Ochoa v. Apeta

b. Right of Accession — Option given to landowner: reason for the option

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Case DigestChapter II — Ownership

Ochoa v. Apeta

G.R. No. 146259 · September 13, 2007 · Supreme Court

b. Right of Accession — Option given to landowner: reason for the option

Gist

A family had occupied a Laguna lot since 1910 and built houses and an apartment building on it, holding a Torrens title they believed covered it. A court-ordered resurvey showed their title actually described the lot next door. The Supreme Court confirmed the true owners and their right to possession, but would not let the courts below order the buildings torn down: the occupants had built in good faith, so the owners must choose — buy the improvements, or sell the land.

Core Doctrine

"[T]he landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one." Good faith is "an honest belief in the validity of one's right, ignorance of a superior claim and absence of intention to overreach another," and a possessor holding under a Torrens title he believes covers the land has it.

Facts

Since 1910 the Ochoas and their predecessors have occupied Lot No. 1580, of 886 square metres at Malaban, Biñan, Laguna, and built houses and an apartment building on it, holding TCT No. T-40624 which they believed covered that lot. Their belief rests on a Torrens title, not a hope — which is what later makes the finding of good faith straightforward.
In May 1982 Mauro Apeta and Apolonia Almazan discovered they were the true owners of Lot No. 1580 under Certificate of Title No. RT-599 (10731), and in January 1988 sued for recovery of possession and damages in the RTC of Biñan, Laguna.
Both sides claimed the same lot under different Torrens titles, so by agreement the trial judge commissioned a Bureau of Lands engineer to resurvey the property.
The resurvey showed the occupants were on the wrong lot. Lot No. 1580 was registered to the respondents' predecessor; the petitioners' own title actually covered Lot No. 1581 next door, which was occupied by someone else. The mistake is one of identification, not of title — everyone held a real title, just to the wrong ground. That is precisely the flaw a possessor is unaware of.
In March 1995 the trial court declared the respondents the true owners, held the petitioners "without right whatsoever to continue in possession," ordered them to deliver possession and to remove their houses and apartment building, and to pay ₱30,000 in fees and expenses. The demolition order is what the Supreme Court will not allow to stand.
The Court of Appeals affirmed in September 2000 and denied reconsideration that November.
Before the Supreme Court the petitioners raised only two grounds — that the lot is theirs, and that the action had prescribed. Neither touches the buildings; the Court takes their fate up on its own motion, asking "should respondents be allowed to take possession of those improvements?"

Issue

Main issue. Whether the respondents, having established ownership of Lot No. 1580, may take the houses and apartment building with it — or whether the petitioners are builders in good faith entitled to the protection of Article 448.

Secondary issues. (1) Whether the petitioners' claim of ownership may be re-examined on a Rule 45 petition. (2) Whether the action is barred by prescription after decades of occupation.

Ruling

Main issue. NO — the buildings do not simply pass with the land, because the petitioners built in good faith. Good faith is "an honest belief in the validity of one's right, ignorance of a superior claim and absence of intention to overreach another," and in possession it means one "is not aware that there exists in his title or mode of acquisition any flaw which invalidates it". On that test the Court is "convinced that petitioners and their predecessors-in-interest were in good faith when they built their houses and apartment building on Lot No. 1580 since they were convinced it was covered by their TCT No. T-40624." Article 448, with 546 and 548, then supplies both the consequence and its rationale: "the landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one." So the respondents may appropriate the houses and apartment building "by paying the proper indemnity or value," or oblige the petitioners to pay for the lot at a price "not more than that of the improvements" — but they may not simply have the buildings pulled down.

Secondary issue (1) — ownership. NOT reviewable. Only questions of law may be raised on Rule 45, and the claim to Lot No. 1580 "is factual in nature"; no exception applying, the Court "can no longer pass upon and evaluate" the resurvey-based finding below.

Secondary issue (2) — prescription. NO. "[N]o title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession" — and "[n]either can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent."

"WHEREFORE, we DENY the petition. The assailed Decision and Resolution of the Court of Appeals in CA G.R. CV No. 56109 are AFFIRMED with MODIFICATION in the sense that respondents have the option to pay for the houses and apartment building constructed by petitioners and their predecessors-in-interest on Lot No. 1580; or to oblige petitioners to pay the price of the lot in an amount not more than the value of the said improvements. SO ORDERED."

Ratio

The reason the option belongs to the landowner. "The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one."
The two branches of the choice. "[T]he landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land."
And the ceiling on the second. The builders may be obliged to pay "the price of Lot No. 1580 which is not more than that of the improvements" — carried into the dispositive as "an amount not more than the value of the said improvements."
What good faith is. "Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry."
Its essence. "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."
And its possessory test. "Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it."
Applied here. "[W]e are convinced that petitioners and their predecessors-in-interest were in good faith when they built their houses and apartment building on Lot No. 1580 since they were convinced it was covered by their TCT No. T-40624."
The indemnity articles. The Court reproduces Article 546 and Article 548 in full as the measure of the "proper indemnity" Article 448 requires.
Registered land is not lost by prescription. "[N]o title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession."
Nor by prescription against the owner's heirs. "Neither can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest."
Findings of fact are not re-weighed on Rule 45. "It is basic that this Court is not a trier of facts," and the ownership issue "requires us to weigh anew the evidence submitted by the parties already passed upon by the Court of Appeals."

Doctrine

The Option Belongs to the Landowner Because the Accessory Follows the Principal (Art. 448): the building is the accessory, the land the principal, so the owner of the land elects.
He Must Choose Only One: appropriate on indemnity, or oblige the builder to buy. The option is exclusive, and demolition is not a third branch.
The Price Demanded Cannot Exceed the Value of the Improvements where the Court so limits it — a disproportionate lot cannot be forced on the builder.
Good Faith Is Honest Belief Plus Ignorance of a Superior Claim (Art. 526): unawareness of a flaw in one's title or mode of acquisition.
A Possessor Holding Under a Torrens Title He Believes Covers the Land Is in Good Faith, even if a resurvey later shows the title describes a different lot.
Indemnity Is Measured by Articles 546 and 548 Together, with a right of retention for necessary and useful expenses.
Registered Land Is Not Lost by Prescription or Adverse Possession (P.D. No. 1529, Sec. 47), nor against the registered owner's heirs.
Ownership Findings Affirmed by the Court of Appeals Are Not Re-Weighed Under Rule 45.

How to place this case in the chapter. Ochoa is the chapter's answer to why the option exists at all, and the sentence to carry away is the one about accession — "the accessory follows the principal and not the other way around." Everything else in the builder group follows from it: the landowner elects because he owns the principal thing, and the builder's protection is an indemnity, not a veto. Read it beside Depra v. Dumlao, which works out the mechanics, and Del Campo v. Abesia, which decides when the article applies at all. Ochoa adds two things neither supplies. First, a workable definition of good faith — honest belief, ignorance of a superior claim, no intent to overreach — applied to the commonest real-world case, a title that turns out to describe the neighbouring lot. Second, the reminder that winning the land does not win the buildings: the respondents proved ownership completely and still could not have the houses torn down. Note too the symmetry the case sets up between the two Torrens titles — one defeats the occupants' claim to the soil, the other establishes their good faith as to what stands on it.

Full Digest — Recitation Format

I. Gist and Central Doctrine

Relationship to requested topic: DIRECT. The Ochoas had occupied Lot No. 1580 at Malaban, Biñan, Laguna since 1910, building houses and an apartment building on it under TCT No. T-40624. Mauro Apeta and Apolonia Almazan discovered in 1982 that they were the true owners under Certificate of Title No. RT-599 (10731) and sued in 1988. A court-ordered resurvey showed that Lot No. 1580 belonged to the respondents' predecessor Margarita Almada, and that the petitioners' own title actually covered Lot No. 1581 next door. The RTC and the Court of Appeals awarded possession and ordered the buildings removed; the Supreme Court affirmed but modified, holding the petitioners builders in good faith and giving the respondents the Article 448 option — because "[t]he choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one."

II. Chronological Narration of Material Facts

"Since 1910, the above-named petitioners and their predecessors-in-interest have been occupying Lot No. 1580 consisting of 886 square meters situated in Malaban, Biñan, Laguna. The lot is covered by Transfer Certificate of Title (TCT) No. T-40624 of the Registry of Deeds of that province. They built their houses and apartment building thereon."
"Sometime in May 10, 1982, Mauro Apeta and Apolonia Almazan, respondents, found that they are the true owners of Lot No. 1580 being occupied by petitioners."
On 22 January 1988, the respondents filed with the Regional Trial Court, Branch 24, Biñan, Laguna a complaint for recovery of possession and damages, docketed as Civil Case No. B-2777, alleging that they are "the lawful owners of Lot No. 1580 covered by Certificate of Title No. RT-599 (10731)."
The petitioners answered, "contending that they are the owners of Lot No. 1580 as shown by TCT No. T-40624 issued by the Registry of Deeds of Laguna."
Upon agreement of the parties, the trial judge "commissioned Engr. Romulo Unciano of the Bureau of Lands of Region IV to conduct a resurvey of the disputed property."
The resurvey, approved by the Bureau of Lands, showed "that Lot No. 1580, occupied by petitioners, was registered in the name of Margarita Almada, respondents' predecessor-in-interest; and that the lot covered by TCT No. T-40624 is not Lot No. 1580, but Lot No. 1581 registered in the name of Servillano Ochoa, petitioners' predecessor-in-interest. This lot has been occupied by Isidro Jasmin."
On 24 March 1995 the trial court ruled for the respondents, declaring them "the true and lawful owners of Lot 1580 of the Biñan Estate Subdivision covered by Transfer Certificate of Title No. RT-599 (10731)" and the petitioners "without right whatsoever to continue in possession thereof"; ordering the petitioners "to deliver peacefully the physical possession of Lot 1580 to the plaintiffs and to remove their houses and apartment building thereon"; and ordering them to pay ₱30,000 jointly and severally "as and for attorney's fees and litigation expenses."
On 8 September 2000 the Court of Appeals affirmed in CA-G.R. CV No. 56109, in a decision penned by Justice Martin S. Villarama, concurred in by Justices Salome A. Montoya and Romeo J. Callejo, Sr.
On 20 November 2000 the appellate court denied reconsideration, and the petitioners came to the Supreme Court under Rule 45.
On 13 September 2007 the Supreme Court denied the petition but modified the judgment, substituting the Article 448 option for the order of removal.

III. Arguments of the Parties

A. Petitioners (Florentino, Troadio and Pedro Ochoa)

Two contentions only: that Lot No. 1580 belongs to them, as shown by TCT No. T-40624; and that the respondents' action is barred by prescription, their family having occupied the lot since 1910.

B. Respondents (Mauro Apeta and Apolonia Almazan)

That they are "the lawful owners of Lot No. 1580 covered by Certificate of Title No. RT-599 (10731)," and entitled to recover possession with damages.

IV. Issues

A. MAIN ISSUE

Whether the respondents, as adjudged owners, may take possession of the houses and apartment building built on Lot No. 1580 — which turns on whether the petitioners were builders in good faith.

B. SECONDARY ISSUES

Whether the petitioners' claim to be the owners of Lot No. 1580 may be reviewed on a Rule 45 petition.
Whether the action is barred by prescription.

V. Ruling / Disposition

A. MAIN ISSUE

The petitioners are builders in good faith, and the respondents must elect. Good faith in possession means one "is not aware that there exists in his title or mode of acquisition any flaw which invalidates it", and the Court is "convinced that petitioners and their predecessors-in-interest were in good faith when they built their houses and apartment building on Lot No. 1580 since they were convinced it was covered by their TCT No. T-40624." "Under the foregoing provisions, the landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one." Accordingly the respondents "may choose between appropriating as their own the houses and apartment building... by paying the proper indemnity or value; or obliging petitioners to pay the price of Lot No. 1580 which is not more than that of the improvements," the indemnity being measured by Article 546 and Article 548.

B. SECONDARY ISSUES

Ownership — not reviewable. "[O]nly questions of law may be raised" on Rule 45; the issue "is factual in nature and requires a review of the pieces of evidence presented by the parties," so the Court "can no longer pass upon and evaluate the lower courts' finding."
Prescription — NO. "[N]o title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession"; "[n]either can prescription be allowed against the hereditary successors of the registered owner."

"WHEREFORE, we DENY the petition. The assailed Decision and Resolution of the Court of Appeals in CA G.R. CV No. 56109 are AFFIRMED with MODIFICATION in the sense that respondents have the option to pay for the houses and apartment building constructed by petitioners and their predecessors-in-interest on Lot No. 1580; or to oblige petitioners to pay the price of the lot in an amount not more than the value of the said improvements. SO ORDERED."

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

The Court raises the issue itself. "Parenthetically, considering that petitioners and their predecessors-in-interest have built their houses and apartment building on Lot No. 1580, should respondents be allowed to take possession of those improvements? In order to settle this matter, we should determine whether petitioners were builders in good faith."
Good faith, described. "Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry."
Good faith, in essence. "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."
Good faith, applied to possession. "Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it."
The finding. "Using the above parameters, we are convinced that petitioners and their predecessors-in-interest were in good faith when they built their houses and apartment building on Lot No. 1580 since they were convinced it was covered by their TCT No. T-40624."
The option, and its rationale. "Under the foregoing provisions, the landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one."
The election as applied. "Following the above provisions, respondents, as owners of Lot No. 1580, may choose between appropriating as their own the houses and apartment building constructed thereon by petitioners and their predecessors-in-interest by paying the proper indemnity or value; or obliging petitioners to pay the price of Lot No. 1580 which is not more than that of the improvements."
Registered land and prescription. "[S]uffice it to state that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. Neither can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest."
The limits of Rule 45. "It is basic that this Court is not a trier of facts," and none of the recognised exceptions — contradictory findings, manifestly mistaken inference, misapprehension of facts, or unresolved relevant facts — was present.

B. Doctrines/Rules

The Accessory Follows the Principal, So the Landowner Elects (Art. 448).
The Option Is Exclusive — "He Must Choose Only One."
The Builder Cannot Be Charged More for the Land Than the Improvements Are Worth, where the Court so limits the election.
Good Faith Is Honest Belief, Ignorance of a Superior Claim, and No Intent to Overreach.
A Possessor Unaware of a Flaw in His Title Is in Good Faith (Art. 526) — including one whose Torrens title turns out to describe an adjoining lot.
Indemnity Is Fixed by Articles 546 and 548.
Registered Land Cannot Be Acquired by Prescription or Adverse Possession (P.D. No. 1529, Sec. 47), Nor Against the Owner's Heirs.
Concurrent Findings of Ownership Are Beyond Rule 45 Review.

C. Limitations/Exceptions

The Court affirmed the respondents' ownership and their right to be "placed in possession." What it struck was the unconditional order to remove the buildings — the ownership ruling stands untouched.
The award of ₱30,000 in attorney's fees and litigation expenses was not disturbed.
Good faith was found on a specific fact: an existing Torrens title the petitioners believed covered the lot. The case is not authority that long occupation alone establishes good faith.
The Court fixed no amounts. Indemnity, the price of the lot and the comparison of values are all left to be worked out below — compare Depra v. Dumlao, which specifies exactly what must be valued.
The disposition limits the price of the land to "not more than the value of the said improvements," which is a firmer cap than Article 448's own "considerably more" standard. Read the two together rather than treating this phrasing as a general restatement.

D. Topic Integration

The relationship is DIRECT.
On the assigned subtopic — the reason for the option — the answer is the principle of accession: the land is the principal and the building the accessory, so the election belongs to the owner of the land. The privilege is not a reward; it is a consequence of which thing the law treats as principal.
Three corollaries follow, and all three appear in the decision. The choice is exclusive ("[h]e must choose only one"); it does not include demolition; and the builder is protected by an indemnity measured by Articles 546 and 548, carrying a right of retention until paid.
Pair it with Depra v. Dumlao for the mechanics of exercising the option, Del Campo v. Abesia for when Article 448 applies at all, and Nuguid v. Court of Appeals for the builder's retention pending payment.
Note the useful practical shape of this case for problems: a mistaken survey, not a squatter. It is the cleanest illustration that good faith is about what the builder knew, not about how modest his claim was — the Ochoas held a real title and built for decades on the strength of it.
Finally, remember the two-title symmetry. P.D. No. 1529, Section 47 protected the respondents' registration against a century of occupation, while the petitioners' own registration is what made them builders in good faith. The Torrens system decided both halves of the case, in opposite directions.

VII. Separate Opinions

NOT IN RECORD. The decision was penned by Justice Angelina Sandoval-Gutierrez for the First Division, with Chief Justice Reynato S. Puno (Chairperson) and Justices Corona, Azcuna and Garcia concurring.

Cited Laws & Provisions

Every statute, rule, and issuance the decision turns on — the text as written, and the work it does in this case.

Civil Code

Article 448, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title II (Ownership), Chapter 2 (Right of Accession), Section 2 (Right of Accession With Respect to Immovable Property)

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. (361a)

Why it is cited here

The article that converts a win on ownership into something less than a win on possession. The landowner "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."

The case is assigned for the reason behind that option, and the Court supplies it in one sentence: "The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around." The land is the principal thing and the building the accessory, so the law puts the election in the hands of the owner of the principal — not because he deserves a windfall, but because accession runs in that direction.

Two limits sit beside the privilege. "He must choose only one" — the option is exclusive, not cumulative, and there is no third choice of simply demanding demolition. And the second option carries a ceiling, which the Court builds straight into its disposition: the builders may be obliged to pay the price of the lot only "in an amount not more than the value of the said improvements."

Civil Code

Article 546, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title V (Possession), Chapter 3 (Effects of Possession)

Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. (453a)

Why it is cited here

What "proper indemnity" means if the owner elects to keep the buildings. "Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof."

Notice the phrase "the person who has defeated him in the possession" — it describes the respondents exactly. They won on title, and the article tells them what winning costs.

The right of retention it carries is the practical answer to the trial court's order that the petitioners "remove their houses and apartment building." A possessor in good faith may hold the property until reimbursed, so an unconditional order to vacate and demolish puts the sequence backwards.

Civil Code

Article 548, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title V (Possession), Chapter 3 (Effects of Possession)

Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended. (454)

Why it is cited here

The third article the Court reproduces, completing the indemnity formula Article 448 points to. "Expense for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers no injury thereby, and if his successors in the possession do not prefer to refund the amount expended."

It marks the outer edge of what a landowner electing to appropriate must pay for. Necessary and useful expenses are reimbursed with a right of retention; ornamental ones are not, and the builder's remedy for those is to take them away if he can do so without injuring the thing.

For a case about houses and an apartment building it does no heavy lifting, but it is quoted because Article 448 sends the reader to "Articles 546 and 548" as a pair — the indemnity is defined by both, never by 546 alone.

Civil Code

Article 526, Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title V (Possession), Chapter 1 (Possession and the Kinds Thereof)

He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be the basis of good faith. (433a)

Why it is cited here

The statutory anchor for the finding of good faith, cited by the Court in its footnote. "He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it."

The Court first gives the general description — good faith "encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage... 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" — and then applies the article's narrower possessory test: "one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it."

What makes the finding easy here is the kind of mistake. The petitioners were not squatting and not guessing; they held TCT No. T-40624 and were "convinced it was covered" by it. A surveyor's error in matching a title to the ground is exactly the flaw the possessor is unaware of. The article's closing sentence is worth remembering alongside this — "[m]istake upon a doubtful or difficult question of law may be the basis of good faith" — since a mistake of fact like this one is a fortiori.

Special Law

Section 47, P.D. No. 1529

Registered land not subject to prescriptions

Presidential Decree No. 1529 (Property Registration Decree, 1978)

No title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession.

Why it is cited here

The answer to the petitioners' prescription defence, and the reason ninety-seven years of occupation bought them nothing. "No title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession."

Long possession is simply irrelevant against a Torrens title: "suffice it to state that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession."

The Court adds the extension that matters when the registered owner has died — "[n]either can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest." So the respondents, claiming through Margarita Almada, were as immune as she would have been.

The irony is worth noticing: the section protects the respondents' registered title, and the petitioners' own registered title is what makes them builders in good faith. The same system that defeats their claim to the land preserves their claim to the buildings.

Cited laws & provisions

Article 448, Civil Code

Civil Code

Why it is cited here

Full entry below ↓

Article 546, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title V (Possession), Chapter 3 (Effects of Possession)

Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.

Why it is cited here

Notice the phrase "the person who has defeated him in the possession" — it describes the respondents exactly. They won on title, and the article tells them what winning costs.

Full entry below ↓

Article 548, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title V (Possession), Chapter 3 (Effects of Possession)

Why it is cited here

Full entry below ↓

Article 526, Civil Code

Civil Code

Civil Code of the Philippines (R.A. No. 386), Book II (Property, Ownership, and Its Modifications), Title V (Possession), Chapter 1 (Possession and the Kinds Thereof)

He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be the basis of good faith. (433a)

Why it is cited here

Full entry below ↓

Section 47, P.D. No. 1529

Special Law

Registered land not subject to prescriptions

Presidential Decree No. 1529 (Property Registration Decree, 1978)

No title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession.

Why it is cited here

Full entry below ↓

Facts

Since 1910 the Ochoas and their predecessors have occupied Lot No. 1580, of 886 square metres at Malaban, Biñan, Laguna, and built houses and an apartment building on it, holding TCT No. T-40624 which they believed covered that lot. Their belief rests on a Torrens title, not a hope — which is what later makes the finding of good faith straightforward.
In May 1982 Mauro Apeta and Apolonia Almazan discovered they were the true owners of Lot No. 1580 under Certificate of Title No. RT-599 (10731), and in January 1988 sued for recovery of possession and damages in the RTC of Biñan, Laguna.
Both sides claimed the same lot under different Torrens titles, so by agreement the trial judge commissioned a Bureau of Lands engineer to resurvey the property.
The resurvey showed the occupants were on the wrong lot. Lot No. 1580 was registered to the respondents' predecessor; the petitioners' own title actually covered Lot No. 1581 next door, which was occupied by someone else. The mistake is one of identification, not of title — everyone held a real title, just to the wrong ground. That is precisely the flaw a possessor is unaware of.
In March 1995 the trial court declared the respondents the true owners, held the petitioners "without right whatsoever to continue in possession," ordered them to deliver possession and to remove their houses and apartment building, and to pay ₱30,000 in fees and expenses. The demolition order is what the Supreme Court will not allow to stand.
The Court of Appeals affirmed in September 2000 and denied reconsideration that November.
Before the Supreme Court the petitioners raised only two grounds — that the lot is theirs, and that the action had prescribed. Neither touches the buildings; the Court takes their fate up on its own motion, asking "should respondents be allowed to take possession of those improvements?"

Issue

Secondary issues. (1) Whether the petitioners' claim of ownership may be re-examined on a Rule 45 petition. (2) Whether the action is barred by prescription after decades of occupation.

Ruling

"WHEREFORE, we DENY the petition. The assailed Decision and Resolution of the Court of Appeals in CA G.R. CV No. 56109 are AFFIRMED with MODIFICATION in the sense that respondents have the option to pay for the houses and apartment building constructed by petitioners and their predecessors-in-interest on Lot No. 1580; or to oblige petitioners to pay the price of the lot in an amount not more than the value of the said improvements. SO ORDERED."

Ratio

The reason the option belongs to the landowner. "The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one."
The two branches of the choice. "[T]he landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land."
And the ceiling on the second. The builders may be obliged to pay "the price of Lot No. 1580 which is not more than that of the improvements" — carried into the dispositive as "an amount not more than the value of the said improvements."
What good faith is. "Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry."
Its essence. "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."
And its possessory test. "Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it."
Applied here. "[W]e are convinced that petitioners and their predecessors-in-interest were in good faith when they built their houses and apartment building on Lot No. 1580 since they were convinced it was covered by their TCT No. T-40624."
The indemnity articles. The Court reproduces Article 546 and Article 548 in full as the measure of the "proper indemnity" Article 448 requires.
Registered land is not lost by prescription. "[N]o title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession."
Nor by prescription against the owner's heirs. "Neither can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest."
Findings of fact are not re-weighed on Rule 45. "It is basic that this Court is not a trier of facts," and the ownership issue "requires us to weigh anew the evidence submitted by the parties already passed upon by the Court of Appeals."

Doctrine

The Option Belongs to the Landowner Because the Accessory Follows the Principal (Art. 448): the building is the accessory, the land the principal, so the owner of the land elects.
He Must Choose Only One: appropriate on indemnity, or oblige the builder to buy. The option is exclusive, and demolition is not a third branch.
The Price Demanded Cannot Exceed the Value of the Improvements where the Court so limits it — a disproportionate lot cannot be forced on the builder.
Good Faith Is Honest Belief Plus Ignorance of a Superior Claim (Art. 526): unawareness of a flaw in one's title or mode of acquisition.
A Possessor Holding Under a Torrens Title He Believes Covers the Land Is in Good Faith, even if a resurvey later shows the title describes a different lot.
Indemnity Is Measured by Articles 546 and 548 Together, with a right of retention for necessary and useful expenses.
Registered Land Is Not Lost by Prescription or Adverse Possession (P.D. No. 1529, Sec. 47), nor against the registered owner's heirs.
Ownership Findings Affirmed by the Court of Appeals Are Not Re-Weighed Under Rule 45.

Full Digest — Recitation Format

I. Gist and Central Doctrine

II. Chronological Narration of Material Facts

"Since 1910, the above-named petitioners and their predecessors-in-interest have been occupying Lot No. 1580 consisting of 886 square meters situated in Malaban, Biñan, Laguna. The lot is covered by Transfer Certificate of Title (TCT) No. T-40624 of the Registry of Deeds of that province. They built their houses and apartment building thereon."
"Sometime in May 10, 1982, Mauro Apeta and Apolonia Almazan, respondents, found that they are the true owners of Lot No. 1580 being occupied by petitioners."
On 22 January 1988, the respondents filed with the Regional Trial Court, Branch 24, Biñan, Laguna a complaint for recovery of possession and damages, docketed as Civil Case No. B-2777, alleging that they are "the lawful owners of Lot No. 1580 covered by Certificate of Title No. RT-599 (10731)."
The petitioners answered, "contending that they are the owners of Lot No. 1580 as shown by TCT No. T-40624 issued by the Registry of Deeds of Laguna."
Upon agreement of the parties, the trial judge "commissioned Engr. Romulo Unciano of the Bureau of Lands of Region IV to conduct a resurvey of the disputed property."
The resurvey, approved by the Bureau of Lands, showed "that Lot No. 1580, occupied by petitioners, was registered in the name of Margarita Almada, respondents' predecessor-in-interest; and that the lot covered by TCT No. T-40624 is not Lot No. 1580, but Lot No. 1581 registered in the name of Servillano Ochoa, petitioners' predecessor-in-interest. This lot has been occupied by Isidro Jasmin."
On 24 March 1995 the trial court ruled for the respondents, declaring them "the true and lawful owners of Lot 1580 of the Biñan Estate Subdivision covered by Transfer Certificate of Title No. RT-599 (10731)" and the petitioners "without right whatsoever to continue in possession thereof"; ordering the petitioners "to deliver peacefully the physical possession of Lot 1580 to the plaintiffs and to remove their houses and apartment building thereon"; and ordering them to pay ₱30,000 jointly and severally "as and for attorney's fees and litigation expenses."
On 8 September 2000 the Court of Appeals affirmed in CA-G.R. CV No. 56109, in a decision penned by Justice Martin S. Villarama, concurred in by Justices Salome A. Montoya and Romeo J. Callejo, Sr.
On 20 November 2000 the appellate court denied reconsideration, and the petitioners came to the Supreme Court under Rule 45.
On 13 September 2007 the Supreme Court denied the petition but modified the judgment, substituting the Article 448 option for the order of removal.

III. Arguments of the Parties

A. Petitioners (Florentino, Troadio and Pedro Ochoa)

B. Respondents (Mauro Apeta and Apolonia Almazan)

That they are "the lawful owners of Lot No. 1580 covered by Certificate of Title No. RT-599 (10731)," and entitled to recover possession with damages.

IV. Issues

A. MAIN ISSUE

B. SECONDARY ISSUES

Whether the petitioners' claim to be the owners of Lot No. 1580 may be reviewed on a Rule 45 petition.
Whether the action is barred by prescription.

V. Ruling / Disposition

A. MAIN ISSUE

B. SECONDARY ISSUES

Ownership — not reviewable. "[O]nly questions of law may be raised" on Rule 45; the issue "is factual in nature and requires a review of the pieces of evidence presented by the parties," so the Court "can no longer pass upon and evaluate the lower courts' finding."
Prescription — NO. "[N]o title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession"; "[n]either can prescription be allowed against the hereditary successors of the registered owner."

VI. Ratio Decidendi and Doctrines

A. Ratio Decidendi

The Court raises the issue itself. "Parenthetically, considering that petitioners and their predecessors-in-interest have built their houses and apartment building on Lot No. 1580, should respondents be allowed to take possession of those improvements? In order to settle this matter, we should determine whether petitioners were builders in good faith."
Good faith, described. "Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry."
Good faith, in essence. "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."
Good faith, applied to possession. "Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it."
The finding. "Using the above parameters, we are convinced that petitioners and their predecessors-in-interest were in good faith when they built their houses and apartment building on Lot No. 1580 since they were convinced it was covered by their TCT No. T-40624."
The option, and its rationale. "Under the foregoing provisions, the landowner can make a choice — either by appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. He must choose only one."
The election as applied. "Following the above provisions, respondents, as owners of Lot No. 1580, may choose between appropriating as their own the houses and apartment building constructed thereon by petitioners and their predecessors-in-interest by paying the proper indemnity or value; or obliging petitioners to pay the price of Lot No. 1580 which is not more than that of the improvements."
Registered land and prescription. "[S]uffice it to state that no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. Neither can prescription be allowed against the hereditary successors of the registered owner, because they step into the shoes of the decedent and are merely the continuation of the personality of their predecessor-in-interest."
The limits of Rule 45. "It is basic that this Court is not a trier of facts," and none of the recognised exceptions — contradictory findings, manifestly mistaken inference, misapprehension of facts, or unresolved relevant facts — was present.

B. Doctrines/Rules

The Accessory Follows the Principal, So the Landowner Elects (Art. 448).
The Option Is Exclusive — "He Must Choose Only One."
The Builder Cannot Be Charged More for the Land Than the Improvements Are Worth, where the Court so limits the election.
Good Faith Is Honest Belief, Ignorance of a Superior Claim, and No Intent to Overreach.
A Possessor Unaware of a Flaw in His Title Is in Good Faith (Art. 526) — including one whose Torrens title turns out to describe an adjoining lot.
Indemnity Is Fixed by Articles 546 and 548.
Registered Land Cannot Be Acquired by Prescription or Adverse Possession (P.D. No. 1529, Sec. 47), Nor Against the Owner's Heirs.
Concurrent Findings of Ownership Are Beyond Rule 45 Review.

C. Limitations/Exceptions

The Court affirmed the respondents' ownership and their right to be "placed in possession." What it struck was the unconditional order to remove the buildings — the ownership ruling stands untouched.
The award of ₱30,000 in attorney's fees and litigation expenses was not disturbed.
Good faith was found on a specific fact: an existing Torrens title the petitioners believed covered the lot. The case is not authority that long occupation alone establishes good faith.
The Court fixed no amounts. Indemnity, the price of the lot and the comparison of values are all left to be worked out below — compare Depra v. Dumlao, which specifies exactly what must be valued.
The disposition limits the price of the land to "not more than the value of the said improvements," which is a firmer cap than Article 448's own "considerably more" standard. Read the two together rather than treating this phrasing as a general restatement.

D. Topic Integration

The relationship is DIRECT.
On the assigned subtopic — the reason for the option — the answer is the principle of accession: the land is the principal and the building the accessory, so the election belongs to the owner of the land. The privilege is not a reward; it is a consequence of which thing the law treats as principal.
Three corollaries follow, and all three appear in the decision. The choice is exclusive ("[h]e must choose only one"); it does not include demolition; and the builder is protected by an indemnity measured by Articles 546 and 548, carrying a right of retention until paid.
Pair it with Depra v. Dumlao for the mechanics of exercising the option, Del Campo v. Abesia for when Article 448 applies at all, and Nuguid v. Court of Appeals for the builder's retention pending payment.
Note the useful practical shape of this case for problems: a mistaken survey, not a squatter. It is the cleanest illustration that good faith is about what the builder knew, not about how modest his claim was — the Ochoas held a real title and built for decades on the strength of it.
Finally, remember the two-title symmetry. P.D. No. 1529, Section 47 protected the respondents' registration against a century of occupation, while the petitioners' own registration is what made them builders in good faith. The Torrens system decided both halves of the case, in opposite directions.