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PNBvsDeJesus:149295:September23,2003:J.Vitug:FirstDivision

FIRSTDIVISION

[G.R.No.149295.September23,2003]

PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS,


represented by his AttorneyinFact, 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 CAG.R. CV No. 56001, entitled Generoso De
Jesus, represented by his AttorneyinFact, Christian De Jesus, versus Philippine National
Bank.TheassaileddecisionhasaffirmedthejudgmentrenderedbytheRegionalTrialCourt,
Branch 44, of Mamburao, Occidental Mindoro, declaring respondent Generoso de Jesus as
being the true and lawful owner of the 124squaremeter portion of the land covered by
Transfer Certificate of Title (TCT) No. T17197 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
thathehadacquiredaparceloflandsituatedinMamburao,OccidentalMindoro,withanarea
of 1,144 square meters covered by TCT No. T17197, and that on 26 March 1993, he had
causedaverificationsurveyofthepropertyanddiscoveredthatthenorthernportionofthelot
was being encroached upon by a building of petitioner to the extent of 124 square meters.
Despitetwolettersofdemandsentbyrespondent,petitionerfailedandrefusedtovacatethe
area.
Petitioner,initsanswer,assertedthatwhenitacquiredthelotandthebuildingsometimein
1981fromthenMayorBienvenidoIgnacio,theencroachmentalreadywasinexistenceandto
remedy the situation, Mayor Ignacio offered to sell the area in question (which then also
belongedtoIgnacio)topetitioneratP100.00persquaremeterwhichofferthelatterclaimedto
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
ownerofthedisputed124squaremeterportionofthelotandorderingpetitionertosurrender
possession of the property to respondent and to cause, at its expense, the removal of any
improvementthereon.
TheCourtofAppeals,onappeal,sustainedthetrialcourtbutitorderedtobedeletedthe
awardtorespondentofattorneysfees,aswellasmoralandexemplarydamages,andlitigation
expenses.
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PetitionerwenttothisCourt,viaapetitionforreview,aftertheappellatecourthaddenied
thebanksmotionforreconsideration,herenowcontendingthat
1.THECOURTOFAPPEALSGRAVELYERREDINLAWINADJUDGINGPNBABUILDERIN
BADFAITHOVERTHEENCROACHEDPROPERTYINQUESTION
2.THECOURTOFAPPEALSGRAVELYERREDINLAWINNOTAPPLYINGINFAVOROF
PNBTHEPROVISIONOFARTICLE448OFTHECIVILCODEANDTHERULINGIN
TECNOGASPHILIPPINESMANUFACTURINGCORP.VS.COURTOFAPPEALS,G.R.No.
108894,February10,1997,268SCRA7.[1]
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
particularreferencetoArticle448,etseq.,oftheCivilCode,abuilderingoodfaithisonewho,
not being the owner of the land, builds on that land believing himself to be its owner and
unawareofanydefectinhistitleormodeofacquisition.
ThevariousprovisionsoftheCivilCode,pertinenttothesubject,read:
Article448.Theownerofthelandonwhichanythinghasbeenbuilt,sown,orplantedingoodfaith,shall
havetherighttoappropriateashisowntheworks,sowingorplanting,afterpaymentoftheindemnity
providedforinArticles546and548,ortoobligetheonewhobuiltorplantedtopaythepriceofthe
land,andtheonewhosowed,theproperrent.However,thebuilderorplantercannotbeobligedtobuy
thelandifitsvalueisconsiderablymorethanthatofthebuildingortrees.Insuchacase,heshallpay
reasonablerent,iftheownerofthelanddoesnotchoosetoappropriatethebuildingortreesafterproper
indemnity.Thepartiesshallagreeuponthetermsoftheleaseandincaseofdisagreement,thecourtshall
fixthetermsthereof.
Article449.Hewhobuilds,plants,orsowsinbadfaithonthelandofanother,loseswhatisbuilt,planted
orsownwithoutrighttoindemnity.
Article450.Theownerofthelandonwhichanythinghasbeenbuilt,plantedorsowninbadfaithmay
demandthedemolitionofthework,orthattheplantingorsowingberemoved,inordertoreplacethings
intheirformerconditionattheexpenseofthepersonwhobuilt,plantedorsowedorhemaycompelthe
builderorplantertopaythepriceoftheland,andthesowertheproperrent.
Abuilderingoodfaithcan,undertheforegoingprovisions,compelthelandownertomake
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
accordswiththeprincipleofaccession,i.e.,thattheaccessoryfollowstheprincipalandnotthe
otherwayaround.[2]Evenastheoptionlieswiththelandowner,thegranttohim,nevertheless,
ispreclusive.Hemuchchooseone.Hecannot,forinstance,compeltheownerofthebuilding
toinsteadremoveitfromtheland.[3]Inorder,however,thatthebuildercaninvokethataccruing
benefitandenjoyhiscorrespondingrighttodemandthatachoicebemadebythelandowner,
heshouldbeabletoprovegoodfaithonhispart.
Goodfaith,hereunderstood,isanintangibleandabstractqualitywithnotechnicalmeaning
orstatutorydefinition,anditencompasses,amongotherthings,anhonestbelief,theabsence
ofmaliceandtheabsenceofdesigntodefraudortoseekanunconscionableadvantage. 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
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essenceofgoodfaithliesinanhonestbeliefinthevalidityofonesright,ignoranceofasuperior
claim, and absence of intention to overreach another.[5] Applied to possession, one is
consideredingoodfaithifheisnotawarethatthereexistsinhistitleormodeofacquisitionany
flawwhichinvalidatesit.[6]
Given the findings of both the trial court and the appellate court, it should be evident
enoughthatpetitionerwouldfallmuchtooshortfromitsclaimofgoodfaith.Evidently,petitioner
was quite aware, and indeed advised, prior to its acquisition of the land and building from
Ignaciothatapartofthebuildingsoldtoitstoodonthelandnotcoveredbythelandconveyed
toit.
Equally significant is the fact that the building, constructed on the land by Ignacio, has in
actualitybeenpartofthepropertytransferredtopetitioner.Article448,oftheCivilCoderefers
toapieceoflandwhoseownershipisclaimedbytwoormoreparties,oneofwhomhasbuilt
someworks(orsownorplantedsomething)andnottoacasewheretheownerofthelandis
the builder, sower, or planter who then later loses ownership of the land by sale or
otherwisefor,elsewisestated,wherethetrueownerhimselfisthebuilderofworkson
hisownland,theissueofgoodfaithorbadfaithisentirelyirrelevant.[7]
Infine,petitionerisnotinavalidpositiontoinvoketheprovisionsofArticle448oftheCivil
Code.TheCourtcommiserateswithpetitionerinitspresentpredicamentupontheotherhand,
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
acceptabletothem.
WHEREFORE, the decision of the Court of Appeals in CAG.R. CV No. 56001 is
AFFIRMED.Nocosts.
SOORDERED.
Davide,Jr.,C.J.,(Chairman),YnaresSantiago,andCarpio,JJ.,concur.
Azcuna,J.,onsickleave.
[1]Rollo,p.12.
[2]Depravs.Dumlao,G.R.No.L57348,16May1985,136SCRA475.
[3]

Ignacio vs. Hilario, 76 Phil. 605 Sarmiento vs. Agana, G.R. No. L57288, 30 April 1984, 129 SCRA 122
TecnogasPhilippinesManufacturingCorp.vs.CourtofAppeals,G.R.No.108894,10February1997,268
SCRA7.

[4]BlacksLawDictionary,AbridgedFifthEdition,p.353.
[5]Bernardovs.Bernardo,96Phil.202Negretevs.CFIofMarinduque,G.R.No.L31267,24November1972,48

SCRA113.
[6]Article526,CivilCodeofthePhilippines.
[7]Pecsonvs.CourtofAppeals,G.R.No.115814,26May1995,244SCRA407.

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