Art.

447 - Rules When Landowner Constructs or Plants on His Land with the
Materials of Another

Rights and Obligations of the Owner of the Land Who Uses the Materials of
Another

- GF - He becomes the owner of the materials but he must pay for their value. (Except
when the materials
could be removed without destruction)
- BF - He becomes the owner of the materials but he must pay: 1) their value; 2) and
damages (except
when the owner of the material decide to remove
whether or not destruction would be caused,
which on this case he would
still be the owner of materials, and will be entitled for damages.
Rights and Obligations of the Owner of the Materials
- GF (LO) - (1) the owner of the materials is entitled to reimbursement (provided he
does not remove
them).
(2) He is entitled to removal (provided no substantial injury is caused).
- BF (LO) - (1) The owner of the materials is entitled to the ABSOLUTE right of removal
and damages
(whether or not substantial injury is caused).
(2) He is entitled to reimbursement and damages (in case he chooses not to
remove).

Examples:
- If the house is built, the owner of the material cannot remove the same, because to
do would necessarily injure the house.
- Just because a persons materials were used, it does not follow that the owner of
the materials becomes owner of any part of the building. At most, C is entitled to
reimbursement for their value.
- When the landowner is in BF, (1) the owner of the material has the absolute right of
removal of the material, and indemnification for damages; (2) be reimbursed for the
value of the materials, and indemnification for damages.

- Indemnification for damages shall comprehend not only the value of the loss
suffered but also that of
the profits which the obligee failed to realize

Queries
- No damage on the material /not yet transformed - they can be returned.

if damage or transformation has been done on the material, they can no longer be
returned.

- Materials already demolished - the law makes no distinction hence owner of the
material may still claim the same
- In case the house was sold, the action should be directed against the buyer, and not
the builder, because the buyer has eventually benefited the accession.

BF and GF

- The builder, planter or sower is in BAD faith if he makes use of the land or
materials which he knows belong t another.
Buys land without verifying whether or not the land belongs to another with a Torrens
Title and who subsequently builds on it, is a builder in bad faith, if indeed the land is already
registered under the Land Registration Law in the name of another.
One who is aware of a notice of lis pendens(pending legal action) is a purchaser in
bad faith.

He is in GOOD faith if he did not know that he had no right to such land or materials

The owner of the materials is in BAD faith if he allows another to use the
materials without informing him of the ownership thereof
The owner of the materials is in GOOD faith if he did not know that another was
using his materials; or
granting that he did know, if he informed the user of the
ownership thereof and made the necessary
prohibition.

Both parties are in bad faith - consider them in good faith.

Rule When Landowner is in Good Faith But Owner of Materials is in Bad Faith
landowner would not only be exempted from reimbursement, but he would also be
entitled to consequential damages (as when for instance, the materials are of an
inferior quality). Moreover, the owner of the materials would lose all rights to them,
such as the right of removal, regardless of whether or not substantial injury would be
caused.

Good faith is always presumed, and upon him who alleges bad faith rests the burden
of proof.

Art. 448. - (both in good faith, option is vested on the owner of the land; if both
are in bad faith, consider them in good faith 448 applies) applies only when the

builder, planter or sower believes he has the right to so build, plant or sow because he
thinks he owns the land or believes himself to have a claim of title.

Option of the owner of the land:

- (1) Appropriate works, sowing, planting upon payment of indemnification.

- (2) Or to compel the builder B to buy the land upon which the house has been built,
unless the value of
The land be considerably more than the value of the house. (In the latter case, rent
should be paid.)
- The owner has no right of demolition, unless otherwise the owner has selected the
compulsory sale and the builder failed to pay for the land.
- It is the owner of the land who has the choice or option, not the builder. Hence, the
builder cannot
compel the owner of the land to sell such land to him.
- If the builder is unwilling to buy, he must vacate the land, and pay rentals until he
does so.
The owner of the land does not ipso facto become the owner of what had been
planted on his land by another. Firstly, we have to determine whether the planter was
in good faith or bad faith. Secondly, assuming that the planter was in good faith, the
landowner, should he desire to get the crops, must first give the proper
indemnification to the planter.
The co-ownership is terminated by the partition and it appears that the house of
defendants overlaps or occupies a portion of 5 sq.m. of the land pertaining to
plaintiffs which defendants obviously built in good faith, then the provisions of Art.
448 of the new Civil Code should apply
Both parties in good faith: (if the land was registered under Torrens System, the
builder is in bad faith)
- Landowner has the preferential right, for her has the option referred to in Art 448.
- Demolition, without exercising the option to sell the land to the land to the Builder is
not an option vested upon the landowner under Article 448.
- Land value is not considerably more than the value of the apartment the difference
being only P.5
million the builder may be compelled to buy the land.
-Since the landowner has chosen to sell the land, the builder must pay. If he cannot
pay, he should not be
allowed to use the land to the owners detriment. Hence, he
must remove the building.
- Before settlement is reached between the builder and the landowner, landowner
may not legally
demand
rental for his land, for after all the builder is a builder in
good faith, and is entitled to retain in the meantime. This right of retention would be
nugatory if he were to be made to pay.

Why Option Is Given to the Landowner and Not to the Planter or Builder:

(1) His right is older and (2) because, by the principle of accession, he is entitled to
the ownership of the accessory thing.

-the lien of the builder on the constructions may be annotated in the certificate of
title by means of a petition filed in the original case wherein the decree of registration
under the Torrens system was
entered.

Ownership over the thing built or sown or planted does not pass to the landowner till
after payment therefor has been given.
The Indemnities to be Given: (1) Necessary Expense, necessary for the
preservation of the thing; (2) Useful Expenses, augment the income of the thing upon
which they are spent; (3) Luxurious Expenses.
Where the landowner has elected to appropriate:
- Yes, the builder is entitled to retain the house until he is paid the full indemnities
since he is a builder in good faith.

- The builder is not entitled to the rents, since his possession is no longer that of a
possessor in good faith.
Note that election by the landowner had already been made.
Therefore, if the builder receives the rents,
he must deduct them from whatever
indemnity is due him.
- Builder not entitled to the fruits during retention for again we may say that during
said retention, he is not considered a possessor in good faith.
- Owner of the land not entitled to collect rent from the builder, otherwise the right of
retention till indemnity is given would be rendered nugatory.

It is the current market value of the improvements which should be made the basis of
reimbursement to the builder in good faith.
In the event that the owner elects to SELL to the builder, planter, or sower the land or
which the improvement stands, the price must be FIXED at the prevailing MARKET
VALUE at the time of payment.
Neither builder nor landowner can oust (expel) each other, for until indemnity is paid,
the builder has the right of retention.
Builder's failure to automatically pay the value of the land does not make the
claimant the owner of the house by accession. Said Article merely gives the
landowner an option to appropriate for himself the house upon payment of the
proper indemnity, or to compel the builder to buy the land upon which the house has
been built, unless the value of the land be considerably more than the value of the
house (in which case, rent should be paid).
Remedies:

- They may leave things as they are and assume the relation of lessor and lessee.
The rent may be fixed by
the court in case of disagreement.
- The landowner may have the house removed. This right of demolition exists
because he has chosen to sell his land, and the builder has failed to pay.
- The landowner may consider the price of the land as an ordinary money debt of the
builder. Therefore,
he may enforce payment thru an ordinary action for the recovery of a
money debt.

Land owner elects to compel the builder to buy the land - the builder losses his right
to retention because is now required to pay.

If the value of the land is more than the value of the building, can the landowner still
avail himself of the option of compelling the builder to pay for the land? Yes, unless
the value of the land is considerably more than the value of the building. The
meaning of considerably more is to be determined by the facts of the case.
When Art. 448 Is Applicable and When It Is Not Applicable

- Art. 448 applies only when the builder, planter, or sower really believes he has the
right to so build,
plant, or sow because he thinks he owns the land
- Possessor in good faith may keep the fruits of the property (rent from lessee), the
possessor is not in good faith once the landowner has exercised his option.

- Art 448 does not apply - when the builder, planter, or sower does not claim
ownership over the land, but
possesses it as mere holder, agent, usufructuary, or
tenant. Here he knew that he doesnt own the land.
- exception - If a tenant (agricultural tenant) whose lease is about to expire,
nevertheless still sows, not knowing that the crops will no longer belong to him, Art. 448
can be applied.
- when the builder, planter, or sower is not a stranger but a co-owner, even if later
on, during the
partition, the portion of land used is awarded to another co-owner. The
reason is that such co-owner
really builds, plants, or sows on his own land, and not on
land not belonging to him.
- when a person constructs a building on his own land, and then sells the land but not
the building to
another, there can be no question of good faith or bad faith on the part
of the builder. Here, he can be
compelled to remove the building. New owner shall not
be required to pay indemnity.
- Constructions made by it during the war are owned not by the owner of the land but
by the Philippines,
since the latter emerged victor in the last war.

A lessee who builds a house (useful improvement) on the land may remove the same,
but cannot compel

the lessor to sell to him the land. He is not considered a possessor in good faith or a
possessor in bad
faith.

Art. 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.
Even if the land used be of public dominion. Here, it is the State that can exercise the
option. Note that the law makes no distinction, as between use in this case of public
or private land.
The landowner may even have his land and the house sold at public auction, keep for
himself the proceeds from the land, and give the rest to the builder. Note that in this
sale at public auction, the proceeds will first be applied to the land, and the rest will
go to the owner of the improvement. Should this balance unfortunately be less than
the value of the building, the builder cannot complain. He will indeed not be entitled
to a reimbursement for the deficiency.

If the landowner sells or in any other way alienates the land in favor of a stranger,
against whom will the builder have a right of action against the original owner or
the new owner? It has been held that the action should primarily be directed against
the new owner, because he benefited from the accession.
- if the land has the torrens title which indicate that the original owner has the title
over the land and the building, the buyer is considered in good faith, and does not
need to pay the builder.
If the new owner paid for the construction, the action may still be directed against
him, BUT this time, he can file a third-party complaint against the original owner, who
ultimately will have to pay, since it is unfair to compel the new owner to pay twice.
Without making his choice, the owner sold the land, the new owner acquires the
option of paying the value of construction or requiring the builder to pay the for the
land.
Once a choice is made by the landowner, it is generally irrevocable. Thus, if the
landowner has elected to get the building, but is finally unable to pay for the
indemnity or value of the building, she cannot afterwards elect to sell the land. Her
monetary obligation to indemnify can indeed be satisfi ed by a levy of execution on
her properties.
Writ of Demolition

Before demolition could be effected, the parties concerned should at least be given a
chance to be heard concerning the interest they claim to possess on said properties. If
demolition is involved, there must be a
hearing on the motion and due notice. The right
to a hearing includes the right of the party interested to present his own case and to submit
evidence in support thereof. The trial court denied petitioner this
right. The trial court
committed grave abuse of discretion as it evaded and virtually refused to perform
a
positive duty enjoined by law.