In cases of builders in bad faith, a property owner can choose to appropriate the structure, without any obligation to pay any indemnity except for necessary expenses, plus damages; or ask the removal of the structure at the builder’s, etc. expense, plus damages; or compel the builder to pay the value of the land, plus damages.
A builder in bad faith is one who builds on land not belonging to him or is aware of the defect in his title.
What can a property owner do to structures or improvements introduced, without his consent, by a squatter or a person who claims ownership but is aware of the defects in his title?
The Civil Code and Supreme Court pronouncements have defined the rights of the property owners against builders in bad faith. Bad faith on the part of the builder pertains to building, planting or sowing made knowingly by one on land not belonging to him and without authority. Furthermore, the builder is in bad faith if he makes use of the land which he knows belongs to another. Conversely, to be deemed a builder in good faith, it is essential that a person asserts title to the land on which he builds, i.e., that he be a possessor in the concept of owner, and that he be unaware that there exists in his title or mode of acquisition any flaw which invalidates it [Spouses Espinoza v. Spouses Mayandoc, G.R. No. 211170, 03 July 2017].
A builder in bad faith will lose what he built without indemnity.
Article 449 of the Civil Code applies to builders in bad faith, to wit:
“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.”
Moreover, Article 450 of the Civil Code will apply. It provides:
“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.”
Furthermore, Article 451 of the Civil Code mandates that “in the case of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower”.
The property owner has 3 alternative rights.
Thus, the following are the three alternative rights of the property owner:
- To appropriate what has been built, planted or sown in bad faith, without any obligation to pay any indemnity therefore except for necessary expenses for the preservation of the land (Art. 452, Civil Code), plus damages; or
- To ask the removal or demolition of what has been built, etc. at the builder’s, etc. expense, plus damages; or
- To compel the builder or planter to pay the price or 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. [Hector S. De Leon, Comments and Cases on Property, p. 156, 4th Ed. (2003)]
It bears great emphasis that a builder in bad faith is not entitled to indemnity for his improvements. 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 (Santos vs. Mojica, G.R. No.L-25450, 31 January 1969).
At most, a builder in bad faith may be reimbursed for necessary expenses.
At most, a builder in bad faith is entitled to be reimbursed the necessary expenses on the land that he made. This finds support in Article 452 of the Civil Code which provides that “the builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.” Necessary expenses are expenses made for the preservation of the thing or those which seek to prevent waste, deterioration or loss of a thing [Hector S. De Leon, Comments and Cases on Property, p. 393, 6th Ed. (2011) citing Manresa].
A builder in bad faith can lose the building, without indemnity for the necessary or useful expenses for the building, but he must be indemnified the necessary expenses for the preservation of the land because, after all, the true owner would have borne such expenses anyway, even if nothing has been built on the land [Edgardo L. Paras, Civil Code of the Philippines Annotated, p. 226, Vol. II, 14th Ed. (1999)]. However, as provided in Article 546 of the Civil Code, a builder in bad faith does not have the right of retention over the premises pending payment.
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