Case Digest: VSD Realty vs. Uniwide

G.R. No. 170677 : October 24, 2012




Petitioner VSD Realty and Development Corporation (VSD) filed a Complaint for annulment of title and recovery of possession of property against respondents Uniwide Sales, Inc. (Uniwide) and Dolores Baello (Baello) with the RTC.

VSD alleged that it is the registered owner of a parcel of land in Caloocan City, wherein VSD purchased the said property from Felisa D. Bonifacio. VSD proved the identity of the land it is claiming through the technical description contained in its title, TCT No. T-285312; the derivative title of Felisa D. Bonifacio, TCT No. 265777; the technical description included in the official records of the subject lot in the Register of Deeds of Caloocan City; and the verification survey conducted by Geodetic Engineer Evelyn Celzo of the DENR-NCR.

On the other hand, Baello countered that the subject property was bequeathed to her through a will by her adoptive mother as approved by the probate court. Therafter, she entered into a Contract of Lease with respondent Uniwide. As a consequence of the lease agreement, Uniwide constructed in good faith a building worth at least P200,000,000.00 on the said property.

The RTC ruled in favor of VSD. On appeal, the CA reversed the RTC. Hence, this petition.


I. Whether or not VSD is entitled to recovery of possession of the subject property?

II. Whether or not Uniwide, as a lessee, is entitled to recover the amount of improvements introduced to the land?

HELD: The petition has merit.

CIVIL LAW: accion reivindicatoria; builder in good faith

Article 434 of the Civil Code provides that to successfully maintain an action to recover the ownership of a real property, the person who claims a better right to it must prove two (2) things: first, the identity of the land claimed, and; second, his title thereto. In regard to the first requisite, in an accion reinvindicatoria, the person who claims that he has a better right to the property must first fix the identity of the land he is claiming by describing the location, area and boundaries thereof. Hutchison v. Buscas held: "It bears stress that in an action to recover real property, the settled rule is that the plaintiff must rely on the strength of his title, not on the weakness of the defendants title. This requirement is based on two (2) reasons: first, it is possible that neither the plaintiff nor the defendant is the true owner of the property in dispute, and second, the burden of proof lies on the party who substantially asserts the affirmative of an issue for he who relies upon the existence of a fact should be called upon to prove that fact."

In this case, petitioner proved his title over the property in dispute as well as the identity of the said property; hence, it is entitled to recover the possession of the property from respondents.

SECOND ISSUE: Uniwide is not entitled to recover from VSD the cost of its improvement on the land.

It is noted that when the contract of lease was executed, Uniwide was unaware that the property leased by it was owned by another person other than Dolores Baello. Nevertheless, Uniwide cannot avail of the rights of a builder in good faith under Article 448 of the Civil Code, in relation to Article 546 of the same Code, which provides for full reimbursement of useful improvements and retention of the premises until reimbursement is made, as the said provisions apply only to a possessor in good faith who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract. Parilla v. Pilar held: "Articles 448 of the Civil Code, in relation to Article 546 of the same Code, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to improve his landlord out of his property."

Petition is GRANTED.