BALDECASA, AILEEN P.

Builder in Good Faith

Article 448, NCC: The owner of the land on which anything has been build, 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
Communities Cagayan v. Nano GR 176791 November 14, 2012

FACTS:
Respondent-spouses Arsenio and Angeles Nanol entered into contract to Sell with petitioner
Communities Cagayan, Inc., whereby the former agreed to sell to respondent-spouses a house
and lot in Camella Homes Subdivision, Cagayan de Oro City. The Respondent-Spouses obtain
a loan from Capitol Development Bank using the property as collateral. The title of the property
were then transferred in the names of the respondent-spouses and submitted to the bank for
loan processing. Unfortunately, the bank collapsed and closed before it could release the loan.
An in-house financing was availed by the respondent-spouses. Few years later, the respondent
demolished the original house and constructed a three-story house. Later the husband died,
leaving the wife to pay for the monthly amortizations.

ISSUE:
Whether or not respondent-spouses are builders in good faith entitled to indemnification for
necessary and useful expenses and/or to buy the land under the provisions of the New Civil
Code.

RULING:
Yes. Article 448 of the Civil Code applies when the builders believe that he is the owner of the
land or that by some title he has the right to build thereon, or that, at least, he has claim of title
thereto. Concededly, this is not present in the instant case. The subject property is covered by a
Contract of Sell hence ownership still remains with petitioner being the seller. Nevertheless,
there were already instances where this Court applied Article 448 even if the builders do not
have a claim of title over the property.

Article 448 applies to the present factual milieu. The established facts of this case show that
respondents fully consented to the improvements introduced by petitioners. In fact, because the
children occupied the lots upon their invitation, the parents certainly knew and approved of the
construction of the improvements introduced thereon. Thus, petitioners may be deemed to have
been in good faith when they built the structures on those lots.