA’s instruction) revealed Lot 24 was few meters short and Lot 27 enlarged by 2 m²
- June 2, 1985 relocation survey showed:
• Lot 24 lost approximately 25 m² on its eastern boundary
• Lots 25 & 26 shifted west but no net area change
• Lot 27 gained about 3 m² from Lot 26 - Petitioners demanded removal of Winston Go’s fence and pathway on Lot 24; refusal led to barangay mediation and later civil case
Trial Court Findings & Decision (1990)
- Action: Accion publiciana for recovery of possession (RTC Malabon, Branch 169)
- Findings: Respondents Go encroached on 42 m² of Lot 24; no fault found on AIA or Li Ching Yao; Quedding’s survey error stemmed from AIA instruction
- Disposition:
- Order Go’s to demolish improvements and vacate encroached area
- Award petitioners P7,800 (survey expenses), P5,000 (transportation), attorney’s fees (25% of market value), and costs
- Dismiss third-party complaint against AIA, Quedding and Li Ching Yao
Court of Appeals Decision (1996)
- Affirmed dismissal against AIA; reinstated third-party claims against Quedding and Li Ching Yao
- Modified relief:
- Respondents Go to pay petitioners the reasonable value of the 42 m² at time of taking, in lieu of demolition
- Li Ching Yao to pay Go’s reasonable value for 37 m² encroachment on Lots 25–26
- Quedding to pay Go’s P5,000 attorney’s fees
- Remanded for evidence on value determinations
Procedural and Equity Issues
- Petitioners argued CA misapplied equity over clear property rights, deprived them of value increases, and admitted third-party complaint despite unpaid filing fees
- Supreme Court held:
• Additional fees on damages constitute a lien on eventual award; CA did not err by awarding attorney’s fees against Quedding
• CA properly dismissed AIA; found Go’s were builders in good faith under Civil Code
Legal Principles on Good-Faith Improvements (Art. 448, Civil Code)
- Owner of land may either:
- Appropriate the improvement upon payment of necessary/useful expenses, or
- Sell the portion of land with the improvement to the builder
- Builder in good faith can’t be compelled to purchase if land value greatly exceeds improvement; may pay reasonable rent instead
- Presumption of good faith until actual notice of improper possession
Supreme Court Ruling & Modification
- Affirmed CA’s dismissal of AIA-related claims and award of P5,000 attorney’s fees against Quedding
- Modified CA’s valuation date: compensation must be fixed at the time of payment (not taking)
- Provided petitioners 30 days to e
Case Syllabus (G.R. No. 125683)
Parties and Title Registration
- Petitioners: Eden Ballatan and Spouses Betty Martinez and Chong Chy Ling, registered owners of Lot No. 24 (414 sqm) in Araneta University Village, Malabon.
- Respondents:
• Gonzalo Go, Sr., registered owner of Lots Nos. 25 (415 sqm) and 26 (313 sqm);
• Winston Go, son of Gonzalo Go, Sr., builder on Lot No. 25;
• Li Ching Yao, registered owner of Lot No. 27 (417 sqm);
• Araneta Institute of Agriculture (AIA), subdivision developer;
• Engineer Jose N. Quedding, AIA-authorized surveyor.
Factual Background
- In 1985, petitioner Ballatan built her house on Lot No. 24 and discovered the eastern fence and pathway of Winston Go’s house encroached on her lot.
- Contractor’s measurements revealed her actual lot area was smaller than the title’s description.
- Ballatan alerted Go and then AIA about the discrepancy; Go claimed his improvements were within Lot No. 25 as surveyed by Quedding in 1983.
Surveys and Discrepancies
- First verification survey (Feb. 28, 1985) by Engineer Quedding: Lot 24 reduced by “a few meters,” Lot 27 increased by 2 sqm; no explanation for Lot 24’s reduction.
- Second relocation survey (June 2, 1985) by Quedding: Lot 24 lost ~25 sqm eastward; Lot 25 encroached but net area unchanged; Lot 26 lost 3 sqm gained by Lot 27.
- Conclusion: Lots 25, 26, 27 shifted west into Lot 24 by a total of 42 sqm.
Trial Court Proceedings and Decision
- April 1, 1986: Ballatan filed Civil Case No. 772-MN (acción publiciana) for recovery of possession before RTC, Malabon, Branch 169.
- Go defendants filed an “Answer with Third-Party Complaint” against Li Ching Yao, AIA, and Quedding.
- August 23, 1990 RTC Decision:
• Ordered Go defendants to demolish encroaching improvements, vacate 42 sqm, and return possession to petitioners;
• Awarded petitioners P7,800 for survey expenses, P5,000 for transportation, attorney’s fees (25% o