Industrial Fruits (Article 442)

DISCUSS ARTICLE 440 -​ Result of cultivation or human labor, such as crops and
other agricultural products.

The ownership of property gives the right by accession to Civil Fruits (Article 443)
everything which is produced thereby, or which is -​ Derive from juridical relations, such as rent, lease
incorporated or attached thereto, either naturally or payments, and interest from loans.
artificially. (353)

Right of accession is a natural right of the owner of a thing ACCESSION CONTINUA

(property). It means that anything that is produced by, or
attached to, or incorporated into that property—either naturally This refers to the union or incorporation of a thing with
(like fruits of a tree or offspring of animals) or artificially (like another, creating a new inseparable whole. It is further
a building constructed on the land)—also belongs to the owner divided into immovables and movables.
of the principal property.
ACCESSION AS TO IMMOVABLES
Example. If you own a piece of land and someone builds a
house on it (with or without your consent), the house is
considered accessory to the land. In general, the owner of the Applies when additions or improvements are made to real
land owns the house. Though other laws may adjust this property, either by natural or human intervention.
depending on good or bad faith.
Alluvium (Article 457)
If your cow gives birth to a calf, you own the calf by right of -​ The gradual and imperceptible deposit of soil on the
accession. banks of rivers, which belongs to the owner of the
riparian land.
If a river gradually adds soil to your land, that new land also
belongs to you. Avulsion (Article 459)
-​ A sudden or violent transfer of soil from one estate to
WHAT IS THE RIGHT OF ACCESSION another caused by natural phenomena (e.g., flood or
earthquake). The original owner retains the right to
Right of Accession is the right of a property owner to reclaim it within two years.
everything that is:
-​ Produced by the property, Change of Riverbed (Articles 461–462)
-​ Attached to it, or -​ If a river changes its course, the owners of the affected
-​ Incorporated into it, whether naturally (e.g., fruits, lands retain ownership of the area abandoned by the
offspring, added land) or artificially (e.g., buildings, riverbed.
improvements). -​ When a river dries up, the owners of adjoining lands
divide the abandoned bed among themselves.

WHAT ARE THE KINDS OF ACCESSION? Formation of Islands (Article 465)

-​ Islands formed in non-navigable and non-floatable
rivers belong to the riparian owners. In navigable rivers,
Accession is divided into two main categories: the islands belong to the State.

Accession Continua (Pertaining to Movable or Immovable Right of Builders, Planters, and Sowers (Articles 447–456)
Property) -​ Governed by the principle that a builder, planter, or
-​ Deals with additions or improvements on a property sower who improves real property owned by another is
through either natural or artificial means. subject to rules that vary based on:

Accession Discreta (Pertaining to Natural Fruits, Industrial Good Faith: Compensation or reimbursement for
Fruits, and Civil Fruits) improvements made.
-​ Deals with the products or yields derived from a
property. Bad Faith: The builder, planter, or sower may be required to
remove their work without indemnity or forfeit the value of the
ACCESSION DISCRETA improvements.

Fruits are things produced by or derived from a property. They ACCESSION AS TO MOVABLES
may be:
Occurs when two movable properties are incorporated to form
Natural Fruits (Article 442) one whole. The rights depend on whether the accession is by
-​ Spontaneous products of the soil, such as plants, and adjunction, commixture, or specification.
the products of animals, such as milk, wool, or
offspring.
 DISCUSS THE EXCEPTIONS TO THE RULE THAT
Adjunction or Conjunction (Article 466) THE FRUITS BELONG TO THE OWNER
-​ When one thing is united to another, forming one whole
while retaining its distinct nature. Ownership rules:
➢​ Principal Thing: Determined by value, volume, Exceptions to the Rule
or function. The rule in Article 441 is not absolute as there are cases where
➢​ The owner of the principal thing acquires the the owner is not entitled to the fruits of his property. The
accessory but may owe indemnity to the owner exceptions to the rule are the following:
of the accessory.
a.) in usufruct
Commixture or Confusion (Article 467) It is the essence of usufruct that the usufructuary199 is entitled
-​ When substances are mixed, losing their individual not only to the enjoyment of the property subject matter thereof
identities. but also to its fruits. Thus, Article 566 of the New Civil Code
provides:
Rules depend on: "Art. 566. The usufructuary shall be entitled to all the natural,
➢​ Mutual Consent: Co-ownership results. industrial and civil fruits of the property in usufruct.
➢​ Without Consent: Ownership rights are determined With respect to hidden treasure which may be found on the
based on the dominant material. land or tenement, he shall be considered a stranger."

Specification (Article 469) b. in lease of rural lands

-​ When a new object is created using materials belonging In lease of rural land, the lessee is entitled to the natural and
to another person. Ownership is determined as follows: industrial fruits of the thing leased while the lessor is entitled to
➢​ If the material value exceeds labor: Owner of civil fruits in the form of the rent paid by the lessee.200
the material owns the new object.
➢​ If labor value exceeds material: Maker acquires c.) in antichresis
the new object but owes indemnity. By the contract of antichresis the creditor acquires the right to
receive the fruits of an immovable of his debtor, with the
obligation to apply them to the payment of the interest, if
WHAT IS THE JUSTIFICATION FOR ACCESSION? owing, and thereafter to the principal of his credit.

The doctrine of accession is an inherent right of the owner of a d.) in possession in good faith
thing to everything produced by such a thing, and to everything According to Article 544 of the New Civil Code, a possessor in
that is united or incorporated therein, either naturally or good faith is entitled to the fruits received by him before his
artificially. It is based on the principle that the accessory possession is legally interrupted.
follows the principal.
e.) fruits naturally falling
DISCUSS ARTICLE 441 According to Article 681 of the New Civil Code, fruits
naturally falling upon adjacent land belong to the owner of the
said land and not to the owner of the tree.
Right of Accession with Respect to What is Produced by Natural fruits are the spontaneous products of the soil, and the
Property young and other products of animals.

Art. 441. To the owner belongs: 2 kinds of natural fruits:

a) The spontaneous products of the soil -those that appear
(1) The natural fruits; without the intervention of human labor, such as the wild fruits
in the forest, herbs, and common grass; and
(2) The industrial fruits;
b.) The young and other products of animals such as milk, hair,
(3) The civil fruits. (354) wool, horn, hide, eggs, and animal dung or manure.
With respect to the natural fruit of the first kind, it is required
In action to recover paraphernal property of the wife, husband’s that the same must be a spontaneous product of the soil. In
intervention is not needed, but if fruits are sought to be other words, it is necessary that there must be no human labor
recovered, the husband must join in the action first because he which has intervened in its generation. If human labor
is a co-owner of said fruits and secondly because he is the intervenes in the production of the fruit, the same is
administrator of the conjugal partnership.
classified as an industrial fruit. Trees which grew
Instances where owner of the land does not own the fruits spontaneously on the soil and adhering thereto are not
-​ Possessor in good faith of the land considered as natural fruits in contemplation of the first
-​ Usufructuary paragraph of Article 442 because they are themselves
-​ Lessee gets the fruits of the land immovables. Trees may, however, be exceptionally considered
-​ In the contract of antichresis(is a contract whereby a as fruits if they are being exploited for an industry
debtor pledges (i.e., conveys possession but not title)
real property to a creditor, allowing the use and With regard to the natural fruit of the second kind, there may
occupation of the pledged property, in lieu of interest on be a situation where the young or offspring is a product of
the loan.), the antichretic creditor gets the fruits, which animals belonging to different owners. Note that our Civil
will be applied first to the interest, and then to the Code is silent with respect to the ownership of the young if the
principal amount of the loan (Art. 2132) male and female parents belonged to different owners.
There is no problem if the mating of the parentanimals is They must have been necessary, and not luxurious or
agreed upon by their respective owners and they provide for excessive. Indeed, they must be commensurate with those
the ownership of the offspring. In the absence of any ordinarily necessitated by the product.
agreement to settle the ownership of the offspring, the rule is
that "the young belong to the owner of the female parent." This WHO IS THE THIRD PERSON REFERRED TO IN
is the rule enunciated by the Supreme Court in the early case of ARTICLE 443?
US v. Caballero205 in consonance with the express provisions
of the Partidas based on the maxim partus sequitur ventrem -
the offspring follows the condition of the mother. The “third person” referred to in Article 443 is someone other
than the owner of the property or the person who receives the
fruits, who has spent money or effort on the production,
DISCUSS ARTICLE 442 gathering, or preservation of those fruits.

Art. 442. Natural fruits are the spontaneous products of the In other words, this third person is usually a separate individual
soil, and the young and other products of animals. or entity who incurs necessary expenses related to the fruits,
and under the law, the person receiving the fruits must
Industrial fruits are those produced by lands of any kind reimburse those expenses—except when the planter is in good
through cultivation or labor. faith (Article 544).

Civil fruits are the rents of buildings, the price of leases of Example: If a caretaker or a hired worker (the third person)
lands and other property and the amount of perpetual or spends money to harvest or preserve fruits on behalf of the
life annuities or other similar income.(355a) owner or possessor, the one who receives the fruits must pay
for these reasonable expenses.
2 kinds of natural fruits
WHEN ARE FRUITS CONSIDERED IN EXISTENCE
Spontaneous products of the soil ACCORDING TO ARTICLE 444?
The young and other products of animals
Whether brought about by scientific means or not, it would
seem that the young of animals should be considered as Art. 444. Only such as are manifest or born are considered
“natural” fruits, since the law makes no distinction. as natural or industrial fruits.

Different owners, the offspring belonging to the owner of the With respect to animals, it is sufficient that they are in the
female was considered also the owner of the young, unless womb of the mother, although unborn. (357)
there is a contrary custom or speculation.
The young of animals are already considered existing even if
WHAT ARE THE THREE KINDS OF FRUITS UNDER still in the maternal womb. (Art. 444, par. 2). But doubt may
ART. 442? DISCUSS AND GIVE EXAMPLES FOR arise whether they are already in the womb or not, so Manresa
EACH. suggests that they should be considered existing only at the
commencement of the maximum ordinary period of gestation.
Natural Fruits
-​ Products of nature without human intervention. Civil fruits accrue daily (Art. 544) – considered personal
Examples: Mangoes from wild trees, grass, animal offspring. property; natural and industrial fruits, while still growing, are
real property.
Industrial Fruits
-​ Products of land through human labor and cultivation. Civil fruits can be pro-rated; natural and industrial fruits
Examples: Rice, corn, sugarcane, fish from fishponds. ordinarily cannot (Art. 544)

Civil Fruits DISCUSS ARTICLE 445

-​ Income derived from property or capital by legal
relations.
Examples: Rent, interest, dividends. 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
DISCUSS ARTICLE 443 the following articles. (358)

He who receives the fruits has the obligation to pay the Deals with accession continua, specifically accession industrial
expenses made by a third person in their production, (building, planting, sowing)
gathering, and preservation. (356)
The difference between sowing and planting is that in the
Art. 443 does not apply when the planter is in good faith, former, each deposit of seed gives rise merely to a single crop
because in this case, he is entitled to the fruits already received, or harvest; whereas in planting, more or less permanent trunks
hence, there is no necessity of reimbursing him. (Art. 544). or trees are produced, which in turn produce fruits themselves.
In the latter case, therefore, without replanting, crops will
Characteristics of the Expenses Referred to in Art. 443 continue to grow every season.

They must have been used for production, gathering, or

preservation, not for the improvement of the property.
Basic Principles of Accession Continua (Accession Industrial) 1.​ Accessorium non ducit sed sequitor suum principali.
(The accessory does not lead but follows its principal.
1)​ The owner of the principal owns the accessions in Or: if the principal is given, the accessory is also given;
accordance with the principle that “the accessory but if the accessory is given, this does not necessarily
follows the principal” (“accesio cedit principali”) mean that the principal is also given.)
2.​ Accessorium sequitor naturam rei cui accedit. (The
➢​ Whatever is attached or added (accessory) to a property accessory follows the nature of that to which it relates.)
belongs to the owner of the main thing (principal) 3.​ Aedifi catum solo, solo cedit. (What is built upon the
land goes with it; or the land is the principal, and
2)​ Separation causes substantial injury to either. whatever is built on it becomes the accessory.)
➢​ If the accessory is separated from the principal thing, it
usually causes serious damage or loss to one or both WHAT ARE THE PRESUMPTIONS UNDER ARTICLE
parties 446?

3)​ He, in good faith, may be held responsible but

should not be penalized All works, sowing, and planting are presumed made by the
➢​ A person who separates the accessory from the owner and at his expense, unless the contrary is proved.
principal in good faith (believing they had the right) (359)
may be responsible for damages but should not be
punished or penalized. Presumptions:
➢​ This is because their mistake was honest, and the law
aims to be fair without harsh penalties. The works, sowing and planting were made by the owner.
They were made at the owner’s expense.
4)​ He, in bad faith, may be penalized
➢​ If a person acts in bad faith (knowingly violating rights
or without legal basis), they may be penalized. Landowner (LO) Builder, Planter, Owner of the
➢​ Bad faith shows intentional wrongdoing or fraud, so the Sower (BPS) Materials (OM)
law imposes penalties to discourage such behavior.

5)​ No one should enrich himself unjustly at the expense Good Faith Good Faith Good Faith
of another.
➢​ This is a fundamental legal and moral principle: No
person should benefit unfairly by harming or taking Acquire improvements Right of retention Collect value of

from someone else. It supports fairness and justice in and pay to BPS indemnity; for necessary and materials primarily
property relations. orSell land to B/P except useful expensePay from BPS,
if the value of the land is value of materials subsidiarily from
6)​ Bad faith + Bad faith = Good faith
more; orRent to to OM LO, if BPS is
➢​ When two parties both act in bad faith toward each
SSubsidiarily liable to OM insolvent;Remove
other (e.g., both knowingly violate each other’s rights
or interests), the law may treat the situation as if both only if without injury
acted in good faith for purposes of fairness or
resolution.
Good Faith Good Faith Bad Faith
➢​ Essentially, mutual wrongdoing may “cancel out”, and
the court may decide the case more equitably,
sometimes treating the parties as if they were innocent Acquire improvements Right of retention Lose them without
or without fault.
and pay to BPS indemnity; for necessary and any right to
orSell land to B/P except useful expenseKeep indemnity.
One Exception: Art 120, Family Code.
if the value of the land is building, planting
It is important to note which is bigger or greater: more; orWithout or sowing w/o
subsidiarily liable for cost indemnity to owner
1.​ the value of the property just before the improvement of material of materials and
was made; or
collect damages
2.​ its value after the improvement including the cost.

Rules Good Faith Bad Faith Bad Faith

If (a) is greater, the whole thing belongs to the owner-spouse,

without prejudice to reimbursement of the conjugal Acquire improvement w/o Recover necessary Recover value from
partnership. paying indemnity and expenses for BPS(as if both acted
collect damages, or preservation;Lose in good faith)If bps
If (b) is greater, the whole thing belongs to the conjugal
Demolition or restoration, improvements w/o acquires
partnership but the owner-spouse must be reimbursed.
and collect damages, or indemnity from LO improvement,
Some Latin Legal Maxims in Connection with Accession Sell to B/P or rent to S, unless LO sells removes materials if
Industrial lands
and collect damagesPay w/o injuryNo action WHAT ARE THE RIGHTS AND OBLIGATIONS OF
necessary expenses to BPS against LO THE PARTIES UNDER ART. 447?

1) Rights and Obligations of the Landowner Who Uses

Bad Faith Bad Faith Bad Faith
Another’s Materials:

Same as though everyone Same as though Same as though Obligation to Pay the Value
acted in good faith everyone acted in everyone acted in
The landowner must pay the value of the materials used if they
belong to someone else.
good faith good faith

Option to Return Materials

Bad Faith Good Faith Good Faith
The landowner may return the materials instead of paying
their value only if the materials have not been damaged or
transformed during construction.
Acquire improvements Remove Remove materials if -​ This return must be at the landowner’s expense.
after paying indemnity and improvements in w/o injury;Collect -​ If the materials are damaged or altered, returning them
is not allowed by law.
damages to any event;Be value of materials,
BPS;Subsidiarily liable to indemnified for primarily from
Liability for Damages in Bad Faith
LO damages; BPS;Subsidiarily If the landowner acted in bad faith (knowing the materials
liable from LO belong to another), they are also liable for damages caused.

2) Rights and Obligations of the Owner of the Materials:

Bad Faith Bad Faith Good Faith
Right to Remove Materials
The materials' owner has the right to remove the materials only
Acquire improvements Right of retention Collect value of
if this can be done without damaging the work or plantings
and pay to BPS indemnity; for necessary and materials primarily built with those materials.
orSell land to B/P except useful expensePay from BPS,
if the value of the land is value of materials subsidiarily from Right to Remove in Case of Bad Faith
more; orRent to to OM and pay him LO, if BPS is If the landowner acted in bad faith, the owner of the materials
may remove them regardless of damage to the work or
SSubsidiarily liable to OM damages insolvent;Collect
plantings and is entitled to indemnification for damages.
damagesIf BPS
acquires 3) Good Faith vs. Bad Faith in Article 447 Context:
improvements,
remove materials in Bad Faith:
any event -​ When the landowner knowingly uses materials that
belong to another.
-​ When a buyer purchases land without verifying title,
Good Faith Bad Faith Good Faith and builds on land registered under another’s name.
-​ When a person is aware of a pending lawsuit affecting
ownership (lis pendens) but still uses the materials.
Acquire improvement w/o Recover necessary Collect value of -​ The owner of materials is in bad faith if they allow use
paying indemnity and expensesLose materials primarily without informing the user of ownership.
collect damages, or Sell to improvements w/o from BPS,
B/P or rent to S, and right of retention subsidiarily from
Good Faith:
-​ When the landowner honestly does not know the
collect from LO unless LO LO, if BPS is
materials belong to another.
damagesDemolition or sells the land insolvent;Collect -​ When the owner of materials informs the user of
restoration, and collect damagesIf BPS ownership and forbids its use.
damages, orPay necessary acquires -​ Good faith is presumed by law until proven otherwise.
expenses to improvements,
BPSSubsidiarily liable to remove materials in DISCUSS THE RULES UNDER ARTICLE 448.
OM any event
The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to
Bad Faith Good Faith Bad Faith
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
Acquire improvements Indemnity for No indemnityLose
price of the land, and the one who sowed, the proper rent.
and pay to BPS indemnity; damagesRemove materials
However, the builder or planter cannot be obliged to buy
improvements in the land if its value is considerably more than that of the
any event building or trees. In such a 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 Builder constructs with the consent of the landowner (De
disagreement, the court shall fix the terms thereof. (361a) Guzman vs. Fuente, 55 Phil. 501)

Art. 448 applies only when the builder, planter or sower DOES NOT APPLY:
believes he has the right to build, plant or sow because he
thinks he owns the land or believes himself to have a claim of Possesses it as mere holder, agent, usufructuary, or tenant. A
title. (Morales vs. CA, 83 SCAD 750) lessee is neither a builder in GF or BF. His rights are governed
by Art. 1678.
Since the choice is given the LO to either appropriation of the
house or to a compulsory selling of the land, he has no right of EX: When the lease is about to expire, he still sows. Usufruct is
removal or demolition, UNLESS after having selected a governed by Arts. 579 and 580.
compulsory sale, the builder fails to pay for the land. (Ignacio
vs. Hilario, 43 OG 140, 76 Phil. 605) When the builder, planter, or sower is not a stranger but a
co-owner, even if later on, during the partition, the portion of
The builder is considered in good faith if he thought that the land used is awarded to another co-owner. (Viuda de Arias v.
land was his: the landowner is in good faith if he did not know Aguilar, [CA] O.G. Supp., Aug. 30, 1941, p. 126; 40 O.G. [5th
that somebody was building on his land, or even if he did Series p. 126].)
know, if he expressed his objection. (Co Tao vs. Chan Chico)
When a person constructs a building on his own land, and then
There can be no preemptive right to buy even as a compromise, sells the land but not the building to another. He can be
as this prerogative belongs solely to the landowner. (Sps. compelled to remove the building. (Golengco v. Regalado, et
Benitez vs CA, 77 SCAD 793, GR 104828, Jan 16, 1997) al., 48 O.G. 5282).

Option is given to LO because (1) his right is older, (2) and by When the builder is a belligerent occupant. Ex. Japanese
principle of accession, he is entitled to ownership of the Imperial Armed Forces
accessory thing. (Bernardo vs. Bataclan)
A defective donation of land, “donee” constructs in good faith
Ownership over the thing built or sown or planted does not a building thereon, and if there is no dispute as to ownership of
pass to the landowner till after payment therefor has been the building, the courts may apply — even in ejectment cases
given. — the provisions of Art. 448 in order to avoid multiplicity of
actions and to administer practical and speedy justice. (Tayag,
Indemnities to be Given: et al. v. Yuseco, et al., 97 Phil. 712, cited also under Art. 428).

Necessary Expenses (Art. 546) – those made for the Choice by the Owner is irrevocable.
preservation of the thing or those without which the thing
would deteriorate or be lost. Includes necessary repairs. DISCUSS SPS. ESPINOZA V. SPS. MAYANDOC
(Mendoza vs. De Guzman, 52 Phil. 164)

Useful Expenses (Art 546) – are those that augment the income FACTS:
of the thing upon which they are spent, or add value to the Spouses Maximo Espinoza and Winifreda De Vera (petitioners)
property (Aringo v. Arena, 14 Phil. 263) but do not include the sought to reverse a Court of Appeals (CA) decision concerning
value of farming implements or work animals which do not a complaint for useful expenses. The case involves a parcel of
remain on the land. (Valenzuela v. Lopez, 51 Phil. 279). land in Dagupan City, originally owned by Eusebio Espinoza,
that became subject to fictitious deeds of sale in 1972 and
Luxurious Expenses – if he desires to appropriate them for 1977, ultimately leading to a Transfer Certificate of Title
himself(Art. 548) (TCT) in the names of Spouses Antonio Mayandoc and Erlinda
Cayabyab Mayandoc (respondents). Petitioners successfully
It is the current market value of the improvements which filed an action for annulment of these documents and
should be made the basis of reimbursement to the builder in reconveyance of the land, with the judgment becoming final on
good faith. (Pecson vs. CA, 61 SCAD 385) March 8, 2004. Subsequently, respondents filed a complaint for
reimbursement for useful expenses, pursuant to Articles 448
Neither builder nor landowner can oust each other, for until and 546 of the New Civil Code, alleging they built a house on
indemnity is paid, the builder has the right of retention. the disputed land in good faith in 1995-1996, believing they
(Martinez v. Baganus, 28 Phil. 500) were the owners. Petitioners argued that respondents were
builders in bad faith, knowing the deeds were fictitious. The
The parties have the following remedies: Regional Trial Court (RTC) initially ordered petitioners to sell
the land to respondents, but the CA modified this, remanding
Leave things be and assume a lessor-lessee relation. the case for the proper application of Civil Code provisions.

Demolish house, if he opted to sell but the builder failed to pay. ISSUES:
The landowner may consider the price of the land as an The petitioners appealed to the Supreme Court, raising two
ordinary money debt of the builder. main issues: (1) whether the CA erred in ruling that the
petitioners failed to prove bad faith on the part of the
APPLICATION: respondents, and (2) whether the CA erred in ruling that the
principle of res judicata does not apply in this case.
Art. 448 applies only when the builder, planter, or sower really
believes he has the right to build, plant, or sow because he
thinks he owns the land. (Alburo v. Villanueva, 7 Phil. 277).
RULING: -​ This prevents unjust enrichment of the landowner at the
The Supreme Court DENIED the petitioners' petition for builder’s expense.
review on certiorari, thereby AFFIRMING the CA's decision. -​ The builder also has the right to retain possession until
On the issue of bad faith, the Court found that petitioners were properly compensated.
not able to prove bad faith on the part of the respondents,
reiterating that good faith is always presumed, and the burden Avoidance of Unjust Enrichment and Promotes Equity
of proving bad faith lies with the party alleging it. Bad faith, -​ No party should unfairly gain at the expense of the
the Court clarified, imports a dishonest purpose or conscious other.
wrongdoing. Regarding res judicata, the Court agreed with the -​ The article ensures a just balance where the
CA that it does not apply, as there was no identity of subject landowner’s property rights are upheld without unfairly
matter and cause of action between the prior annulment case depriving the builder of the value of his work.
and the present case for reimbursement of useful expenses. The
Court further noted that denying reimbursement would allow Legal Certainty and Practicality
for inequitable enrichment. Consequently, the Court affirmed -​ The law provides clear options to avoid disputes: either
the CA's decision to remand the case to the RTC for further the landowner keeps the improvements or forces
proceedings, specifically for assessing the current fair market sale/rent.
value of the land and for the proper application of Article 448, -​ The irrevocability of the owner’s choice brings finality
in relation to Articles 546 and 548 of the New Civil Code. and certainty.
-​ Remedies and rules for disputes are established to
DOCTRINE: facilitate practical solutions.
This case underscores the application of Article 448 of the
Civil Code, which governs the rights of a landowner and a DISCUSS ARTICLE 449.
builder in good faith. Under this article, the landowner
(petitioners) has the exclusive option to either (1) appropriate
the improvements (the house) after paying indemnity for Art. 449. He who builds, plants or sows in bad faith on the
necessary and useful expenses as provided in Articles 546 and land of another, loses what is built, planted or sown without
548, or (2) oblige the builder (respondents) to pay for the price right to indemnity. (362)
of the land. However, if the land's value is considerably more
than the improvements, the builder cannot be forced to buy it, Only growing or standing crops and not gathered crops.
but shall pay reasonable rent instead. This right of choice
belongs to the landowner due to the principle of accession, A person who builds, plants, or sows on the land of another in
where the accessory follows the principal, and the landowner's bad faith—that is, knowing that the land belongs to someone
right is older. The Court emphasized that to be a builder in else—loses all rights to what has been built, planted, or sown
good faith, a person must assert title to the land, possess it in without any entitlement to indemnity or compensation. This
the concept of an owner, and be unaware of any flaw in their rule applies specifically to growing or standing crops, meaning
title. Good faith is presumed, and the burden of proving bad those still on the land and not yet harvested. The purpose of
faith rests on the party alleging it. The case also clarifies that this provision is to protect the rights of the true landowner and
res judicata will not apply when there is no identity of subject to discourage unlawful occupation or use of property by those
matter and cause of action between prior and subsequent legal who knowingly infringe upon another’s ownership. By denying
actions. any reimbursement to the bad faith builder or planter, the law
seeks to uphold the principle that no one should unjustly
benefit at the expense of another, thereby reinforcing respect
WHAT IS THE RATIONALE OF ARTICLE 448? for property rights and deterring wrongful acts.

The rationale of Article 448 is grounded on balancing fairness WHAT IS THE EXCEPTION TO THE RULE OF
and equity between the owner of the land and the builder, LACK OF INDEMNITY?
planter, or sower in good faith who mistakenly believes he
owns the land. It aims to protect the rights of the landowner as
the principal owner while also compensating the good faith The exception to the rule of lack of indemnity under Article
builder for their improvements. 449 is when the builder, planter, or sower in bad faith has
already gathered or harvested the crops before the landowner
Protection of the Landowner’s Rights as Principal Owner asserts ownership. In this case, the bad faith party may keep the
-​ The principle of accession applies: “the accessory gathered crops and is not required to return them or pay
follows the principal,” meaning anything built or indemnity. The rule of no indemnity applies only to growing or
planted on the land generally belongs to the landowner. standing crops still on the land, not to those already collected.
-​ The landowner’s ownership is recognized as older and
superior. WHAT ARE THE REMEDIES OF THE LANDOWNER
-​ The landowner is given the option to either keep the WHOSE LAND SOMEBODY BUILT UPON IN BAD
improvements (after indemnity) or compel the builder FAITH?
to buy the land or pay rent, protecting his property
rights.
The landowner whose land has been built upon, planted, or
sown in bad faith (i.e., the builder knew he had no right to the
Fair Compensation to the Good Faith Builder
land) has the following remedies under Articles 449–450 of the
-​ Since the builder acted under a bona fide belief of
Civil Code:
ownership, the law protects his investment by requiring
the landowner to pay for necessary and useful expenses.
1. Appropriate the Improvements Without Paying Necessary Expenses Benefit the Property Itself
Indemnity -​ These expenses are not luxuries or improvements that
increase value but are essential for maintenance and
The landowner may retain the building, planting, or sowing as preservation.
his own, without any obligation to pay the bad faith builder. -​ Since the landowner keeps the property and benefits
from the preservation, fairness requires reimbursement.
This is a penalty imposed on the builder for acting in bad faith.
Legal Basis
2. Demand Removal of the Improvements at the Builder’s -​ Under Article 452, even a possessor in bad faith is
Expense entitled to reimbursement for necessary expenses (but
not for useful or luxury expenses) if the landowner
The landowner may compel the bad faith builder to remove the appropriates the building, planting, or sowing.
structure or planting from the land. -​ The bad faith possessor also has no right of
retention—he must return the property but may still be
The builder must shoulder the cost of removal and repair any compensated for what was necessary.
damage caused to the land.
WHAT ARE THESE NECESSARY EXPENSES
This remedy is provided under Article 450. REFERRED TO UNDER ARTICLE 452?

3. Damages (if applicable)

The builder, planter or sower in bad faith is entitled to
If the land was damaged due to the construction or planting, the reimbursement for the necessary expenses of preservation
landowner may also claim damages in addition to the above of the land. (n)
remedies.
The necessary expenses referred to under Article 452 are those
DISCUSS ARTICLE 451 that are essential for the preservation, maintenance, or
protection of the land. These include costs incurred to prevent
Art. 451. In the cases of the two preceding articles, the the land from deteriorating or being lost, such as repairs to
landowner is entitled to damages from the builder, planter prevent erosion, construction of retaining walls to avoid
or sower. (n) collapse, or expenses for cleaning and safeguarding the
property. These do not include improvements that add value or
In cases where someone builds, plants, or sows in bad faith on enhance the land's productivity—only those needed to keep the
another's land—as covered under Articles 449 and 450—the land in its original or usable condition.
landowner is entitled to claim damages from the wrongdoer.
This means that, aside from either appropriating the WHAT IS THE EFFECT IF BOTH THE
improvement without paying indemnity or compelling its BUILDER/PLANTER/SOWER AND THE LAND
removal at the builder’s expense, the landowner may also seek OWNER WERE IN BAD FAITH (ARTICLE 453)?
compensation for any harm or loss suffered. Such damages
may include actual damage to the land, loss of income or use,
or any expenses incurred in restoring the property. The article If both the builder, planter, or sower and the landowner are in
reinforces the legal principle that bad faith should not only be bad faith under Article 453, the law treats the situation as if
denied reward but should also carry liability, thereby protecting both were in good faith. In this case, the rules under Article
the property rights of lawful owners and deterring willful or 448 will apply, meaning the landowner has the option to either
negligent encroachments. appropriate the improvements after paying indemnity or
compel the builder to buy the land or pay rent. This rule is
based on fairness—when both parties are at fault, neither
WHY IS THE BUILDER IN BAD FAITH ENTITLED should be placed in a worse position than if they had both acted
TO REIMBURSEMENT FOR NECESSARY honestly.
EXPENSES?

WHAT IS THE RULE WHEN THE LAND OWNER IS

The builder in bad faith is entitled to reimbursement for IN BAD FAITH, BUT THE BUILDER, PLANTER, OR
necessary expenses based on the principle of equity and unjust SOWER IS IN GOOD FAITH (ARTICLE 454)?
enrichment. While the law penalizes the bad faith builder by WHO ARE THE PARTIES INVOLVED UNDER
making him forfeit ownership of his improvements (Art. 449), ARTICLE 455? DISCUSS THEIR RIGHTS
it still recognizes that certain expenses—specifically necessary
ones—benefit the landowner by preserving or maintaining the
property. Art. 454. When the landowner acted in bad faith and the
builder, planter or sower proceeded in good faith, the
Prevent Unjust Enrichment provisions of article 447 shall apply. (n)
-​ Even if the builder acted in bad faith, the landowner
should not profit unjustly from essential improvements Art. 455. If the materials, plants or seeds belong to a third
(e.g., repairs, structural reinforcements) that preserved person who has not acted in bad faith, the owner of the
or protected the property. land shall answer subsidiarily for their value and only in
-​ The law ensures that one party does not gain at the the event that the one who made use of them has no
expense of another, even if the latter acted improperly. property with which to pay.

When the landowner is in bad faith but the builder, planter, or

sower is in good faith, Article 454 applies. In this case, the
builder, planter, or sower does not lose what was built, planted,
or sown. Instead, he is entitled to own the improvement and the
landowner cannot appropriate it without the builder’s consent.
If the landowner wants to keep the improvement, he must pay
for it as provided under Article 546 (necessary and useful
expenses), and he may also be liable for damages. The law
favors the party in good faith and penalizes the one in bad
faith.

Under Article 455, the parties involved are:

-​ The owner of the materials, and

-​ The builder, planter, or sower who used those materials
on another’s land.

This article applies when the builder, planter, or sower uses

materials belonging to someone else in constructing, planting,
or sowing on land not his own. The owner of the materials has
the right to be reimbursed for the value of the materials used in
good faith. However, if the builder acted in bad faith and
knowingly used someone else’s materials, the material owner
may recover the materials or their value and possibly claim
damages. The law protects both property rights (of the
landowner and material owner) and good faith builders, while
punishing bad faith conduct.

DISCUSS ARTICLE 456

In the cases regulated in the preceding articles, good faith

does not necessarily exclude negligence, which gives right to
damages under article 2176. (n)

It is possible that a person may be in good faith, and also

negligent. In fact, in negligence, there is no intent to do wrong.
On the other hand, bad faith presupposes an intent to cause
damage or prejudice. In case there is negligence, damages for
his culpa will arise under Art. 2176.

In such cases, even if good faith is present, the negligent party

may still be held liable for damages under Article 2176, which
governs quasi-delicts or culpa aquiliana. This means that a
person can be required to pay for damages caused by their lack
of due care, even if they believed they were acting rightfully or
had no malicious intent. Bad faith, in contrast, involves
deliberate wrongdoing or intent to cause harm.