GR 149295; (September, 2003) (Digest)
G.R. No. 149295 , September 23, 2003
Philippine National Bank vs. Generoso De Jesus, represented by his Attorney-in-Fact, Christian De Jesus
FACTS
Respondent Generoso de Jesus owned a parcel of land in Mamburao, Occidental Mindoro, covered by TCT No. T-17197. A verification survey in 1993 revealed that a building owned by petitioner Philippine National Bank (PNB) encroached upon a 124-square-meter portion of his property. Despite demand letters, PNB refused to vacate. PNB claimed it acquired the building and an adjacent lot from former Mayor Bienvenido Ignacio in 1981, at which time the encroachment already existed. PNB asserted that Ignacio offered to sell the encroached portion to the bank, which it accepted, but the sale did not materialize because Ignacio later mortgaged that lot to the Development Bank of the Philippines without PNB’s knowledge.
ISSUE
Whether petitioner PNB is a builder in good faith entitled to the rights under Article 448 of the Civil Code, thereby compelling the landowner to choose between appropriating the building upon indemnity or selling the encroached land.
RULING
No, PNB is not a builder in good faith and cannot invoke Article 448. The Supreme Court affirmed the decisions of the lower courts. The legal logic is twofold. First, the good faith required under Article 448 implies an honest belief in the validity of one’s title and ignorance of any flaw in the mode of acquisition. The evidence established that PNB was aware of the encroachment at the time of its purchase from Ignacio, as it was advised that part of the building stood on land not included in the sale. This knowledge precludes a finding of good faith.
Second, and more fundamentally, Article 448 applies to a situation where a person builds on land believing himself to be its owner. It does not apply where, as here, the builder (or his predecessor, Ignacio) was the owner of the building but not the land on which it was built. The provision governs disputes between the landowner and a builder who is not the owner of the land. In this case, the true owner of the land (de Jesus) is not the builder. The builder (Ignacio, and subsequently PNB as transferee of the building) constructed on land he did not own. Since PNB acquired the building with knowledge of the encroachment, it stepped into the shoes of its predecessor and cannot claim the status of a builder in good faith. Therefore, respondent, as the lawful landowner, is entitled to recover possession and have the encroachment removed at PNB’s expense.