Penalties for Building on Land You Do Not Own in the Philippines

(A practical doctrinal guide for owners, builders, and practitioners)

1) Why this matters

Erecting a structure on land you don’t own triggers overlapping civil, criminal, and administrative liabilities. Philippine law looks first to good faith vs. bad faith, then to who owns the land, and finally to how the occupation happened (peaceably vs. by force or intimidation), while local building and zoning rules add stop-work, demolition, and permitting consequences.

2) The civil law backbone: accession, good faith, and bad faith

a) Accession and Article 448 cluster

Under the Civil Code rules on accession, anything built on land generally follows the land. Articles 448, 449–456, 546–548, and 549–555 establish who keeps the building, who pays whom, and whether removal is allowed. The pivotal inquiry is good faith—the honest belief that one had a right to build.

Builder in GOOD FAITH; Landowner in GOOD FAITH The owner may (i) appropriate the building after paying the builder the value of the improvements (typically the current market value, not merely cost), or (ii) require the builder to buy the land if the land’s value is not considerably more than the building’s value. If the land is far more valuable, courts favor appropriation with indemnity rather than a forced sale of the land.
Builder in BAD FAITH; Landowner in GOOD FAITH The owner can (i) appropriate the building without paying (the strict penalty for bad faith), or (ii) demand removal of the structure at the builder’s expense, plus damages. The builder in bad faith is also liable for fruits or rentals (see below).
Builder in GOOD FAITH; Landowner in BAD FAITH The law protects the good-faith builder: the landowner may be compelled to pay or sell the land, and the builder may have a right of retention until reimbursed.
Mutual bad faith Courts typically treat the case as if the builder alone were in bad faith (to prevent unjust enrichment on either side), but they can calibrate damages equitably.

b) Possessor’s expenses and fruits

Necessary expenses (to preserve the property): reimbursable to any possessor; a good-faith builder has a retaining lien until paid.
Useful expenses (that increase value): reimbursable only to a possessor in good faith (or the owner may choose to pay the increase in value).
Luxurious/ornamental expenses: generally not reimbursable; the builder may remove them if this can be done without damage to the principal thing.
Fruits/income: A possessor in bad faith owes fruits (civil and natural) received and those the owner could have received. Courts often translate this into reasonable rentals for the period of occupation, plus legal interest.

c) Remedies owners typically file

Ejectment (forcible entry or unlawful detainer) in first-level courts to recover physical possession within short prescriptive periods (1 year from dispossession or last demand).
Acción publiciana (recovery of the right to possess) if possession has ripened beyond ejectment timelines.
Acción reivindicatoria (recovery of ownership) to regain title and possession.
Damages (rents, lost profits, attorney’s fees) and demolition of the encroaching structure.

d) Torrens title and prescription

Registered land (Torrens): ownership is indefeasible, and as a rule no acquisitive prescription runs against the registered owner. An innocent builder cannot defeat a Torrens title by long occupation alone.
Unregistered land: acquisitive prescription may apply if statutory requisites are met (true, adverse, public, continuous possession for the full period). Even then, bad faith can defeat claims or expand damages.

3) Criminal exposure

Criminal liability is not automatic for merely building without permission. It depends on how possession was obtained and the means used.

Occupation of Real Property or Usurpation of Real Rights (Revised Penal Code, generally when violence or intimidation is employed). Entering/holding land by force or threats can lead to imprisonment and fines.
Altering boundaries or landmarks is punishable. Builders who quietly move a mojon (boundary marker) to justify a larger footprint risk criminal charges.
Fraud-based offenses (other forms of swindling) may attach if deceit is used to obtain or maintain possession.
Malicious mischief may apply where there is damage to property.
Trespass to dwelling covers residences; open land is treated differently, so prosecutors lean on the specific property offenses above or local ordinances.

Key point: If entry or continued occupation involves threats, coercion, or violence, criminal liability becomes a frontline risk, on top of civil consequences.

4) Administrative and regulatory penalties

a) National Building Code (PD 1096) and local ordinances

No building permit = stop-work orders, fines, and demolition. Building officials can issue Notices of Violation and Orders of Demolition for structures built without permit or contrary to zoning.
A permit typically requires proof of ownership or authority (e.g., owner’s consent, lease, or SPA). Building on land you don’t own often means you cannot lawfully secure a permit, so the work proceeds illegally.
LGUs may impose administrative fines, padlock sites, and coordinate with police for demolition following due process.

b) Zoning and locational clearances

Local zoning boards and planning offices can deny or revoke locational clearances where the applicant lacks ownership/authority, or where the structure violates the Comprehensive Land Use Plan (CLUP) or zoning ordinance. Revocation often precedes enforcement and demolition.

c) Urban housing and demolition rules

The Urban Development and Housing Act (UDHA) sets procedural safeguards for evictions and demolitions (e.g., adequate written notice, consultation, presence of proper authorities, and, in certain cases, relocation assistance).
The UDHA also penalizes professional squatters and squatting syndicates—those who profit from organized illegal occupations or own land but squat elsewhere—with criminal sanctions. Individual poverty-driven occupation is treated differently from for-profit squatting, but unauthorized building remains removable and may carry civil liability.

d) Special regimes (public, protected, or ancestral domains)

Government land: expect stricter enforcement; illegal occupants can face administrative eviction and separate criminal counts where statutes penalize unauthorized occupation.
Protected areas/foreshore: environmental and coastal laws carry fines, criminal penalties, and demolition.
Ancestral domains: building without free and prior informed consent of Indigenous Cultural Communities may lead to administrative and criminal liability, plus removal.

5) Typical penalty package in real cases

Immediate civil exposure
- Ejectment (summary removal) or ordinary actions recovering possession/ownership.
- Demolition at the builder’s expense if in bad faith or if the owner chooses removal under Article 450.
- Back rentals/fruits (reasonable compensation for use), damages for delay, and attorney’s fees.
- Loss of the structure without payment if the owner appropriates under Article 449 due to the builder’s bad faith.
Administrative hits
- Stop-work order, fines, and permit denial/revocation.
- Demolition under PD 1096 and local ordinances following due process.
Criminal risk
- If violence/intimidation or tampering with boundaries occurred.
- If organized/profiteering conduct exists (squatting syndicates), UDHA penalties may apply.

6) What counts as “good faith” (and how it is lost)

Good faith means honest belief that you had a right to build—e.g., reliance on a deed, lease, SPA, or a survey that reasonably appeared correct.
Bad faith is knowledge of another’s superior right (e.g., you saw the title or were warned) yet you proceeded, or you built after service of demand or after suit commenced.
A builder might start in good faith but slip into bad faith upon receiving formal notice that the land is another’s and continuing the work anyway.

7) Encroachment strips and boundary mistakes

Small encroachments (e.g., a wall intruding by 0.50 meter) are not trivial under Philippine law. Even minor intrusions can lead to mandatory removal if the owner invokes Article 450 (builder in bad faith) or if courts deem removal more equitable than forced sale. Where both parties acted in good faith and the land is negligible compared to the improvement, courts sometimes favor indemnity over demolition to avoid waste—but owners remain empowered to insist on strict property lines, especially with a Torrens title.

8) Commercial vs. residential context

Commercial builders are held to a higher standard of diligence (due diligence on title, burdens, rights-of-way, and surveys). Courts are more willing to find bad faith if a developer ignored red flags in due diligence or proceeded despite a pending adverse claim.
Residential/self-help construction may receive some equitable leeway on timelines to vacate or set-offs, but liability structure is the same.

9) Government projects and eminent domain

If the builder is a government agency or contractor acting within expropriation or right-of-way proceedings, different rules apply: courts focus on just compensation and due process, not Article 448. Private builders cannot cloak themselves with this shield.

10) Practical playbooks

For landowners (to stop or unwind an unauthorized build)

Title & survey: Gather certified title copies and commission a relocation survey to prove encroachment.
Prompt written demand: Put the builder on notice (this can affect good/bad faith analysis).
File ejectment quickly if within one year; otherwise, acción publiciana/reivindicatoria.
Seek injunction/TRO to stop ongoing construction and preserve status quo.
Pursue demolition and damages, including reasonable rentals for use and occupation, and fruits where appropriate.
Leverage administrative avenues: report to LGU/building official for stop-work and permit revocation.

For builders/occupants (to mitigate liability)

Paper your right immediately (owner’s written consent, lease, SPA, or Waiver).
If notified of an adverse claim, stop building and negotiate; continuing risks a finding of bad faith.
If you truly relied on documents, preserve proof (emails, drafts, title verification receipts, surveyor’s report) to support good faith.
Consider buying the strip or paying indemnity where Article 448 would otherwise force demolition or loss of the structure.
For improvements with major sunk costs, explore amicable appropriation by the owner (owner keeps the building, pays value) to cut losses.
Never use force/intimidation—that flips the matter into criminal territory.

11) Damages: how courts typically compute

Indemnity for improvements (if owed): often the current fair value (depreciated replacement cost), not raw receipts.
Reasonable rentals/fruits: benchmarked against market rental rates for similarly situated land, plus legal interest from demand or filing.
Consequential damages: e.g., business interruption (must be proven), cost of demolition/reconstruction, survey and fencing costs, plus attorney’s fees in proper cases.

12) Defenses and edge cases

Consent or tolerance by the owner can blunt claims (but mere silence is risky to rely on).
Estoppel may arise if the owner induced the construction.
Boundary uncertainty: where both parties relied on official surveys later corrected, courts tend to assign good faith and craft equitable outcomes (buy-the-strip or indemnity).
Public easements (riverbanks, road setbacks): even with owner’s consent, building within easement zones can be demolished by authorities.
Corporate acts: builders must show proper board approvals and signing authority; lack of authority can unravel “good faith.”

13) Takeaways (penalties at a glance)

Civil: loss of the structure without payment (if you’re in bad faith and the owner appropriates), demolition at your cost, back rentals/fruits, and damages.
Criminal: liability attaches where there is violence, intimidation, deceit, or boundary tampering; organized/profiteering squatting is also penalized.
Administrative: stop-work, fines, permit denial/revocation, and demolition, with special rules in urban housing, protected areas, public land, and ancestral domains.
Strategic truth: Good faith saves value; bad faith multiplies losses.

14) Checklist before you build (or before you sue)

For builders

Certified true copy of the owner’s title (or proof of the State’s authority for public land).
Written authority to occupy and build (lease, SPA, consent).
Relocation survey tying boundaries to the title.
Building permit + zoning clearance.
Neighborhood/HOA and easement clearances if applicable.

For owners

Relocation survey confirming encroachment.
Demand letter to establish bad faith and start rentals/fruits clock.
Ejectment or ordinary action (with injunction) depending on timing.
Administrative complaint with LGU/building official.
Motion for demolition (post-judgment) if removal is chosen.

Final note

This article distills the dominant rules and remedies that Philippine courts and regulators apply when someone builds on land they do not own. Specific outcomes turn on facts—especially good vs. bad faith, registration status, surveys, notices, and conduct during dispute. When the stakes are high (e.g., substantial improvements or commercial projects), treat survey control, paper authority, and permit compliance as non-negotiables—and if conflict arises, act promptly to preserve rights and manage penalties.