Builder as a Person Claiming to be Owner and Builder as a Leasehold Tenant (Art. 448 and 1678, NCC)
- ADS
- Apr 24, 2020
- 3 min read
In the current state of Philippine demographics and urban planning where a booming population becomes a norm, the search for solving the problem in land scarcity proves to be quite inevitable. The current trend to solve this problem is to offset the rising population’s need of land not through horizontal occupation but vertically through high rise condominium buildings. Lease, on the other hand, becomes the usual avenue for people to temporarily occupy land not of their own.
The need to occupy and possess property may come in different forms and each having its own designated legal rules. For example, the claim of a person believing himself to be the rightful owner of a land has its own designation under the law (Title II - Ownership under the New Civil Code) and consequences different from a person claiming a right under a leasehold contract (Title VIII – Lease under the New Civil Code). More often than not, tenants covered by this contract recognize and is well-aware that the law protects them when conflicts arise. In Lease, it is a basic tenet that a lessee may set up even as against the lessor the possession of the land during the validity of the agreed period as provided in the Lease agreement. Building infrastructures or introduction of improvements by the tenants in the premises draws conflict especially when it involves a huge amount.
When a person builds in good faith on the land of another, the applicable provision is Article 448 of the New Civil Code, which reads:
“Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.” [Underscoring supplied]
This provision, however, is oftentimes wrongly used by tenants in claiming reimbursements for the improvements they introduced in the land. The Supreme Court has ruled in a number of cases that Article 448 only applies if the builders, sowers or planters believe themselves to be owners of the land or, at least, to have a claim of title thereto. [1]
Rather than claiming indemnity for the improvements introduced, the law on Lease provides that the owner of the land has the right of choice with respect to the issue on reimbursements. The provision under Article 1678 of the New Civil Code states:
“Article 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.” [Underscoring supplied]
Clearly, the effects of the two provisions when applied are different. In a contract of lease, the favorable scenario would be that the lessee will be reimbursed one half (1/2) of the value of the improvements, subject to the condition that the lessor is open to reimbursement, otherwise, the lessee cannot claim anything. The rule may be unjust but the reason is simple: the land is not his.
____________________
[1] Pada-Kilario v. Court of Appeals, 379 Phil. 515, 530, January 19, 2000; Chua v. Court of Appeals, 361 Phil. 308, 318, January 21, 1999; Balucanag v. Francisco, 207 Phil. 433, 438; Floreza v. Evangelista, 96 SCRA 130, 136, February 21, 1980; Quemuel v. Olaes, 111 Phil. 797, April 29, 1961; Alburo v. Villanueva, 7 Phil. 277, 280, January 2, 1907.
Comments