Philippine National Bank v Generoso de Jesus

GR No. 149295, September 23, 2003

Facts: In 1995, respondent filed a complaint against the petitioner bank for recovery of ownership
and possession, with damages. Respondent alleged that he had acquired a parcel of land and
caused a verification survey of property. He discovered that the northern portion of the lot was
being encroached upon by a building of petitioner to the extent of 124 square meters. He sent two
demand letters but, PNB refused to vacate. Petitioner contended that when it acquired the lot and
building from Mayor Ignacio, the encroachment was already existing. To remedy the situation,
Mayor offered to sell the area to petitioner but, the sale did not materialize since the mayor
mortgaged the lot to Development Bank of the Philippines. Trial court decided in favor of
respondent declaring him to be the rightful owner of the disputed lot and ordered petitioner to
surrender the possession and removal of improvements. CA affirmed RTC.
Issue: Whether or not Article 448 should be applied in the case
Held: No. Article 448 provides:
Art. 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
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 448 refers to piece of land whose ownership is claimed by two or more persons, one of
whom has built some work. It will not apply if the builder is the also the owner of the land who
has given up up ownership of the said land by way of sale or other means. 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 the defect in his title or mode of acquisition. Good faith is an honest belief, an absence
of malice and design to defraud to seek unconscionable advantage. In possession, one is
considered in good faith if he is not aware that there exists in his title any flaw which can
invalidates it. Given the findings of both RTC and CA, it is evident enough that petitioner would
fall much to short from its claim of good faith. Petitioner was aware and advises, prior to his
acquisition, that a part of building sold stood on the land not covered by the land conveyed to
him. Therefore, petitioner was not in valid position to invoke provisions of Article 448.