Owner of land has two options against builder in good faith

Owner of land has two options against builder in good faith
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Dear PAO,
I found out that the kitchen of my neighbor was constructed on a portion (15 square meters, more or less) of my unoccupied lot. I demanded the demolition of his kitchen, or else I would sue him. He offered to purchase the lot, claiming he built his kitchen in good faith. We agreed to have the portion appraised by an expert, and the recommended price is P15,000 per square meter. I told my neighbor of my decision to sell the portion of the land to him, but he claimed that he had no funds to pay the high price. He also said that the value of his kitchen was approximately P100,000. Hence, he would just dismantle his kitchen to avoid paying a larger sum. Can I compel my neighbor to purchase the portion he occupied? What other options do I have under the circumstances?


Dear Wanda,
The facts you have mentioned in your letter are exactly governed by Article 448 of the New Civil Code of the Philippines, which provides that:


“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 aforecited law was explained by the high court in the case entitled Spouses Espinoza v. Spouses Mayandoc, GR 211170, July 3, 2017, where the Supreme Court, through Chief Justice Diosdado Peralta, stated:

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“As such, Article 448 of the Civil Code must be applied. It applies when the builder believes that he is the owner of the land or that by some title he has the right to build thereon, or that, at least, he has a claim of title thereto. In Tuatzs v. Spouses Escol et al., this Court ruled that the seller (the owner of the land) has two options under Article 448: (1) he may appropriate the improvements for himself after reimbursing the buyer (the builder in good faith) the necessary and useful expenses under Articles 546 and 548 of the Civil Code; or (2) he may sell the land to the buyer, unless its value is considerably more than that of the improvements, in which case, the buyer shall pay reasonable rent, thus:
“The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord 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. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.

“The raison d’etre for this provision has been enunciated thus: 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.”
Applying the above-quoted decision in your situation, as a land owner, you have two options as provided under Article 448 of the New Civil Code, and these are: acquire the improvements (kitchen) after payment of proper indemnity, or oblige your neighbor to pay for the land. However, you cannot compel your neighbor to buy the occupied portion, considering that its value is more than that of the improvement (kitchen), so he may pay instead a reasonable rent.

We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated on.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]

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