The Supreme Court ruled that even if a person isn’t a good faith builder, they can still retain possession of land if they built improvements with the owner’s knowledge and without opposition for a long period. This decision emphasizes that landowners who passively allow improvements on their property may have to compensate the builder before demanding the land back. This shifts the usual dynamics in unlawful detainer cases, acknowledging the investments made by those who improve land with the owner’s implicit consent.

Tacit Approval: When Silence Implies Consent in Land Disputes

The case revolves around a property dispute between the Belvis family (petitioners) and the Erola family (respondents). Cecilia Belvis is the sister of Conrado Erola. The Erolas filed an unlawful detainer case against the Belvises, seeking to reclaim a lot in Pontevedra, Capiz. The Erolas claimed they allowed the Belvises to occupy the land as close relatives, with the understanding that they would vacate upon demand. The Belvises, however, contended that the land was originally purchased by their mother, Rosario Erola, and that Conrado Erola registered it solely in his name, creating an implied trust. They further argued that they had been in possession of the land for over 34 years, making significant improvements in the belief that they were co-owners.

The lower courts ruled in favor of the Erolas, ordering the Belvises to vacate the property. The Municipal Circuit Trial Court (MCTC) found that the Belvises failed to prove their claim of co-ownership and that their occupation was merely tolerated. This decision was affirmed by the Regional Trial Court (RTC) and the Court of Appeals (CA). The appellate court further held that the Belvises could not be considered builders in good faith, as they were aware that the property was registered in Conrado Erola’s name.

The Supreme Court partly granted the petition, focusing on the issue of whether the Belvises were builders in good faith and thus entitled to retain possession of the land until they were reimbursed for the improvements they had made. While the Court agreed with the lower courts that the Belvises could not be deemed builders in good faith, it also noted that the Erolas had knowledge of and consented to the improvements made by the Belvises over a significant period. This crucial fact altered the legal landscape of the case.

The Supreme Court underscored the relevance of Article 453 of the Civil Code, which addresses situations where both the builder and the landowner act in bad faith. The article states:

ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith.

It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part.

Applying this provision, the Court reasoned that because the Erolas knew of and did not oppose the improvements made by the Belvises, they were also considered to have acted in bad faith. Consequently, the rights and obligations of both parties should be treated as if they had acted in good faith, invoking Article 448 in relation to Articles 546 and 548 of the Civil Code.

Article 448 of the Civil Code addresses the situation of a builder in good faith on another’s land, granting the landowner the option to either appropriate the improvements after paying indemnity or to oblige the builder to purchase the land. The Court emphasized that if the landowner chooses to appropriate the improvements, the builder has the right to retain possession of the land until reimbursement for necessary and useful expenses is made.

Furthermore, the Court provided the landowners two options. As landowners, respondents have the following options:

1. They may appropriate the improvements after payment of indemnity representing the value of the improvements introduced and the necessary, useful and luxurious expenses defrayed on the subject lots; or
2. They may oblige petitioners to pay the price of the land, if the value is not considerably more than that of the improvements and buildings.

In light of these considerations, the Supreme Court remanded the case to the MCTC for further proceedings. The MCTC was tasked with determining the facts essential for the proper application of Articles 448, 546, and 548 of the Civil Code, and ultimately deciding which party was entitled to physical possession of the land.

The ruling serves as a reminder that property rights are not absolute and that landowners have a responsibility to act diligently when others make improvements on their property. By failing to object to the improvements made by the Belvises, the Erolas essentially acquiesced to those changes. This acquiescence significantly impacted the legal outcome, requiring the Erolas to compensate the Belvises for the value of the improvements before reclaiming possession of the land.

FAQs

What was the key issue in this case?	The central issue was whether the Belvises, who made improvements on the Erolas’ land with the latter’s knowledge but without explicit consent, were entitled to retain possession until compensated for those improvements.
What is unlawful detainer?	Unlawful detainer is a legal action filed to recover possession of real property from someone who initially had lawful possession but whose right to possess has expired or been terminated.
What does it mean to be a builder in good faith?	A builder in good faith is someone who believes they have a right to build on the land, either because they believe they own it or have a valid claim of title, even if that belief is later found to be mistaken.
What is the significance of Article 448 of the Civil Code?	Article 448 governs the rights and obligations of a landowner and a builder in good faith, giving the landowner the option to either appropriate the improvements after paying indemnity or to compel the builder to purchase the land.
How did the Erolas’ knowledge of the improvements affect the case?	The Court deemed that the Erolas’ knowledge and lack of opposition to the improvements constituted bad faith on their part, triggering the application of Article 453 and leading to a ruling that the Belvises were entitled to compensation.
What options do the Erolas have now?	The Erolas can either appropriate the improvements by paying the Belvises for their value and related expenses, or they can require the Belvises to purchase the land if its value is not significantly higher than the improvements.
What is the effect of remanding the case to the MCTC?	Remanding the case to the MCTC means the lower court must determine the specific value of the improvements made by the Belvises and assess the land’s value to apply Articles 448, 546, and 548 of the Civil Code accurately.
Can this ruling apply to other similar cases?	Yes, this ruling sets a precedent for cases where landowners are aware of and do not object to improvements made on their property, potentially entitling the builders to compensation before they can be evicted.

This case underscores the importance of clear communication and diligent action in property matters. Landowners should promptly address any unauthorized improvements on their land to protect their rights, while those making improvements should ensure they have proper authorization to avoid future disputes.

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. JULIAN BELVIS, SR., AND CECILIA BELVIS, SPS. JULIAN E. BELVIS, JR., AND JOCELYN BELVIS, SPS. JULIAN E. BELVIS III AND ELSA BELVIS, AND JOUAN E. BELVIS, PETITIONERS, VS. SPS. CONRADO V. EROLA AND MARILYN EROLA, AS REPRESENTED BY MAUREEN FRIAS, G.R. No. 239727, July 24, 2019