Owner of land has two options against builder in good faith

Construction on your land by builder in good faith? What to do?

The facts are governed by Article 448 of the New Civil Code of the Philippines, which provides that:

"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."

The aforecited law was explained by the high court in the case entitled Spouses Espinoza v. Spouses Mayandoc, GR 211170, July 3, 2017, where the Supreme Court, through Chief Justice Diosdado Peralta, stated:

"As such, Article 448 of the Civil Code must be applied. It applies when the builder believes 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 a claim of title thereto. In Tuatzs v. Spouses Escol et al., this Court ruled that the seller (the owner of the land) has two options under Article 448:

(1) he may appropriate the improvements for himself after reimbursing the buyer (the builder in good faith) the necessary and useful expenses under Articles 546 and 548 of the Civil Code; or

(2) he may sell the land to the buyer, unless its value is considerably more than that of the improvements, in which case, the buyer shall pay reasonable rent, thus:

"The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.

"The raison d'etre for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option because his right is older and because, by the principle of accession, he is entitled to the ownership of the accessory thing."

So, as a land owner, you have two options as provided under Article 448 of the New Civil Code, and these are: acquire the improvements after payment of proper indemnity, or oblige your neighbor to pay for the land.

However, one cannot compel the builder to buy the occupied portion, so he/she may pay instead a reasonable rent.

Source: Manila Times

Residential prices expected to rise 2.2% annually through 2026

Residential real estate prices in Metro Manila are projected to increase by 2.2% annually through 2026, reflecting a “flattish recovery” amid the exit of Philippine Offshore Gaming Operators (POGOs), according to Colliers Philippines.

“Prices are likely to revert to pre-pandemic levels in the third quarter of 2029,” Joey Roi Bondoc, director and head of Research at Colliers Philippines, said during a briefing on July 31.

The Philippine residential segment will see elevated vacancies as POGOs are set to vacate the country by year-end, according to consulting firms.

Colliers forecasted that rents are set to grow by 1.6% annually from 2024 up to 2026 and will return to pre-pandemic levels in the second quarter of 2028.

“The growth of residential real estate loans is slowing down. From 2017 to 2019, which was a peak period for residential demand across the Philippines, especially in Metro Manila, demand was partly influenced by POGO demand,” Mr. Bondoc said.

President Ferdinand R. Marcos, Jr. has ordered a total ban on all POGOs due to their ties to illicit activities such as financial scams, money laundering, prostitution, and human trafficking.

Metro Manila central business districts currently have 159,000 condominium units as of the second quarter of 2024.

“Currently, vacancy is at 17.7%. With POGO demand, we’re likely to see that inching up to 25.4% by the end of 2024,” Mr. Bondoc said.

The Metro Manila vacancy rate will reach 24.9% in 2025, he said.

He added that for the Bay Area, where POGO employees and residents are mostly concentrated, vacancy is expected to surge to 55% from the current 28% without POGOs by the end of the year, and 53% in 2025.

Meanwhile, Leechiu Property Consultants, Inc. Founder and Chief Executive Officer David Leechiu said the residential sector’s high-end condominium market will continue to be resilient, but the middle market “will be hurt badly.”

He added that the middle market condominium will become cheaper to rent and will fall even faster and deeper than the office segment.

“I think what used to rent for P600 per square meter will very soon be renting for P300 or P250 per square meter in residential,” Mr. Leechiu said.

POGOs will vacate a million square meters of residential space, he said.

“I think a lot of the consumer sector will also be impacted because these POGOs employ thousands of Filipinos that are local that have to submit their recordings, and then, now, it’s going to be harder,” he added. 

Source: Business World

July inflation accelerates to 4.4%

Headline inflation in July reached its highest rate in nine months, driven by higher price increases in housing, water, electricity, gas and other fuels, transport items, and food and non-alcoholic beverages, the Philippine Statistics Authority (PSA) reported.

Preliminary data from the agency showed the consumer price index grew by 4.4 percent year on year in July, accelerating from the 3.7 percent in June, but slower than 4.7 percent in the same period last year.

This is within the 4 to 4.8 percent forecast of the Bangko Sentral ng Pilipinas (BSP) for the month, however, it was higher than the 4 percent average inflation forecast in an Inquirer poll of 11 economists conducted last week.

Inflation print in July marked the fastest growth in nine months or since the 4.9 percent logged in October 2023.

This marked the first time that the inflation breached the central bank’s 2 to 4 percent target range for the year.

For the first seven months, inflation averaged 3.7percent, still lower from the 6.8 percent in July 2023.

Source: Inquirer