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 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.
II. Option given to Landowner:
1. Options

shall agree on the terms of

the lease and in case of
disagreement, the court
shall fix the terms thereof.
d. Reason for the Option
1. Just and equitable solution to conflict
of rights if all parties are in good
faith, a conflict of rights arises
between the owners, and it becomes
necessary to protect the owner of the
improvement
without
causing
injustice to the landowner.
2. Principle of accession landowner is
entitles to the ownership of the
accessory
thing
because
the
accessory follow the principal.
3. Benefit to builder instead of being
outrightly ejected from the land, he
can compel the landowner to make a
choice either to pay for the
improvement or to sell the land.
CASE:

b. To appropriate improvement upon payment

of the required indemnity based on its
present or current value, pursuant to Arts.
546 and 548
i.
Liability of the builder to account for
the fruits received
1. Once the landowener elects
to
appropriate
the
improvements, the builder
cannot
exactly
be
considered a possessor in
good faith
2. Fruits that the builder
receives during the period
of
retention
must
be
deducted from whatever
indemnity is due him; in
case it exceeds the value of
the indemnity, the excess
shall be returned to the
owner of the land.
3. If the building is occupied
by the builder himself who
acted in good faith, the
landowner has no right to
collect
rents
for
the
occupation of the land while
the
latter
retains
the
building.
c. To oblige the builder or planter to pay the
price of the land and the sower to pay the
proper rent
i.
When this right cannot be exercised
1. If the value of the land is
considerably more than that
of the building or trees.
ii.
Fixing
of
price
remedies
of
landowner if builder/planter refuses
to pay
2. He shall pay reasonable
rent they entered into a
Forced Lease. The parties

Ochoa v. Apeta, G.R. No. 146259, Sept. 13,

2007
Petitioners and their predecessors-in-interest have been
occupying Lot No. 1580. They built their houses and
apartment building thereon. Respondents, found that
they are the true owners of Lot No. 1580 being occupied
by petitioners.
RTC declared that respondent as the true owner of Lot
1580 acquired through their predecessor-in-interest and
declaring the defendants without right whatsoever to
continue in possession thereof. Decision affirmed by CA.
Neither can prescription be allowed against the
hereditary successors of the registered owner, because
they step into the shoes of the decedent and are merely
the continuation of the personality of their predecessorin-interest. 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.
Using the above parameters, we are convinced that
petitioners and their predecessors-in-interest were in
good faith when they built their houses and apartment
building on Lot No. 1580 since they were convinced it
was covered by their TCT No. T-40624.
Respondents have the option to pay for the houses and
apartment building constructed by petitioners and their
predecessors-in-interest on Lot No. 1580; or to oblige
petitioners to pay the price of the lot in an amount not
more than the value of the said improvements.
III. Right of the Landowner to Remove or
Demolish Improvement:
Since the option is given to the landowner and it
is limited to paying for the improvement or
selling his land to the builder, he cannot refuse
to exercise his right of choice and compel the
builder
to
remove
or
demolish
the
improvement.

 The landowner is entitled to such removal only

when after having chosen to sell his land, the
other party fails to pay for the same.
The improvement that is transitory in character
or is transferable, there is no accession,
therefore, the landowner has every right to
have the same removed from his property.
CASE:
Depra v. Dumlao, G.R. No. L-57348, May 16, 1985
FACTS:
The properties of Francisco Depra and Agustin Dumlao
were adjoining each other. In 1972, Dumlao built his
house.
However, he unwittingly built the kitchen portion of his
house on Depras land. Depra then sued Dumlao for
unlawful detainer. During pre-trial, the parties agreed
that Dumlao was a builder in good faith.
Eventually, the trial court ruled that both parties were in
good faith but then a forced lease was ordered whereby
Dumlao retains the kitchen but he shall pay a rental to
Depra at P5.00 per month. But Depra refused to receive
the rental payments from Dumlao, instead, Depra filed
an action for quieting of title against Dumlao.
ISSUES:
Whether or not the order of forced lease decreed in the
unlawful detainer case is valid.
HELD:
No. The judgment of forced lease is improper. A forced
lease, just like co-ownership is not favored. It should be
considered that the parties themselves stipulated that
Dumlao, the builder, was in good faith and it was later
found that Depra, the owner, was also in good faith.
Hence, what applies is the provisions of Article 448 of
the Civil Code, which provides in sum that:
a. Builder in good faith entitled to retain the
possession of the land on which he built in good faith
until he is paid the value of the building he built in good
faith;
b. Owner in good faith has the option to either (i) pay
for the building OR (ii) sell his land to the builder in
good faith but builder cannot be forced to buy said land
if the same is considerably more than the value of the
building.
Forced rent only comes in if the owner exercises his
right to sell the land but the builder rejects it by reason
of the price thereof being considerably more than the
value of the building in such case, the parties shall
agree to the terms of the lease, if they cant agree then
they may bring the issue to court.
IV. Builders/Sowers/Planters Right to Retain
Improvement
CASE:
Nuguid v. CA, G.R. No. 151815, Feb. 13, 2005

Pedro P. Pecson owned a commercial lot which he built a

four-door two-storey apartment building. For failure to
pay realty taxes, the lot was sold at public auction by
the City Treasurer of Quezon City to Mamerto
Nepomuceno, who in turn sold it for P103,000 to the
spouses Juan and Erlinda Nuguid.
Pecson challenged the validity of the auction sale
before the RTC the RTC upheld the spouses' title but
declared that the four-door two-storey apartment
building was not included in the auction sale. This was
affirmed in toto by the Court of Appeals and thereafter
by this Court.
The Nuguids became the uncontested owners of the
256-square meter commercial lot. As a result, the
Nuguid spouses moved for delivery of possession of the
lot and the apartment building.
The trial court ruled that the Spouses Nuguid were to
reimburse Pecson for his construction cost following
which, the spouses Nuguid were entitled to immediate
issuance of a writ of possession over the lot and
improvements. In the same order the RTC also directed
Pecson to pay the same amount of monthly rentals to
the Nuguids as paid by the tenants. The appellate court
affirmed the order of payment of construction costs but
rendered the issue of possession moot on appeal. SC
set aside the ruling of the RTC and CA.
The right of retention is considered as one of the
measures devised by the law for the protection of
builders in good faith. Its object is to guarantee full and
prompt reimbursement as it permits the actual
possessor to remain in possession while he has not
been reimbursed (by the person who defeated him in
the case for possession of the property) for those
necessary expenses and useful improvements made by
him on the thing possessed. Accordingly, a builder in
good faith cannot be compelled to pay rentals during
the period of retention nor be disturbed in his
possession by ordering him to vacate.
V. Effect of Alienation by the Landowner with
Improvements:
a.

Where purchaser paid only price of land - a

purchaser, in accordance with Art. 453, who buys
with improvements belonging to another knowing
such fact, places himself in the position of an owner
of land who has acted in bad faith.

b.

Where
purchaser
paid
also
value
of
improvements if the new owner has paid for the
improvements, the action may still be brought
against him without prejudice to his right to recover
from the former owner.

c.

Option given to purchaser if the former owner

had not exercised his option, either to pay for the
value of the house, or require the builder to pay for
the value of the land, the owner of the land by
purchase where the builder is in good faith is given
the choice.

d.

Where the land registered under the Torrens

system if the land is registered under the Torrens
system and the certificate of the shows the holder
to be the owner of the land and the improvements
thereon, any purchaser for value, without notice,
who buys the land on reliance on such title will take
the property free from the builders lien.

7. Built a house on a lot after his predecessor-ininterest, his parents, had been summoned in
civil case regarding said lot, even reconstructed
the house into a bigger one while case was
pending
CASE:

Art 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
Art 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
Art 451.
In case of the two preceding
articles, the landowner is entitled to
damages from the builder, planter or sower
Art 452. The builder, planter or sower in bad
faith is entitled to reimbursement for the
necessary expenses of preservation of the
land
B. Builder/Planter/Sower in Bad Faith (Art. 449
452)
I. Instances of Bad Faith
1. Bought a house from another with full knowledge
of the fact that the land belonged to the landlord
of the seller
2. Simply took possession of a land which its former
possessors were compelled to abandon by
reason of war
3. Bought a land with notice that there was some
defect in the title of the vendor and could not
have failed to know that another had been
holding the land under a claim of ownership or
had presumptive knowledge of the owners
Torrens title
4. Had been found by the RTC to be a builder in bad
faith and ordered to deliver improvements to the
owner which finding is presumed correct until
reversed,
and,
therefore,
notwithstanding
allegation of good faith, is not entitled to retain
possession until reimbursed pending appeal
5. Bought a parcel of land and then constructed a
new building after the filing of action against him
for annulment of the sale of the land
6. Bought a parcel of land with the knowledge that
the property was under litigation and then
planted about 3.000 coconut trees thereon

Rodriguez, Sr. v. Francisco, G.R. No. L-13343, Dec.

29, 1962
Exequiel Ampil executed a deed of sale covering the
land in favor of defendant Maximo Francisco. Sometime
thereafter, the defendant took possession of the
premises which, upon his death, was continued by his
heirs up to the present, publicly and in the concept of
owner. Despite the sale, the Torrens title continued until
1937 in the name of the vendor Exequiel Ampil.
Upon the foregoing facts the trial court adjudged
plaintiff the rightful owner of the disputed land and
ordered defendant to deliver its possession to him, but
found defendant to be a possessor in good faith and
hence free from liability for damages.
The judgment appealed from was affirmed in so far as it
declared plaintiff the owner, and therefore entitled to
the possession, of the land in question. SC is of the
opinion, did not necessarily make appellee a possessor
in bad faith. It has not been shown that Maximo
Francisco was notified or had actual knowledge of the
said proceeding for consolidation of ownership in
appellant.
The possession having begun in good faith the
presumption is that it continued to be enjoyed in the
same character until it could be proven that the
possessor was not unaware that his possession was
wrongful (Article 528 and 529, Civil Code).
However, we agree with appellant's alternative
contention that on the date of the service of summons
upon appellee in this case, considering that the former
was thereafter declared owner by final judgment,
appellee's possession in good faith was interrupted and
hence from that time he lost the right to the fruits.
Considering, however, that there is no evidence as to
when the cultivation of the land started and when it was
finished in the year 1950, appellee should be held liable
for damages, consisting of the fruits of the land in
question, only from the year 1951.
Therefore, defendant-appellee, as administrator of the
estate of the deceased Maximo Francisco, is ordered to
pay, plaintiff-appellant.
Mindanao Academy, Inc. v. Yap, G.R. No. L-17681,
Feb. 26, 1965
By deed entitled "Mutual Agreement," executed on May
10, 1964, Rosenda A. de Nuqui (widow of deceased
Sotero Dionisio) and her son Sotero Dionisio, Jr. sold
three parcels of residential land and another parcel of
land in favor of Ildefonso D. Yap. Included in the sale

were certain buildings situated on said lands as well as

laboratory equipment, books, furniture and fixtures
used by two schools. The buyer, Ildefonso D. Yap,
obtained possession of the properties by virtue of the
sale, took over the operation of the two schools
The court a quo rendered judgment that the Mutual
Agreement was null and void and that defeddant (Yap)
is ordered to restore to the plaintiffs in said case all the
buildings and grounds described in the Mutual
Agreement
together
with
all
the
permanent
improvements thereon. The trial court held that Erlinda
as well as her husband acted in bad faith, because
"having reasonable notice of defendants' having
unlawfully taken possession of the property, they failed
to make reasonable demands for (him) to vacate the
premises to respect their rights thereto."
The lower court correctly found that both vendors and
vendee in the sale acted in bad faith and therefore must
be treated, vis-a-vis each other, as having acted in good
faith. The return of the properties by the vendee is a
necessary consequence of the decree of annulment.
There can be no doubt that Erlinda D. Diaz is entitled to
recover a share of the said rents in proportion to her
own interest in the lands and the interest of her four coowners which she had acquired. Rosenda Nuqui and her
son Sotero, it is true, acted in bad faith when they sold
the properties as theirs alone; but so did the defendant
Yap when he purchased them with knowledge of the
fact that there were other co-owners.
Although the bad faith of one party neutralizes that of
the other and hence as between themselves their rights
would be as if both of them had acted in good faith at
the time of the transaction, this legal fiction of Yap's
good faith ceased when they sold the properties as
theirs alone; but so did the court's declaration of
liability for the rents thereafter is correct and proper.
A possessor in good faith is entitled to the fruits only so
long as his possession is not legally interrupted, and
such interruption takes place upon service of judicial
summons (Arts. 544 and 1123, Civil Code).
Lumungo v. Usman, G.R. No. L-25359, Sept. 28,
1968
FACTS:
Dominga Usman sold and transferred her rights in and
to 3 lots in question to Jose Angeles. The latter made
the purchase with the knowledge of the dispute
between Atty. Usman, Domingas husband and by the
plaintiffs. Angeles, upon taking possession of the land
planted the same with coconuts and most of fruit
bearing trees.

planter or sower in bad faith my recover under the first

paragraph of Arts. 452 and 456. The facts and finding of
the RTC and CA leave no room for doubt that Jose
Angeles was a purchaser and builder in bad faith.
According to Art. 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.
Santos v. Mojica, G.R. No. L-25450, Jan. 31, 1969
In the Court of First Instance of Rizal, eleven brothers
and sisters, all surnamed Allanigue, brought an action
against their sister, Lorenza Allanigue, her husband,
Simeon Santos for partition of a lot and for the
annulment of certain conveyances involving the same.
Defendants having been declared in default, the trial
court, after hearing the plaintiffs' evidence, rendered
judgment ordering the partition of the lot among the
eleven plaintiffs and the defendant Lorenza Allanigue.
A writ of execution was issued on the judgment ordering
the defendants to vacate the lot and deliver its
possession to the plaintiffs. The defendants and movant
Leonardo Santos having failed to remove their houses
from the lot within the period given them, the court
ordered the sheriff to demolish said houses.
After the said decision of the Supreme Court had
become final ordered the demolition of the defendants'
houses. The defendants having voluntarily removed
their houses, the only house that remained standing on
the lot was that belonging to Leonardo Santos.
Leonardo Santos' house having been built and
reconstructed (after March, 1962) into a bigger one
after his predecessors-in-interest, his parents, had been
summoned in 1959 in Civil Case No. 217-R, he must be
deemed a builder in bad faith. As builder in bad faith he
lost the improvement made by him consisting of the
reconstructed house to the owners of the land without
right to indemnity, pursuant to Article 449
The Allanigue brothers and sisters therefore became
owners of the improvement consisting of the house
built in bad faith by Leonardo Santos if they chose to
appropriate the accession. (Article 445 and 449)
However, said owners could choose instead the
demolition of the improvement or building at the
expense of the builder, pursuant to Article 450 of the
Civil Code.

II. Consequences for Bad Faith (Arts. 449 and

450)

ISSUE:
Whether or not, Jose Angeles
is entitled to the
reimbursement of the coconut tree he planted on the
property under litigation

Art 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

HELD:
NO. It should be noted that such improvements are not
necessary expenses of preservation which a builder,

Art 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.
b.
c.

Loses what is built, planted or sown without

right to indemnity
Owner may demand demolition, have the
planting or sowing removed at the expense of
the person who built, planted or sowed
Builder or planter to pay the price of the land;
Sower pay the proper rent

III. Rights of Builder/Planter/Sower in Bad Faith

(Art. 452)

To compel the builder or planter to

pay the price or the value of the land,
whether or not the value of the land
is considerably more than the value
of the improvements, and the sower
to pay the proper rent, plus damages

NOTE: Basis for the damages is the amount

which reasonably corresponds with the value of
the properties lost or destroyed as a result of the
occupation in bad faith, as well as the fruits from
the properties that the owner of the land
reasonably expected to obtain.
Art 453. If there was bad faith, not only on the
part of the person who built, planted or sowed on
the land of another, but also on the part of the
owner of such land, the rights of one and the
other shall be the same as though both had acted
in bad faith.

1.

Examples
of
necessary
expenses
for
the
preservation of land
Defense work to prevent erosion
Litigation in defense of the land against
claims of usurpers
Real property taxes

c.

NOTE: Necessary expenses shall be refunded to

every possessor, including one in bad faith but only
th possessor in good faith is entitled to retain the
thing until he is reimbursed. (Art. 546)
2.

Right of retention (Art. 546);

Right
to
expenses
of
production

Art. 546. Necessary expenses shall be

refunded to every possessor; but only the
possessor in good faith may retain the thing
until he has been reimbursed therefor.
Useful expenses shall be refunded
only to the possessor in food faith with the
same retention, the person who has
defeated him in the possession having the
option of refunding the amount of the
expenses or of paying the increase in value
which the thing may have acquired by
reason thereof.
IV. Rights of Owner of the Land (Art. 450 451)
1.

3 Alternative rights of a landowner in

good faith:
a. To appropriate what has been built,
planted, or sown in bad faith without
any obligation to pay any indemnity
therefor
except
for
necessary
expenses for the preservation of the
land, plus damages
b. To ask the removal or demolition of
what has been built, etc. at the
builders, etc. expense, plus damages

It is understood that there is bad faith on

the part of the landowner whenever the act was
done with his knowledge and without opposition
on his part.
C. Landowner and the Builder/Planter/Sower are
both in Bad Faith (Art. 453)
a. Both are considered in good faith where both
parties acted in bad faith, their rights shall be
determined as if both acted in good faith
b. When both in bad faith the second paragraph of
Art. 453 defines bad faith on the part of the
landowner but not bad faith on the part of the
builder, etc. nevertheless, a builder is in bad
faith if he builds knowing that the land does not
belong to him, and that he has no right,
permission, or authority to do so.
CASE:
Floreza v. Evangelista, G.R. No. L-25462, Feb. 21,
1980
FACTS:
The Evangelistas were the owner of a residential lot in
Rzal. They borrowed 100.00 from Floreza. Floreza then
occupied the lot and built a house on light materials
with the consent of Evangelista; additional loans were
made by Evangelista.
Floreza demolished the house of light materials and
constructed one of strong materials. Floreza has not
been paying rentals since the beginning of their
transactions. Eventually, Evangelista sold, with right to
repurchase within 6 years, their land to Floreza. Seven
months before the expiration of the repurchase period,
the Evangelistas were able to pay in full. Floreza
refused to vacate the lot unless he was first reimbursed
for the value of the house he built.
Evangelistas files a complaint. RTC ruled based on Art.
448, saying that the Evangelistas have the choice

between purchasing the house or selling the lot to

Floreza. CA ruled that Art. 448 was inapplicable and
that Floreza is not entitled to the reimbursement of his
house and could remover same at his own expense.
ISSUE:
Whether or not Floreza is entitled to reimbursement of
the cost of his house
HELD:
No. Issue of reimbursement is not moot because if
Floreza has no right to retention, then he must pay
damages in the form of rentals. CA was correct in
saying that Art. 448 is inapplicable because it applies

only to builder in good faith. Art. 453 is also not

applicable because it requires that both parties should
be in bad faith.
Petitioner has no right to reimbursement of the value of
the house which he has erected on the residential lot of
the Evangelistas, much less to retention of the
premises until he is reimbursed. The rights of the
petitioner are more akin to those of a usufructuary who,
under Art. 578 may make on the property useful
improvements but with no right to be indemnified
therefor.