PROPERTY NOTES

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 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.

2nd CASE - A: BUILDER/PLANTER/SOWER BUILDS, PLANTS, SOWS ON ANOTHERS LAND USING HIS OWN MATERIALS (ART. 448 - BOTH PARTIES IN GOOD FAITH )

LANDOWNER is in Good Faith

Has the following Options: 1. To appropriate or acquire whatever has been built, planted or sown after paying indemnity which includes necessary expenses and useful expenses (Arts. 448 & 546) To appropriate luxurious improvement, provided he refunds the expenses OR

BUILDER/PLANTER/SOWER IS OWNER OF MATERIALS & in Good Faith

2.

To oblige the builder/planter/sower to pay the price of the land, and the one who sowed, the proper rent.
However, the landowner cannot oblige the builder or planter to buy the land if its value is considerably more than the building or planting.

1. Entitled to receive payment for necessary & useful expenses, plus luxurious expenses if landowner appropriates them Has right of retention over the land without need to pay rent until landowner pays the indemnity. 2. Can remove useful improvements provided no injury is caused to principal thing If the land owner does not appropriate the luxurious improvements, builder can remove the same provided theres no injury caused. 3. To buy the land if the value is not considerably more than the value of the building or plantings. 4. If the value of land is cons. more, he cannot be obliged to buy the land, but he can pay rent if landowner does not choose to appropriate the b/p. 5. If he cannot pay the value of the land, landowner can require him to remove the b/p. 6. If he cannot pay the rent, the landowner can eject him from the land.

Art. 448 Gives the Option to the Landowner and Not to the Builder or Planter, because: a.) Landowners right is older b.) Landowner is owner of the principal property and by principle of accession (i.e. accession industrial) he can own the accessory. (also see Art. 445)
Art. 445. Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belong to the owner of the land, subject to the provisions of the ff articles.

Latin Legal Maxim: Aedificatum solo, solo cedit What is built upon the land goes with it: the land is the principal, and whatever is built on it becomes the accessory.

Exception: When it is impractical for the landowner to exercise his right to appropriate the building (or planting). Read: Grana and Torralba v. Court of Appeals, et al.,L-12486, Aug. 31, 1960. Rights of Builder in Good Faith (BGF) if Landowner opts to appropriate the building but before the indemnities are given: 1. BGF can retain the house until he is fully paid. 2. BGF is not entitled to the rents or fruits of the building after election by landowner to appropriate the building. From that time on, he is no longer a possessor in good faith. If he receives them, he must deduct these from the indemnity due him. 3. BGF cannot be compelled to pay rent while retaining the building, before payment of the indemnities by the landowner. Otherwise, the right of retention becomes nugatory or futile. Note: If the Landowner elects to compel the builder to pay the price of the land, the BGF has no right to retain the land for the latter is the one required to pay. Q. What remedies are available to the parties if the landowner elects to sell the land but the builder in good faith fails to pay the value of the land? 1. Landowner does not automatically becomes the owner of the building if BGF fails to pay the sale price. No automatic accession. Art. 448 does not provide this. Ownership of the building as accessory passes only upon payment of the indemntiy. 2. The parties may thus have the following remedies; a.) They can enter into a lessor lessee relations. In case of disagreement, the court may fix the terms. b.) The landowner can have the house removed. c.) The landowner may consider the price of his land as an ordinary money debt. He can enforce payment against BGF by filing a suit for recovery for sum of money like an ordinary debt. Judgement may be executed by levying on the
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building and the land, which may be sold at public auction. The landowner can then keep the value of the land; the rest will be turned over to the builder. In case of deficiency, BGF will suffer the loss. (Bernardo v. Bataclan, 66 Phil. 598) Rights of Landowner Before he Makes the Choice: Neither builder in good faith or landowner can oust each other Until indemnity is paid by the landowner, builder has right of retention, as ownership of the building passes only to the landowner after he pays indemnity. NOTA BENE: 1.) The landowner on whose land a building is constructed in good faith cannot refuse to elect to either -- pay for the building, or, sell the land to the builder in good faith. Otherwise, the court will interfere to fix the disagreement of the parties pursuant to Art. 448 and Art. 546 of the Civil Code. ( Ignacio v. Hilario, 76 Phil. 605; Depra v. Dumlao, GR L57348, May 16, 1985) 2,) Once the landowner elects from any of his alternative rights in Art. 448, his choice becomes irrevocable. If the landowner opts to get the building, but cannot pay for it, she cannot afterwards opt to sell the land to the builder in good faith. The builder in good faith can levy an execution on the landowners property to pay the monetary obligation or indemnity. (Tayag v. Yuseco, 97 Phil. 712) 3.) If the owner elects to sell the land where the building or work or planting stands, the price is fixed at the prevaili ng market value at the time of payment. (Ballatan v. CA 302 SCRA 34, 1995). Or, in case of reimbursement to the builder in good faith for improvements done, current market value should be paid. (Pecson v. CA, 61 SCAD 385, 1995) 4.) Art. 448 also applies to land that is of public dominion. Here, the State exercises the option of the landowner. The law does not make any distinction whether the land is private or public land. (Insular Govt. v. Aldecoa and Co., 19 Phil. 505) 6.) A lessee who builds on the land may remove his construction or improvement made, but cannot compel the landowner to sell him the land. He is not a builder in good faith contemplated by Art. 448. (Southwestern Univ. v. Salvador, L-48013, May 28, 1979) Please read the Critique of Justice J.B.L. Reyes re Art. 448 whereby the builder in good faith cannot be required to pay the value of the land if it is considerably higher than the building or construction made, and the Reply of the Code Commission. (Pages 242, 243 of the Civil Code, Paras Annotated) (Report Case: Fernandez Del Campo v. Abeisa, L-49219, Ar. 15, 1988)

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.

Article 449 applies to planting or sowing which are still growing and standing crops. Art. 449 is different from Art. 443 which applies to crops already gathered where the person who produced, gathered and preserved may be reimbursed by the landowner who receives or appropriates them for himself. Rules on Gathered and Growing Crops when the Planter is in Bad Faith: a.) If the crops are still standing, growing and not yet gathered the planter in bad faith will forfeit them in favor of the landowner without right to indemnity (by principle of accession continua), plus payment of damages to the landowner. (Art. 449, 451). or they can be removed at planters expense, plus payment of damages to the landowner. (Art. 450, 451). If applicable, planter in bad faith is entitled to reimbursement for necessary expenses of preservation of the land. (Art. 452)

b.) If the crops have been gathered, the planter in bad faith must return or pay the value of the crops minus the expenses for production, gathering and preservation. (Art. 443) NOTA BENE:
1.) A Builder or planter found in bad faith by the court, is not entitled to retention of

the land pending appeal of the case as there is a legal presumption that the decision by the lower court (RTC) is correct unless reversed by the higher court.
(De Leon v. Caluag, L-18722, Sept. 14, 1967).
2.)

A party who plants, builds or introduces improvements while a litigation is pending between him and the other party involving the same property, cannot be considered a builder or planter in good faith. He is deemed a builder or planter in bad faith under Art. 449 and is not entitled to reimbursement. (Lumungo et al. v. Usman
et al, L-25359, 1968; Felices v. Iriola, L-11269, 1958; Santos v. Mojica, L-25450 see pp.246-247, Paras, Civil Code, Vol II; Mindanao Academy Inc. v. Yap L-17681, 1965 p. 250, id. )

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 cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower. 4

Art. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land. 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 good faith. 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 his part. Art. 454. When the landowner acted in bad faith and the builder, planter or sower proceeded in good faith, the provisions of Art. 447 shall apply.

2nd CASE - B: BUILDER/PLANTER/SOWER BUILDS, PLANTS, SOWS ON ANOTHERS LAND USING HIS OWN MATERIALS (ARTS. 449 - 454 - EITHER OR BOTH LANDOWNER & BPS ARE IN BAD FAITH)

LAND OWNER (LO) 1. GOOD FAITH has option to: a.) Acquire what is built/planted/sown without paying for indemnity, except: *necessary expenses for preservation of land; *luxurious expenses if he decides to acquire the lux ornaments PLUS - Collect damages from BPS
b.) Can demand demolition, removal of b/p/s at expense of BPS in bad faith, plus collect damages from BPS

BUILDER/PLANTER/SOWER (BPS) IS OWNER OF MATERIALS

1. BAD FAITH
a.) Loses what has been built, planted, sown plus damages paid to LO b.) Can be required by landowner to demolish or remove the b/p/s and restore things in their former condition at the expense of the BPS, plus pay damages to LO c.) To pay for value of land whether or not it is considerably higher than the building or plantings, plus pay damages to LO d.) To pay rent for the use of the land if the landowner so chooses plus pay damages to LO. e.) Entitled to reimbursement for necessary expenses for preservation of land, but has no right of retention of land. f.) Not entitled to refund for useful expenses and cannot remove the useful improvements even if no injury will be caused. g.) Not entitled to reimbursement for luxurious expenses except when the land owner acquires the luxurious improvements valued at a time landowner enters possession h.) Can remove luxurious improvements if no injury is caused & landowner wont retain
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c.) Oblige B/P to pay the price of the land, and the sower the proper rent, plus damages.

Art. 455. If the materials, plants, or seeds belong to a third person who has not acted in bad faith, the owner of the land shall answer subsidiarily for their value and only in the event that the one who made use of them has no property with which to pay. This provision shall not apply if the owner makes use of the right granted by Article 450. If the owner of the materials, plants or seeds has been paid by the builder, planter or sower, the latter may demand from the landowner the value of the materials and labor.

This article provides for the rights of the owner of the materials, plants or seeds, who is in good faith, to collect or enforce payment from the other parties such as the landowner and builder or planter for the value of the materials or plants or seeds. Rights of Owner of the Materials: 1.) If the Owner of Materials is in Good Faith, he is entitled to reimbursement principally from the Builder or Planter as it is the latter who first used the materials. The landowner may be subsidiarily liable in case of insolvency of the builder or planter, and only, if he elects to use or appropriate the materials or construction or plants. If the landowner opts to compel the builder to buy the land or to demolish the building or remove the plants, he cannot be held subsidiarily liable. 2.) If the Owner of Materials acted in Bad Faith, he loses all rights to be indemnified (Art. 449), and may even be liable for damages (as when the materials are of inferior quality). NOTE: If all three parties are in bad faith, then they shall be considered to have acted in good faith. Articles 447 and 448 may apply.