G.R. No. 149295. September 23, 2003 PHILIPPINE NATIONAL BANK,, Petitioner, v. GENEROSO DE JESUS, Represented by His Attorney

G.R. No. 149295.
September 23, 2003
PHILIPPINE NATIONAL BANK,, Petitioner, v. GENEROSO DE JESUS, represented by his Attorney-

in-Fact, CHRISTIAN DE JESUS, respondent.
DECISION
VITUG, J.:
Petitioner Philippine National Bank disputes the decision handed down by the Court of Appeals
promulgated on 23 March 2001 in CA-G.R. CV No. 56001, entitled Generoso De Jesus, represented by
his Attorney-in-Fact, Christian De Jesus, versus Philippine National Bank. The assailed decision has
affirmed the judgment rendered by the Regional Trial Court, Branch 44, of Mamburao, Occidental
Mindoro, declaring respondent Generoso de Jesus as being the true and lawful owner of the 124-
square-meter portion of the land covered by Transfer Certificate of Title (TCT) No. T-17197 and
ordering petitioner bank to vacate the premises, to deliver possession thereof to respondent, and to
remove the improvement thereon.
It would appear that on 10 June 1995, respondent filed a complaint against petitioner before the
Regional Trial Court of Occidental Mindoro for recovery of ownership and possession, with damages,
over the questioned property. In his complaint, respondent stated that he had acquired a parcel of
land situated in Mamburao, Occidental Mindoro, with an area of 1,144 square meters covered by TCT
No. T-17197, and that on 26 March 1993, he had caused a verification survey of the property and
discovered that the northern portion of the lot was being encroached upon by a building of petitioner
to the extent of 124 square meters. Despite two letters of demand sent by respondent, petitioner
failed and refused to vacate the area.
Petitioner, in its answer, asserted that when it acquired the lot and the building sometime in 1981
from then Mayor Bienvenido Ignacio, the encroachment already was in existence and to remedy the
situation, Mayor Ignacio offered to sell the area in question (which then also belonged to Ignacio) to
petitioner at P100.00 per square meter which offer the latter claimed to have accepted. The sale,
however, did not materialize when, without the knowledge and consent of petitioner, Mayor Ignacio
later mortgaged the lot to the Development Bank of the Philippines.
The trial court decided the case in favor of respondent declaring him to be the rightful owner of the
disputed 124-square-meter portion of the lot and ordering petitioner to surrender possession of the
property to respondent and to cause, at its expense, the removal of any improvement thereon.
The Court of Appeals, on appeal, sustained the trial court but it ordered to be deleted the award to
respondent of attorneys fees, as well as moral and exemplary damages, and litigation expenses.
Petitioner went to this Court, via a petition for review, after the appellate court had denied the banks
motion for reconsideration, here now contending that -
1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A BUILDER IN BAD FAITH
OVER THE ENCROACHED PROPERTY IN QUESTION;
2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN FAVOR OF PNB THE
PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND THE RULING IN TECNOGAS PHILIPPINES
MANUFACTURING CORP. VS. COURT OF APPEALS, G.R. No. 108894, February 10, 1997, 268 SCRA
7.1
cräläwvi rtual ibrä ry
The Regional Trial Court and the Court of Appeals have both rejected the idea that petitioner can be
considered a builder in good faith. In the context that such term is used in particular reference to
Article 448, et seq., of the Civil Code, a builder in good faith is one who, not being the owner of the
land, builds on that land believing himself to be its owner and unaware of any defect in his title or
mode of acquisition.
The various provisions of the Civil Code, pertinent to the subject, read:
Article 448. 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 a
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.
Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built,
planted or sown without right to indemnity.
Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may
demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.
A builder in good faith can, under the foregoing provisions, compel the landowner to make a choice
between 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, i.e., that the accessory follows the principal and not the other way around. 2 Even as the
option lies with the landowner, the grant to him, nevertheless, is preclusive. He much choose one. He
cannot, for instance, compel the owner of the building to instead remove it from the land. 3 In order,
however, that the builder can invoke that accruing benefit and enjoy his corresponding right to
demand that a choice be made by the landowner, he should be able to prove good faith on his part.
Good faith, here understood, 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. An individuals personal
good faith is a concept of his own mind and, therefore, may not conclusively be determined by his
protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances
which ought to put the holder upon inquiry.4 The essence of good faith lies in an honest belief in the
validity of ones right, ignorance of a superior claim, and absence of intention to overreach
another.5 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.6 cräläwvirtua lib räry
Given the findings of both the trial court and the appellate court, it should be evident enough that
petitioner would fall much too short from its claim of good faith. Evidently, petitioner was quite aware,
and indeed advised, prior to its acquisition of the land and building from Ignacio that a part of the
building sold to it stood on the land not covered by the land conveyed to it.
Equally significant is the fact that the building, constructed on the land by Ignacio, has in actuality
been part of the property transferred to petitioner. Article 448, of the Civil Code refers to a piece of
land whose ownership is claimed by two or more parties, one of whom has built some works (or sown
or planted something) and not to a case where the owner of the land is the builder, sower, or
planter who then later loses ownership of the land by sale or otherwise for, elsewise stated,
where the true owner himself is the builder of works on his own land, the issue of good
faith or bad faith is entirely irrelevant.7 cräläwvi rtua lib räry
In fine, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil Code. The
Court commiserates with petitioner in its present predicament; upon the other hand, respondent, too,
is entitled to his rights under the law, particularly after having long been deprived of the enjoyment of
his property. Nevertheless, the Court expresses hope that the parties will still be able to come up with
an arrangement that can be mutually suitable and acceptable to them.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is AFFIRMED. No costs.
SO ORDERED.

G.R. No. 149295. September 23, 2003 PHILIPPINE NATIONAL BANK,, Petitioner, v. GENEROSO DE JESUS, Represented by His Attorney

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G.R. No. 149295.

September 23, 2003

PHILIPPINE NATIONAL BANK,, Petitioner, v. GENEROSO DE JESUS, represented by his Attorney-

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