Builder in Good Faith: Meaning
Quick answer
A builder in good faith is a person who builds on land that turns out to belong to someone else, without knowing of any defect in his or her title. Article 448 of the Civil Code protects such a builder: the landowner must either pay for the building or make the builder buy the land, and cannot simply have the house torn down. A builder in bad faith gets no such protection.
What does Article 448 say?
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.
The article goes on: the builder cannot be obliged to buy the land if its value is considerably more than that of the building. In that case he pays reasonable rent, if the landowner does not take the building, and the court fixes the terms if they cannot agree. See Article 448 for the full explanation.
Who counts as a builder in good faith?
In Spouses Padilla v. Malicsi (2016), the Supreme Court said that "a builder in good faith is a builder who was not aware of a defect or flaw in his or her title when he or she introduced improvements on a lot that turns out to be owned by another." In Spouses Espinoza v. Spouses Mayandoc (2017), it added that the builder must claim title to the land, as a possessor in the concept of owner, and be unaware of any flaw that invalidates that title.
The claim has to be proved. In Padilla, the builders had relied on a stranger's word and had not checked the tax declarations or the title before building. The Court held they were not builders in good faith, so Article 448 did not apply.
Who chooses what happens to the building?
The landowner. As quoted in Padilla, "The choice belongs to the owner of the land", but the landowner "cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land." If the landowner takes the building, the builder is paid under Article 546: necessary expenses, and useful expenses or the increase in value, with the right to keep the building until paid. Under Article 548, expenses for pure luxury are not refunded, though the ornaments may be removed if this causes no damage.
What about a builder in bad faith?
Under Article 449, a person who builds in bad faith on the land of another "loses what is built, planted or sown without right to indemnity." The landowner may also demand demolition at the builder's expense, or make him pay the price of the land (Article 450), and may claim damages (Article 451). If both acted in bad faith, Article 453 treats them as if both had acted in good faith.
Example
Made-up illustration: Nestor bought a lot under a notarized deed and built a house. Years later a court finds the lot belongs to Rosa. If Nestor did not know of the flaw in his title, Rosa must choose: pay for the house or make Nestor buy the land. If the land is worth far more than the house, Nestor cannot be forced to buy it and pays reasonable rent if Rosa does not take the house. Whether Nestor was in good faith is decided on the evidence.
For more, see You built on someone else's land in good faith: what now?.
Which provisions use this term?
Frequently asked questions
What is a builder in good faith?
In Spouses Padilla v. Malicsi (2016), the Supreme Court said it is a builder who was not aware of a defect or flaw in his or her title when he or she introduced improvements on a lot that turns out to be owned by another.
What are the landowner's options under Article 448?
The landowner may appropriate the building after paying the indemnity in Articles 546 and 548, or oblige the builder to pay the price of the land. If the land is worth considerably more than the building, the builder cannot be forced to buy it and pays reasonable rent instead.
Can the landowner just order the house demolished?
Not when the builder was in good faith. As quoted in Padilla, the landowner cannot refuse to exercise either option and compel the builder to remove the building. Demolition is an option against a builder in bad faith (Article 450).
Who has to prove good faith?
The builder who claims it. In Padilla, the Supreme Court said the builder must substantiate the claim by preponderance of evidence; the ordinary presumption of good faith is not enough.
What happens to a builder in bad faith?
Under Article 449, he loses what he built without right to indemnity. The landowner may also demand demolition at the builder's expense or make him pay the price of the land (Article 450), with damages (Article 451).
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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