1. BACHRACH MOTOR v.

TALISAYSILAY
Article 355 of the Civil Code considers three things as
civil fruits: First, the rents of buildings; second, the
proceeds from leases of lands; and, third, the income
from perpetual or life annuities, or other similar sources
of revenue.
That is why we say that by "civil fruits" the Civil Code
understands one of three and only three things, to wit:
the rent of a building, the rent of land, and certain kinds
of income.
for it is not obtained from that land but from something
else, it is not civil fruits of that land, and the bank's
contention is untenable.
It is to be noted that the said bonus bears no immediate,
but only a remote accidental relation to the land
mentioned, having been granted as compensation for
the risk of having subjected one's land to a lien in favor
of the bank, for the benefit of the entity granting said
bonus.
2. PACIFIC FARMS v. ESGUERRA
The abovequoted legal provision contemplates a
principal and an accessory, the land being considered
the principal, and the plantings, constructions or works,
the accessory. The owner of the land who in good faith
whether personally or through another makes
constructions or works thereon, using materials
belonging to somebody else, becomes the owner of the
said materials with the obligation however of praying for
their value.2The owner of the materials, on the other
hand, is entitled to remove them, provided no substantial
injury is caused to the landowner. Otherwise, he has the
right to reimbursement for the value of his materials.
Well-established in jurisprudence is the rule that
compensation should be borne by the person who has
been benefited by the accession.
3. BERNARDO v. BATACLAN
The Civil Code confirms certain time-honored principles
of the law of property. One of these is the principle of
accession whereby the owner of property acquires not
only that which it produces but that which is united to it

either naturally or artificially. (Art. 353.) 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 (art. 358). Where, however, the
planter, builder, or sower has acted in good faith, a
conflict of rights arises between the owners and it
becomes necessary to protect the owner of the
improvements without causing injustice to the owner of
the land. In view of the impracticability of creating what
Manresa calls a state of "forced coownership" (vol. 3, 4th
ed., p. 213), the law has provided a just and equitable
solution by giving the owner of the land the option to
acquire the improvements after payment of the proper
indemnity or to oblige the builder or planter to pay for the
land and the sower to pay the proper rent (art. 361). It is
the owner of the land who is allowed to exercise the
option because his right is older and because, by the
principle of accession, he is entitled to the ownership of
the accessory thing (3 Manresa, 4th ed., p. 213).
The law, as we have already said, requires no more than
that the owner of the land should choose between
indemnifying the owner of the improvements or requiring
the latter to pay for the land.
4. ROSALES v. CASTELLTORT
In view of the good faith of both parties in this case,
their rights and obligations are to be governed
byArticle 448, which has been applied to
improvements or portions of improvements built by
mistaken belief on land belonging to the adjoining
owner.
A builder in good faith is one who builds with the belief
that the land he is building on is his, or that by some title
one has the right to build thereon, and is ignorant of any
defect or flaw in his title.27
Article 527 of the Civil Code provides that good faith is
always presumed, and upon him who alleges bad faith
on the part of a possessor rests the burden of proof.
Under the foregoing provision, the landowner can
choose between appropriating the building by paying the
proper indemnity or obliging the builder to pay the price
of the land, unless its value is considerably more than
that of the structures, in which case the builder in good
faith shall pay reasonable rent.34 If the parties cannot

come to terms over the conditions of the lease, the court

must fix the terms thereof.
The choice belongs to the owner of the land, a rule that
accords with the principle of accession, i.e., that the
accessory follows the principal and not the other way
around. Even as the option lies with the landowner, the
grant to him, nevertheless, is preclusive.
Where the builder, planter or sower has acted in good
faith, a conflict of rights arises between the owners, and
it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of
the land. In view of the impracticability of creating a state
of forced co-ownership, the law has provided a just
solution by giving the owner of the land the option to
acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for
the land and the sower the proper rent. He cannot refuse
to exercise either option. It is the owner of the land who
is authorized to exercise the option, because his right is
older, and because, by the principle of accession, he is
entitled to the ownership of the accessory thing.
Possession acquired in good faith does not lose this
character except in the case and from the moment facts
exist which show that the possessor is not unaware that
he possesses the thing improperly or wrongfully.The
good faith ceases or is legally interrupted from the
moment defects in the title are made known to the
possessor, by extraneous evidence or by suit for
recovery of the property by the true owner.
Generally, Article 448 of the Civil Code provides that the
payment of reasonable rent should be made only up to
the date appellees serve notice of their option as
provided by law upon the appellants and the court a quo;
that is, if such option is for appellees to appropriate the
encroaching structure. In such event, appellants would
have a right to retain the land on which they have built in
good faith until they are reimbursed the expenses
incurred by them. This is so because the right to retain
the improvements while the corresponding indemnity is
not paid implies the tenancy or possession in fact of the
land on which it is built, planted or sown.
5. SAN DIEGO v. MONTESA

This provision is expressly made applicable to builders in

good faith (Article 448). The right of retention thus
granted is merely a security for the enforcement of the
possessor's right to indemnity for the improvement
comments made by him. As a result, the possessor in
good faith, in retaining the land and its improvements
pending reimbursement of his useful expenditures, is not
bound pay any rental during the period of retention;
otherwise the value of his security would be impaired (cf.
Tufexis vs. Chunaco (C.A.), 36 O.G. 2455).
Normally, of course, the landowner has the option to
either appropriate the improvement or to sell the land to
the possessor.
6. MIRANDA v. FADULLON
A builder in good faith may not be required to pay
rentals. He has a right to retain the land on which he has
built in good faith until he is reimbursed the expenses
incurred by him. Possibly he might be required to pay
rental only when the owner of the land chooses not to
appropriate the improvement and requires the builder in
good faith to pay for the land, but that the builder is
unwilling or unable to buy the land, and then they decide
to leave things as they are and assume the relation of
lessor and lessee, and should they disagree as to the
amount of the rental then they can go to the court to fix
that amount.
7. IGNACIO v. HILARIO
The owner of the building erected in good faith on a land
owned by another, is entitled to retain the possession of
the land until he is paid the value of his building, under
article 453. The owner of the land, upon the other hand,
has the option, under article 361, either to pay for the
building or to sell his land to the owner of the building.
8. DEPRA v. DUMLAO
The owner of the building erected in good faith on a land
owned by another, is entitled to retain the possession of
the land until he is paid the value of his building, under
article 453 (now Article 546). The owner of the land,
upon the other hand, has the option, under article 361
(now Article 448), either to pay for the building or to sell
his land to the owner of the building. But he cannot as
respondents here did refuse both to pay for the building
and to sell the land and compel the owner of the building
to remove it from the land where it erected. He is entitled

to such remotion only when, after having chosen to sell

his land. the other party fails to pay for the same
Additional benefits were extended to the builder but the
landowner retained his options
Where the builder, planter or sower has acted in good
faith, a conflict of rights arises between the owners, and
it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of
the land. In view of the impracticability of creating a state
of forced co-ownership, the law has provided a just
solution by giving the owner of the land the option to
acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for
the land and the sower to pay for the proper rent. It is the
owner of the land who is authorized to exercise the
option, because his right is older, and because, by the
principle of accession, he is entitled to the ownership of
the accessory thing.
9. ORTIZ v. KAYANAN
Possession in good faith ceases or is legally interrupted
from the moment defects in the title are made known to
the possessor, by extraneous evidence or by the filing of
an action in court by the true owner for the recovery of
the property. 12 Hence, all the fruits that the possessor
may receive from the time he is summoned in court, or
when he answers the complaint, must be delivered and
paid by him to the owner or lawful possessor.
However, even after his good faith ceases, the
possessor in fact can still retain the property, pursuant to
Article 546 of the New Civil Code, until he has been fully
reimbursed for all the necessary and useful expenses
made by him on the property. This right of retention has
been considered as one of the conglomerate of
measures devised by the law for the protection of the
possessor in good faith. Its object is to guarantee the
reimbursement of the expenses, such as those for the
preservation of the property, 14 or for the enhancement of
its utility or productivity. 15It permits the actual possessor
to remain in possession while he has not been
reimbursed by the person who defeated him in the
possession for those necessary expenses and useful
improvements made by him on the thing possessed. The
principal characteristic of the right of retention is its
accessory character. It is accessory to a principal
obligation. Considering that the right of the possessor to

receive the fruits terminates when his good faith ceases,

it is necessary, in order that this right to retain may be
useful, to concede to the creditor the right to secure
reimbursement from the fruits of the property by utilizing
its proceeds for the payment of the interest as well as
the principal of the debt while he remains in possession.
The right of retention in this case is analogous to a
contract of antichresis and it cati be considered as a
means of extinguishing the obligation, inasmuch as the
right to retain the thing lasts only for the period
necessary to enable the creditor to be reimbursed from
the fruits for the necessary and useful expenses. 1
According to Manresa, the right of retention is, therefore,
analogous to that of a pledge, if the property retained is
a movable, and to that of antichresis, if the property held
is immovable.
In all of these cases, the right of retention is used as a
means of extinguishing the obligation.
In a pledge, if the thing pledged earns or produces fruits,
income, dividends or interests, the creditor shall
compensate what he receives with those which are
owing him.
The debtor can not reacquire enjoyment of the
immovable until he has actually paid what he owes the
creditor.
10. IGNAO v. IAC
The court a quo correctly held that Article 448 of the Civil
Code cannot apply where a co-owner builds, plants or
sows on the land owned in common for then he did not
build, plant or sow upon land that exclusively belongs to
another but of which he is a co-owner. The co-owner is
not a third person under the circumstances, and the
situation is governed by the rules of co-ownership.
However, when, as in this case, the ownership is
terminated by the partition and it appears that the home
of defendants overlaps or occupies a portion of 5 square
meters of the land pertaining to plaintiffs which the
defendants obviously built in good faith, then the
provisions of Article 448 of the new Civil Code should
apply.
In other words, when the co-ownership is terminated by
a partition and it appears that the house of an erstwhile

co-owner has encroached upon a portion pertaining to

another co-owner which was however made in good
faith, then the provisions of Article 448 should apply to
determine the respective rights of the parties.
Such ruling contravened the explicit provisions of Article
448 to the effect that "(t)he owner of the land . . . shall
have the right to appropriate . . .or to oblige the one who
built . . . to pay the price of the land . . . ." The law is
clear and unambiguous when it confers the right of
choice upon the landowner and not upon the builder and
the courts.
11. FILIPINAS COLLEGES v. TIMBANG

Under Article 448, the right to appropriate the works or

improvements or to oblige the one who built or planted to
pay the price of the land' belongs to the owner of the
land. The only right given to the builder in good faith is
the right to reimbursement for the improvements; the
builder, cannot compel the owner of the land to sell such
land to the former. ...
... To be deemed a builder in good faith, it is essential
that a person assert title to the land on which he builds;
i.e., that he be a possessor in concept of owner (Art.
525, Civil Code) and that he be unaware 'that there
exists in his title or mode of acquisition any flaw which
invalidates it.' (Art. 526, Civil Code)

Although it is true it was declared therein that in the

event of the failure of the builder to pay the land after the
owner thereof has chosen this alternative, the builder's
right of retention provided in Article 546 is lost,
nevertheless there was nothing said that as a
consequence thereof, the builder loses entirely all rights
over his own building.

It is such a builder in good faith who is given the 1ight to

retain the thing, even as against the real owner, until he
has been reimbursed in full not only for the necessary
expenses but also for useful expenses. (Art. 546, Civil
Code)

A builder in good faith not be required to pay rentals. he

has right to retain the land on which he has built in good
faith until he is reimbursed the expenses incurred by
him. Possibly he might be made to pay rental only when
the owner of the land chooses not to appropriate the
improvement and requires the builder in good faith to
pay for the land but that the builder is unwilling or unable
to pay the land, and then they decide to leave things as
they are and assume the relation of lessor and lessee,
and should they disagree as to the amount of rental then
they can go to the court to fix that amount.

The rights of a builder in good faith under Article 448 of

the New Civil Code does (sic) not apply to a case where
one co-owner has built, planted or sown on the land
owned in common.Manresa agreeing with Sanchez
Roman, says that as a general rule this article is not
applicable because the matter should be governed more
by the provisions on co-ownership than on accession.

wherein the court has ruled that the owner of the land in
entitled to have the improvement removed when after
having chosen to sell his land to the other party, i.e., the
builder in good faith fails to pay for the same.

However, when, as in this case, the co-ownership is

terminated by the partition and it appears that the house
of defendants overlaps or occupies a portion of 5 square
meters of the land pertaining to plaintiffs which the
defendants obviously built in good faith, then the
provisions of Article 448 of the new Civil Code should
apply.

where this Court approved the sale of the land and the
improvement in a public auction applying the proceeds
thereof first to the payment of the value of the land and
the excess, if any, to be delivered to the owner of the
house in payment thereof.
12. MANOTOK REALTY v. TECSON

13. DEL OCAMPO v. ABESIA

The co-owner is not a third person under the

circumstances, and the situation is governed by the rules
of co-ownership.

14. PECSON v. CA
By its clear language, Article 448 refers to a land whose
ownership is claimed by two or more parties, one of
whom has built some works, or sown or planted
something. The building, sowing or planting may have
been made in good faith or in bad faith. The rule on good

faith laid down in Article 526 of the Civil Code shall be

applied in determining whether a builder, sower or
planter had acted in good faith. 12

reimbursement for all the necessary and useful

expenses incurred; it also gives him right of retention
until full reimbursement is made.

Article 448 does not apply to a case where the owner of

the land is the builder, sower, or planter who then later
loses ownership of the land by sale or donation.

While the law aims to concentrate in one person the

ownership of the land and the improvements thereon in
view of the impracticability of creating a state of forced
co-ownership,it guards against unjust enrichment insofar
as the good-faith builders improvements are concerned.
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. In addition, as in this case, the owner of
the land is prohibited from offsetting or compensating the
necessary and useful expenses with the fruits received
by the builder-possessor in good faith. Otherwise, the
security provided by law would be impaired. This is so
because the right to the expenses and the right to the
fruits both pertain to the possessor, making
compensation juridically impossible; and one cannot be
used to reduce the other.

15. NUGUID v. CA
In so ruling, this Court pointed out that: (1) Article 448 of
the Civil Code is not apposite to the case at bar where
the owner of the land is the builder, sower, or planter
who then later lost ownership of the land by sale, but
may, however, be applied by analogy; (2) the current
market value of the improvements should be made as
the basis of reimbursement; (3) Pecson was entitled to
retain ownership of the building and, necessarily, the
income therefrom; (4) the Court of Appeals erred not
only in upholding the trial courts determination of the
indemnity, but also in ordering Pecson to account for the
rentals of the apartment building from June 23, 1993 to
September 23, 1993.
In other words, says respondent, accounting was
necessary. For accordingly, he was entitled to rental
income from the property. This should be given effect.
The Court could have very well specifically included rent
(as fruit or income of the property), but could not have
done so at the time the Court pronounced judgment
because its value had yet to be determined, according to
him. Additionally, he faults the appellate court for
modifying the order of the RTC, thus defeating his right
as a builder in good faith entitled to rental from the
period of his dispossession to full payment of the price of
his improvements, which spans from November 22,
1993 to December 1997, or a period of more than four
years.
Under Article 448, the landowner is given the option,
either to appropriate the improvement as his own upon
payment of the proper amount of indemnity or to sell the
land to the possessor in good faith. Relatedly, Article 546
provides that a builder in good faith is entitled to full

Clearly, this resulted in a violation of respondents right

of retention. Worse, petitioners took advantage of the
situation to benefit from the highly valued, incomeyielding, four-unit apartment building by collecting rentals
thereon, before they paid for the cost of the apartment
building. It was only four years later that they finally paid
its full value to the respondent.
The petitioners had reaped all the benefits from the
improvement introduced by the respondent during said
period, without paying any amount to the latter as
reimbursement for his construction costs and expenses.
They should account and pay for such benefits.
16. TUASON v. DE LUMANLAN
Respondent could have asked that she recover or be
credited with the amounts paid by her to the Deudors,
but as no claim to such credit was ever advanced by her

in the trial Court, no pronouncement can be made

thereon in this appeal. Equity demands, however, that
her right to claim such return, or to have the amount
offset against the sums she was sentenced to pay,
should be, as it is, reserved.
17. TECHNO GAS v. CA
.Article 527 of the Civil Code presumes good faith, and

since no proof exists to show that the encroachment

over a narrow, needle-shaped portion of private
respondent's land was done in bad faith by the builder of
the encroaching structures, the latter should be
presumed to have built them in good faith. It is presumed
that possession continues to be enjoyed in the same
character in which it was acquired, until the contrary is
proved. Good faith consists in the belief of the builder
that the land he is building on is his, and his ignorance of
any defect or flaw in his title. Hence, such good faith, by
law, passed on to Pariz's successor, petitioner in this
case.
Further, "(w)here one derives title to property from
another, the act, declaration, or omission of the latter,
while holding the title, in relation to the property, is
evidence against the former." And possession acquired
in good faith does not lose this character except in case
and from the moment facts exist which show that the
possessor is not unaware that he possesses the thing
improperly or wrongfully. The good faith ceases from the
moment defects in the title are made known to the
possessor, by extraneous evidence or by suit for
recovery of the property by the true owner.
Consequently, the builder, if sued by the aggrieved
landowner for recovery of possession, could have
invoked the provisions of Art. 448 of the Civil Code,
which reads:
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 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.
The obvious benefit to the builder under this article is
that, instead of being outrightly ejected from the land, he
can compel the landowner to make a choice between
the two options: (1) to appropriate the building by paying
the indemnity required by law, or (2) sell the land to the
builder. The landowner cannot refuse to exercise either
option and compel instead the owner of the building to
remove it from the land.
In view of the good faith of both petitioner and private
respondent, their rights and obligations are to be
governed by Art. 448.
Where the builder, planter or sower has acted in good
faith, a conflict of rights arises between the owners, and
it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of
the land. In view of the impracticality of creating a state
of forced co-ownership, the law has provided a just
solution by giving the owner of the land the option to
acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for
the land and the sower to pay the proper rent. It is the
owner of the land who is authorized to exercise the
option, because his right is older, and because, by the
principle of accession, he is entitled to the ownership of
the accessory thing.
18. PLEASANTVILLE v. CA
Good faith consists in the belief of the builder that the
land he is building on is his and his ignorance of any
defect or flaw in his title. And as good faith is presumed,
petitioner has the burden of proving bad faith on the part
of Kee.
19. GRANDE v. CA

20. AGUSTIN v. IAC

Accretion benefits a riparian owner when the following
requisites are present: (1) that the deposit be gradual
and imperceptible; (2) that it resulted from the effects of
the current of the water; and (3) that the land where

accretion takes place is adjacent to the bank of a river

(Republic vs. CA, 132 SCRA 514).
These accretions belong to riparian owners upon whose
lands the alluvial deposits were made (Roxas vs.
Tuason, 9 Phil. 408; Director of Lands vs. Rizal, 87 Phil.
806). The reason for this principle is because, if lands
bordering on streams are exposed to floods and other

damage due to the destructive force of the waters, and if

by virtue of law they are subject to encumbrances and
various kinds of easements, it is only just that such risks
or dangers as may prejudice the owners thereof should
in some way be compensated by the right of accretion
(Cortes vs. City of Manila, 10 Phil. 567)