Short answer. When both parties were in bad faith, Article 453 of the Civil Code treats them as if both had acted in good faith. The harsh penalties that apply to a bad-faith builder alone — loss of everything built without any reimbursement — do not apply when the landowner was equally complicit. Their rights are governed by the good-faith rules instead.
What the law says
If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part.
Civil Code, Article 453 — Bad Faith on Both Sides. Read the full provision →
The rule: mutual bad faith is treated as mutual good faith
Article 453 applies a principle of symmetry. When a builder constructs on another's land knowing it is not theirs, the usual rule strips the builder of everything built and gives it to the landowner without compensation. But if the landowner also acted in bad faith — knew the building was happening and did not object — the law levels the playing field. Article 453 states: "the rights of one and the other shall be the same as though both had acted in good faith." The good-faith rules, which are more balanced, then govern the relationship.
When is the landowner in bad faith
Article 453 defines this precisely: "It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part." Two elements are required: the landowner must have known the building was taking place, and the landowner must not have objected to it. Silent acquiescence, watching construction proceed without raising the issue, is treated as bad faith. A landowner who was absent and genuinely unaware of the construction is not in bad faith under this provision.
What the good-faith rules give the builder
Under the good-faith framework, the builder does not simply lose everything. The landowner has options: appropriate the improvements by paying the builder the necessary and useful expenses, or require the builder to buy the land at a fair price if the builder cannot be required to remove the structure. The builder may also have a right of retention until reimbursed for useful improvements. This is materially better than the bad-faith builder's position — where the landowner takes the structure for free and may also seek damages and demolition.
Practical implications
If you are a landowner who watched construction take place on your land and did not formally object, you may not be able to invoke the harsh bad-faith builder penalties. The builder can argue that your silence constituted knowledge and acquiescence, triggering Article 453 and the good-faith framework. Conversely, if you are a builder facing claims based on bad faith, establishing that the landowner knew and did not object may significantly improve your legal position. In either case, documenting what was known by whom and when — through communications, permits, neighbour accounts, or photographs — is critical.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Onesimo Agapito vs. Marilyn F. Agapito, G.R. No. 255157, July 4, 2022 — read the decision on LawPhil →
- Pen Development Corporation and Las Brisas Resort Corporation vs. Martinez Leyba, Inc, G.R. No. 211845, August 9, 2017 — read the decision on LawPhil →
- Erlinda Dinglasan Delos Santos and her daughters, namely, Virginia, Aurea, and Bingbing all surnamed Delos Santos vs. Alberto Abejon and the estate of Teresita Dinglasan Abejon, G.R. No. 215820, March 20, 2017 — read the decision on LawPhil →
- Bank of the Philippine Islands vs. Vicente Victor C. Sanchez, et al./Generoso Tulagan, et al. vs. Vicente Victor C. Sanchez, et al./Reynaldo V. Maniwang vs. Vicente C. Sanchez and Felisa Garcia Yap, G.R. No. 179518 / G.R. No. 179835 / G.R. No. 179954, November 19, 2014 — read the decision on LawPhil →