### Facts:
1. The dispute arose over a 42-square-meter portion of the residential land owned by Eden Ballatan and spouses Betty Martinez and Chong Chy Ling.
2. The parties own adjacent lots at Block No. 3, Poinsettia Street, Araneta University Village, Malabon, Metro Manila.
3. Petitioner Ballatan’s land is Lot No. 24 (414 square meters), while respondents Gonzalo Go, Sr., and his son Winston Go own Lots No. 25 (415 square meters) and No. 26 (313 square meters), and respondent Li Ching Yao owns Lot No. 27 (417 square meters).
4. In 1985, during the construction of her house on Lot No. 24, Ballatan noticed that the fence and pathway of Winston Go’s house encroached on her property.
#### Procedural Posture:
1. Ballatan adjusted AIA and Go to the discrepancy; AIA authorized surveys by Engineer Jose Quedding.
2. Multiple surveys indicated discrepancies among the lots with mutual encroachments.
3. Ballatan demanded Go to dismantle improvements on her land.
4. After failed negotiations and barangay mediation on April 1, 1986, Ballatan filed Civil Case No. 772-MN for recovery of possession in the Regional Trial Court, Malabon, Branch 169.
5. The Go’s filed an “Answer with Third-Party Complaint” against Li Ching Yao, AIA, and Engineer Quedding.
6. The trial court ruled in favor of Ballatan, ordering the Go’s to vacate and demolish structures on Ballatan’s lot and dismissed the third-party complaint against AIA, Quedding, and Li Ching Yao. Respondents Go appealed.
7. The Court of Appeals modified the trial court’s decision: ordered the Go’s to pay for the encroached land, reinstated claims against Li Ching Yao and Quedding, and remanded the case for valuation evidence.
8. Petitioners elevated the case to the Supreme Court questioning the reliance on equity and the valuation date and non-dismissal for unpaid docket fees for the third-party complaint.
### Issues:
1. Whether the Court of Appeals erred in applying equity and disregarding statutory property rights.
2. Whether the Court of Appeals erred in fixing the valuation date of the land encroachment at the time of taking, not payment.
3. Whether the unpaid docket fees for the third-party complaint warranted its dismissal.
### Court’s Decision:
1. **Equitable Application**:
– Court held the appellate court can apply equity when statutory law does not fully resolve all factual matrices, thus correctly applied Civil Code provisions, particularly Article 448.
2. **Valuation Date**:
– The Supreme Court ruled that the valuation at the time of payment (not taking) is correct to ensure fairness to the landowner, aligning it with precedents distinguishing from expropriation proceedings.
3. **Third-Party Complaint Filing Fees**:
– The Court found no jurisdictional error in Court of Appeals accepting the third-party complaint despite the non-specific prayer for damages claimed by Go, relating that the additional filing fee constitutes a lien on awarded amounts.
### Doctrine:
– **Article 448 of the Civil Code**: Rights of the landowner to choose between appropriating the improvement or selling the land to the good-faith builder. Requires fair compensation valuation at the time of payment, not at the time of taking.
– **Equitable Jurisdiction**: Equitable solutions to encroachment cases hinge on real-time fairness, ensuring the landowner’s rights are protected vis-a-vis increased land values and landscape usability.
### Class Notes:
– **Accion Publiciana**: Suits for recovery of possession not annually time-sensitive unlike forcible entry/ejectment.
– **Good Faith Presumption**: Default consideration unless proven otherwise, impacting remedial avenues under property law doctrines.
– **Jurisdiction Over Claims**: Full jurisdiction acquired when primary fees paid; additional unassessed fees constitute a lien.
### Historical Background:
This case exemplifies the tensions in real property disputes where urban development collides with historical land titling and surveyed misplacements. Amidst the evolution of the jurisdictional approach to real actions, it reflects the judicial balancing act, leveraging equity under the Civil Code to uphold proprietorial justice amidst infrastructural encroachments.
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