Effects of Good Faith and Bad Faith on

Property Rights
on 1:14 PM in Civil Law, Notes

(Articles 448-456, Civil Code)

o
o
o
o
o

If
If
If
If
If

improvement on land added by builder in good faith

improvement on land added by builder in bad faith
both landowner and builder are in bad faith
landowner is in bad faith
owner of materials for improvement is in good faith

If Improvement on Land added by Builder in Good Faith

(1) Rights of Landowner - has option to elect:

1.

appropriate the improvement after payment of indemnity (necessary,

useful, and luxurious expenses)
2.
oblige the builder to buy land or the sower/planter to pay rent (art.
448)
(2) Rights of Builder

1.
2.

right to retain land until payment of indemnity

if value of land is considerably more than the value of improvement,
builder is not obliged to buy the land, instead, may pay rent (art. 448)
NOTA BENE:
- if no agreement is made as to lease of land, then court may fix the terms

- if, after opting to sell land to builder and builder, after agreeing, fails to pay, landowner
may: a) remove the improvement; b) sell both land and improvement in a public auction
and apply the proceeds thereof first to the value of land and send the rest, if any, to the
builder
If Improvement on Land added by Builder in Bad Faith
(1) Rights of Landowner - three options:

becomes owner of improvement by virtue of the "principle of

accession" without paying indemnity, PLUS damages (art. 449 and art. 451)
o
demolish/remove the improvement at the expense of the builder PLUS
damages
o
compel the builder to buy land w/n the value of land is considerably
more than value of improvement PLUS damages (art. 450 and art. 451)
(2) Rights of Builder/Planter/Sower - no right of retention (art. 449), only to
reimbursement for expenses necessary for preservation of land (art. 452)
NOTA BENE: (Regarding Gathered and Growing Crops)
- if the crops have already been gathered, planter/sower must return the value of crops
or the crops themselves but minus the necessary expenses (for production, gathering
and preservation)
- if the crops have not yet been gathered, planter/sower must completely forfeit them to
landowner without right to indemnity
If Both Landowner and Builder are in Bad Faith
- treated as though both are in good faith (art. 453)
If only Landowner is in Bad Faith
- apply art. 447: a) landowner must pay for value of improvement PLUS damages; b)
builder may remove/demolish the improvement and landowner must pay for damages

If Owner of Materials for Improvement is in Good Faith

(1) Rights of Landowner - same; subsidiarily liable for value of materials if he compels
the builder to purchase land
(2) Rights of Builder - same; principally liable for value of materials; demand from
landowner the value of materials if latter appropriates the improvement
(3) Rights of Owner of Materials (Third Person) - demand from builder; if builder cannot
pay, demand from landowner if latter appropriates the improvement