Short answer. The bad faith on both sides cancels out. The Civil Code treats the rights of the builder and the landowner as though both had acted in good faith, once it is shown that you, as landowner, also knew about the construction and did not oppose it. Neither side's bad faith gives them an advantage over the other.
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.
Civil Code, Article 453 — Bad Faith on Both Sides. Read the full provision →
Mutual bad faith is treated as mutual good faith
Article 453 sets out a striking rule: where bad faith exists on the part of both the builder and the landowner, the law does not simply stack two wrongs against each other or try to figure out whose bad faith was worse. Instead, it resets the relationship entirely — the rights of one and the other shall be the same as though both had acted in good faith. The parties are placed back into the more balanced set of rules that would apply if neither had known anything was wrong.
What counts as bad faith on the landowner's side
The article defines this precisely so it is not left to guesswork: there is bad faith on the landowner's part whenever the act was done with his knowledge and without opposition on his part. In other words, if you knew the construction was happening on your land and did nothing to object to it while it was underway, that silence is treated as bad faith for purposes of this article — you do not need to have actively encouraged the builder for your own bad faith to be established.
Why this matters for how the dispute gets resolved
Because both sides are placed on equal footing, this rule takes away whatever advantage either party might otherwise have gained from the other's bad faith. A landowner cannot benefit from a builder's improper construction simply because the builder knew better, if the landowner's own silence in the face of that construction amounted to bad faith as well. The dispute over the improvements then proceeds under the same general framework that governs an ordinary good-faith building situation.
What to establish about your own conduct
The key fact to pin down is timing and knowledge on both sides: when the builder started construction, when you as landowner became aware of it, and whether you raised any objection at that point or simply let it continue. If you can show you objected promptly once you learned of the construction, your own conduct may not amount to bad faith under this article's definition, which could change how the dispute is resolved. Gather whatever record exists of when you found out and what, if anything, you said or did at the time, and bring it to a lawyer to work through the applicable rules.
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 →