1) The core idea: “accession” and why it matters

Philippine property law follows the principle of accession: what is built, planted, or sown on land generally “attaches” to the land. But the law also protects fairness when the improvement was introduced by someone who honestly believed they had the right to do so.

When a person builds a structure on land that actually belongs to another, the outcome depends mainly on good faith or bad faith of the parties and is governed primarily by the Civil Code provisions on accession (especially the rules on a builder/planter/sower and the landowner).

In practice, these cases usually involve:

boundary mistakes,
buying land under a defective title,
relying on an invalid deed or authority,
building with the belief that the land was one’s own (or that one was authorized).

2) Key definitions (these decide almost everything)

A. Builder / Planter / Sower

A builder introduces a building or structure. A planter introduces trees or perennial plants. A sower introduces crops or seedlings.

The rules are broadly similar for all three, but buildings trigger the most litigation because they are expensive and often immovable.

B. Good faith (builder in good faith)

A builder in good faith is one who honestly believes they own the land or have a lawful right to build on it, and is unaware of any defect in their title or authority.

Good faith is usually linked to:

possession with a claim of ownership,
a colorable title or document,
a genuine boundary mistake,
reliance on representations that appear legitimate.

Good faith is not a mere claim; it is assessed from facts showing an honest, reasonable belief.

C. Bad faith

A party is in bad faith if they know they have no right (or strongly suspect they have no right) and proceed anyway, or they ignore clear warnings (e.g., notices, demands to stop, visible boundary markers, known title of another).

D. Presumption and burden

In civil law, good faith is generally presumed, and bad faith must be proven by the party alleging it. Evidence matters: letters, surveys, titles, demand notices, admissions, prior disputes, and conduct.

3) The main rule when the builder is in good faith (and the landowner is also in good faith)

This is the classic scenario:

You are the landowner,
Someone else built on your land,
The builder genuinely believed they had the right to build.

Landowner’s options (the landowner chooses)

The law gives the landowner the election between two principal remedies:

Option 1: Appropriate (keep) the improvement

The landowner may keep the building/planting—but must pay indemnity (compensation) to the builder in good faith.

What must be paid is governed by the rules on reimbursement of useful and necessary expenses:

Necessary expenses: to preserve the property (e.g., repairs essential to prevent deterioration).
Useful expenses: that increase value or productivity (e.g., a building that raises the land’s value).

For buildings, indemnity usually corresponds to the value of the improvement (often proved by appraisal, receipts, engineer’s estimates, or market valuation). Courts commonly use evidence of current value or reasonable cost/value increase, depending on the facts and claims.

Option 2: Compel the builder to buy the land (forced sale), with an important exception

The landowner may require the builder in good faith to purchase the portion of land occupied by the building at a reasonable price.

Exception (critical): if the value of the land is considerably more than the value of the building, the landowner cannot force the builder to buy the land. In that situation, instead of a forced sale:

the builder must pay reasonable rent if they remain, under terms fixed by agreement or by the court,
and the relationship becomes similar to a lease/compensation arrangement until the matter is resolved (often with court-determined rent).

Practical meaning: the law avoids an oppressive result where a modest structure would force the builder to buy very valuable land.

4) Builder’s powerful protection: right of retention

A builder in good faith typically enjoys a right of retention: the right to remain in possession of the portion affected until fully paid the required indemnity (when the landowner chooses to appropriate).

This is a major leverage point:

The landowner cannot simply take the building and eject the builder without paying if the law requires indemnity.
Courts may require payment first, or secure the amount, before turnover.

However, retention is not a license to waste, expand, or worsen the dispute. Courts can regulate possession, require accounting, and prevent further construction.

5) What “indemnity” can include (and what it usually does not)

Common inclusions

Value of the building or improvement (proved by appraisal/engineering estimates)
Reimbursement of necessary and useful expenses
Sometimes, documented improvements that increased land value

Common exclusions or limits

Luxury expenses (purely ornamental) are treated differently: reimbursement is limited and removal may be allowed if it can be done without damage.
Lost profits are not automatic; they require proof and a legal basis (often tied to damages, bad faith, or specific claims).

Evidence that matters

building permits, receipts, contractor bills, progress photos
tax declarations (helpful but not conclusive)
valuation by licensed appraisers/engineers
proof of when construction happened and under what belief/authority

6) Boundary overlap cases (partial encroachment)

Many disputes involve a structure partly encroaching. Courts may:

apply the same accession rules to the encroaching portion,
order segregation (if feasible) and valuation of the affected area,
fix compensation/rent proportionally.

In practice, a relocation survey by a geodetic engineer is often decisive.

7) When the builder is in bad faith (and the landowner is in good faith)

If the builder knew the land was not theirs (or they were warned and continued), the law is far less protective.

Typical consequences:

The landowner may demand removal/demolition at the builder’s expense, plus damages, or
The landowner may appropriate what was built without paying indemnity, and still claim damages (depending on circumstances and proof).

Bad faith is heavily fact-driven. Continued construction after formal demand to stop is frequently treated as strong evidence of bad faith.

8) When the landowner is in bad faith and the builder is in good faith

This arises when the landowner:

stood by and allowed construction despite knowing it was on their land,
encouraged it, misled the builder, or acted in a way that made the builder reasonably believe they had the right.

In this scenario, the law tends to protect the builder more strongly. Typical outcomes include:

stronger entitlement to reimbursement and damages against the landowner,
limitation on the landowner’s ability to choose oppressive options,
and continued recognition of the builder’s retention rights until payment.

Courts scrutinize landowner conduct: silence alone is not always bad faith, but silence coupled with knowledge and circumstances where fairness required objection can be.

9) When both parties are in bad faith

When both acted in bad faith, the Civil Code approach generally treats them as if both were in good faith for purposes of accession, without prejudice to liability for damages due to bad faith.

This prevents either party from profiting from wrongdoing while still providing a workable property solution.

10) Materials owned by someone else (third-party materials)

Sometimes the builder used materials that belonged to another person (e.g., stolen lumber, unpaid supplier issues). Separate rules determine whether:

the landowner who appropriates must pay for materials,
the true owner of the materials can claim value,
the builder is liable to the material owner.

These issues can become triangular disputes (landowner vs builder vs supplier/owner of materials) and are handled under the Civil Code’s provisions on ownership of materials and accession.

11) Interaction with “possessors in good faith” and expenses

Apart from the specific builder/landowner accession rules, the Civil Code also has broader rules on possessors in good faith—especially regarding:

reimbursement for necessary and useful expenses,
rights to fruits (income) before knowledge of the defect,
and obligations after possession becomes in bad faith.

These general rules often supplement accession disputes, especially where:

the builder also possessed and benefited from the land,
fruits (rentals, harvest, income) are at issue,
the good faith period ended at a specific time (e.g., upon receipt of demand letter).

A common court approach is to identify:

when good faith ended (often upon notice),
then compute consequences before and after that date (rentals, damages, accounting).

12) Remedies and typical cases filed (how disputes are actually litigated)

A. If you are the landowner

Common legal actions and objectives:

Accion reivindicatoria (recovery of ownership) or similar actions to assert title and recover possession
Accion publiciana (recovery of better right to possess) depending on possession details
Forcible entry / unlawful detainer (summary ejectment) only if the facts fit the strict requirements and time rules
Quieting of title if conflicting claims exist

But even if ownership is clear, courts will usually still address the accession consequences: indemnity, forced sale vs rent, retention, removal, and valuation.

B. If you are the builder

Typical defenses and counterclaims:

assertion of good faith
demand for indemnity if landowner appropriates
invocation of the right of retention
opposition to demolition/removal if good faith is established
request for forced sale or court-determined rent, depending on valuation and legal posture

C. Surveys and technical evidence are often decisive

relocation survey
area computation of encroached portion
valuation reports for land and improvement

13) How courts usually structure judgments

A typical decision in a builder-in-good-faith case will:

Declare ownership of the land (who truly owns it)
Determine good faith/bad faith (builder and landowner)
Require the landowner to choose between appropriation (with payment) or compelled sale (subject to exception)
Set valuation procedures: appoint commissioners, require appraisals, or hold hearings
Fix amounts: indemnity, purchase price, or rent
Recognize retention until payment (if applicable)
Provide timelines and consequences of noncompliance (e.g., payment schedule, turnover, sheriff implementation)

14) Common misconceptions (that cause expensive mistakes)

“The landowner automatically owns the building without paying anything.”

Not if the builder is in good faith and the law requires indemnity.

“The builder automatically gets to buy the land.”

The landowner generally chooses, and forced sale can be blocked when land value is considerably higher than the building.

“Good faith is whatever the builder claims.”

Good faith is measured by conduct and knowledge. Titles, surveys, written notices, and behavior during construction matter.

“Once demanded to stop, continuing construction has no effect.”

Continuing after notice is often treated as evidence that good faith ended (or never existed), changing liabilities dramatically.

15) Practical framework for analyzing any case

To assess rights and likely outcomes, the decisive questions are:

Who owns the land? (title, survey, boundaries)
Where exactly is the structure? (relocation survey, encroached area)
What did the builder believe, and was it reasonable? (documents, authority, boundary basis)
When did the builder learn of the defect? (demand letter, notices, meetings)
How do the values compare?
- value of land portion affected
- value of the building/improvement
What remedy is legally allowed and equitable?
- appropriation + indemnity
- compelled sale (or rent if exception applies)
- removal/demolition + damages (if bad faith)

16) The bottom line (Philippine rule-set in one view)

If builder is in good faith (classic case)

Landowner chooses:
- Keep the building → must pay indemnity, builder may retain until paid; or
- Require builder to buy the land, unless land value is considerably more than building → then rent instead.

If builder is in bad faith

Landowner can typically demand removal at builder’s expense and/or appropriate without indemnity, with possible damages.

If landowner is in bad faith (builder in good faith)

Builder’s protection strengthens: reimbursement and possibly damages; landowner’s options constrained by fairness.

If both in bad faith

Treated largely as if both in good faith for accession outcomes, without prejudice to damages due to bad faith.

17) Why this area is “fact-heavy”

The Civil Code gives structured options, but good faith, timing of notice, comparative valuation, and conduct of both sides determine:

whether forced sale is allowed,
whether rent applies,
whether demolition is available,
how much indemnity is owed,
and whether damages are awarded.

That is why these disputes often turn less on slogans (“it’s my land!”) and more on surveys, documents, notices, and valuations.