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EDEN BALLATAN v. CA

FACTS:

The case involves a dispute between the petitioners and respondents over a 42-square meter residential land in Malabon, Metro Manila. The petitioners own Lot No. 24, while respondent Gonzalo Go owns Lots Nos. 25 and 26. Winston Go, another respondent, built his house on Lot No. 25, adjacent to Lot No. 24. Lot No. 27, registered under respondent Li Ching Yao's name, is adjacent to Lot No. 26.

Petitioner Ballatan discovered that the concrete fence and side pathway of Winston Go's house encroached on her property. A survey conducted by Engineer Jose N. Quedding confirmed the encroachment. A subsequent survey revealed that Lot No. 24 lost approximately 25 square meters on its eastern boundary, while Lot No. 25 encroached on Lot No. 24. Ballatan demanded the removal of the encroachments, but the respondents refused.

As a result, Ballatan filed a civil case for recovery of possession. The trial court ruled in favor of the petitioners, ordering the respondents to vacate the encroached portion, demolish the improvements, and pay damages, attorney's fees, and costs of the suit. The third-party complaint against AIA and Engineer Quedding was dismissed, while the complaint against Li Ching Yao was reinstated.

Respondents Go appealed, and the Court of Appeals modified the decision. The dismissal of the third-party complaint against AIA was affirmed, but the complaint against Li Ching Yao and Engineer Quedding was reinstated. The appellate court ordered Go to pay Ballatan, and Li Ching Yao to pay Go.

Separately, the petitioners filed a complaint for recovery of possession, but failed to pay the necessary docket and filing fees. The respondents filed a third-party complaint against AIA, Jose Quedding, and Li Ching Yao seeking the same remedy as the principal complaint, including attorney's fees and costs. The Court of Appeals admitted the third-party complaint, prompting the petitioners to question the jurisdiction of the court due to the non-payment of fees.

ISSUES:

  1. Whether the Court of Appeals erred in awarding damages despite the failure of the respondents to specify the amount prayed for and pay the corresponding additional filing fees.

  2. Whether the Court of Appeals erred in dismissing the third-party complaint against the Araneta Institute of Agriculture (AIA) and holding that the discrepancies in lot areas were not due to AIA's fault.

  3. Whether the Court of Appeals erred in finding that respondent Li Ching Yao was a builder in good faith and that he had no knowledge of the encroachment on the adjacent land.

  4. Whether or not the owners of the land have the right to appropriate the improvements made by the builder, planter or sower.

  5. Whether or not the owners of the land have the right to sell the land on which the improvements stand to the builder, planter or sower.

  6. Whether or not the owners of the land have the right to require the builder, planter or sower to purchase the land if its value is considerably more than the improvements.

  7. Whether or not the owners of the land have the right to require the builder, planter or sower to pay rent to the owner of the land if they cannot come to terms over the conditions of the lease.

  8. Whether or not the owners of the land have the right to have the court fix the terms of the lease if the parties cannot come to terms.

  9. Whether the petitioners should be ordered to either buy the portion of respondents Go's improvement or sell to respondents the portion of their land on which the improvement stands.

  10. Whether respondents Go should exercise their rights as owners of Lots Nos. 25 and 26 in relation to the builder of the improvement that encroached on their land.

  11. Whether Engineer Quedding should be ordered to pay attorney's fees to respondents Go.

  12. Whether the third-party complaint against Araneta Institute of Agriculture should be dismissed.

RULING:

  1. The Court of Appeals did not err in awarding damages despite the failure of the respondents to specify the amount prayed for and pay the corresponding additional filing fees. The claim for attorney's fees referred to damages arising after the filing of the complaint against the respondents. The additional filing fee on this claim is deemed to constitute a lien on the judgment award.

  2. The Court of Appeals correctly dismissed the third-party complaint against AIA. The claim that the discrepancies in lot areas were due to AIA's fault was not proven. Instead, it was the erroneous survey by Engineer Quedding that triggered these discrepancies. Respondents Go relied on this survey in constructing their house, believing it was entirely within their father's land.

  3. The Court of Appeals did not err in finding that respondent Li Ching Yao was a builder in good faith and had no knowledge of the encroachment on the adjacent land. Good faith is always presumed, and the burden of proving bad faith rests on the one alleging it. Respondent Li Ching Yao built his house before any of the other parties did and there was no evidence that he knew a portion of it encroached on respondents Go's land.

  4. Yes, the owners of the land have the right to appropriate the improvements made by the builder, planter or sower.

  5. Yes, the owners of the land have the right to sell the land on which the improvements stand to the builder, planter or sower.

  6. No, the owners of the land are not obliged to require the builder, planter or sower to purchase the land if its value is considerably more than the improvements.

  7. Yes, the owners of the land have the right to require the builder, planter or sower to pay rent to the owner of the land if they cannot come to terms over the conditions of the lease.

  8. Yes, the owners of the land have the right to have the court fix the terms of the lease if the parties cannot come to terms.

  9. The petitioners are ordered to exercise their option within 30 days from the finality of the decision to either buy the portion of respondents Go's improvement or sell the encroached portion of their land to respondents Go. The purchase price must be at the prevailing market price at the time of payment. If buying the improvement will render respondents Go's house useless, then petitioners should sell the encroached portion of their land to respondents Go. If petitioners choose to sell the land but respondents Go are unwilling or unable to buy, then the latter must vacate the subject portion and pay reasonable rent. If the value of the land is considerably more than the value of the improvement, respondents Go may elect to lease the land, in which case the parties shall agree upon the lease terms. If they fail to agree, the court is directed to fix the terms of the lease.

  10. Respondents Go are ordered to exercise their rights as owners of Lots Nos. 25 and 26 in relation to the builder of the improvement that encroached on their land.

  11. The Court of Appeals' decision ordering Engineer Quedding to pay attorney's fees to respondents Go is affirmed.

  12. The Court of Appeals' dismissal of the third-party complaint against Araneta Institute of Agriculture is affirmed.

PRINCIPLES:

  • The court acquires jurisdiction over a claim for damages upon full payment of the fees within a reasonable time or may allow a motion for amendment of the complaint to allege the precise amount of damages and accept payment of the requisite legal fees.

  • In cases of unspecified claims for damages, the additional filing fee thereon constitutes a lien on the judgment award.

  • The owner of land on which something has been built, sown, or planted in good faith has the right to appropriate it after payment of the necessary and useful expenses to the builder, planter, or sower, or oblige them to purchase the land. Good faith is always presumed, and the burden of proving bad faith rests on the party alleging it.

  • Article 448 of the Civil Code allows the owners of the land to appropriate the improvements made by the builder, planter or sower.

  • The owners of the land also have the right to sell the land on which the improvements stand to the builder, planter or sower.

  • The owners of the land are not obliged to require the builder, planter or sower to purchase the land if its value is considerably more than the improvements.

  • If the parties cannot agree on the conditions of the lease, the owners of the land can require the builder, planter or sower to pay rent to the owner of the land, and if they still cannot come to terms, the court can fix the terms of the lease.

  • Parties may be ordered to exercise their options when it comes to buying or selling portions of land and improvements encroached upon.

  • The purchase price for the land or improvement must be at the prevailing market price at the time of payment.

  • If buying the improvement will render the owner's house useless, the encroached portion of the land should be sold to the owner.

  • If the value of the land is considerably more than the value of the improvement, the owner may elect to lease the land instead.