Effects of good faith and bad faith on property right

1. 1
Effects of Good
Faith and Bad Faith
on Property Rights
(Articles 448-456,
Civil Code)
If improvement on
land added by
builder in good faith
If improvement on
land added by
builder in bad faith
If both landowner
and builder are in
bad faith
If landowner is in
bad faith
If owner of
materials for
improvement is in
good faith
If Improvement on

2. 2
Land added by
Builder in Good
Faith
(1) Rights of
Landowner - has
option to elect:
appropriate the
improvement after
payment of
indemnity
(necessary, useful,
and luxurious
expenses)
oblige the builder to
buy land or the
sower/planter to pay
rent (art. 448)
(2) Rights of Builder
right to retain land
until payment of
indemnity

3. 3
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

4. 4
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)
demolish/remove the
improvement at the
expense of the
builder PLUS
damages
compel the builder
to buy land w/n the
value of land is
considerably more
than value of
improvement PLUS
damages (art. 450

5. 5
and art. 451)
(2) Rights of
Builder/Planter/Sow
er - 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

6. 6
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
b) builder may
remove/demolish the
improvement and

7. 7
improvement PLUS
damages
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

8. 8