Spouses Cruz Dela Land Lot House Art Civil

VIII.

Ciriaco Realty Corporation ( CRC) sold to the spouses Del a Cruz a 500-square meter land (Lot A) in Paranaque. The land now has a fair market value of Pl,200,000. CRC likewise sold to the spouses Rodriguez, a 700-square meter land (Lot B) which is adjacent to Lot A. Lot B has a present fair market value of P1,500,000.

The spouses Dela Cruz constructed a house on Lot B, relying on the representation of the CRC sales agent that it is the property they purchased.  Only upon the completion of their house did the spouses Dela Cruz discover that they had built on Lot B owned by the spouses Rodriguez, not on Lot A that they purchased. They spent P 1,000,000 for the house.

As their lawyer, advise the spouses Dela Cruz on their rights and obligations under the given circumstances, and the recourses and options open to them to protect their interests. (8%)

SUGGESTED ANSWER:

Based on the facts as stated, the spouses Dela Cruz as builders and the spouses Rodriguez as land owners, are both in good faith.  The spouses Dela Cruz are builders in good faith because before constructing the house, they exercised due diligence by asking the agent of CRC the location of Lot A, and they relied on the information given by the agent who is presumed to know the identity of the lot purchased by the Dela Cruz spouses (Pleasantville v. CA, 253 SCRA 10[1996]).  On the other hand, there is no showing that the landowners, spouses Rodriguez, acted in bad faith.  The facts do not show that the building was done with their knowledge and without opposition on their part. (Art. 453 Civil Code).  Good faith is always presumed (Art. 527 Civil Code).

The owner of the land on which anything has been built, sown or planted in good faith shall have the right:

1.  to appropriate as his own the works after payment of the indemnity provided for in Articles 546 and 548, or

2.  to oblige the one who built to pay the price of the land.

However, the builder cannot be obliged to buy the land if its value is considerably more than that of the building.  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 (Art. 448, Civil Code).

The house constructed by the spouses Dela Cruz is considered as a useful expense, since it increased the value of the lot.  As such, should the spouses Rodriguez decide to appropriate the house, the spouses Dela Cruz are entitled to the right of retention pending reimbursement of the expenses they incurred or the increase in value which the thing may have acquired by reason of the improvement. (Art. 546 Civil Code).  Thus, the spouses Dela Cruz may demand P1,000,000 as payment of the expenses in building the house or increase in value of the land because of the house as a useful improvement, as may be determined by the court from the evidence presented during the trial. (Depra v. Dumlao, 136 SCRA 475[1985]; Technogas Phils, v. CA, 268 SCRA 5[1997]).