Short answer. Yes. Article 546 refunds necessary expenses to every possessor, in good faith or bad — essential repairs that preserved the property are recoverable regardless of good faith. What the bad-faith possessor loses is the right to retain the property until paid, and any refund for useful expenses, which go only to the good-faith possessor.
What the law says
Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.
Civil Code, Article 546 — Necessary and Useful Expenses. Read the full provision →
What the law says
Useful expenses shall be refunded only to the possessor in good faith
Civil Code, Article 546 — Necessary and Useful Expenses. Read the full provision →
Necessary expenses are refunded to everyone
Bad faith does not forfeit everything. Article 546 opens with a rule that applies across the board: necessary expenses shall be refunded to every possessor. "Every possessor" means exactly that — the possessor in good faith and the possessor in bad faith alike. The reasoning is that necessary expenses preserve the property the owner is getting back; had the possessor not paid them, the owner would have had to. Letting the owner recover the property in its preserved state while keeping the money that preserved it would enrich him unjustly, so the law refunds those costs whatever the possessor's good or bad faith.
What counts as a necessary expense
The category is narrower than "anything spent on the property." Necessary expenses are those required to keep the property in being and prevent its deterioration — essential repairs, the assessments that stop it being lost for non-payment. They are not improvements that merely make the property better or more valuable; those are useful expenses, governed by a different rule. Classifying an outlay correctly is what decides whether a bad-faith possessor recovers it at all, because the refund he keeps is confined to spending that genuinely preserved the thing, not spending that enhanced it.
What bad faith does cost: retention
The refund comes without the leverage a good-faith possessor enjoys. The article continues that only the possessor in good faith may retain the thing until he has been reimbursed. The bad-faith possessor is entitled to his necessary expenses, but he cannot hold on to the property as security for payment — he must surrender it and pursue the refund separately. Retention is the good-faith possessor's advantage; the bad-faith possessor gets the money in principle but loses the practical grip that would let him withhold the property until the owner pays.
Useful expenses are another matter
The line hardens when it comes to improvements. Under Article 546, useful expenses shall be refunded only to the possessor in good faith. A bad-faith possessor who spent to increase the property's value recovers nothing for it under this article — no reimbursement of the cost and no share of the added value. So a possessor in bad faith should not assume that money sunk into the property comes back; only what was truly necessary to preserve it does, and even that without the right to retain. Distinguishing preservation from improvement is where the whole outcome turns.
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 →
- Henry L. Sia vs. Court of Appeals, et al, G.R. No. 108222, May 5, 1997 — read the decision on LawPhil →
- Sulo sa Nayon, Inc. and/or Philippine Village Hotel, Inc. et al. vs. Nayong Filipino Foundation, G.R. No. 170923, January 20, 2009 — read the decision on LawPhil →
- Republic of the Philippines vs. Heirs of Eriberto Ontiveros, G.R. No. 241507, December 7,2022 — read the decision on LawPhil →