What is BPS?
BPS is the shorthand used by law students, Bar takers, and legal learners to refer to the rules on the Right of Accession with Respect to Immovable Property under the Civil Code. It stands for Builder, Planter, Sower, or Building, Planting, Sowing—the types of improvements that may be introduced on immovable property, usually land.
These rules govern the legal consequences when one person builds, plants, or sows on land owned by another. They determine the respective rights and obligations of the parties involved.
Let’s put it in context
The right of accession entitles the owner of a thing to also own its fruits (accession discreta) and any additions or improvements made to it (accession continua). Accession industrial is a specific form of accession continua concerning immovable property, where anything artificially and inseparably attached or incorporated into the property becomes part of it, and thus belongs to the owner of the principal thing.
In accession industrial, the general rule is that any artificial improvement inseparably attached to an immovable property belongs to its owner. However, if another person builds, plants, or sows on the land of another, they incur expenses that may give rise to legal remedies, especially when either or both parties acted in good faith.
The remedies available depend primarily on whether the parties acted in good or bad faith. The type and nature of the improvements also play a role in determining the appropriate remedy.
The right of accession with respect to immovable property is governed by Articles 445 to 465 of the New Civil Code.
What is “good faith”?
For the builder, et al., good faith means:
(1) the belief that they have the right to use the materials or to build, plant, or sow on another’s land; and
(2) that knowledge of the lack of such right was acquired only after the improvements were completed.
Such belief must be based on a just title or claim to the property, where the possessor believes they acquired it from the rightful owner and has no knowledge of any flaw or defect in the title that would invalidate it.
For the landowner, good faith means:
(1) promptly objecting to the construction of improvements upon learning of it; and
(2) doing so before the improvements are completed.
Conversely, bad faith arises when any of these elements are lacking on the part of the builder, et al., or the landowner.
When do the BPS rules not apply?
The BPS rules do not apply in situations governed by:
(1) other provisions of the New Civil Code,
(2) special laws, or
(3) contractual stipulations.
Examples:
- Pacto de retro sales, governed by Articles 1606 and 1616 of the Civil Code [1];
- Lease, governed by Article 1678 of the Civil Code [1];
- Condominium ownership, governed by the Condominium Act, the Master Deed of Restrictions, and the By-laws of the Condominium Corporation [2];
- A unit owner’s exclusive ownership is limited to the interior of his unit.
- Areas outside the unit—such as the land, common areas, and airspace—are owned collectively through the Condominium Corporation.
- Thus, construction by a unit owner on the roof deck is improper, as the airspace is not privately owned.
- In such cases, the unit owner is not considered a builder in good faith, and the rules on industrial accession do not apply.
- Co-owned property, governed by Articles 484 to 501 of the Civil Code.
Exception: If, after partition, it is discovered that a co-owner’s structure encroached on a portion adjudicated to another, the rules may be relevant.
Who are the parties involved under the BPS rules?
To better understand the BPS rules, it’s important to identify the key parties involved:
(1) Material Owner (MO) – the person who owns the materials used in the building, planting, or sowing (BPS);
(2) Builder, Planter, or Sower (BPSr) – the one who builds, plants, or sows on land belonging to another;
(3) Landowner (LO) – the person who owns or has rightful possession of the land.
What are the different situations covered by the BPS rules?
The BPS rules cover the following situations:
(1) The LO BPS on his own land using the materials of the MO;
(2) The BPSr BPS on the land of the LO using his own materials; and
(3) The BPSr BPS on the land of the LO using the materials of the MO.
So what are the rules?
[1] If the LO BPS on his own land using the materials of the MO:
If both acted in good faith, or both acted in bad faith:
(a) the LO must appropriate the materials and indemnify the MO;
(b) the MO may remove only when no injury will result to the improvements (note: there is no real accession here since the improvement is still separable from the land)
If the LO acted in good faith, and the MO acted in bad faith:
(a) the MO loses the materials without indemnity;
(b) the MO is liable for damages.
If the LO acted in bad faith, and the MO acted in good faith:
The MO may choose either:
(a) indemnification, or
(b) removal at the expense of LO, even though removal may cause injury to the improvements;
(c) the LO is liable for damages
[2] If the BPSr BPS on the land of the LO using his own materials:
If both acted in good faith, or both acted in bad faith:
(a) the LO has primary right to appropriate the BPS upon indemnifying the BPSr;
(b) the LO may compel BPr to purchase the land if its value is not considerably more than the value of the BPS, or lease the same if otherwise;
(c) the LO may compel Sr to lease the land.
If the LO acted in good faith, and the BPS acted in bad faith:
(a) the LO may appropriate the BPS, including fruits, without need to indemnify the BPSr;
(b) the LO may compel BPr to purchase the land, even if its value is considerably more than the value of the improvements;
(c) the LO may compel Sr to lease the land;
(d) the LO may demand demolition of the building, and removal of planting or sowing at the expense of BPSr; and
(d) the BPSr is liable for damages.
If the LO acted in bad faith, and the BPS acted in good faith:
The BPSr may choose:
(a) indemnification for materials and reasonable compensation for labor; or
(b) removal of the improvements at the expense of LO, even though removal may cause injury to the land;
(c) the LO is liable for damages.
[3] If the BPSr BPS on the land of the LO using the materials of the MO:
If both MO and BPSr acted in good faith
(a) if the BPSr paid for the materials, the LO has the same rights against BPSr as if the BPSr used his own materials;
(b) if BPSr is insolvent or unable to pay for the materials, the LO may appropriate the BPS and indemnify the BPSr for the cost of labor, and the MO for the cost of materials.
If the MO acted in good faith, and the BPS acted in bad faith:
(a) if the BPSr paid for the materials, the LO has the same rights against BPSr as if the BPSr used his own materials;
(b) if BPSr is insolvent or unable to pay for the materials, the LO may appropriate the BPS and indemnify MO for the cost of materials;
(c) the BPSr is not entitled to indemnification for the cost of labor;
(d) the BPSr is liable for damages.
If the MO acted in bad faith, and the BPS acted in good faith:
(a) if the BPSr paid for the materials, the LO has the same rights against BPSr as if the BPSr used his own materials;
(b) if BPSr is insolvent or unable to pay for the materials, the LO may appropriate the BPS and indemnify BPSr for the cost of labor;
(c) the MO is not entitled to indemnification for the cost of materials;
(d) the MO is liable for damages.
If both MO and BPSr acted in bad faith
(a) the LO may appropriate the BPS, without need to indemnify the BPSr for the cost of labor, and the MO for the cost of materials;
(b) the BPSr and MO are liable for damages.
The bottom line? BPS rules fill in the gaps, but only if no other law or contract applies. Know the parties, spot the situation, and apply the right rule!