In Sps. Ernesto V. Yu and Elsie Yu vs. Eulogio A. Topacio, Jr., the Supreme Court addressed the complexities of land ownership disputes, specifically focusing on encroachment and good faith. The Court ruled that while a party’s title to a property may be valid, their physical possession of a portion belonging to another requires resolution under Article 448 of the Civil Code. This means the landowner whose property was encroached upon can choose to either appropriate the improvements by paying indemnity or require the encroacher to purchase the land.

Overlapping Claims: When Good Faith Encounters Land Boundaries

This case originated from an Amended Complaint filed by Eulogio A. Topacio, Jr., seeking to quiet title, recover possession, and secure reconveyance of land from spouses Ernesto V. Yu and Elsie Yu. Topacio claimed that the spouses Yu’s title cast a cloud on his own, leading to the legal battle. The central issue revolved around conflicting claims to parcels of land in Barangay Paliparan, Dasmarinas, Cavite. Topacio asserted ownership over Lot 7402-E covered by TCT No. T-348422, while the spouses Yu based their claim on TCT No. T-490552. The dispute highlighted the intricacies of land titles and the legal remedies available to landowners in the Philippines.

The spouses Yu countered that they acquired their property from spouses Asislo Martinez and Norma Linatoc through an Absolute Deed of Sale dated June 10, 1994. Their predecessors, the spouses Martinez, had obtained the land from the Bureau of Lands on June 9, 1989, evidenced by Sales Certificate No. 1793, Deed No. V-70973. A relocation survey was conducted before the purchase to ascertain the property’s boundaries, further solidifying their belief in their rightful ownership. After the sale, the spouses Yu took possession, exercised dominion, and diligently paid real estate taxes, reinforcing their claim.

To resolve the conflicting claims, the Regional Trial Court (RTC) granted Topacio’s Motion for Joint Survey. A survey team from the Community Environment and Natural Resources Office (CENRO) of Trece Martirez City, led by Geodetic Engineer Ramoncito Tañola, conducted a verification survey on April 22, 2009. The survey revealed that while both properties shared a common point (Mon. 79), plotting their respective tie lines showed they were approximately 1,526 meters apart. Crucially, the survey indicated that the structure claimed by the spouses Yu, covering 450 square meters, was situated within Topacio’s property.

The RTC initially dismissed Topacio’s Complaint, stating that there was insufficient proof that the spouses Yu obtained their title fraudulently. According to the RTC, since no fraud was established, there was no instrument, record, claim, encumbrance, or proceeding that constituted a cloud of doubt upon Topacio’s title. However, the Court of Appeals (CA) modified the RTC’s ruling, ordering the spouses Yu to vacate Topacio’s property, remove any improvements, and pay reasonable compensation for the use and occupation of the land. The CA’s decision led to the Supreme Court review.

The Supreme Court clarified the distinct actions involved in the case, particularly quieting of title and recovery of possession. An action for quieting of title aims to determine the respective rights of the complainant and other claimants. Articles 476 and 477 of the Civil Code provide the legal basis for such actions, allowing the removal of any cloud on the title. The Supreme Court emphasized that for an action for recovery of possession to succeed, the plaintiff must fully prove both ownership and the identity of the property claimed. This is governed by Article 434 of the Civil Code, which requires the plaintiff to rely on the strength of their title rather than the weakness of the defendant’s claim.

ART. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.

Building on this principle, the Court found no error in the CA’s ruling that Topacio’s action for quieting of title was unavailing. To succeed in such an action, the plaintiff must prove both legal or equitable title in the property and that the claim casting a cloud on the title is invalid. While Topacio proved his legal title, he failed to demonstrate that the spouses Yu’s title was invalid or ineffective. The spouses Yu presented a valid chain of ownership, tracing their title back to a Sales Certificate from the Bureau of Lands. There was also no evidence of fraud in the procurement of their TCT, reinforcing its validity. Absent such evidence, the Court found no basis to invalidate TCT No. T-490552 issued in favor of the spouses Yu.

The Supreme Court addressed the spouses Yu’s concerns regarding the verification survey conducted by Engr. Tañola. Despite their claims of irregularities, the Court upheld the CA’s reliance on the survey results. Engr. Tañola’s appointment was court-ordered, and the survey was attended by all parties and their representatives. As a government official from DENR/CENRO, Engr. Tañola’s actions are presumed to be regular, and the spouses Yu’s evidence was insufficient to overcome this presumption. Based on the survey and the technical descriptions of the properties, the Court concluded that the two certificates of title covered different parcels of land, negating the claim of double registration.

That based on the actual verification survey the property claimed by Sps. Ernesto V. Yu and Elsie Yu with existing structure and with the total area of 450 square is inside the property of Eulogio A. Topacio, Jr. covered by Lot 7402-E, Psd-042106-054870.

While the Court rejected Topacio’s actions for quieting of title and reconveyance, it upheld his right to recover possession of the encroached property. The survey revealed that the spouses Yu were physically occupying a portion of Topacio’s land, despite their valid title covering a different area. The Supreme Court agreed with the CA’s assessment that the spouses Yu had taken possession of land not described in their Torrens title, resulting in a physical encroachment on Topacio’s property. As the rightful owner of the encroached land, Topacio was entitled to seek recovery of its full possession.

The Court, however, acknowledged that the spouses Yu acted in good faith when they possessed the disputed property. They genuinely believed in the validity of their right to possess the land based on their title. The essence of good faith lies in an honest belief in the validity of one’s right, ignorance of a superior claim, and absence of intention to overreach another. The spouses Yu were unaware of any flaw in their title or mode of acquisition that invalidated their claim. Given their good faith, the Court applied Article 448 of the Civil Code, which governs the rights and obligations of a builder in good faith on land owned by another.

ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

Under Article 448, Topacio, as the landowner, has the option to either appropriate the improvements made by the spouses Yu by paying the proper indemnity or oblige them to pay the price of the land. If the land’s value is considerably more than that of the improvements, the spouses Yu shall pay reasonable rent if Topacio does not choose to appropriate the improvements. The choice belongs to the landowner. Consequently, the Supreme Court deleted the award of damages in favor of Topacio and the award of attorney’s fees, noting the absence of bad faith on the part of the spouses Yu.

FAQs

What was the key issue in this case?	The central issue was whether the spouses Yu encroached on Topacio’s land, and what remedies were available given the good faith of the spouses Yu. The case involved conflicting land claims and the application of Article 448 of the Civil Code.
What is an action for quieting of title?	An action for quieting of title is a legal remedy to remove any cloud or doubt on the title to real property. It aims to ensure that the rightful owner can enjoy their property without fear of disturbance from adverse claims.
What does it mean to be a builder in good faith?	A builder in good faith is someone who builds on land believing they have a right to do so, unaware of any defect in their title or mode of acquisition. Good faith implies an honest intention and absence of fraudulent behavior.
What are the rights of a landowner when someone builds in good faith on their property?	Under Article 448 of the Civil Code, the landowner can choose to appropriate the improvements by paying indemnity or oblige the builder to purchase the land. If the land is more valuable, the builder pays rent if the landowner doesn’t want the improvements.
Why was Topacio’s action for quieting of title not successful?	Topacio failed to prove that the spouses Yu’s title was invalid or ineffective, which is a requirement for a successful action for quieting of title. The spouses Yu presented a valid chain of ownership and there was no evidence of fraud.
What was the significance of the survey in this case?	The survey established that the spouses Yu were physically occupying a portion of Topacio’s land, even though their title covered a different area. This finding was crucial in determining the encroachment and the applicable remedies.
What is the effect of a Torrens title?	A Torrens title serves as conclusive evidence of ownership of the land referred to, providing strong legal protection to the titleholder. It is generally presumed to be regularly issued and valid.
What is the legal basis for recovering possession of property?	The right to recover possession is based on Article 434 of the Civil Code, which requires the plaintiff to prove ownership and identify the property claimed. The plaintiff must rely on the strength of their title, not the weakness of the defendant’s claim.

In conclusion, the Supreme Court’s decision underscores the importance of clearly defined property boundaries and the remedies available when disputes arise. The ruling reinforces the application of Article 448 of the Civil Code, ensuring fairness when a party builds in good faith on another’s land. The case highlights the need for landowners to be diligent in protecting their property rights and for builders to ascertain the true boundaries of the land before commencing construction.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SPS. ERNESTO V. YU AND ELSIE YU vs. EULOGIO A. TOPACIO, JR., G.R. No. 216024, September 18, 2019