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BOOK II PROPERTY, OWNERSHIP, AND ITS MODIFICATION


Title I. CLASSIFICATION OF PROPERTY
PRELIMINARY PROVISIONS
ARTICLE 414. All things which are or may be the object of appropriation are considered either: (1) (2) Immovable or real property; or Movable or personal property. (333)

1. Introductory Concepts
[1.1] Origin of the Word Property

The word property is derived from the Latin word proprius, meaning belonging to one or ones own.1 Traditionally, therefore, the concept of property extends only to those things which are already possessed and found in the possession of man.2 Hence, in the traditional notion, the concept of property is inseparable from the relation which the object has with the person exercising dominion or right over it. It is in this sense that the concept of property is said to be limited compared to the concept of things, which extends to all objects that exist,3 whether it is already in the possession of man or not.

1 2

Miss. Thompson v. Kreutzer, 72 So. 891, 112 Miss. 165. 2 Falcon 6, 3 Manresa 10, cited in II Tolentino, Civil Code of the Philippines, 1992 ed., II Tolentino, Civil Code of the Philippines, 1992 ed., 2. 1

2.
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[1.2]

Concept of Things

The concept of property (bienes) is intimately related with the concept of things (cosa). It must be noticed that the Civil Code does not dene the term property but simply implies that the concept refers to things which are susceptible of appropriation.4 With the foregoing in mind, it is but proper to begin the discussion of property with the concept of things. There was a time in history when certain persons, called slaves, were considered merely as chattels or things that could be the subject of appropriation. But as human civilization progressed, the practice of slavery has been condemned and eventually eradicated. In the modern world, therefore, distinction is made between persons and things. The former is regarded as the subject or the holder of rights while the latter is its object, although the actions of the former may likewise be the object of rights. Thus, while the human person may not be considered as property, his conduct or acts, to a certain extent, may give rise to enforceable rights in favor of other persons if such act or conduct is considered by law as a source of obligation. Things, therefore, are objects external to man. But the concept of things under the Civil Code is not limited to corporeal objects or to objects that can be perceived by the senses. The concept also extends to those which have only an intellectual or juridical existence (incorporeal objects). Otherwise stated, the concept of things in our Civil Code embraces both material objects and rights. This is clear from the provisions of Articles 414, 415 and 416 of the New Civil Code. To illustrate, in Article 414, the law considers all things susceptible of appropriation as property, which may either be real or personal. In Articles 415 and 416, on the other hand, rights are likewise considered as property. This is exemplied in the provision of paragraph 10 of Article 415 which classies as real property those real rights over immovable property and in the provision of paragraph 1 of Article 417 of the New Civil Code which classies as personal property obligations and actions which have for their object movables or demandable sums.

See Art. 414, NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Preliminary Provisions

[1.3]

Concept of Property under the Civil Code

As discussed in supra 1.1, the traditional notion is that property are those things which are already possessed and found in the possession of man. However, in our Civil Code, the concept of property is not conned to things which are already appropriated or possessed by man but also extends to those susceptible of such appropriation, although not yet appropriated. This is clear from the provisions of Article 414 which classies as property all things which are or may be the object of appropriation. From the viewpoint of the Code, therefore, the terms property and things are identical to each other and may be used interchangeably.5
[1.4] Susceptibility to Appropriation

As mentioned in supra 1.2, the term property under the Civil Code refers to things which are susceptible of appropriation. Hence, even in the juridical sense, not all things may be considered as property. This much is clear from the very provision of Article 414 of the New Civil Code. Pursuant to said article, it is essential that a thing must be susceptible of appropriation before it can be considered as property. Things which cannot, therefore, be subjected to human control by reason of sheer physical impossibility are not considered as property. Examples are the following: (1) Things which, because of their distance, their depth or their immensity are not capable of human control such as the sun, the stars and the ocean, are not properties; (2) Ordinarily, forces of nature such as lightning and rain are not properties because of impossibility of appropriation in their diffused state. However, when they are brought under human control through the help of science, i.e., electricity, they may now be regarded as property.6 For the purpose of classifying things as property, the criterion of susceptibility to appropriation should be distinguished from the concept of things or objects which are outside the commerce of man. While things which are outside the commerce of man may not be the object of

5 6

See II Caguioa, Civil Code of the Philippines, 1966 ed., 3. See Art. 416(3), NCC.

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a contract,7 they are not necessarily disqualied from being considered as property pursuant to the criterion mentioned in Article 414 of the Code. For example, properties of public dominion pertaining to the State, being outside the commerce of man, cannot be the object of contracts. However, they are considered property under the Code.8
[1.5] Additional Requisites

Aside from the criterion of susceptibility to appropriation mentioned in Article 414, most authors in the subject provide for two additional requisites before considering a thing as property: (1) utility, or that it can serve as a means to satisfy human needs; and (2) substantivity or individuality, or that the thing must have an autonomous and separate existence. With respect to the requisite of utility, it is inconceivable at this age to think of a thing which is incapable of satisfying any human need or want. As such, this requirement is of little use in law because almost all things are capable of giving utility to man. The requisite of individuality, on the other hand, need not be spelled out separately for the same is implicitly required in Article 414 of the Code. Thus, to be considered a separate property, a thing must have an autonomous and separate existence and not simply a part of a whole. But if a part is separated from the whole and, while in that state, is capable of satisfying any human need or want, it can then be considered as a separate property. This is the basis, for example, of the rule stated in Article 466 of the New Civil Code which states that whenever two movable things belonging to different owners are, without bad faith, united in such a way that they form a single object, the owner of the principal thing acquires the accessory, indemnifying the former owner thereof for its value. Hence, when a diamond stone is attached to a ring, the ring and the stone constitute a single property since they now form a single object. However, when the stone is removed from the ring it will be regarded as a separate property from the ring to which it has once been attached.

7 8

See Art. 1347, NCC. See Arts. 419 to 425, NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Preliminary Provisions

The same can be said of the different parts of the living human body. While these parts remain attached to the person, they are not considered as property because they are integral parts of the person and the latter is not, in law, considered as thing. However, when a part of the human body, such as hair and teeth, is separated from the person, it may now be considered as property for it now has an autonomous and independent existence. 2. Classication of Property
[2.1] Classication under Book II of the Civil Code

Although there are many classications of property, Book II of the New Civil Code enumerates the more important classications, as follows: (1) Immovable or movable (Arts. 415 to 417); (2) Movables, in turn, are classied into consumable or nonconsumable (Art. 418); (3) From the viewpoint of ownership, property is classied either as property of public dominion or of private ownership (Arts. 419 to 425). It is obvious from Article 414 that the term immovable is used synonymously with the term real property and the term movable is used synonymously with the term personal property.
[2.2] Importance of Classication

The classication of property in Article 414 into immovable (real) and movable (personal) is based on the nature of the thing itself and is the most important in point of law because of the various legal consequences owing therefrom, as follows: [2.2.1] For purposes of applying the rules of acquisitive prescription: The ownership of movables prescribes through uninterrupted possession for four years in good faith or through uninterrupted possession for eight years, without need of any other condition.9 Ownership and other

Art. 1132, NCC.

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real rights over immovable property, on the other hand, are acquired by ordinary prescription through possession of ten years10 or thirty years, without need of title or of good faith.11 [2.2.2] In determining the propriety of the object of the contracts of pledge, chattel mortgage and real estate mortgage: Only movables can be the object of the contracts of pledge and chattel mortgage.12 On the other hand, only immovables can be the object of a real estate mortgage contract.13 As a consequence, should the parties execute a chattel mortgage over a real property, the same is null and void and registration of the instrument in the Registry of Property does not validate it insofar as third parties are concerned.14 [2.2.3] For purposes of determining the formalities of a donation: If the value of the personal property donated exceeds P5,000.00, the donation and the acceptance are required to be in writing; otherwise, the donation is void.15 In order that the donation of an immovable property may be valid, it must be made in a public document, as well as the acceptance thereof.16 [2.2.4] In extrajudicial deposit: Only movable things may be the object of extrajudicial deposit.17 [2.2.5] In crimes of theft, robbery and usurpation: Only personal property can be the object of the crimes of theft and robbery.18 However, the crime of usurpation dened in Article 312 of the Revised Penal Code can be committed only with respect to a real property.

Art. 1134, NCC. Art. 1137, NCC. 12 Arts. 2094 and 2140, NCC. 13 Art. 2124, NCC. 14 Associated Insurance & Surety Co., Inc. v. Iya, 103 Phil. 972 (1958). 15 Art. 748, NCC. 16 Art. 749, NCC. 17 Art. 1966, NCC. 18 Art. 308, RPC.
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PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Immovable Property

[2.2.6] For purposes of determining the venue in remedial law: In the law of procedure, it is important to know the classication of property for purposes of venue. If the action affects title to or possession of real property, or interest therein, the action (referred to as real action) must be led in the proper court wherein the real property involved, or a portion thereof, is situated.19 All other actions (referred to as personal action) may be commenced and tried where the plaintiff or the defendant resides, at the election of the plaintiff.20 ***** Chapter 1 IMMOVABLE PROPERTY
Art. 415. The following are immovable property: (1) Land, buildings, roads and constructions of all kinds adhered to the soil; (2) Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; (3) Everything attached to an immovable in a xed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; (4) Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements; (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; (6) Animal houses, pigeon-houses, beehives, sh ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included;
19 20

Rule 4, Section 1, 1997 Rules of Civil Procedure. Rule 4, Section 2, 1997 Rules of Civil Procedure.

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(7)

Fertilizer actually used on a piece of land;

(8) Mines, quarries and slug dumps, while the matter thereof forms part of the bed, and waters either running or stagnant; (9) Docks and structures which, though oating, are intended by their nature and object to remain at a xed place on a river, lake, or coast; (10) Contracts for public works, and servitudes and other real rights over immovable property. (334a)

3. Immovable Property
[3.1] No Denition under the Code

Article 415 of the New Civil Code does not dene immovable or real property but enumerates what are considered as such.21 This is so because of the difculty of drawing precisely a denition of this term simply because the word is not used in its etymological or grammatical meaning but in its juridical meaning, i.e., the term is applied to many things which, although by nature are personal, are considered by law as real. Consequently, to avoid difculty the law simply goes by way of enumeration.22
[3.2] Kinds of Immovable (Real) Property

Immovable or real property may be reduced to four general classes or kinds, notwithstanding the enumerations in Article 415, to wit: [3.2.1] Immovable by nature those which by their essence and nature are immovable or cannot be moved from one place to another, such as lands and roads in paragraph 1 of Article 415 and mines, quarries and slug dumps in paragraph 8 of Article 415; Immovable by incorporation those which are treated as immovable by reason of their attachment or incorporation to an immovable in such manner as to be an integral part thereof, such as buildings and constructions of all kinds adhered to the soil

[3.2.2]

21 22

Peoples Bank and Trust Co. v. Dahican Lumber Company, 20 SCRA 84, 93 (1967). 3 Manresa, 6th Ed., 16, cited in II Caguioa, Civil Code, 1966 ed., 11.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Immovable Property

mentioned in paragraph 1 of Article 415; trees, plants and growing fruits mentioned in paragraph 2 of Article 415 while they are still attached to the land or form an integral part of an immovable; and those that are attached to an immovable in the manner provided for in paragraph 3 of Article 415; [3.2.3] Immovable by destination those which are essentially movable, but by the purpose for which they have been placed in an immovable, partake of the nature of the latter because of the added utility derived therefrom, such as those mentioned in paragraphs 4, 5, 6, 7 and 9 of Article 415; and Immovable by analogy or by law those that are mentioned in paragraph 10 of Article 415.

[3.2.4]

4. Real Property under Article 415(1) Lands, buildings, roads and constructions of all kinds adhered to the soil (A) Lands and Roads
[4.1] Lands and roads

There is no question that lands and roads are always immovable. By their nature, they are considered as immovable or real property. (B) Buildings
[4.2] Building Is Immovable By Incorporation

A house (or a building) is immovable by incorporation.23 As explained in Bicerra v. Teneza,24 a house (or a building) is classied as immovable property by reason of its adherence to the soil on which it is built. Thus, a building which is merely superimposed on the soil is not a real property.25 When paragraph No. (1) of Article 415 of the New Civil Code classies buildings as immovables, the building referred
Ladera v. CN Hodges, (CA), 48 O.G. 5374, 5379 (1952). 6 SCRA 649, 651 (1962). 25 Bautista v. Supnad, (CA), 59 O.G. 1575 (1962).
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to is that which substantially adheres to the land and not one which is merely superimposed on the soil. In the language of Justice J.B.L. Reyes in Ladera v. CN Hodges,26 the building referred to under the law is a true building or not one merely superimposed on the soil. Since a house or a building is classied as immovable property by reason of its adherence to the soil on which it is built, once the house is demolished it ceases to exist as such and hence its character as an immovable likewise ceases.27
Bicerra v. Teneza 6 SCRA 649 (1962) In this case, the plaintiff led an action before the Court of First Instance (now RTC) of Abra alleging that the defendant forcibly demolished his house and that the materials of the house, after it was dismantled, were placed in the custody of the barrio lieutenant. Plaintiff prayed that he be declared the owner of the house and/or materials and that defendant be ordered to pay him damages in the total sum of P800. The CFI dismissed the action on the ground that the same was within the exclusive original jurisdiction of the Justice of the Peace of Court (now MTC), the action not being a real action. In sustaining the dismissal of the complaint, the Supreme Court explained: A house is classied as immovable property by reason of its adherence to the soil on which it is built (Art. 415, par. 1, Civil Code). This classication holds true regardless of the fact that the house may be situated on land belonging to a different owner. But once the house is demolished, as in this case, it ceases to exist as such and hence its character as an immovable likewise ceases. It should be noted that the complaint here is for recovery of damages. [4.3] Buildings Are Always Immovable

Buildings are always immovable under the Code.28 While there is a holding to the effect that a building which is merely superimposed on the soil or is sold for immediate demolition may be considered as a movable or personal property,29 Justice J.B.L. Reyes claried that the rule that a building is immovable or real property has reference only to a true building or one which is not merely superimposed on the soil.30
Supra, 5380. Bicerra v. Teneza, supra, 651. 28 Punzalan, Jr. v. Vda. de Lacsamana, 121 SCRA 331, 335 (1983). 29 Bautista, et al. v. Supnad, (CA), 59 O.G. 1575, 1578 (1962). 30 Ladera v. C.N. Hodges, et al., (CA), 48 Off. Gaz., 5374, 5380 (1952); cited in Evangelista v. Alto Surety & Ins. Co., Inc., 103 Phil. 401, 404 (1958).
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PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Immovable Property

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Punzalan, Jr. v. Vda. De Lacsamana 121 SCRA 331 (1983) In this case, Punzalan mortgaged with PNB a parcel of land situated in Tarlac which was eventually foreclosed by PNB in 1970. However, the bank secured title thereto only in 1977. In the meantime, while the property was still in the possession of Punzalan, he constructed thereon in 1974 a warehouse allegedly with the permission of PNB. In 1978, PNB sold the land, including the building thereon, to Vda. de Lacsamana. Thus, Punzalan led an action to annul the sale with respect to the building. He led the action in Quezon City. The court dismissed the action on the ground of improper venue because the action is for recovery of a real property. The court ruled that the venue should have been Tarlac. In sustaining the decision of the lower court, the Supreme Court ruled that the warehouse claimed to be owned by (Punzalan) is an immovable or real property as provided in Article 415(1) of the Civil Code and that buildings are always immovable under the Code. The Court further ruled that the prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case, which is to recover said real property. It is a real action. [4.3.1] Rule is not affected by the fact that the building is treated separately from the land

A building treated separately from the land on which it stood is immovable property and the mere fact that the parties to a contract seem to have dealt with it separate and apart from the land on which it stood in no wise changed its character as immovable property.31 It is obvious that the inclusion of the building, separate and distinct from the land, in the enumeration of what may constitute real properties (in Article 415 of the New Civil Code) could only mean one thing that a building is by itself an immovable property, a doctrine already pronounced by the Supreme Court as early as the case of Leung Yee v. Strong Machinery Co.32 Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation, the improvements thereon, still a building by itself may be mortgaged apart from the land on which it has been built.33 Such a mortgage would still be a real estate mortgage for the
Punzalan, Jr. v. Vda. de Lacsamana, supra, 335-336; citing Leung Yee v. Strong Machinery Co., 37 Phil. 644 (1918). 32 Lopez v. Orosa, Jr. and Plaza Theatre, Inc., 103 Phil. 98, 105 (1958); cited in Prudential Bank v. Panis, 153 SCRA 390, 396 (1987). 33 Prudential Bank v. Panis, supra, 396, citing Leung Yee v. Strong Machinery Co., supra.
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building would still be considered immovable property even if dealt with separately and apart from the land.34
Prudential Bank v. Panis 153 SCRA 390 (1987) In this case, the pivotal issue is whether or not a valid real estate mortgage can be constituted on the building erected on the land belonging to another. Answering in the afrmative, the Supreme Court explained In the enumeration of properties under Article 415 of the Civil Code of the Philippines, this Court ruled that, it is obvious that the inclusion of building separate and distinct from the land, in said provision of law can only mean that a building is by itself an immovable property. (Lopez v. Orosa, Jr., et al., L-10817-18, Feb. 28, 1958; Associated Ins. and Surety Co., Inc. v. Iya, et al., L-10837-38, May 30, 1958) Thus, while it is true that a mortgage of land necessarily includes, in the absence of stipulation of the improvements thereon, buildings, still a building by itself may be mortgaged apart from the land on which it has been built. Such a mortgage would still be a real estate mortgage for the building would still be considered immovable property even if dealt with separately and apart from the land (Leung Yee v. Strong Machinery Co., 37 Phil. 644). In the same manner, this Court has also established that possessory rights over said property before title is vested on the grantee, may be validly transmitted or conveyed as in a deed of mortgage (Vda. de Bautista v. Marcos, 3 SCRA 438 [1961]). [4.3.2] Rule is not affected by the fact that the building is erected on a land owned by another person

The law makes no distinction as to whether or not the owner of the land is or is not the owner of the building.35 Hence, a building is an immovable property regardless of whether or not said structure and the land on which it is adhered to belong to the same owner36 or whether it is erected by the owner of the land or by a usufructuary or lessee.37
Id. Ladera v. CN Hodges, 48 Off. Gaz., 5374, 5379; Makati Leasing and Finance Corp. v. Wearever Textile Mills, 122 SCRA 296, 301 (1983). 36 Lopez v. Orosa, Jr. and Plaza Theater, Inc., supra, 105. 37 Ladera v. CN Hodges (CA), supra, 5380.
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A building certainly cannot be divested of its character of a realty by the fact that the land on which it is constructed belongs to another.38 To hold it the other way, the possibility is not remote that it would result in confusion, for to cloak the building with an uncertain status made dependent on the ownership of the land, would create a situation where a permanent xture changes its nature or character as the ownership of the land changes hands.39
Ladera v. C.N. Hodges, et al. (CA) 48 Off. Gaz. 5374 (1952) In this case, Ladera purchased from CN Hodges a parcel of land payable in installments. After the execution of the contract, Ladera built on the lot a house of mixed materials. When Ladera failed to pay the agreed instalments, CN Hodges rescinded the contract and led an action for ejectment. The court thereupon rendered a decision upon agreement of the parties requiring Ladera to vacate and surrender possession of the lot and to pay P10 a month until delivery of the premises. Thereafter, the court issued an alias writ of execution and the sheriff levied upon the house. The sheriff subsequently posted notices of sale at auction but did not publish the same in a newspaper of general circulation. The sale pushed through. Thereupon, Ladera led an action to set aside the sale. The trial court set aside the sale for non-compliance with the requirement of publication (of the notice of sale) in judicial sales of real property under the Rules of Court. CN Hodges appealed from the said decision contending that the house, being built on land owned by another person, should be regarded in law as movable or personal property. The Court of Appeals, speaking thru Justice J.B.L. Reyes held that a true building (not one merely superimposed on the soil) is immovable or real property, whether it is erected by the owner of the land or by a usufructuary or lessee. Thus, the Court of Appeals ruled that the lower court was right in concluding that, as the object of the levy and sale was real property, the publication in a newspaper of general circulation was indispensable and it being admitted that no such publication was ever made, the execution sale was void. Evangelista v. Alto Surety & Ins. Co., Inc. 103 Phil. 401 (1958) In this case, Evangelista sued Rivera for collection of sum of money on June 4, 1949. On the same date, he obtained a writ of preliminary attachment, which was levied upon a house built by Rivera on a land owned by Alto Surety.

38 39

Associated Ins. & Surety Co., Inc. v. Iya, et al., 103 Phil. 972, 979 (1958). Id.

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The levy was made pursuant to the rules governing the levy of real properties. In due course, judgment was rendered in favor of Evangelista, who, on October 8, 1951, bought the house at the public auction made to satisfy the judgment. The corresponding deed of sale was issued to him on October 22, 1952. When Evangelista sought to take possession of the house, he was told that Alto Surety was now the owner of the house because the latter allegedly bought the house at an auction sale on September 29, 1950. It turned out that Alto Surety likewise led an action against Rivera and likewise obtained a favorable judgment. The corresponding deed was issued to Alto Surety on May 10, 1952. Subsequently, Evangelista instituted an action against Alto Surety and Rivera for the purpose of establishing his title over said house. The trial court ruled in favor of Evangelista. On appeal, however, the Court of Appeals reversed the decision of the trial court on the ground that Evangelista did not acquire a preferential lien through the preliminary writ of attachment because the house was levied as if it were an immovable property. The Court of Appeals was of the opinion that the house should have been levied pursuant to the rules governing the levy of personal property (apparently for the reason that the house was constructed on a land belonging to another). In reversing the decision of the CA, the Supreme Court reiterated the ruling in Ladera v. Hodges (48 Off. Gaz., 5374) that a true building (not one merely superimposed on the soil) is immovable or real property, whether it is erected by the owner of the land or by a usufructuary or lessee. [4.4] Instances Where Building Is Treated As Personal Property By the Parties

Although the dicta in some decisions of the Supreme Court to the effect that the parties to a contract may by agreement treat as personal property that which by nature would be a real property40 may have tended to erode the doctrine pronounced in Leung Yee v. Strong Machinery41 that a building is by itself an immovable property the fact remains that the nature of a building does not depend on the way the parties deal with it. The classication of property into real or personal is provided for by law and may not, therefore, be changed by the agreement of the parties. As such, even if the parties may treat as personal property that which under the law is a real property, that agreement does not in any way alter the character of the property as an immovable or real property.
40 Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, 632-633 (1923); see also De Jesus v. Guan Bee Co., 72 Phil. 446 and Luna v. Encarnacion, 91 Phil. 531 (1952). 41 Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Immovable Property

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[4.5]

Doctrine of Estoppel; Navarro and Tumalad Cases

In Ladera v. CN Hodges,42 Justice J.B.L. Reyes explained that the ruling in Standard Oil,43 De Jesus v. Guan Bee Co.,44 Evangelista v. Abad,45 and Tomines v. San Juan,46 to the effect that the parties to a contract may by agreement treat as personal property that which by nature would be a real property is predicated on statements by the owner declaring his house to be a chattel, a conduct that may conceivably estop him from subsequently claiming otherwise. This doctrine of estoppel was eventually applied by the Court in Navarro47 and Tumalad48 cases. In these two cases, a chattel mortgage contract was executed by the parties involving a house. Thereafter, the mortgagors questioned the validity of the chattel mortgage so executed on the ground that the subject matter thereof was not chattel but real property. While it is true that only personal properties can be the subject of a chattel mortgage49 and that the execution of a chattel mortgage covering a real property (a building, for example) is invalid and a nullity,50 the court need not resolve the issue of the validity of the chattel mortgage in the cases of Navarro and Tumalad. As a consequence, there is no need on the part of the court to rule on the character of the house (or building) in these cases. Note that the cases of Navarro and Tumalad can be resolved by simply applying the doctrine of estoppel which, in fact, was what the Court did. As applied in the above cases, the doctrine of estoppel not only prohibits a party from assuming inconsistent positions but also precludes him from repudiating an obligation voluntarily assumed after having accepted benets therefrom. To countenance such repudiation would be contrary to equity and would put a premium on fraud or misrepresentation. In other words, the Court did not rule in Navarro and Tumalad that the subject chattel mortgage was valid and that the

Supra. Supra. 44 Supra. 45 (CA) 36 O.G. 2913. 46 (CA) 45 O.G. 2935. 47 Navarro v. Pineda, 9 SCRA 631 (1963). 48 Tumalad v. Vicencio, 41 SCRA 143 (1971). 49 See Sec. 1, Act No. 3952. 50 Associated Ins. & Surety Co. v. Iya, 103 Phil. 972, 979 (1958).
42 43

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house (or building) subject matter of the cases was a personal property. Rather, the Court simply applied the doctrine of estoppel, in that, since the parties so agreed that the building (or house) is a personal property and a proper subject of the contract of chattel mortgage, they are estopped from denying the existence of the chattel mortgage which, as between them, must be upheld.
Navarro v. Pineda 9 SCRA 631 (1963) In this case, Runo Pineda and his mother, Juana Gonzales, executed a deed of real estate and chattel mortgages in favor of Conrado Navarro, whereby Gonzales, by way of real estate mortgage hypothecated a parcel of land belonging to her, and Pineda, by way of chattel mortgage, mortgaged his house erected on a lot belonging to another person and one motor truck. Both mortgages were contained in one instrument, which was registered both in the Ofce of the Register of Deeds and the Motor Vehicle Ofce. When Navarro led a complaint for foreclosure of the mortgage, Pineda questioned the validity of the chattel mortgage over his house on the ground that the house, being an immovable property, could not be the subject of a chattel mortgage, citing the cases of Lopez v. Orosa, Jr., 103 Phil. 98; Associated Ins. & Surety Co., Inc. v. Iya, 103 Phil. 972; and Leung Yee v. Strong Machinery Co., 37 Phil. 644. The trial court upheld the validity of the chattel mortgage. The decision of the trial court was directly appealed to the Supreme Court. In sustaining the decision of the trial court, the Supreme Court applied the principle of estoppel because the house in question was treated as personal or movable property by the parties to the contract themselves. In the deed of chattel mortgage, Pineda conveyed by way of chattel mortgage (his) personal properties, a residential house and a truck. The mortgagor himself grouped the house with the truck, which is, inherently a movable property. The Court explained further that the cases cited by Pineda were not applicable because in these cases, third persons assailed the validity of the deed of chattel mortgages; whereas in this case, it was one of the parties to the contract of mortgage who assailed its validity. Tumalad v. Vicencio 41 SCRA 143 (1971) In this case, Vicencio and Simeon executed a chattel mortgage in favor of Tumalad over their house of strong materials built on a lot rented from Madrigal & Company, Inc. When Vicencio and Simeon defaulted in the payment of their obligation, the mortgage was extrajudicially foreclosed and the house was sold at public auction. Tumalad emerged as the highest bidder during the auction. Subsequently, Tumalad led an action for ejectment against

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Vicencio and Simeon. In their answer, the defendants impugned the legality of the chattel mortgage and its subsequent foreclosure on the ground that the house, being an immovable, could only be the subject of a real estate mortgage and not a chattel mortgage. When the case nally reached the Supreme Court, the said Court again applied the principle of estoppel since the parties treated the subject house as personalty. The Court explained that although there is no specic statement referring to the subject house as personal property, yet by ceding, selling or transferring a property by way of chattel mortgage (Vicencio and Simeon) could only have meant to convey the house as chattel, or at least, intended to treat the same as such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise. This case was likewise compared with Associated Ins. & Surety Co., Inc. v. Iya, Lopez v. Orosa, Jr. and Plaza Theatre, Inc. and Leung Yee v. Strong Machinery Co. Unlike in these three cases, wherein third persons assailed the validity of the chattel mortgage, it is the debtors-mortgagors who are attacking the validity of the chattel mortgage in this case. Hence, the doctrine of estoppel applies. [4.6] Compared with the cases of Associated Ins. & Surety Co. v. Iya, Evangelista v. Alto Surety & Ins. Co., Inc., Manarang v. Olada and Piansay v. David

In the cases of Associated Ins. & Surety Co. v. Iya, Evangelista v. Alto Surety & Ins. Co., Inc., Manarang v. Olada and Piansay v. David, the question on the character of the house or building concerned was of primordial consideration. In other words, there was no other way of resolving these cases except with a precise ruling on the character of the house (or building) subject thereof. In Evangelista v. Alto Surety & Ins. Co., Inc.,51 for example, the main question was who between the contending parties had a preferential right over the house? If the levy made on the house pursuant to a writ of preliminary attachment in 1949 was valid, then Evangelista had a preferential right over the same, otherwise, it would be Alto Surety. The validity of the levy, in turn, would depend upon the character of the house. If the house was a real property, then the levy would be valid. If the house was a personal property, then the levy would not be valid. Since the resolution of the case calls for the application of the law (Article 415[1], NCC), there is no other conclusion except that the house is a real property it is so whether it is erected on a land belonging to another.
51

103 Phil. 401.

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In Associated Ins. & Surety Co. Inc. v. Iya,52 the principal question was this: May Associated Insurance rightfully demand for the exclusion of the house from the foreclosure of the real estate mortgage by Iya? In this case, if the chattel mortgage over the house is to be preferred over the real estate mortgage over the same house, then Associated Insurance may rightfully demand for the exclusion of the house in the foreclosure of the real estate mortgage since it was executed prior to the latter mortgage. In the said case, the debtor-mortgagor executed two mortgages in favor of different mortgagees. The rst was a chattel mortgage in favor of Associated Insurance covering the house. The second was a real estate mortgage over the same house and the lot on which the house was situated in favor of Iya. Both mortgage obligations were not paid. Hence, Associated Insurance foreclosed the chattel mortgage over the house and eventually purchased the house during the auction. When the real estate mortgage was about to be foreclosed, Associated Insurance sought for the exclusion of the house claiming a preferential right over it by virtue of the chattel mortgage and its subsequent foreclosure. Iya, in turn, questioned the validity of the chattel mortgage contract contending that since the subject matter thereof was real property, the same was not valid. In this case, the court is required to meet squarely the issue of the validity of the chattel mortgage contract. And in resolving said issue, the court must pass upon the character of the house whether it is real property or personal property. If the house is a real property, then the chattel mortgage is not valid and Associated Insurance does not acquire a preferential right over the house subject matter of the mortgage. But if the house is a personal property, then the chattel mortgage is valid and Associated Insurance has a preferential right over the house. Since the court is called upon to apply the law (Article 415[1], NCC), there is no other conclusion except that the house is a real property it is so whether it is erected on a land belonging to another. In Manarang v. Olada,53 a house was made the subject matter of a chattel mortgage contract. When the mortgage obligation was

52 53

Supra. 99 Phil. 108 (1956).

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not paid, the creditor opted to le an action for collection (instead of foreclosing the mortgage) and after obtaining favorable judgment, the creditor caused the levy upon execution of the same house subject matter of the chattel mortgage contract. Before the property could be sold at the public auction, the debtor offered to pay her indebtedness. The sheriff, however, told her to likewise pay the expenses incurred in the publication of the notice of sale. The debtor, however, refused to pay the publication expenses contending that such publication was not necessary since the house was not a real property. Note that under the Rules of Court, if what is to be sold at a public auction is a real property, publication of the notice of sale is indispensable. Without such publication, the sale is a nullity. On the other hand, if what is to be sold is a personal property, there is no need for publication. Hence, the issue in this case is the character of the house, whether it is a real property or personal property for purposes of sale on execution. Since the character of the house is the precise issue in this case, the court is once again called upon to apply the law (Article 415[1], NCC). Since the court is called upon to apply the law (Article 415[1], NCC), there is no other conclusion except that the house is a real property. In Piansay v. David,54 a house was again made the subject matter of a chattel mortgage which was foreclosed. The mortgagee bought the house during the auction and later sold the same to Piansay. Another unsecured creditor of the debtor led an action for collection against him. After obtaining judgment, said creditor (Mangubat) caused the levy upon execution of the house earlier foreclosed and sold to Piansay. Thus, Piansay questioned the validity of the levy upon execution. The main question in this case is this: who between Piansay and Mangubat has a better right over the house? In order to answer this question, there is a need on the part of the court to pass upon the issue of the validity of the chattel mortgage contract. If the same is valid, then Piansay acquires a preferential right over the house subject matter of the chattel mortgage; otherwise, Mangubat shall acquire a preferential right over it. The validity of the chattel mortgage, in turn, is dependent upon the character of the house. If the house is a personal property, then the
54

12 SCRA 227.

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chattel mortgage is valid; otherwise, it is not. Since the court is again called upon to apply the law (Article 415[1], NCC), there is no other conclusion except that the house is a real property.
Manarang v. Olada 99 Phil. 108 (1956) In this case, Manarang executed a chattel mortgage over a house of mixed materials in favor of Esteban. Upon default, Esteban led an action to recover the loan. Judgment having been entered in plaintiffs favor, execution was issued against the same property mortgaged. Before the property could be sold at the auction, Manarang offered to pay the sum of P277. The sheriff, however, refused the tender unless the additional amount of P260 representing the expenses incurred for the publication of the notice of sale be also paid. Manarang refused to pay the additional amount contending that the house in question was considered as personal property by the parties, hence, publication of its sale at public auction was not necessary. In upholding the action of the sheriff, the Supreme Court explained that the rules on execution do not allow the parties to a contract to treat a real property as personal because sale on execution affect the public and third persons. The regulation governing sales on execution are for public ofcials to follow and were never intended to suit the consideration that parties, may have privately given to the property levied upon. Hence, the mere fact that a house was the subject of a chattel mortgage and was considered as personal property by the parties does not make said house personal property for purposes of the notice to be given for its sale at public auction. In ne, the Supreme Court declare that the house of mixed materials levied upon on execution, although subject of a contract of chattel mortgage between the owner and a third person, is real property within the purview of Rule 39, Section 16 of the Rules of Court as it has become a permanent xture on the land, which is real property. Evangelista v. Alto Surety & Ins. Co., Inc. 103 Phil. 401 (1958) In this case, Evangelista sued Rivera for collection of sum of money on June 4, 1949. On the same date, he obtained a writ of preliminary attachment, which was levied upon a house built by Rivera on a land owned by Alto Surety. The levy was made pursuant to the rules governing the levy of real properties. In due course, judgment was rendered in favor of Evangelista, who, on October 8, 1951, bought the house at the public auction made to satisfy the judgment. The corresponding deed of sale was issued to him on October 22, 1952. When Evangelista sought to take possession of the house, he was told that Alto Surety was now the owner of the house because the latter allegedly bought the house at an auction sale on September 29, 1950. It turned out that Alto Surety likewise

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led an action against Rivera and likewise obtained a favorable judgment. The corresponding deed was issued to Alto Surety on May 10, 1952. Subsequently, Evangelista instituted an action against Alto Surety and Rivera for the purpose of establishing his title over said house. The trial court ruled in favor of Evangelista. On appeal, however, the Court of Appeals reversed the decision of the trial court on the ground that Evangelista did not acquire a preferential lien through the preliminary writ of attachment because the house was levied as if it were an immovable property. The CA was of the opinion that the house should have been levied pursuant to the rules governing the levy of personal property. In reversing the decision of the CA, the Supreme Court explained that a house is immovable or real property, whether it is erected by the owner of the land or by a usufructuary or lessee. Hence, the levy that was made was proper and Evangelista acquired a preferential right over the house by virtue of the writ of preliminary attachment which was secured long before the sale of the house in favor of Alto Surety. Associated Ins. & Surety Co., Inc. v. Iya, et al. 103 Phil. 972 (1958) In this case, the spouses Valino purchased a lot on installment basis from Philippine Realty Corporation. Prior to the full payment of the purchase price, ownership remained with PRC. In the meantime, the spouses Valino constructed a house on the lot and subsequently mortgaged the same in favor of Associated Insurance by way of a chattel mortgage. After completing payment of the purchase price on the lot and after the issuance of the title to the lot in their names, the spouses Valino subsequently mortgaged the lot and the house (earlier mortgaged to Associated Insurance) in favor of Iya by way of a real estate mortgage. Soon, the spouses Valino defaulted in the payment of their obligation secured by the chattel mortgage. Thus, Associated Insurance foreclosed the chattel mortgage over the house and subsequently caused the said house to be declared in its name for tax purposes. When the surety company learned of the existence of the real estate mortgage, it led an action for the purpose of excluding the house from the real estate mortgage. In the meantime, the spouses likewise defaulted in the payment of their obligation secured by the real estate mortgage. Thus, Iya led an action against the spouses Valino and Associated Insurance for the payment of the mortgage obligation with an alternative prayer for the foreclosure of the real estate mortgage. The two cases were jointly heard. After trial, the lower court ruled that the chattel mortgage in favor of Associated Insurance was preferred and superior over the real estate mortgage in favor of Iya, with respect to the house. The lower court thus ordered the exclusion of the house in the foreclosure of the real estate mortgage. On appeal to the Supreme Court, the portion of the decision of the lower court excluding the house in the foreclosure of the real

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estate mortgage was reversed. In reversing the said portion of the decision, the Supreme Court explained that the house in question was a real property and the chattel mortgage in favor of Associated Insurance was not valid since its subject matter was not a personal property. The chattel mortgage being void, Associated Insurance did not acquire any right over the house. Piansay v. David 12 SCRA 227 (1964) In this case, Conrado David obtained a loan from Uy Kim upon the security of a chattel mortgage on a house situated at Tondo, Manila. When David defaulted, Uy Kim foreclosed the mortgage and the house was sold to Uy Kim. Thereafter, Uy Kim sold the house to Salvador Piansay. In the meantime, Marcos Mangubat led an action for collection of loan against David. After obtaining a judgment against David, the house was levied upon at the instance of Mangubat. Piansay assailed the right of Mangubat to levy upon execution the house in question alleging that the same belongs to him, he having bought it from Uy Kim, who, in turn, acquired it at the auction sale held in connection with the extrajudicial foreclosure of the chattel mortgage constituted in her favor by David. In ruling in favor of Mangubat, the Court held regardless of the validity of a contract constituting a chattel mortgage on a house, as between the parties to said contract, the same cannot and does not bind third persons, who are not privies to the aforementioned contract or their privies. As a consequence, the sale of the house in the proceedings for the extrajudicial foreclosure of said chattel mortgage, is null and void insofar as defendant Mangubat is concerned, and did not confer upon Mrs. Uy Kim, as buyer in said sale, any dominical right in and to said house, so that she could not have transmitted to her assignee, plaintiff Piansay, any such right as against defendant Mangubat. [4.7] Classication of property into real or personal property, a question of law the Standard Oil case

In the case of Standard Oil Co. of New York v. Jaramillo,55 the Supreme Court ruled that the Register of Deed may not refuse the registration of a chattel mortgage on the pretext that the subject matter thereof is not a personal property. The Court claries that the duties of the register of deeds in respect to the registration of chattel mortgages are of purely ministerial in character. As earlier discussed, the classication of property into real or personal is provided for by law. In refusing the registration of a chattel mortgage on the ground that the subject matter
55

Supra.

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thereof is not a personal property, the register of deeds is engaging itself in the interpretation of the law which is the exclusive province of the courts. For that reason, the Supreme Court claried that the duty of the register of deeds in respect to the registration of chattel mortgages is of a purely ministerial character. The Standard Oil case is telling us that the registration of a chattel mortgage covering a real property before the chattel mortgage registry may not be prevented by the register of deeds. What then is the effect of such registration? In Associated Ins. & Surety Co., Inc. v. Iya,56 the Supreme Court held that the registration of a chattel mortgage covering a building in the Chattel Mortgage Registry produces no effect whatsoever, for where the interest conveyed is in the nature of a real property, the registration of the document in the registry of chattels is merely a futile act. Thus, the registration of the chattel mortgage of a building of strong materials produces no effect as far as the building is concerned.57 But then again, as between the parties to said chattel mortgage, they are not allowed to assail the validity of said agreement under the principle of estoppel.
Standard Oil Co. of New York v. Jaramillo 44 Phil. 630 (1923) In this case, Gervasia de la Rosa, a lessee of a parcel of land situated in the City of Manila and owner of the house of strong materials built thereon, executed a deed of chattel mortgage, conveying to plaintiff by way of mortgage both the leasehold interest in said lot and the building which stands thereon. After said document was duly acknowledged and delivered, the petitioner caused the same to be presented to defendant, as register of deeds of the City of Manila, for the purpose of having the same recorded in the book of record of chattel mortgages. Upon examination of the instrument, defendant was of the opinion that it was not a chattel mortgage, for the reason that the interest therein mortgaged did not appear to be personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on this ground. A petition for mandamus was led against the register of deeds. The Supreme Court ruled that the position taken by the register of deeds is untenable. It is his duty to accept the proper fee and place the instrument on record. The Court explained that the duties of a register of deeds in respect to the registration
Supra. Associated Ins. & Surety Co., Inc. v. Iya, 103 Phil. 972, 979, citing Leung Yee v. Strong Machinery Co., 37 Phil. 644.
56 57

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of chattel mortgages are of a purely ministerial character, and no provision of law can be cited which confers upon him any judicial or quasi-judicial power to determine the nature of any document of which registration is sought as a chattel mortgage.

(C) Construction Adhered To the Soil


[4.8] Constructions of All Kinds Adhered To the Soil

To be immovable, the construction must be attached permanently to the land.58 It becomes immovable by incorporation. The adherence to the soil must not be of provisional or temporary character but xed or integral. Thus, in a case,59 the steel towers constructed by the Manila Electric Company were not considered as real properties because they were removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place. In Meralco Securities Industrial Corporation v. CBAA,60 however, the Court held that the pipeline system in question is indubitably a construction adhering to the soil. It is attached to the land in such a way that it cannot be separated therefrom without dismantling the steel pipes which were welded to form the pipeline.
Board of Assessment Appeals v. Manila Electric Co. 10 SCRA 68 (1964) In this case, the City Assessor of Quezon City classied the 40 steel towers constructed by Meralco within Quezon City as real properties for purposes of taxation. Thus, the Board of Assessment Appeals of Quezon City required Meralco to pay the amount of P11,651.86 as real property tax on the said steel towers for the years 1952 to 1956. Meralco paid the amount under protest and questioned the imposition of the tax before the Court of Tax Appeals. The CTA ordered the cancellation of the tax declarations on the aforesaid steel towers and directed the City Treasurer of Quezon City to refund the payments made by Meralco. The CTA ruled that the steel towers were personal properties and were not, therefore, subject to real property tax. On appeal, the Supreme Court sustained the decision of the CTA holding that Granting for the purpose of argument that the steel supports or towers in question are not embraced within the term poles, the
3 Manresa 18-19, cited in II Tolentino, Civil Code, p. 17. Board of Assessment Appeals v. Manila Electric Company, 10 SCRA 68 (1964). 60 114 SCRA 261 (1982).
58 59

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logical question posited is whether they constitute real properties, so that they can be subject to a real property tax. The tax law does not provide for a denition of real property; but Article 415 of the Civil Code does, by stating the following are immovable property: (1) Land, building, roads and constructions of all kinds adhered to the soil; xxx xxx xxx (3) Everything attached to an immovable in a xed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; xxx xxx xxx (5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; xxx xxx xxx. The steel towers or supports in question, do not come within the objects mentioned in paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not constructions analogous to buildings nor adhering to the soil. As per description, given by the lower court, they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed could easily be dismantled and moved from place to place. They cannot be included under paragraph 3, as they are not attached to an immovable in a xed manner, and they can be separated without breaking the material or causing deterioration upon the object to which they are attached. Each of these steel towers or supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled by unscrewing the bolts and reassembled by screwing the same. These steel towers or supports do not also fall under paragraph 5, for they are not machineries, receptacles, instruments or implements, and even if they were, they are not intended for industry or works on the land. Petitioner is not engaged in an industry or works on the land in which the steel supports or towers are constructed.

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5. Real Property under Article 415(2) Trees, plants and growing fruits (A)
[5.1]

Trees and Plants


Trees and Plants

Trees, plants and growing fruits, while they are attached to the land, are immovable property.61 They are immovable by reason of their incorporation to the soil or because they form an integral part of the immovable. If, therefore, the trees or plants are cut or uprooted for purposes of making them rewood or timber they become movable property except when the timber constitutes the natural product of the tenement and, therefore, forms an integral part of the immovable.62 (B)
[5.2]

Growing Fruits
Growing Fruits

With regard to growing fruits, they are considered as real property so long as they are still attached to the soil. But for certain purposes and while still attached to the soil, growing fruits may exceptionally be treated as personal property pursuant to the provisions of Article 416(2) of the New Civil Code. By way of example, ungathered fruits are considered personal property for the purpose of sale of the whole or part of the crops.63 In addition, ungathered fruits have the nature of personal property for purposes of attachment and execution and in applying the provisions of the Chattel Mortgage Law.64
Sibal v. Valdez 50 SCRA 512 (1927) In this case, the deputy sheriff of the Province of Tarlac attached several properties of Leon Sibal, among which was included the sugar cane in seven parcels of land. Thereafter, the said deputy sheriff sold at public auction said properties, including the sugar cane, to Valdez. Sibal offered to redeem said sugar came and tendered to Valdez the amount sufcient to cover the price paid by the latter. Valdez, however refused to accept the money and to return the sugar cane on the ground that the sugar cane in question had the nature of
Inter-Regional Development Corp. v. CA, 65 SCRA 265, 268 (1975). 3 Manresa, 6th ed., 20. 63 3 Manresa, 6th ed., 21. 64 Sibal v. Valdez, 50 Phil. 512, 524 (1927).
61 62

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personal property and was not, therefore, subject to redemption. On the issue of whether the sugar in question is personal or real property, the Supreme Court held that for purposes of attachment and execution, and for the purposes of the Chattel Mortgage Law, ungathered products have the nature of personal property.

6. Real Property under Article 415(3) Everything attached to an immovable in a xed manner
[6.1] Attachment Must Be In A Fixed Manner

These properties are immovable by incorporation. Their attachment to an immovable must be in a xed manner and in such a way that they cannot be separated therefrom without breaking the material or deterioration of the object.65 In the Board of Assessment Appeals case,66 for example, the Supreme Court ruled that the steel towers of Meralco could not be included under paragraph 3 because they are not attached to an immovable in a xed manner since they could be separated without breaking the material or causing deterioration upon the object to which they were attached. Each of the steel towers consists of steel bars or metal strips, joined together by means of bolts, which could be disassembled by unscrewing the bolts and reassembled by screwing the same.
[6.2] Need Not Be Attached By the Owner

The Civil Code nowhere requires that the attachment or incorporation be made by the owner of the land or immovable himself. For the property to be immobilized under paragraph 3, the only criterion is its union or incorporation with the immovable in the manner required by law.
[6.3] However, Intent of the Parties May Govern

The principle of estoppel may likewise apply with respect to properties mentioned in paragraph 3 of Article 415. The fact that the machineries are heavy, bolted or cemented on the real property, for example, does not make them ipso facto immovable under Article

65 66

Art. 415, par. 3. Board of Assessment Appeals v. Manila Electric Company, supra.

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415(3), as between the parties since their intent has to be looked into. Thus, if the parties treat the machinery as chattels, they are bound by their agreement under the principle of estoppel67 notwithstanding the fact that the machinery may have been attached to an immovable in a xed manner and may not be separated therefrom without breaking the material or deterioration of the object to which it is attached.
Tsai v. Court of Appeals 366 SCRA 324 (2001) In this case, Ever Textile Mills, Inc. obtained in 1975 a three million loan from PBCom. As security for the loan, Evertex executed in favor of PBCom a deed of real and chattel mortgage over the lot where its factory stands, and the chattels located therein as enumerated in a schedule attached to the mortgage contract. In 1979, PBCom granted a second loan of P3,356,000 to Evertex. The loan was secured by a chattel mortgage over personal properties enumerated in a list attached thereto. In 1982, PBCom foreclosed the real and chattel mortgages. In 1982, Evertex was declared insolvent. In the meantime, PBCOm sold the factory, lock and stock and barrel to Ruby Tsai in 1984. In 1989, Evertex led an action for annulment of the sale, reconveyance and damages. Evertex alleges, inter alia, that PBCom appropriated some chattels not included in the real and chattel mortgage in 1975 nor in the chattel mortgage of 1979. Evertex further alleged that these properties were acquired only in 1981. Tsai and PBCom contended, on the other hand, that the disputed 1981 machineries were real properties because they were heavy, bolted or cemented on the real property. In nding the contention to be unmeritorious, the SC held Petitioners contend that the nature of the disputed machineries, i.e., that they were heavy, bolted or cemented on the real property mortgaged by EVERTEX to PBCom, make them ipso facto immovable under Article 415(3) and (5) of the New Civil Code. This assertion, however, does not settle the issue. Mere nuts and bolts do not foreclose the controversy. We have to look at the parties intent. While it is true that the controverted properties appear to be immobile, a perusal of the contract of Real and Chattel Mortgage executed by the parties herein give us a contrary indication. In the case at bar, both the trial and the appellate courts reached the same nding that the true intention of PBCom and the owner, EVERTEX, is to treat machinery and equipment as chattels. The
67

Tsai v. CA, 366 SCRA 324 (2001).

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pertinent portion of respondent appellate courts ruling is quoted below: xxx xxx xxx In the absence of any showing that this conclusion is baseless, erroneous or uncorroborated by the evidence on record, we nd no compelling reason to depart therefrom. Too, assuming arguendo that the properties in question are immovable by nature, nothing detracts the parties from treating it as chattels to secure an obligation under the principle of estoppel. As far back as Navarro v. Pineda, 9 SCRA 631 (1963), an immovable may be considered a personal property if there is a stipulation as when it is used as a security in the payment of an obligation where a chattel mortgage is executed over it, as in the case at bar. In the instant case, the parties herein: (1) executed a contract styled as Real Estate and Chattel Mortgage, instead of just Real Estate Mortgage if indeed their intention is to treat all properties included therein as immovable, and (2) attached to the said contract a separate LIST OF MACHINERIES & EQUIPMENT. These facts, taken together, evince the conclusion that the parties intention is to treat these units of machinery as chattels. A fortiori, the contested after-acquired properties, which are of the same description as the units enumerated under the title LIST OF MACHINERIES & EQUIPMENT, must also be treated as chattels.

7. Real property under Article 415(4) Statues, reliefs, paintings or other objects for use or ornamentation
[7.1] Requisites

These are real properties by destination. In order that the properties mentioned in this paragraph may be considered as real property, the following requisites must concur: (1) they must be placed in buildings or on lands by the owner of the immovable or by his agent; and (2) the attachment must be intended to be permanent.
[7.2] Distinguish From Paragraph 3

The real properties in this paragraph are to be distinguished from those mentioned in paragraph 3, as follows: (1) here the incorporation

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must be made by the owner of the immovable either personally or through an agent; while it is immaterial as to who makes the incorporation in paragraph 3; (2) the incorporation in paragraph 3 must be such that separation is impossible; whereas, in paragraph 4 separation is possible without deterioration of the immovable or destruction of the material. 8. Real Property under Article 415(5) Machineries, receptacles, instruments or implements
[8.1] Immovable By Destination in Par. (5); Requisites

The properties mentioned in paragraph 5 are essentially movables but by reason of their purpose they being destined for use in the industry or work in the tenement they are converted into real properties. In order to be immobilized under paragraph 5, however, the following requisites must be satised: (1) (2) (3) (4)
[8.2]

They must be machinery, receptacles, instruments or implements; They must be placed by the owner of the tenement or by his agent; There must be an industry or work carried in such building or on the piece of land; and They must tend directly to meet the needs of said industry or work.
Properties Contemplated Under Paragraph 5

The properties contemplated in this paragraph are machineries, receptacles, instruments or implements. Thus, in the Board of Assessment Appeals case,68 the Supreme Court did not consider the steel towers constructed by Meralco as falling under paragraph 5 for they are not machineries, receptacles, instruments or implements.
[8.3] They Must Be Placed By the Owner or By His Agent

In Davao Sawmill Co. v. Castillo,69 the Supreme Court held that machinery which is movable by nature becomes immobilized when
68 69

Supra. 61 Phil. 709 (1935).

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placed by the owner of the tenement, property or plant, but not so when placed by tenant, usufructuary, or any other person having only a temporary right, unless such person acted as the agent of the owner.70 Hence, if the machinery, receptacles, instrument or implements are not placed by the owner of the tenement or by his agent, these properties remain as movables and are not converted into real properties. As further explained by Justice J.B.L. Reyes in Ladera v. CN Hodges,71 in the case of immovables by destination (such as statutes, paintings and reliefs, machinery and implements, and animal houses), the Code requires that they be placed by the owner of the tenement, in order to acquire the same nature or consideration of real property.
[8.3.1] Exception to the Rule in supra 8.3

Should the machinery, receptacles, instruments or implements be placed in the land or tenement by the lessee thereof, the same remains personal because they are not placed by the owner of the tenement. An exception will arise, however, if in the contract of lease it is stipulated that such machinery, receptacles, instruments or implements placed there by the lessee will become, at the termination of the lease, the property of the lessor for in that case they will be considered as immovable property since in placing them the lessee will just be merely acting as an agent of the lessor.72 In the Davao Sawmill case, the Supreme Court quoted with approval the case of Valdez v. Central Altagracia, Inc.,73 where it was held that while under the general law of Puerto Rico machinery placed on property by a tenant does not become immobilized, yet, when the tenant places it there pursuant to a contract that it shall belong to the owner, it then becomes immobilized as to that tenant and even as against his assignees and creditors who had sufcient notice of such stipulation.74

See also Burgos, Sr. v. Chief of Staff, AFP, 133 SCRA 800, 812 (1984). Supra, 5379. 72 See Davao Sawmill v. Castillo, supra. 73 225 U.S. 58. 74 Cited in Peoples Bank and Trust Co. v. Dahican Lumber Company, 20 SCRA 84, 95
70 71

(1967).

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Davao Sawmill Co. v. Castillo 61 Phil. 709 Plaintiff operated a sawmill. The land upon which the business was conducted was leased from another person. On the land, the sawmill company erected a building which housed the machinery used by it. Some of the machines were mounted and placed on foundations of cement. In the contract of lease, plaintiff agreed to turn over free of charge all improvements and buildings erected by it on the premises with the exception of machineries, which shall remain with the plaintiff. In an action brought by the defendant herein, judgment was rendered against plaintiff. A writ of execution was issued and the machineries placed on the sawmill were levied upon as personalty by the sheriff. The question raised in this case involves the determination of the nature of the machineries, for plaintiff claimed that they were immobilized and they belonged to the owner of the land. In holding that the machinery is not immobilized, the Court explained that machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner. Burgos, Sr. v. Chief of Staff, AFP 133 SCRA 800 (1984) In this case, the search warrants issued were questioned on grounds, inter alia, that real properties were seized under the disputed warrants. In debunking this particular argument, the Supreme Court declared xxx Under Article 415(5) of the Civil Code of the Philippines, machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land and which tend directly to meet the needs of the said industry or works are considered immovable property. In Davao Sawmill Co. v. Castillo where this legal provision was invoked, this Court ruled that machinery which is movable by nature becomes immobilized when placed by the owner of the tenement, property or plant, but not so when placed by tenant, usufructuary, or any other person having only a temporary right, unless such person acted as the agent of the owner. In the case at bar, petitioners do not claim to be the owners of the land and/or building on which the machineries were placed. This being the case, the machineries in question, while in fact bolted to the ground remain movable property susceptible to seizure under a search warrant.

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Peoples Bank and Trust Co. v. Dahican Lumber Company 20 SCRA 84 (1967) In this case, Atlantic Gulf & Pacic Company (AG & P) sold and assigned all its rights in a lumber concession to Dahican Lumber Company (DALCO) for a total sum of $500,000, of which only $50,000 was paid. To develop the concession, DALCO obtained various loans from Peoples Bank & Trust Company. The loan was secured by a real estate mortgage over ve parcels of land, including the buildings and improvements thereon. The mortgage was executed on July 13, 1950. On the same date, DALCO executed a second mortgage on the same properties in favor of AG & P to secure payment of the unpaid balance of the purchase price. Both deeds contained an identical provision extending the mortgage lien to properties to be subsequently acquired by DALCO including but not limited to machinery, xtures, tools and equipments which the mortgagor may install, use in connection with the premises. After July 13, 1950, DALCO purchased various machineries, equipment, spare parts and supplies (collectively referred to as after-acquired properties). Pursuant to the provisions of the mortgage deeds, the Bank requested DALCO to submit compete lists of said properties but the latter failed to do so. Thereafter, the board of directors of DALCO passed a resolution to rescind the alleged sales of after-acquired properties by Connel Bros. Company Philippines (CONNEL). After which, DALCO and CONNEL executed the corresponding agreements of rescission of sale. The Bank demanded for the cancellation of such agreements. When DALCO refused to do so, the Bank and AG & P commenced foreclosure proceedings of the mortgage deeds, including the after-acquired properties. DALCO and CONNEL contended that the mortgages were null and void as regards the after acquired properties because they were not registered in accordance with the Chattel Mortgage Law. In upholding the validity of the mortgage and the foreclosure, the Court held that the after-acquired properties came within the operation of Article 415, paragraph 5 and Article 2127 of the New Civil Code. The Court explained that since the after acquired properties were purchased by DALCO in connection with, and for the use in the development of its lumber concession and that they were purchased in addition to, or in replacement of those already existing in the premises on July 13, 1950 they must be deemed, in law, to have been immobilized, with the result that the real estate mortgages involved herein which were registered as such did not have to be registered a second time as chattel mortgages in order to bind the after acquired properties and affect third persons. The Court likewise held that CONNEL is also barred from denying that the properties in question had become immobilized. The Court explained: Moreover, quoted in the Davao Sawmill case was that of Valdez v. Central Altagracia, Inc. (225 U.S. 58), where it was held that while under the general law of Puerto Rico, machinery placed on property by a tenant does not

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become immobilized, yet, when the tenant places it there pursuant to a contract that it shall belong to the owner, it then becomes immobilized as to that tenant and even as against his assignees and creditors who had sufcient notice of such stipulation. In the case at bar it is not disputed that DALCO purchased the after acquired properties to be placed on, and be used in the development of its lumber concession, and agreed further that the same shall become immediately subject to the lien constituted by the questioned mortgages. There is also abundant evidence in the record that DAMCO and CONNEL had full notice of such stipulation and had never thought of disputed validity until the present case was led. Consequently, all of them must be deemed barred from denying that the properties in question had become immobilized. [8.4] They Must Tend Directly To Meet the Needs of Said Industry or Work

The properties mentioned in paragraph 5 are immovable by destination and they are converted into real properties by reason of their purpose, not by reason of their attachment to an immovable. In Berkenkotter v. Cu Unjieng e Hijos,75 it was held that the installation of the machinery and equipment in the central of the Mabalacat Sugar Co., Inc. for use in connection with the industry carried by that company, converted the said machinery and equipment into real property by reason of their purpose. The Court explained in the said case that it cannot be said that their incorporation therewith was not permanent in character because, as essential and principal elements of a sugar central, without them the sugar central would be unable to function or carry on the industrial purpose for which it was established. The Court adds, inasmuch as the central is permanent in character, the necessary machinery and equipment installed for carrying on the sugar industry for which it has been established must necessarily be permanent. The same ruling was made in the case of Ago v. Court of Appeals,76 where the Court held that by the installation of the sawmill machineries in the building of the Golden Pacic Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the meaning of Article 415(5) of the Civil Code of the Philippines.
75 76

61 Phil. 663. 6 SCRA 530, 537.

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Berkenkotter v. Cu Unjieng 61 Phil. 663 The Mabalacat Sugar Co., Inc., owner of a sugar central, obtained from defendant a loan secured by a real estate mortgage constituted on two parcels of land with all the buildings, improvements, sugarcane mill thereon, and whatever forms part or was a necessary complement of said sugar-cane mill. Shortly thereafter, the company decided to increase the capacity of its sugar central by buying additional machinery and equipment, which it installed in the central, so that instead of milling 150 tons daily it could produce 250. The company obtained a loan from plaintiff to pay for the machinery. The issue in the present action is whether the additional machinery was subject to the mortgage deed executed in favor of defendant. In holding the machinery to be real property, the Court explained that the installation of the machinery and equipment in question in the central converted them into real property by reason of their purpose and constitutes a permanent improvement on said sugar central and subjects said machinery and equipment to the real estate mortgage constituted on the sugar central. Ago v. Court of Appeals 6 SCRA 360 (1962) In this case, Ago bought sawmill machineries and equipments from Grace Park Engineering, Inc., executing a chattel mortgage over said machineries and equipments to secure the balance of the purchase price, which Ago agreed to pay on installments. When Ago defaulted, Grace Park instituted foreclosure proceedings of the mortgage. To enjoin the foreclosure, Ago instituted a special civil action. The parties, however, arrived at a compromise agreement. Ago sold the machineries to Golden Pacic Sawmill, Inc., which installed the same in a building and permanently attached the same to the ground. In the meantime, as Ago continued to default in his payments as provided in the judgment by compromise, Grace Park led with the trial court a motion for execution, which was granted. Thereafter, the sheriff levied upon and sold the sawmill machineries and equipments in question without prior publication of the notice of sale. Ago questioned the legality of the sale contending that the machineries were real properties. When the case eventually reached the Supreme Court, the Court declared the sale to be void for lack of the necessary advertisement of sale by publication in a newspaper as required by the rules on the execution sale of a real property. The Court explained that the installation of the sawmill machineries in the building of the Golden Pacic Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the meaning of Article 415(5) of the Civil Code of the Philippines.

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GSIS v. Calsons, Inc. 23 SCRA 891 (1968) In this case, Calsons, Inc. borrowed from GSIS upon the security of a real estate mortgage over ve parcels of land together with all the buildings and improvements now existing thereon or which may hereafter be constructed on the mortgaged properties. GSIS thereafter applied for foreclosure of the mortgage on grounds, inter alia, that Calsons without prior consent of GSIS removed and disposed of the complete band sawmill and lling machine which formed part of the properties mortgaged. Calsons did not deny this allegation but contended that said machines were not included in the mortgage. The Supreme Court ruled that the machineries were part of the immovable since they were permanently attached to the property and installed there by the former owner to meet the needs of certain works or industry therein. Hence, the machineries need not be the subject of a separate chattel mortgage in order to be deemed duly encumbered in favor of GSIS. [8.5] They Must Be Essential and Principal Elements of the Industry or Works

Before movables may be deemed immobilized in contemplation of paragraph 5 of Article 415, it is necessary that they must be essential and principal elements of the industry or works without which such industry or works would be unable to function or carry on the industrial purpose for which it was established.77 We must distinguish, therefore, those movables which become immobilized by destination because they are essential and principal elements in the industry from those which may not be so considered immobilized because they are merely incidental, not essential and principal.78 Thus, cash registers, typewriters, etc., usually found and used in hotels, restaurants, theaters, etc. are merely incidentals and are not and should not be considered immobilized by destination, for these businesses can continue or carry on their functions without these equipments.79 Airline companies use forklifts, jeep-wagons, pressure pumps, IBM machines, etc., which are incidentals, not essentials, and thus retain their movable nature.80 On the other hand, machineries of breweries used in the manufacture of liquor and soft drinks, though movable in nature, are immobilized because
Mindanao Bus Co. v. City Assessor and Treasurer, 6 SCRA 197, 200 (1962). Id. 79 Id. 80 Id.
77 78

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they are essential to said industries; but the delivery trucks and adding machines which they usually own and use and are found within their industrial compounds are merely incidentals and retain their movable nature.81
Mindanao Bus Co. v. City Assessor and Treasurer 6 SCRA 197 (1962) In this case, the City Assessor of Cagayan de Oro City assessed a realty tax on several equipment and machineries of Mindanao Bus Co., a company engaged in the transportation business. These equipment were placed on wooden or cement platforms and can be moved around in the bus companys repair shop. The bus company appealed the assessment to the Board of Tax Appeals on the ground that the same are not realty. The Board of Tax Appeals of the City, however, sustained the city assessor. Thus, the bus company appealed to the Court of Tax Appeals, which likewise sustained the city assessor. In reversing the decision of the Court of Tax Appeals, thereby holding that the equipment in question are not real property, the Supreme Court distinguished between principal and essential elements of the industry from those that are merely incidental. According to the Court, in order that movable equipments to be immobilized in contemplation of the law they must rst be essential and principal elements of an industry or works without which such industry or works would be unable to function or carry on the industrial purpose for which it was established. In this case, the tools and equipment in question are by their nature, not essential and principal elements of Mindanao Bus Co.s business of transporting passengers and cargoes by motor trucks. They are merely incidentals acquired as movables and used only for expediency to facilitate and/or improve its service. Even without such stools and equipments, its business may be carried on. As explained by the Court, the transportation business could be carried on without the repair or service shop if its rolling equipment is repaired or serviced in another shop belonging to another. [8.6] The Industry or Works Must Be Carried On In A Building or On A Piece of Land

Aside from the element of essentiality, paragraph 5 of Article 415 also requires that the industry or works be carried on in a building or on a piece of land.82 In the Mindanao Bus case, for example, the equipments in question were not deemed real property because the transportation
81 82

Id. Id., 201.

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business, according to the Court, is not carried on in a building or permanently on a piece of land, as demanded by law. Likewise, in the Board of Assessment Appeals case,83 the Court held that the steel towers do not fall under paragraph 5 of Article 415 for they are not machineries, receptacles, instruments or implements, and even if they were, the Court declared that they are not intended for industry or works on the land since the Manila Electric Company is not engaged in an industry or works on the land in which the steel supports or towers are constructed.
[8.7] Application of the Doctrine of Estoppel in Article 415(5)

The doctrine of estoppel was likewise applied by the Supreme Court with respect to properties which are considered immobilized by reason of its destination or purpose under paragraph 5 of Article 415. In Sergs Products, Inc. v. PCI Leasing and Finance, Inc.,84 the Court held that the machines therein are proper subjects of a writ of replevin,85 although they are essential and principal elements of the industry because the parties have treated the same as personal property. In the Sergs Products case, Sergs Products Inc. (SPI) and PCI Leasing and Finance, Inc. (PCI) entered into a lease agreement providing that the machines in question were to be considered as personal property, although the same were essential and principal elements in the chocolate-making business of SPI. Subsequently, PCI led a complaint against SPI for sum of money, with an application for a writ of replevin. The sheriff then proceeded to seize the machines in question. SPI contended that the subject machines used in their factory were not proper subjects of the writ of replevin because they were in fact real property having become immobilized by destination. SPI went to the Court of Appeals via an original action for certiorari. The Court of Appeals, however, sustained the writ and held that the machines were personal property. Thus, SPI appealed to the Supreme Court. In holding that the machines are proper subjects of the writ of replevin even if they are considered immobilized under paragraph 5 of Article 415, the Court explained that the lease agreement, of which SPI is a party, clearly
Supra, 74. 338 SCRA 499 (2000). 85 Note: Under the Rules of Court, writs of replevin are issued for the recovery of personal property only.
83 84

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provides that the machines in question are personal property, hence, SPI is estopped from denying the characterization of the subject machines as personal property. The Court cautioned, however, that its holding that the machines should be deemed personal property pursuant to the Lease Agreement is good only insofar as the contracting parties are concerned. The Sergs Products case must be distinguished from Ago v. Court of Appeals.86 In the latter case, Ago executed a chattel mortgage contract in favor of Grace Park Engineering over certain machineries and equipment which the former purchased from the latter to secure the payment of the balance of the price remaining unpaid. When Ago defaulted in his payments, Grace Park instituted extrajudicial foreclosure proceedings of the mortgage. To enjoin said foreclosure, Ago instituted an action against Grace Park. In the said case, Ago and Grace Park arrived at a compromise agreement. When Ago violated the compromise agreement, Grace Park obtained from the court a writ of execution. Pursuant to said writ, the sheriff levied upon and ordered the sale of the sawmill machineries and equipments in question. The sheriff sold the machineries and equipments without prior publication of the notice of sale. It turned out, however, that after purchasing the machineries and equipments from Grace Park, the same had already been assigned by Ago to Golden Pacic Sawmill Inc. in payment of its subscription to the shares of stocks of said corporation. Thereafter, the sawmill machineries and equipments were installed in a building and permanently attached to the ground for use in the sawing of logs carried on in said building by Golden Pacic. In declaring the sale made by the sheriff as null and void because of the absence of publication of the notice of sale, the Supreme Court explained that by the installation of the sawmill machineries in the building of the Golden Pacic Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary and permanent part of the building or real estate on which the same was constructed, converting the said machineries and equipments into real estate within the meaning of Article 415(5) of the Civil Code of the Philippines. Note that in the Ago case, even if the machineries in question were made the subject matter of a chattel mortgage contract, the doctrine of
86

Supra.

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estoppel was not applied because the interest of a third party (Golden Pacic Sawmill, Inc.) would be prejudiced. And besides, the holding in the Sergs Products case that the machines should be deemed personal property is good only insofar as the contracting parties to the Lease Agreement are concerned. In the Ago case, Golden Pacic was not a party to the chattel contract, hence, it was not bound by the agreement of the parties therein treating the machines as personal property.
Makati Leasing and Finance Corp. v. Wearever Textile Mills, Inc. 122 SCRA 294 (1983) In this case, Wearever Textile Mills, Inc. executed a chattel mortgage contract in favor of Makati Leasing and Finance Corporation covering certain raw materials and machinery. Upon default, Makati Leasing led a petition for judicial foreclosure of the properties mortgaged. Acting on Makati Leasings application for replevin, the lower court issued a writ of seizure. Pursuant thereto, the sheriff enforcing the seizure order seized the machinery subject matter of the mortgage. In a petition for certiorari and prohibition, the Court of Appeals ordered the return of the machinery on the ground that the same cannot be the subject of replevin because it is a real property pursuant to Article 415 of the new Civil Code, the same being attached to the ground by means of bolts and the only way to remove it from Wearever textiles plant would be to drill out or destroy the concrete oor. When the motion for reconsideration of Makati Leasing was denied by the Court of Appeals, Makati Leasing elevated the matter to the Supreme Court. In reversing the decision of the Court of Appeals and reinstating the decision of the lower court, the Court explained Examining the records of the instant case, We nd no logical justication to exclude the rule out, as the appellate court did, the present case from the application of the above-quoted pronouncement. If a house of strong materials, like what was involved in the above Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from the denying the existence of the chattel mortgage. In rejecting petitioners assertion on the applicability of the Tumalad doctrine, the Court lays stress on the fact that the house involved therein was built on a land that did not belong to the owner

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of such house. But the law makes no distinction with respect to the ownership of the land on which the house is built and We should not lay down distinctions not contemplated by law. It must be pointed out that the characterization by the private respondent is indicative of the intention and impresses upon the property the character determined by the parties. As stated in Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may by agreement treat as personal property that which by nature would be a real property, as long as no interest of third parties would be prejudiced thereby.

9. Real property under Article 415(6) Animal houses, pigeon-houses, etc.


[9.1] Animal Houses and Pigeon Houses, Etc.

The structures mentioned in paragraph 6 are immovable by destination and the Code requires that they be placed by the owner of the land in order to acquire the same nature or consideration of real property. Even if not placed by the owner, however, such structures may still qualify as real property under paragraph 1 of Article 415, being a construction attached to the soil, provided that such attachment must be of a permanent character.
[9.2] Animals Included

It is worthy to note that animals in the pigeon-houses, beehives, shponds and breeding places mentioned in paragraph 6 of Article 415 are likewise considered as real property. However, these animals will be considered as personal property under laws which so provide for them pursuant to the second paragraph of Article 416 referring to real property which by any special provision of law is considered as personal property. Thus, the sh in shponds will be considered as personal property for purposes of theft under the Revised Penal Code. 10. Real Property under Article 415(7): Fertilizers These are immovables by destination. The fertilizers must actually be used on the land because it is only then that the intention of the

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owner to use them on the tenement is beyond doubt.87 Hence, fertilizers kept in the farmhouse are not immovable.88 11. Real Property under Article 415(8) Mines, quarries, slag dumps, waters ...
[11.1] Mines, Quarries and Slag Dumps

They are considered immovable property while the matter thereof forms part of the bed, that is, the matter thereof remains unsevered from the soil. Once separated they are no longer mines but minerals and are considered as personal property.
[11.2] Waters

The waters, either running or stagnant, referred to here are those which are found in their natural beds such as owing streams, rivers or canals. 12. Real Property under Article 415(9): Docks and Structures They are considered as immovables, though oating, as long as they are intended by their nature and object to remain at a xed place on a river, lake, or coast. In one case,89 the Provincial Assessor of Batangas City assessed a real estate tax on the power barges operated by FELS Energy, Inc., which power barges were moored at Balayan Bay in Calaca, Batangas. On the question of whether the power barges are real property, the Court held that they are so and are categorized as immovable property by destination pursuant to the provisions of Article 415(9) of the Civil Code. 13. Real Property under Article 415(10)
[13.1] Rights as Property

As discussed in supra 1.2, the concept of property extends to rights provided that the same is patrimonial in nature. Patrimonial

II Tolentino, Civil Code, 1982 ed., p. 20. 3 Manresa 32. 89 FELS Energy, Inc. v. The Province of Batangas, et al., G.R. No. 168557, Feb. 16, 2007.
87 88

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rights, in turn, are either (1) real the power belonging to a person over a specic thing, without a passive subject individually determined against whom such right may be personally exercised; it is enforceable against the whole world; or (2) personal the power belonging to one person to demand of another, as a denite passive subject, the fulllment of a prestation to give, to do or not to do.
[13.2] How Rights Classied

Whether a right is personal or real property shall depend on: (1) whether it is a personal or real right, and (2) whether the subject matter thereof is a personal or real property. Except for rights arising from contracts for public works which are classied as real property under paragraph 10 of Article 415, all personal rights will fall under personal property regardless of the subject matter thereof. With respect to real rights, however, the classication thereof will depend on its subject matter. If the subject matter of the real right is a real property, then such real right is a real property. This is clear from paragraph 10 of Article 415 which classies as real property real rights over immovable property. Thus, a real estate mortgage is a real right and a real property by itself.90 On the other hand, if the subject matter of the real right is a personal property, as in the case of chattel mortgage, such real right is classied as personal property. 14. Denition of Real Property in Real Estate Taxation
[14.1] Concept of Real Property in Realty Taxation

The area of real property taxation presents difculty to the courts on the matter of the classication of property for taxation purposes because there are highly controversial and borderline cases which do not fall squarely within the provisions of Article 415 of the New Civil Code and yet, the property involved therein may rightfully be classied as realty pursuant to existing tax laws. Hence, in the area of real property taxation, there is a nagging question as to which law shall govern the classication of property for taxation purposes is it the provisions of the Civil Code or the provisions of tax laws?

90 MBTC v. Alejo, 364 SCRA 812, 819 (2001); see also Hongkong & Shanghai Bank v. Aldecoa & Co., 30 Phil. 255, 273.

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The various decisions of the Supreme Court on the above question are not source of enlightenment but even add to the confusion because there were cases decided solely on the basis of Article 415 of the New Civil Code91 but there were also cases decided on the basis of the provisions of the Assessment Law (Commonwealth Act No. 470) and the Real Property Tax Code (Presidential Decree No. 464).92 In Benguet Corporation v. Central Board of Assessment Appeals,93 the Supreme Court even recognized the fact that the Real Property Tax Code does not dene real property but simply says that the realty tax is imposed on real property, such as lands, buildings, machinery and other improvements afxed or attached to real property. The same observation was arrived at by the Court in the Board of Assessment Appeals v. Manila Electric Co.,94 where it was held that the tax law did not provide for a denition of real property. In the Board of Assessment case, it was held that that the steel supports or towers in question were not subject to realty tax because they were not real property under either paragraphs (1), (3) or (5) of Article 415 of the New Civil Code. In the Mindanao Bus case, the Court likewise held that the imposition of realty tax on the maintenance and repair equipment in question was not proper because the properties involved were not real property under paragraph (5) of Article 415. In Meralco Securities Industrial Corp. v. CBAA,95 the Court, on the other hand, afrmed the propriety of the imposition of realty tax on the pipeline system of Meralco Securities on the ground that the same was considered a construction adhering to the soil, hence, real property under paragraph (1) of Article 415. In Manila Electric Co. v. CBAA,96 a case involving two storage tanks, the Court held that the imposition of real tax was proper even if the storage tanks were not embedded in the land. The Court recognized

91 Mindanao Bus Co. v. City Assessor and Treasurer, 6 SCRA 197 (1962); Board of Assessment Appeals v. Manila Electric Co., 10 SCRA 68 (1964) and Manila Securities Industrial Corp. v. Central Board of Assessment Appeals, 114 SCRA 261 (1982). 92 Caltex (Phils.), Inc. v. CBAA, 114 SCRA 296 (1982) and Manila Electric Co. v. CBAA, 114 SCRA 273 (1982). 93 G.R. No. 106041, Jan. 29, 1993. 94 Supra. 95 Supra. 96 Supra.

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that this was a borderline case which could not be decided solely on the basis of Article 415 but by the pertinent provisions of the Assessment Law (Commonwealth Act No. 470) and the Real Property Tax Code (Presidential Decree No. 464).97 In Caltex (Phils.), Inc. v. CBAA, involving equipment and machinery permanently afxed by Caltex to its gas station rented from a certain lessor, the Court held that the issue of whether the said equipment and machinery are subject to realty tax should be resolved primarily under the provisions of the Assessment Law and the Real Property Tax Code. In these two cases, had the Court applied the provisions of Article 415, the properties therein involved would not be classied as real property. In applying the provisions of the tax laws in lieu of Article 415, the Court justied the same on the basis of its dictum in Standard Oil Co. of New York v. Jaramillo98 it is a familiar phenomenon to see things classed as real property for purposes of taxation which on general principle might be considered personal property. In the light of the foregoing cases, it appears that in real property taxation, the classication of property for taxation purposes is not the exclusive domain of the Civil Code, especially in borderline cases such as that of Manila Electric Co. v. CBAA and Caltex (Phils.), Inc. v. CBAA, where the provisions of existing tax laws were primarily applied. In these borderline cases, the property involve is usually either machinery or improvements. It is usually with respect to these two kinds of property that a problem may arise in the matter of their classication for taxation purposes because existing tax laws may provide for specic denitions of what may be considered as machinery or improvement.
[14.2] Machinery and Improvements Subject to Realty Tax [14.2.1] Machinery

The old Real Property Tax Code and the present provisions on Real Property Taxation under the Local Government Code of 1991 (R.A. No. 7160), both imposed realty tax on land, building, machinery, and other improvements which are not specically exempted therein. However, both tax laws dene the terms machinery and improvement in a
97 The precursor of the present Real Property Taxation under Title 2, Book II of the Local Government Code of 1991 (R.A. No. 7160). 98 44 Phil. 630, 633.

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manner which drastically departs from the provisions of Article 415 of the Civil Code. For example, Section 3 of the Real Property Tax Code denes machinery, as follows: m) Machinery shall embrace machines, mechanical contrivances, instruments, appliances and apparatus attached to the real estate. It includes the physical facilities available for production, as well as the installations and appurtenant service facilities, together with all other equipment designed for or essential to its manufacturing, industrial or agricultural purposes. Under the Title on Real Property Taxation in the Local Government Code of 1991, the term machinery is dened, thus: (o) Machinery embraces machines, equipment, mechanical contrivances, instruments, appliances or apparatus which may or may not be attached, permanently or temporarily, to the real property. It includes the physical facilities for production, the installations and appurtenant service, facilities, those which are mobile, self-powered or self-propelled, and those not permanently attached to the real property which are actually, directly and exclusively used to meet the needs of the particular industry, business or activity and which by their very nature and purpose are designed for, or necessary to its manufacturing, mining, logging, commercial, industrial or agricultural purposes; Note that both under the old Real Property Tax Code and the present law on Real Property Taxation, in order to classify machinery as realty for taxation purposes, what is important is that the same must be essential or necessary to the operation of the business or industry. If so, it is classied as realty subject to real property tax, even if the other requirements of paragraph (5) of Article 415 of the New Civil Code may not be present. Thus, in Caltex (Phils.), Inc. v. CBAA, the equipment and machinery therein involved were held to be subject to realty tax because they are necessary to the operation of the gas station, for without them the gas station would be useless.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Immovable Property

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[14.2.2]

Improvements

The old Real Property Tax Code99 dened a taxable improvement, as follows: k) Improvement is a valuable addition made to property or an amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its value, beauty or utility or to adapt it for new or further purposes. A similar denition is to be found in the present law on Real Property Taxation:100 (m) Improvement is a valuable addition made to a property or an amelioration in its condition, amounting to more than a mere repair or replacement of parts involving capital expenditures and labor, which is intended to enhance its value, beauty or utility or to adapt it for new or further purposes. As to whether a structure constitutes an improvement so as to partake of the status of realty, according to the Supreme Court, would depend upon the degree of permanence intended in its construction and use.101 The expression permanent as applied to an improvement does not imply that the improvement must be used perpetually but only until the purpose to which the principal realty is devoted has been accomplished.102 It is sufcient that the improvement is intended to remain as long as the land to which it is annexed is still used for the said purpose.103 In addition, the tax laws require that the structure must be such that it enhances the value and utility of the property to which it is annexed. In the case of Benguet Corp. v. CBAA, et al.,104 the petitioner questioned the imposition of real estate taxes on the tailings dam it
See Sec. 3(k), Real Property Tax Code. See Sec. 199(m), R.A. No. 7160. 101 Benguet Corp. v. CBAA, et al., G.R. No. 106041, Jan. 29, 1993. 102 Id. 103 Id. 104 Supra.
99 100

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constructed, arguing that the dam cannot be subjected to realty tax as a separate and independent property because it does not constitute an assessable improvement on the mine. In sustaining the imposition of a realty tax over the tailings dam, the Court held that the dam falls within the denition of an improvement because it is permanent in character and it enhances both the value and utility of petitioners mine. The same ruling was made by the Supreme Court in the case of Manila Electric Co. v. CBAA,105 involving two storage tanks, which while not embedded in the land were nonetheless considered as improvements on the land because (1) they enhanced its utility and rendered it useful to the oil industry and (2) they have been installed with some degree of permanence as receptacles for the considerable quantities of oil needed by MERALCO for its operations. Chapter 2 MOVABLE PROPERTY
Art. 416. The following things are deemed to be personal property: (1) Those movables susceptible of appropriation which are not included in the preceding article; (2) Real property which by any special provision of law is considered as personalty; (3) and (4) In general, all things which can be transported from place to place without impairment of the real property to which they are xed. (335a) Art. 417. The following are also considered as personal property: (1) Obligations and actions which have for their object movables or demandable sums; and (2) Shares of stock of agricultural, commercial and industrial entities, although they may have real estate. (336a) Forces of nature which are brought under control by science;

105

Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION CLASSIFICATION OF PROPERTY Movable Property

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15. Movable Property


[15.1] No Precise Denition of the Term

The Civil Code does not likewise dene the term personal or movable property. As in the case of real or immovable property, the Code simply enumerates in Articles 416 and 417 thereof what are to be considered as personal property. Note that under our law, the meaning and application of the term personal property depends upon the meaning and application which our law gives to the term real property. Thus, under our law, all properties which are not real are personal. Hence, while certain property may, by its nature, be moved from one place to another, it will not be considered as movable property if it is classied as immovable property under the provisions of Article 415 because of the purpose for which it has been placed in an immovable, in which case, it shall partake of the nature of the latter and shall be classied as an immovable property by destination.
[15.2] What May Be Considered Movable Property, In General

In general, all things susceptible of appropriation which can be transported from place to place without impairment of the real property to which they are xed106 and not included in the enumeration in Article 415107 are classied as personal or movable property. By way of example: if certain machineries for use in an industry or works are placed on the tenement not by the owner of the tenement and they are not attached to the tenement in a xed manner but can, in fact, be separated therefrom without causing substantial injury, they are considered as movable property. Note that by their nature, these machineries can be transported from place to place and they do not become immobilized, either by reason of incorporation (under Article 415[3]) because they can be separated from the tenement without causing substantial injury or by reason of destination (under Article 415[5]) because they are not placed on the tenement by its owner, which is a requirement under this paragraph for the movable to be immobilized.

106 107

Art. 416(4), NCC. Art. 416(1), NCC.

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[15.3] Realty Considered as Personalty By Special Provisions of Law

As discussed in supra 5.2 and 9.2, there are certain properties classied under Article 415 of the Code as real property which may, by special provision of law, be considered as personal property for purposes of the application of the said special provision of law. In applying the provisions of the Revised Penal Code for the commission of the crime of theft, for example, the animals in the animal houses referred to in paragraph 6 of Article 416 will be considered as personal property. Also, for purposes of attachment, execution and the Chattel Mortgage Law, ungathered fruits referred to in the second paragraph of Article 415 shall be treated as personal property. To a certain extent, therefore, the provision of the second paragraph of Article 416 is an attempt to qualify the rules outlined in Article 415 of the Code.
[15.4] Forces of Nature

Paragraph (3) of Article 416 is an attempt to clarify the rule outlined in Article 414 that only things susceptible of appropriation are considered as property. The forces of nature in their original state are not, ordinarily, subject to appropriation because of the degree of difculty in appropriating them. However, paragraph (3) of Article 416 claries that if these forces of nature are brought under the control of man through the help of science, thereby becoming appropriable, they are now considered as property and classied as personal property. Hence, gas108 and electricity109 are considered personal property under this provision.
[15.5] Chose in Action

A chose in action is personal property110 and it is an intangible or incorporeal right.111 A chose in action means, literally, a thing in action,112 and is the right of bringing an action,113 or a right to recover a

US v. Tambunting, 41 Phil. 364. US v. Carlos, 21 Phil. 553. 110 Art. 417(1), NCC; Ark. Gregory v. Colvin, 363 S.W. 2d 539, 540, 235 Ark. 1007. 111 Tex. Browne v. King, Civ. App., 196 S.W. 884, afrmed 235 S.W. 522, 111 Tex. 330. 112 Gregory v. Colvin, supra. 113 Id.
108 109

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debt or money,114 or a right or proceeding in a court of law to procure the payment of a sum of money,115 or a right to recover a personal chattel or a sum of money by action.116 As discussed in supra 13.2, since a chose in action is merely a personal right, it is to be classied as a personal property.
[15.6] Obligations In General

Every obligation creates a personal right on the part of the creditor to demand for its fulllment or performance. The right to demand for the performance of the obligation is, by itself, a property. Since the right to demand the performance of the obligation is simply a personal right on the part of the creditor, such right is classied as personal property pursuant to the discussion in supra 13.2.
Art. 418. Movable property is either consumable or non-consumable. To the rst class belong those movables which cannot be used in a manner appropriate to their without their being consumed; to the second class belong all the others. (337)

16. Consumable and Non-consumable


[16.1] Consumable and Non-Consumable

The classication of property into consumable or non-consumable applies only to movable property and does not nd application to immovable property. In addition, such classication does not nd application to all kinds of movable property but only to those which are corporeal in nature. As dened, a consumable is a movable which cannot be used in a manner appropriate to its nature without itself being consumed. For example, a cigarette cannot be used in a manner appropriate to its nature, i.e., for smoking, without itself being consumed. A non-consumable, on the other hand, is a movable which can be used in a manner appropriate to its nature without itself being consumed. An example of a non-consumable is table which can be used in the manner appropriate to its nature and, yet, it will not be consumed.

114 115

Ill. People, for Use of Vancil Motor Co. v. Weaver, 40 N.E. 2d 83, 313 Ill. App. 317. N.Y. Niles v. Mathusa, 47 N.Y.S. 38, 20 App. Div. 483, afrmed 57 N.Y. 184, 162 Ala. Peavy Lumber Co. v. Murchison, 130 So. 2d. 338, 272 Ala. 251.

N.Y. 546.
116

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PROPERTY

[16.2] Distinguished From Fungible and Non-Fungible

Aside from the classication provided in Article 418 of the Civil Code, movables may likewise be classied into fungibles or nonfungibles. In classifying movables into consumable or non-consumable, the basis of the classication is the very nature of the corporeal object itself. On the other hand, the basis of the classication of movables into fungible or non-fungible is simply the intention of the parties. The movable is classied as fungible if, by the intention of the parties, it can be replaced by another of the same kind; otherwise, it is a nonfungible. Chapter 3 PROPERTY IN RELATION TO THE PERSON TO WHOM IT BELONGS
Art. 419. Property is either of public dominion or of private ownership. (338)

17. Public Dominion and Private Ownership


[17.1] Public Dominion and Private Ownership

From the point of view of ownership, property is classied either as that of public dominion or that of private ownership.117 However, this classication is not complete and accurate since the Civil Code fails to consider the basic difference between patrimonial property and ordinary private property. The Code seems to suggest that those properties of the State which are called patrimonial are in equal footing with properties of private ownership. But this should not be the case. As will be explained in infra 23.3, patrimonial properties of the State are not exactly in the same category as ordinary private properties. The latter can be acquired thru adverse possession while the adverse possession of the former cannot ipso facto ripen into ownership as it is an iron-clad dictum that prescription can never lie against the State.118

117 118

Art. 419, NCC. Alonso v. Cebu Country Club, Inc., 417 SCRA 115, 127.

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[17.2] Classication of Property From the Point of View of Ownership

From the viewpoint of ownership, the Civil Code classies properties, as follows: (1) in relation to the State, its properties are either of public dominion or patrimonial properties;119 (2) in relation to the political subdivisions (provinces, cities and municipalities), their properties are either of public dominion (for public use) or patrimonial properties;120 (3) in relation to persons and entities other than the State and its political subdivisions (or private persons, either individually or collectively), their properties are denominated as that of private ownership.121
Art. 420. The following things are property of public dominion: (1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character; (2) Those which belongs to the State, without being for public use, and are intended for some public service or for the development of the national wealth. (339a)

18. Property of State: Public Dominion


[18.1] Kinds of Property of Public Dominion Pertaining to the State

In relation to the State, there are three kinds of property of public dominion: (1) those that are intended for public use; (2) those that are intended for some public service; and (3) those that are intended for the development of national wealth.122
[18.2] Public Dominion, as Referring To Public Ownership

In a sense, the term public dominion means ownership by the public in general123 or public ownership. As used in this sense, the ownership referred to is a special collective ownership for the general use and enjoyment, an application to the satisfaction of collective
See Arts. 420 and 421, NCC. See Arts. 423 and 424, NCC. 121 See Art. 425, NCC. 122 Art. 420, NCC. 123 Note that the old Civil Code used the term public ownership instead of public dominion.
119 120

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needs, and resides in the social group.124 Viewed in this light, the State holds these properties not in the concept of an owner125 but only in consequence of its territorial integrity.126 Hence, the relation of the State to these properties arises from the fact that the State is the juridical representative of the social group, and as such it takes care of them, preserves them and regulates their use for the general welfare.127 The term public dominion is to be viewed as referring to public ownership in relation to the properties of the State intended for public use or for some public service mentioned in paragraph numbers (1) and (2) of Article 420. Since the ownership of these properties belong to the public in general and not to the State, the latter may not make them the object of commerce unless they are properly converted into patrimonial properties pursuant to the provisions of Article 422 of the New Civil Code.
[18.3] Public Dominion, as Referring To State Ownership

In another sense, the term public dominion may also mean properties or things held by the State by regalian right.128 Under Section 2 of Article XII of the 1987 Philippine Constitution, which reafrms the regalian doctrine or jura regalia earlier enshrined in the 1935 Philippine Constitution, all lands of the public domain as well as all natural resources are owned by the State.129 While these properties are owned by the State, they remain to be part of the public dominion. Hence, in Chavez v. Public Estates Authority,130 for example, the Supreme Court held that submerged lands are part of the States inalienable natural resources and classied as property of public dominion.

124 Laurel v. Garcia, 187 SCRA 797, 808 (1990), citing 3 Manresa, 66-69; Tolentino, Commentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26. 125 See II Tolentino, Civil Code of the Philippines, 1992 ed., p. 30. 126 Caguioa, Civil Code of the Philippines, Vol. II, 1966 ed., p. 30. (Note: According to Justice Fernando in Lee Hong Hok v. David, 48 SCRA 372, 377 [1972], the government authority possessed by the state which is appropriately embraced in the concept of sovereignty comes under the heading of imperium.) 127 See II Tolentino, Civil Code of the Philippines, 1992 ed., p. 30. 128 Republic v. Alagad, 169 SCRA 455, 461 (1989). 129 The capacity of the State to own or acquire property is the states power of dominium. (Separate Opinion of J. Puno in Cruz v. Secretary of Environment and Natural Resources, 347 SCRA 128, 165). 130 415 SCRA 403 (2003).

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[18.4] Public Ownership Distinguished From State Ownership

Property of public dominion falling under the concept of State ownership by virtue of regalian right must be distinguished from property of public dominion in the concept of public ownership. In the latter, not even the State may make them the object of commerce. Hence, they cannot be leased, donated, sold or be the object of any contract.131 With respect to natural resources, they are not, however, totally outside the commerce of man as the Constitution allows the State to enter into co-production, joint venture or production-sharing agreements with private individuals or corporations for their exploration, development and utilization.132 With respect to shponds, for example, which are likewise owned by the State,133 they may be leased although they may not be alienated. Under Section 45 of R.A. No. 8550, otherwise known as The Philippine Fisheries Code of 1998, public lands such as tidal swamps, mangroves, marshes, foreshore lands and ponds suitable for shery operations shall not be disposed or alienated but they may be the subject matter of a shpond lease agreement.
[18.5] Intent to Devote, Sufcient

For a property of the State to fall under public dominion, it is not necessary that the same be actually used for some public use or for some public service. In the case of Manila Lodge No. 761 v. Court of Appeals,134 the Supreme Court claried that in order to be property of public dominion an intention to devote it to public use is sufcient and it is not necessary that it must actually be used as such. Hence, it matters not that the property is not actually devoted for public use or for some public service.135 If the property has been intended for such use or service, and it has not been devoted to other uses and no measures have been adopted which amount to a withdrawal thereof from public use or service, the same remains property of public dominion, the fact that it is not actually devoted for public use or service notwithstanding.136

Municipality of Cavite v. Rojas, 30 Phil. 602. See Sec. 2, Article XII of the 1987 Constitution. 133 Menchavez v. Teves, Jr., 449 SCRA 380, 391 (2005). 134 73 SCRA 162, 182-183 (1976). 135 Agripino Capitulo, et al. v. Alejo Aquino, No. 15488-R, (CA) 53 O.G. 1477, November 19, 1956. 136 Ibid.
131 132

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Manila Lodge No. 761 v. Court of Appeals 73 SCRA 162 (1976) In 1905, the Philippine Commission enacted Act No. 1360 authorizing the City of Manila to reclaim a portion of the Manila Bay and the reclaimed area was to form part of the Luneta extension. The Act likewise provided that the reclaimed area shall be the property of the City of Manila. The City of Manila was likewise authorized to lease the northern side of the reclaimed area for a hotel site. Subsequently, the Philippine Commission passed Act No. 1657, amending Act No. 1360, to authorized the City of Manila to lease or sell the portion set aside as a hotel site. After the reclamation, the City of Manila sold a portion of the reclaimed land (located on the southern end) to Manila Lodge which, in turn, sold the same to Tarlac Development Corp. After such purchase, the City of Manila led a petition in court for the re-annotation of its right to repurchase the property sold to Manila Lodge, which petition was granted by the court. Thereafter, the TDC led an action to be declared the purchaser of the property in good faith. After trial, the trial court found the subject land to be part of the public park or plaza and, therefore, part of the public dominion. Consequently, the court declared the sale of the subject land by the City of Manila to Manila Lodge void. Both Manila Lodge and TDC appealed from the said decision. One of the issues raised by the appellants was that in order that the character of property for public use may be so attached to a plaza, the latter must be actually constructed or at least laid out as such. They contended that the subject property was not yet constructed as a plaza or at least laid out as a plaza when it was sold by the City of Manila. On this particular issue, the Supreme Court held that in order to be property of public dominion an intention to devote it to public use is sufcient. The Court explained: It is not necessary, therefore, that a plaza be already constructed or laid out as a plaza in order that it be considered property for public use. It is sufcient that it be intended to be such. In the case at bar, it has been shown that the intention of the lawmaking body in giving to the City of Manila the extension to the Luneta was not a grant to it of patrimonial property but a grant for public use as a plaza. [18.6] Public Use and Public Service, Distinguished

In Villarico v. Sarmiento,137 the Supreme Court dened the term public use as that use which is not conned to privileged individuals, but is open to the indenite public. Hence, properties for public use may be distinguished from properties intended for public service in that the former may be used indiscriminately by the public while
137

442 SCRA 110, 115 (2004), citing US v. Tan Piaco, 40 Phil. 853, 856 (1920).

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the latter, although used for the benet of the public, cannot be used indiscriminately by anyone but only by those that are authorized by proper authority.138 19. Property of Public Dominion: For Public Use
[19.1] Enumeration of Properties of the State for Public Use

The rst paragraph of Article 420 enumerates the properties of public dominion which are intended for public use, as follows: roads, canals, rivers, torrents, ports and bridges constructed by the State; banks, shores, roadsteads, and others of similar character. Articles 5 and 6 of P.D. No. 1067, as amended, otherwise known as The Water Code of the Philippines, add to the above enumeration, the following: Art. 5. The following belong to the State: a.G b.G c.G d.G Rivers and their natural beds; Continuous or intermittent waters of springs and brooks running in their natural beds and the bed themselves; Natural lakes and lagoons; All other categories of surface waters such as water owing over lands, water from rainfall whether natural or articial, and water from agriculture runoff, seepage and drainage; Atmospheric water; Subterranean or ground waters; and Seawater.

e.G f.G g.G

Art. 6. The following waters found on private lands also belong to the State: a. b. c. d. e.
138

Continuous or intermittent waters rising on such lands. Lakes and lagoons naturally occurring on such lands; Rain water falling on such lands; Subterranean or ground waters; and Waters in swamps and marshes.

II Caguioa, Civil Code of the Philippines, 1966 ed., p. 31.

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(A)

Roads

[19.2] Roads

The roads referred to under Article 420(1) of the New Civil Code are the national highways and roads constructed and maintained by the national government through the Department of Public Works and Highways. Provincial, city and municipal roads and streets, on the other hand, are properties of public dominion of the local government unit concerned and are governed by Article 424 of the Civil Code and the provisions of the Local Government Code. (B) Canals

[19.3] Canals

A canal is usually an articial waterway, drainage, irrigation or navigation.139 In the case of Santos v. Moreno,140 the Supreme Court, quoting Article 339(1) of the Spanish Civil Code of 1889,141 held that canals constructed by the State and devoted to public use are of public ownership (or of public dominion). Conversely, said the Court, canals constructed by private persons within their private lands and devoted exclusively for private use must be of private ownership. In the Santos case, the canals involved were declared to be of private ownership since they were constructed by the owners of hacienda San Esteban for their exclusive use and prohibited the public from using them. In the case, however, of Mercado v. Municipal President of Macabebe,142 while the canal involved (Batasan-Limasan) was originally dug by the estates owner, the Supreme Court held that he had lost any right over it by prescription since he allowed said canal to be used by the public for navigation and shing purposes for a period of twenty-two (22) years. In this case, the canal could have been of private ownership had not its builder lost it by prescription. In Bautista v. Alarcon,143 the plaintiff therein sought the injunction against the defendants who allegedly constructed a dam across a public
Magno v. Vargas, 54331-R, August 27, 1979. 21 SCRA 1141, 1166 (1967). 141 Which provisions were substantially reproduced in Article 420(1) of the new Civil
139 140

Code.
142 143

59 Phil. 592 (1934). 23 Phil. 631.

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canal which conveyed water from the Obando River to shponds belonging to several persons. The canal was situated within a public land. In sustaining the injunction granted by the lower court, the Supreme Court said: No private person has a right to usurp possession of a watercourse, branch of a river, or lake of the public domain and use, unless it shall have been proved that he constructed the same within property of his exclusive ownership, and such usurpation constitutes a violation of the legal provisions which explicitly exclude such waterways from the exclusive use or possession of a private party. (Italics supplied) In view of the foregoing cases, the rule appears to be that if a canal is constructed by private person within his private land and devoted it exclusively for private use, the same is of private ownership. However, if the canal is situated within a public property or the same is constructed by the State and devoted to public use, such canal is property of public dominion.
Mercado v. Municipal President of Macabebe 59 Phil. 592 (1934) The predecessor-in-interest of the plaintiff was the owner of an hacienda in which owed a river and a creek near each other. The owner of the hacienda made an excavation connecting these two bodies of water, constructing a sort of canal known as Batasan-Limasan. This canal was then used not only by residents of the hacienda, but also by people of nearby barrios and municipalities as a means of communication in attending to their needs. This continued from 1906 to 1928, when the owner of the hacienda closed the two openings of the Batasan-Limasan and converted it into a sh pond. The government ordered the removal of the dikes closing both ends of the Batasan-Limasan, and this case was brought as an appeal from that order. In holding that the builder of the canal lost it by prescription, the Supreme Court explained And even granting that the Batasan-Limasan creek acquired the proportions which it had, before it was closed, as a result of excavations made by laborers of the appellants predecessor-ininterest, it being a fact that, since the time it was opened as a water route between the Nasi River and Limasan creek, the owners thereof as well as strangers, that is, both the residents of the hacienda and those of other nearby barrios and municipalities, had been using it not only for their bancas to pass through but also for shing

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purposes, and it being also a fact that such was the condition of the creek at least since 1906 until it was closed in 1928, if the appellant and her predecessors-in-interest had acquired any right to the creek in question by virtue of excavations which they had made thereon, they had lost such right through prescription, inasmuch as they failed to obtain, and in fact they have not obtained, the necessary authorization to devote it to their own use to the exclusion of all others. The use and enjoyment of a creek, as any other property susceptible of appropriation, may be acquired or lost through prescription, and the appellant and her predecessors in interest certainly lost such right through the said cause, and they cannot now claim it exclusively for themselves after the general public had been openly using the same from 1906 to 1928. xxx

(C)

Rivers

[19.4] River is a Composite Term

Although Article 420 of the New Civil Code speaks only of rivers and banks, rivers is a composite term which includes: (1) the running waters, (2) the bed, and (3) the banks.144 All these constitute the river.145 Since a river is but one compound concept, it should have only one nature, i.e., it should either be totally public or completely private. And since rivers are of public ownership, it is implicit that all the three component elements be of the same nature also.146 However, to dispel all possible doubts, Article 420, paragraph 1 of the New Civil Code and Article 5, paragraph (a) of the Water Code of the Philippines, expressly make all three elements properties of public dominion.
[19.5] Natural Bed of a River

The bed of the river is also classied as property of the public dominion.147 In the case of Binalay v. Manalo,148 it was held that the buyer did not acquire private ownership of the bed of the eastern branch of the Cagayan River even if it was included in the deeds of absolute

144 Binalay v. Manalo, 195 SCRA 374, 384 (1991), citing Hilario v. City of Manila, 19 SCRA 931 (1967). 145 Hilario v. City of Manila, supra, p. 939. 146 Id. 147 Art. 502(1), NCC; Art. 5(a), Water Code of the Philippines; see also Binalay v. Manalo, supra, 384; Republic v. CA, 132 SCRA 514 (1984). 148 Supra.

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sale executed by the sellers since the sellers could not have validly sold land that constituted property of public dominion. In Republic v. Court of Appeals,149 the Court ruled that the lower court cannot validly order the registration of two lots in the names of private respondents since these lots were portions of the bed of the Meycauayan river and are therefore classied as property of the public domain under Article 420, paragraph 1 and Article 502, paragraph 1 of the Civil Code of the Philippines.
[19.6] Extent of River Bed

What is the extent of the river bed? Article 70 of the Law of Waters of August 3, 1866 denes the natural bed or channel of a creek or river as the ground covered by its waters during the highest oods.150 The Supreme Court had the occasion to apply this provision in the case of Binalay.151 In the above-mentioned case, Manalo purchased two parcels of land: (1) the rst parcel, consisting of 8.65 hectares, was purchased from Faustina Taccad; and (2) the second parcel, consisting of 1.80 hectares, was purchased from Gregorio Taguba. During the cadastral survey conducted in Balug, Tumauini, Isabela on October 21, 1969, the two parcels of land purchased by Manalo were surveyed and consolidated into one lot, designated as Lot No. 307, which contains a total area of 4.6849 hectares, broken down as follows: (1) the whole of 1.80 hectares acquired from Taguba; and (2) 2.8489 hectares acquired from Taccad. As the survey was taken during the rainy season, a portion of the land bought from Taccad then under water was left unsurveyed and was not included in Lot 307. In this case, it appears that the Cagayan River forks at a certain point to form two branches the western and the eastern and then unites at the other end to form a narrow strip of land. The eastern branch of the river cuts through the land of Manalo and is inundated with water only during the rainy season. It likewise appear that the submerged or the unsurveyed portion of the land of Manalo is the bed of the eastern branch of Cagayan River. For about eight months of the year (from January to August) when the level of the water at the
Supra. cited in Binalay v. Manalo, supra, 382. 151 Supra.
149 150

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point of where the Cagayan River forks is at its ordinary depth, river water does not ow into the eastern branch. And while this condition persists, the eastern bed is dry and is susceptible to cultivation. During the rainy season (September to December), however, the water level in the Cagayan River increases. As the river becomes swollen due to heavy rains, the unsurveyed area of Manalos property would be inundated with water, causing the eastern bed to be covered with owing river waters. On the question of whether the unsurveyed area of Manalos alleged property is part of the natural bed of the eastern branch of the Cagayan River, the Supreme Court applied the provisions of Article 70 of the Law of Waters of August 3, 1866 which denes the natural bed or channel of a creek or river as the ground covered by its waters during the highest oods. According to the Court, the highest oods in the eastern branch of the Cagayan River occur with the annual coming of the rains as the river waters in their onward course cover the entire depressed portion in Manalos property. As a consequence, the Supreme Court declared the regularly submerged portion or the eastern bed of the Cagayan River to be property of public dominion.
[19.7] Banks of Rivers

Riverbanks are expressly declared to be property of public dominion in paragraph 1 of Article 420 of the New Civil Code. The phrase banks of a river is understood to be those lateral strips or zones of its beds which are washed by the stream only during such high oods as do not cause inundations.152 In other words, the banks refer to the lateral lines or strips reached by the waters when the river is at high tide.153 Applying the foregoing denition, the Supreme Court absolved the defendants in the case of Hilario v. City of Manila,154 from any liability to Hilario since according to the Court they were extracting gravel and sand only from the banks of the San Mateo River which constitute part of the public domain and not from the property of Hilario. In
152

Hilario v. City of Manila, supra, 938, citing Art. 73 of the Law of Waters of August 3, Ibid., at 946. Supra.

1866.
153 154

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this case, Hilario sued the City of Manila and other defendants for indemnity for the sand and gravel extracted from the San Mateo River banks of the Hilario Estate. The Supreme Court held, however, that the defendants were extracting materials not from the property of Hilario but only from the river banks which is property of public dominion.
[19.8] Accretion on Riverbanks

Accretions on river banks, however, belong to the owner of lands adjoining the banks,155 provided that the deposit is due to the effects of the current of the river.156 Where the deposit of land was not formed solely by the natural effect of the water current of the river bordering said land but is also the consequence of the direct and deliberate intervention of man, it is deemed a man-made accretion and, as such, part of the public domain.157 (D) Ports

[19.9] Ports

The term ports in Article 420(1) of the New Civil Code includes seaports and airports.158 The MIAA Airport Lands and Buildings constitute a port constructed by the State.159 Hence, they are properties of public dominion and thus owned by the State or the Republic of the Philippines.160 In Manila International Airport Authority v. CA,161 the Court explained: No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like roads, canals, rivers, torrents, ports and bridges constructed by the State, are owned by the State. The term ports includes seaports and airports. The MIAA Airport Lands and Buildings constitute a port constructed by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and
Art. 457, NCC. Republic v. CA, 132 SCRA 514 (1984). 157 Tiongco v. Director of Lands, 16 C.A. Rep. 211, cited in Vda. de Nazareno v. CA, 257 SCRA 589 (1996). 158 Manila International Airport Authority v. CA, 495 SCRA 591, 622. 159 Id. 160 Id. 161 Supra.
155 156

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Buildings are properties of public dominion and thus owned by the State or the Republic of the Philippines. The Airport Lands and Buildings are devoted to public use because they are used by the public for international and domestic travel and transportation. The fact that the MIAA collects terminal fees and other charges from the public does not remove the character of the Airport Lands and Buildings as properties for public use. The operation by the government of a tollway does not change the character of the road as one for public use. Someone must pay for the maintenance of the road, either the public indirectly through the taxes they pay the government, or only those among the public who actually use the road through the toll fees they pay upon using the road. The tollway system is even a more efcient and equitable manner of taxing the public for the maintenance of public roads. The charging of fees to the public does not determine the character of the property whether it is of public dominion or not. Article 420 of the Civil Code denes property of public dominion as one intended for public use. Even if the government collects toll fees, the road is still intended for public use if anyone can use the road under the same terms and conditions as the rest of the public. The charging of fees, the limitation on the kind of vehicles that can use the road, the speed restrictions and other conditions for the use of the road do not affect the public character of the road. (E) Shores

[19.10] Shore, Dened

Shore is understood to be that space which is alternately covered and uncovered by water with the movements of the tides.162 Its interior or terrestrial limit is the line reached by the highest equinoctial tides.163 Where the tides are not appreciable, the shore begins on the land-side at
162 Art. 1, The Law of Waters of August 3, 1866, cited in Francisco v. Government of the P.I., 28 Phil. 505, 507 (1914) and Government of the Philippine Islands v. Cabagis, 53 Phil. 112, 115 (1929). 163 Id.

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the line reached by the sea during ordinary storms or tempests.164 Thus, in Cagampang v. Morano,165 the Supreme Court held that the subject property is part of the shore and public property as the same is covered by the highest tides from May to July and there is no showing that these tides are due to abnormal conditions.
[19.11] Shore, Property of Public Dominion

Shores are properties of public dominion.166 Thus, when the sea advances and private properties are permanently invaded by the waves, the properties so invaded become part of the shore or beach and they then pass to the public domain.167 The owner thus dispossessed does not retain any right to the natural products resulting from their new nature; it is a de facto case of eminent domain, and not subject to indemnity.168 This process whereby private property is converted into property for public use through the natural action of the sea and the abandonment by the owner has been called natural expropriation.169
[19.12] Accretions on Seashore

Accretions and alluvial deposits caused by the action of the sea are governed by Article 4 of the Spanish Law of Waters of 1866, an old but still valid law.170 Under said law, lands added to the shores by accretions and alluvial deposits caused by the action of the sea, form part of the public domain. Since alluvial formation along the seashore is part of the public domain, it is not open to acquisition by adverse possession by private persons.171 It is outside the commerce of man, unless otherwise declared by either the executive or legislative branch of the government.172 The accretion on the foreshore of the Manila Bay, the latter being an inlet or an arm of the sea, for example, is part of the public domain.173 On the other hand, the Laguna de Bay is a lake the
Id. 22 SCRA 1040 (1968). 166 Art. 420(1), NCC. 167 Government of the Philippine Islands v. Cabangis, supra, 115-116, cited in Republic v. Court of Appeals, 281 SCRA 639, 655-656 (1997). 168 Id. 169 Caguioa, Civil Code of the Philippines, Vol. II, 1966 ed., p. 33. 170 Heirs of Emiliano Navarro v. Intermediate Appellate Court, 268 SCRA 74 (1997). 171 De Buyser v. Director of Lands, 121 SCRA 13, 16 (1983). 172 Id., citing Ignacio v. Director of Lands, 108 Phil. 335. 173 Heirs of Emiliano Navarro v. IAC, supra., citing Ignacio v. Director of Lands and Valeriano, 108 Phil. 335 (1960).
164 165

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accretion on which, by the mandate of Article 84 of the Spanish law of Waters of 1866, belongs to the owner of the land contiguous thereto.174 (F) Foreshore Lands

[19.13] Part of Public Dominion

Foreshore lands are part of the public dominion.175 The term foreshore land was dened by the Court of Appeals in the case of Hacut v. Director of Lands176 which involved a parcel of land along Basilan Island. The appellate court, quoting from Bouviers Law Dictionary, dened foreshore lands as: that part of the land immediately in front of the shore; the part which is between high and low water marks, and alternately covered with water and left dry by the ux and reux of the tides. It is indicated by a middle line between the highest and lowest tides.177 In the two resolutions issued by the Supreme Court in 1965 involving the Ponce cases,178 the Supreme Court had the occasion to dene the term foreshore lands in relation to Republic Act No. 1899. The said Act, which was passed by Congress on June 22, 1957, authorizes municipalities and chartered cities to undertake and carry out at their own expense the reclamation by dredging, lling or other means, of any foreshore lands bordering their respective territories. The law, however, did not dene the term foreshore lands. In these cases, the Supreme Court upheld the dictionary meaning of the term foreshore lands that the Court of Appeals adopted in the Hacut case. In these cases, the City of Cebu entered into a reclamation contract with the Cebu Development Corporation to reclaim foreshore land along the coast of Cebu City pursuant to R.A. No. 1899. The Supreme Court declared that the authority to reclaim granted to chartered cities and municipalities under R.A. No. 1899 is limited to foreshore lands only
174 Heirs of Emiliano Navarro v. IAC, supra, 90; citing Government of the P.I. v. Colegio de San Jose, 53 Phil. 423 (1929); Republic v. Court of Appeals, 131 SCRA 532 (1984); Republic v. Alagad, 169 SCRA 455 (1989); and Meneses v. CA, 246 SCRA 162 (1995). 175 Republic v. CA, 281 SCRA 639 (1997). 176 49 O.G. No. 5, p. 1863 (1953). 177 At p. 1865. 178 Ponce v. Gomez, L-21870, February 3, 1965, and Ponce v. City of Cebu, L-22669, June 24, 1966.

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which, quoting Corpus Juris, is that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary ow of the tides. Thus, in the Ponce cases, the Supreme Court upheld the Cebu City ordinance but only with respect to the reclamation of the foreshore areas, and nullied the same with respect to the submerged areas. In Republic v. Court of Appeals,179 the Supreme Court declared as invalid the ordinances passed by the Pasay City and the reclamation agreements it entered into with Republic Real Estate Corporation on the ground that the subject matter thereof were submerged lands and not foreshore lands. The Court held that the term foreshore lands cannot be unduly stretched to include the submerged areas. The Court reiterated what was said in the Ponce cases that the term foreshore refers to that part of the land adjacent to the sea which is alternately covered and left dry by the ordinary ow of the tides. In Chavez v. Public Estates Authority,180 the Court declared as invalid the joint venture agreement between Public Estates Authority (PEA) and Amari Coastal Bay Development Corporation (Amari). In said case, PEA entered into a joint venture agreement with Amari obligating itself to convey title and possession over 750 hectares of land, 592.15 hectares or 78% of the total area are still submerged and permanently under the waters of Manila Bay. Under the said agreement, the PEA conveyed to Amari the submerged lands even before their actual reclamation, although the documentation of the deed of transfer and issuance of the certicates of title would be made only after actual reclamation. A question arose with respect to the validity of this transaction. In declaring the contract to be invalid the Supreme Court held: Submerged lands, like the waters (sea or bay) above them, are part of the States inalienable natural resources. Submerged lands are property of public dominion, absolutely inalienable and outside the commerce of man. This is also true with respect to foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the Constitution.

179 180

299 SCRA 199 (1998). 415 SCRA 403 (2003).

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(G)

Lakes

[19.14] Ownership of Lakes

Natural lakes and lagoons and their beds belong to the State181 and are part of public dominion.182 Lakes and lagoons naturally occurring on private lands also belong to the State.183 Hence, lakes and lagoons developed by a private person on private lands are of private ownership. The Water Code of the Philippines, however, prohibits any person from developing a lake, stream or spring for recreational purposes without rst obtaining a permit from the National Water Resources Council.184 The Laguna de Bay has long been recognized as a lake.185 As such, the accretion occurring therein, by mandate of Article 84 of the Spanish Law of Waters of 1866, belongs to the owner of the land contiguous thereto.186
[19.15] Natural Bed of Lakes, Dened

What is the natural bed or basin of lakes? In the case of Republic v. Court of Appeals,187 the Supreme Court dened the extent of a lake bed, as follows: The natural bed or basin of lakes, ponds, or pools, is the ground covered by their waters when at their highest ordinary depth.188 In Republic v. Court of Appeals, the Republic, thru the Director of Lands, opposed the registration of a parcel of land with an area of 17,311 square meters and situated near the shore of Laguna de Bay,
Art. 5(c), Water Code of the Philippines. Art. 502(4), NCC. 183 Art. 6(b), Water Code of the Philippines. (Note: To this extent, the provision of Art. 503[2] of the NCC is deemed repealed. The repealing clause of the Water Code provides, in part: Art. 100. The following laws, parts and/or provisions of laws are hereby repealed: a. The provisions of the Spanish Law on Waters of August 3, 1886, the Civil Code of the Philippines [RA 386] on ownership of waters, easements relating to waters, use of public waters and acquisitive prescription on the use of waters, which are inconsistent with the provisions of this Code. xxx) 184 Art. 41, Water Code of the Philippines. 185 Government of P.I. v. Colegio de San Jose, 53 Phil. 423 (1929); Republic v. Court of Appeals, 131 SCRA 532 (1984); Republic v. Alagad, 169 SCRA 455 (1989). 186 Heirs of Emiliano Navarro v. IAC, supra, 90, citing Government of the P.I. v. Colegio de San Jose, 53 Phil. 423 (1929); Republic v. Court of Appeals, 131 SCRA 532 (1984); Republic v. Alagad, 169 SCRA 455 (1989); and Meneses v. CA, 246 SCRA 162 (1995). 187 131 SCRA 532 (1984). 188 Citing Art. 74 of the Law of Waters of 1866.
181 182

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about twenty (20) meters therefrom, on the ground that such is part of the public domain and therefore not registrable. The Director of Lands contends that since the land sought to be registered is covered with water four to ve months a year, the same is part of the lake bed of Laguna de Bay, or is at least, a foreshore land. The rise in the water level of the Laguna de Bay, as observed four to ve months a year during the rainy season, is caused by the rains. It is the rains which bring about the inundation of a portion of the land in question. Applying the provisions of Article 74 of the Law of Waters of 1866, the Supreme Court held that since the rise in the water level which causes the submersion of the land occurs during a shorter period (four to ve months a year) than the level of the water at which the land is completely dry, the latter should be considered as the highest ordinary depth of Laguna de Bay. Therefore, the Court concludes, the land sought to be registered is not part of the bed or basin of Laguna de Bay, and therefore capable of registration as private property. In Republic v. Alagad,189 the Supreme Court dened the highest ordinary depth of the waters of the Laguna de Bay as the highest depth of the waters during the dry season or such depth being the regular, common, natural, which occurs always or most of the time during the year. Otherwise stated, where the rise in water level is due to the extraordinary action of nature, rainfall for instance, the portions inundated thereby are not considered part of the bed or basin of the body of water in question.190 It cannot therefore be said to be foreshore land but land outside of the public dominion, and land capable of registration as private property.191 (H) Others of Similar Character

[19.16] Creeks

A creek is dened as a recess or arm extending from a river and participating in the ebb and ow of the sea.192 It is a property belonging to the public domain which is not susceptible to private appropriation and
169 SCRA 455, 463-464, citing Republic v. CA, supra. Id., at 464. 191 Id. 192 Maneclang v. Intermediate Appellate Court, 161 SCRA 469, 471 (1988), citing Mercado v. Municipal President of Macabebe, 59 Phil. 592 (1934); see also Maneclang v. IAC, 144 SCRA 553, 556 (1986); Usero v. Court of Appeals, 449 SCRA 352, 359 (2005).
189 190

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acquisitive prescription,193 and, as public water, it cannot be registered under the Torrens System in the name of any individual.194 It is included in the phrase others of similar character in paragraph 1 of Article 420 of the New Civil Code.195 20. Property of Public Dominion: For Public Service All properties of the State that are devoted or intended for some public service are likewise part of the public dominion.196 As earlier explained, these properties cannot be used indiscriminately by anyone but only by those that are authorized by proper authority. A good example of a property falling under this category is the Roppongi property.197 The Roppongi property is one of the four (4) properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan in 1956. Under the said agreement, the Roppongi property was specically designated to house the Philippine Embassy. As such, the nature of the Roppongi lot as property for public service is expressly spelled out.198 It is dictated by the terms of the Reparations Agreement and the corresponding contract of procurement which bind the Philippine government and the Japanese government.199 As property of public dominion, the Roppongi lot is outside the commerce of men and cannot be alienated.200 21. Property of Public Dominion: For the Development of National Wealth Property of public dominion pertaining and/or belonging to the State refers not only to property devoted to public use or to some public service, but also to property devoted to the development of the national wealth. This class of property constituted property of public dominion although employed for some economic or commercial activity to increase the national wealth.201

Id., 471; see also Celestial v. Cachopero, 413 SCRA 469 and Usero v. CA, supra, 359. Id., 471; see also Usero v. CA, supra, 359. 195 Usero v. CA, supra, 359. 196 Art. 420(2), NCC. 197 Laurel v. Garcia, 187 SCRA 797, 808 (1990). 198 Id., 807. 199 Id., 807. 200 Id., 808. 201 See Chavez v. Public Estates Authority, 384 SCRA 152, 192 (2002).
193 194

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[21.1] The Regalian Doctrine and State Ownership of Natural Resources

Under the Regalian Doctrine, all lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State.202 The Spaniards rst introduced the doctrine to the Philippines through the Laws of the Indies and the Royal Cedulas, specically, Law 14, Title 12, Book 4 of the Novisima Recopilacion de Leyes de las Indias which laid the foundation that all lands that were not acquired from the Government, either by purchase or by grant, belong to the public domain.203 Upon the Spanish conquest of the Philippines, ownership of all lands, territories and possessions in the Philippines passed to the Spanish Crown.204 The Laws of the Indies were followed by the Ley Hipotecaria or the Mortgage Law of 1893. The Spanish Mortgage Law provided for the systematic registration of titles and deeds as well as possessory claims. The Royal Decree of 1894 or the Maura Law partly amended the Mortgage Law as well as the Law of the Indies. The Maura Law was the last Spanish land law promulgated in the Philippines. It required the adjustment or registration of all agricultural lands, otherwise the lands would revert to the State.205 The 1935, 1973 and 1987 Constitutions adapted the Regalian doctrine substituting, however, the State, in lieu of the King, as the owner of all lands and waters of the public domain.206 Justice Reynato S. Puno, in his separate opinion in Cruz v. Secretary of Environment and Natural Resources,207 explained thus: One of the xed and dominating objectives of the 1935 Constitutional Convention was the nationalization and conservation of the natural resources of the country. There
202 Collado v. Court of Appeals, 390 SCRA 343, 354 (2002), citing Republic v. Sayo, 191 SCRA 71 (1990). 203 Id., 354-355, citing the Separate Opinion of J. Puno in Cruz v. Secretary of Environment and Natural Resources, 347 SCRA 128 (2000). 204 Id., 355. 205 Id., 355. 206 Id., 357, citing the Separate Opinion of J. Puno in Cruz v. Secretary of Environment and Natural Resources, supra. 207 Supra, at pp. 171-172.

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was an overwhelming sentiment in the Convention in favor of the principle of state ownership of natural resources and the adoption of the Regalian doctrine. State ownership of natural resources was seen as a necessary starting point to secure recognition of the states power to control their disposition, exploitation, development, or utilization. The delegates to the Constitutional Convention very well knew that the concept of State ownership of land and natural resources was introduced by the Spaniards, however, they were not certain whether it was continued and applied by the Americans. To remove all doubts, the Convention approved the provision in the Constitution afrming the Regalian doctrine. The 1987 Constitution reafrmed the Regalian doctrine in Section 2 of Article XII on National Economy and Patrimony,208 to wit: Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, sheries, forests or timber, wildlife, ora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities or it may enter into coproduction, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twentyve years, renewable for not more than twenty-ve years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, sheries, or industrial uses other than the development of water power, benecial use may be the measure and limit of the grant.

208 Separate Opinion of J. Puno in Cruz v. Secretary of Environment and Natural Resources, supra, 173.

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xxx. Under the Regalian Doctrine embodied in the present Constitution, all lands of the public domain as well as all natural resources enumerated in the above-quoted provision, whether on public or private land, belong to the State.209 (A) Natural Resources

[21.2] Fishponds

Fishponds are owned by the State.210 The 1987 Constitution specically declares that all lands of the public domain, waters, sheries, and other natural resources belong to the State. Included here are the shponds, which may not be alienated but only leased.211 Possession thereof, no matter how long, cannot ripen into ownership.212 Under Section 45 of R.A. No. 8550, otherwise known as The Philippine Fisheries Code of 1998, public lands such as tidal swamps, mangroves, marshes, foreshore lands and ponds suitable for shery operations shall not be disposed or alienated. They may, however, be the subject matter of a shpond lease agreement.213
[21.3] Watershed Reservation

A watershed reservation is also a natural resource214 and cannot therefore be alienated.215 A positive act (e.g., an ofcial proclamation) of the Executive Department is needed to declassify land which had been earlier classied as a watershed reservation and to convert it into alienable or disposable land for agricultural or other purposes.216 Unless and until the land classied as such is released in an ofcial proclamation so that it may form part of the disposable agricultural lands of the public domain, the rules on conrmation of imperfect title do not apply.217

Id., 173. Menchavez v. Teves, Jr., 449 SCRA 380, 391 (2005). 211 Id. 212 Id. 213 Id. 214 Collado v. CA, supra. 215 Id. 216 Id., 369. 217 Id.
209 210

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[21.4] Submerged Lands

Submerged lands, like the waters (sea or bay) above them, are part of the States inalienable natural resources.218 Submerged lands are property of public dominion, absolutely inalienable and outside the commerce of man.219 This is also true with respect to foreshore lands. Any sale of submerged or foreshore lands is void being contrary to the Constitution.220 (B) Lands of the Public Domain

[21.5] Classication

Under Section 3 of Article XII of the 1987 Philippine Constitution, lands of the public domain are classied into agricultural, forest or timber, mineral lands and national parks. Only agricultural lands are allowed, however, to be alienated.221 On the other hand, mineral and timber or forest lands are not subject to private ownership unless they are rst reclassied as agricultural lands and so released for alienation.222 Hence, it is already a settled rule that forest lands or forest reserves are not capable of private appropriation, and possession thereof, however long, cannot convert them into private property, unless such lands are reclassied and considered disposable and alienable by the Director of Forestry.223
[21.6] Classication of Public Lands, Prerogative of the Executive

Agricultural public lands may be dened as those alienable portions of the lands of the public domain which are not forest or timber, mineral,224 or national parks.225 Their disposition is provided for under Commonwealth Act No. 141 (Sections 6-7), which states that it is only the President, upon the recommendation of the proper department head, who has the authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands.
Chavez v. Public Estates Authority, supra. Id. 220 Id. 221 Sec. 3, Art. XII, 1987 Philippine Constitution. 222 Director of Forestry v. Villareal, 170 SCRA 598, 601 (1989). 223 Republic v. IAC, 186 SCRA 88, 93 (1990). 224 See Republic v. De Porkan, 151 SCRA 88; Krivenko v. Register of Deeds, 79 SCRA 461; Mapa v. Insular Government, 10 Phil. 175. 225 See Sec. 3, Art. XII, 1987 Constitution.
218 219

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The classication of public lands, therefore, is an exclusive prerogative of the Executive Department of the Government and not of the courts.226 In the absence of such classication, the land remains as unclassied land until it is released therefrom and rendered open to disposition.227 This is in consonance with the Regalian doctrine that all lands of the public domain belong to the State, and that the State is the source of any asserted right to ownership in land and charged with the conservation of such patrimony.228 As such, all lands not appearing to be clearly within private ownership are presumed to belong to the State. Unless public land is shown to have been reclassied or alienated to a private person by the State, it remains part of the inalienable public domain. To overcome this presumption, incontrovertible evidence must be established that the land subject of the application is alienable or disposable.229
[21.7] When Public Lands Classied As Patrimonial Property

Since property of public dominion is outside the commerce of man and not susceptible to private appropriation and acquisitive prescription, the adverse possession which may be the basis of a grant of title in the conrmation of an imperfect title under the Public Land Act refers only to alienable or disposable portions of the public domain.230 It is only after the Government has declared the land to be alienable and disposable agricultural lands that the year of entry, cultivation and exclusive and adverse possession can be counted for purposes of an imperfect title.231 From the foregoing, it appears that agricultural public lands are classied as patrimonial property of the State as soon as they are made available for alienation or disposition. Prior to the reclassication of public lands into agricultural lands and prior to their being made available for alienation and disposition, they form part of the property of public dominion, under Article 420, paragraph 2, for the development of the national wealth and under Section 2 of Article XII of the 1987 Constitution.232

Director of Lands v. Court of Appeals, 129 SCRA 689, 692. Id. 228 Id. 229 Republic v. Lao, 405 SCRA 291, 298. 230 Celestial v. Cachopero, 413 SCRA 469, 485. 231 Id. 232 II Tolentino, Civil Code of the Phil., 1992 ed., 38.
226 227

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22. Characteristics of Properties of Public Dominion The following are the characteristics of properties of public dominion:
[22.1] They Are Outside the Commerce of Man

Properties of public dominion are outside the commerce of man.233 Being outside the commerce of man, it cannot be alienated or leased or otherwise be the subject matter of contracts.234 Hence, the right of the public to use public property may not be bargained away through contract.235 In Dacanay v. Asistio,236 for example, when certain public streets in Caloocan City were converted into ea markets and leased to several vendors, the Supreme Court held that such leases were null and void since a public street is property for public use hence outside the commerce of man. Being outside the commerce of man, it may not be the subject of lease or other contract. In this case, the Court directed the City Mayor to demolish the market stalls occupying said city streets. In Maneclang v. Intermediate Appellant Court,237 the Supreme Court declared as null and void the compromise agreement between the parties since the stipulations contained therein partake of the nature of an adjudication of ownership in favor of one of the parties of the shpond in dispute which was found to be originally a creek forming a tributary of the Agno River. Being outside the commerce of man, these properties may not be alienated. In Laurel v. Garcia,238 for example, the Supreme Court held that since the Roppongi Property is a property of public dominion it cannot be alienated. In Chavez v. Public Estates Authority,239 the Court voided the joint venture agreement between PEA and Amari since the former conveyed to the latter submerged lands, which are declared to
Dacanay v. Asistio, Jr., 208 SCRA 404, 411 (1992). Id., citing Villanueva v. Castaeda and Macalino, 15 SCRA 142; Municipality of Cavite v. Rojas, 30 Phil. 602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; and Muyot v. De la Fuente, 48 O.G. 4860. 235 Id. 236 Supra. 237 114 SCRA 553 (1986). 238 187 SCRA 797, 808 (1990). 239 Supra.
233 234

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be part of the States inalienable natural resources, hence, absolutely inalienable. In Binalay v. Manalo,240 it was held that the buyer did not acquire private ownership of the bed of the eastern branch of the Cagayan River even if it was included in the deeds of absolute sale executed by the sellers since the sellers could not have validly sold land that constituted property of public dominion. With respect to natural resources, however, the Constitution allows the State to enter into co-production, joint venture or productionsharing agreements with private individuals or corporations for their exploration, development and utilization.241 With respect to shponds which are likewise owned by the State,242 they may be leased although they may not be alienated. Under Section 45 of R.A. No. 8550, otherwise known as The Philippine Fisheries Code of 1998, public lands such as tidal swamps, mangroves, marshes, foreshore lands and ponds suitable for shery operations shall not be disposed or alienated but they may be the subject matter of a shpond lease agreement.
[22.2] They Are Not Susceptible To Private Appropriation and Acquisitive Prescription

Properties of public dominion are not susceptible to private appropriation and acquisitive prescription.243 Thus, in Celestial v. Cachopero,244 the Court held that the petitioners claim of ownership over a parcel of land which is a dried-up bed of the Salunayan Creek based on her alleged long term adverse possession must necessarily fail since the same is a property of public dominion. In Palomo v. Court of Appeals,245 the Court held that the adverse possession which may be the basis of a grant of title in conrmation of imperfect title cases applies only to alienable lands of the public domain. In this case, since the subject property is part of the reservation for provincial park purposes and, thus, part of the forest zone, it is not registrable and its possession, no matter how lengthy, cannot convert it into private property.

Supra. See Sec. 2, Article XII of the 1987 Constitution. 242 Menchavez v. Teves, Jr., 449 SCRA 380, 391 (2005). 243 Celestial v. Cachopero, supra, 485. 244 Supra. 245 266 SCRA 392, 401 (1997).
240 241

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Since properties of public dominion are not subject to private appropriation, they cannot be registered under the Land Registration Law and be the subject of a Torrens Title. In Republic v. Court of Appeals,246 the Court ruled that the lower court cannot validly order the registration of two lots in the names of private respondents since these lots were portions of the bed of the Meycauayan river and are therefore classied as property of the public domain under Article 420, paragraph 1 and Article 502, paragraph 1 of the Civil Code of the Philippines. In Republic v. Intermediate Appellate Court,247 the Court likewise held that the subject parcel of land, being part of a forest reserve, cannot be registered.
[22.3] They Are Not Subject To Attachment and Execution

Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale.248 Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy.249 Essential public services will stop if properties of public dominion are subject to encumbrances, foreclosures and auction sale.250 Hence, it was held in one case251 that the City of Paraaque cannot foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-payment of real estate tax since the Airport Lands and Buildings of MIAA are properties of public dominion.252 In Vda. de Tan Toco v. Municipal Council of Iloilo,253 the Supreme Court held that the property of a municipality, whether real or personal, necessary for governmental purposes cannot be attached and sold at public auction to satisfy a judgment against the municipality. According to the Court, the necessity for government service justies that the property for public use of the municipality be exempt from execution. In this case, by virtue of a writ of execution obtained by the plaintiff against the Municipality of Iloilo, the sheriff attached two auto trucks
132 SCRA 514 (1984). 186 SCRA 88 (1990). 248 Manila International Airport Authority v. CA, supra. 249 Id. 250 Id. 251 Id. 252 See supra 18.9. 253 49 Phil. 52.
246 247

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used for street sprinkling, a police patrol automobile, police station and market together with the lots which they occupy. The Court declared the attachment as invalid. In Tufexis v. Olaguera,254 the Court likewise held that the usufruct of the public market was not subject to attachment on account of its being of a public character.
[22.4] They Cannot Be Burdened With Voluntary Easements

In Villarico v. Sarmiento,255 for example, the petitioner claimed a right of way on a lot owned by the DPWH and on which stairways were built for the use of the people as a passageway to the Ninoy Aquino Avenue. The Supreme Court held that since the lot is a property of public dominion devoted to public use, it cannot be burdened by a voluntary easement or right of way in favor of Villarico.
Villarico v. Sarmiento 442 SCRA 110 (2004) Villarico is the owner of a lot in La Huerta, Paraaque City. His lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land belonging to the government. As this highway was elevated by four meters and therefore higher than adjoining areas, the DPWH constructed stairways at several portions of this strip of public land to enable the people to have access to the highway. Sometime in 1991, Villarico had a building constructed on a portion of said government land. In November of that same year, a part thereof was occupied by Andoks Litson and Marites Carinderia. In 1993, by means of a Deed of Exchange of Real Property, Villarico acquired a portion of the area owned by the government and registered in his name under TCT No. 74430. In 1995, Villarico led with the RTC of Paraaque City a complaint for accion publiciana against several respondents, including Sarmiento, alleging that respondents structures on the government land closed his right of way to the Ninoy Aquino Avenue and encroached on a portion of his lot covered by TCT No. 74430. Respondents deny the allegations claiming that they have been issued licenses and permits by Paraaque City to construct their buildings on the area and that Villarico has no right over the subject property as it belongs to the government. In holding that neither Villarico nor respondents have a right of possession
254 255

32 Phil. 654. 442 SCRA 110 (2004).

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over the disputed lot where the stairways were built as it is a property of public dominion, the Supreme Court explained that the lot on which the stairways were built is for the use of the people as passageway to the highway belongs to the State. Consequently, it is a property of public dominion. And considering that the said lot is a property of public dominion, it cannot be burdened by a voluntary easement or right of way in favor of Villarico. In fact, its use by the public is by mere tolerance of the government through the DPWH. Hence, Villarico cannot appropriate it for himself and he cannot claim any right of possession over it.
Art. 421. All other property of the State, which is not of the character stated in the preceding article, is patrimonial property. (340a)

23. Patrimonial Property of the State All other property of the State, which is not of the character stated in Article 420 of the New Civil Code, is patrimonial property.256 It is considered as a property of the State in what may be called the private sense.257 It is said that over this kind of property the State has the same rights and has the same power of disposition as private individuals subject, of course, to existing rules and regulations.258 Thus, in Chavez v. Public Estates Authority,259 the Court held that government owned lands, as long they are patrimonial property, can be sold to private parties, whether Filipino citizens or qualied private corporations.
[23.1] Examples of Patrimonial Property [23.1.1] Friar Lands

From the beginnings of Spanish colonization up to the establishment of American sovereignty, religious corporations had acquired large tracts of land in the Philippines, breeding feelings of unrest and agitation among Filipino tenants occupying those lands.260 In order to avert any outbreak of violence, the Philippine Bill of 1902 authorized the Insular Government to exercise the power of eminent domain over lands which, on August 13, 1898, were owned or held by religious
Art. 421, NCC. Hinunangan v. Director of Lands, 24 Phil. 124, 127 (1913). 258 II Caguioa, Civil Code of the Phil., 1966 ed., 36. 259 403 SCRA 1, 31, G.R. No. 133250, May 6, 2003. 260 Dissenting Opinion of J. Tinga in Alonso v. Cebu Country Club, Inc., 417 SCRA 115, citing A. Maalac and R. Maalac, Land Registration, 3rd ed., 95.
256 257

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orders in such tracts or parcels or in such manner as in the opinion of the Philippine Commission injuriously affected the peace and welfare of the people. Hence, the Friar Lands Act (Act No. 1120) was passed to appease the restless Filipinos and to curtail and diminish the inuence of the Catholic Church. Thus, lands acquired by the government from religious corporations or orders (during the Taft administration in 1903) are referred to as friar lands. Friar lands over which the Government holds title are not public lands but private or patrimonial property of the State.261 However, they can be alienated only upon proper compliance with the requirements of Act No. 1120 or the Friar Lands Act.262
[23.1.2] Alienable and Disposable Lands of the Public Domain

Alienable lands of the public domain, or those available for alienation or disposition, are part of the patrimonial properties of the State.263 They are State properties available for private ownership except that their appropriation is qualied by Sections 2 and 3 of Article XII of the Constitution and the public land laws.264 Before lands of the public domain are declared available for private acquisition, or while they remain intended for public use or for public service or for the development of national wealth, they would partake of properties of public dominion just like mines before their concessions are granted, in which case, they cannot be alienated or leased or otherwise be the object of contracts.265 In contrast, patrimonial properties may be bought or sold or in any manner utilized with the same effects as properties owned by private persons.266
[23.1.3] Lands Covered by Republic Act No. 7227

Well-settled is the doctrine that public land granted to an enduser government agency for a specic public use may subsequently
Jacinto v. Director of Lands, 49 Phil. 853 (1926). Alonso v. Cebu Country Club, Inc., supra. 263 Separate Opinion of J. Bellosillo in Chavez v. PEA, 403 SCRA 1, 37, citing II Tolentino, Civil Code of the Philippines 38 (1992). 264 Id. 265 Id., at p. 38, citing Montano v. Insular Government, 22 Phil. 572 (1909). 266 Id.; citing Manila Lodge No. 761 v. CA, 73 SCRA 162.
261 262

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be withdrawn by Congress from public use and declared patrimonial property to be sold to private parties.267 R.A. No. 7227 creating the BCDA is a law that declares specic military reservations no longer needed for defense or military purposes and reclassies such lands as patrimonial property for sale to private parties.268
[23.2] Disposition of Patrimonial Property

It was held in Laurel v. Garcia,269 that any conveyance of a real property falling under the patrimonial property of the State must be authorized and approved by a law enacted by the Congress. The Court cited Section 48, Book I of the Administrative Code of 1987 (Executive Order No. 292), which reads: SEC. 48. Ofcial Authorized to Convey Real Property. Whenever real property of the Government is authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government by the following: (1) For property belonging to and titled in the name of the Republic of the Philippines, by the President, unless the authority therefore is expressly vested by law in another ofcer. (2) For property belonging to the Republic of the Philippines but titled in the name of any political subdivision or of any corporate agency or instrumentality by the executive head of the agency or instrumentality. Hence, in the case of Laurel, the Court held that even if the Roppongi property is patrimonial property of the State, then President Corazon Aquino could not sell it since there was no law authorizing her to do so.
[23.3] Not Susceptible To Acquisitive Prescription

There is a view to the effect that patrimonial properties of the State are subject to acquisitive prescription on the basis of Article 1113 of the New Civil Code, which reads:
Chavez v. Public Estates Authority, 403 SCRA 1, 31 (2003). Id. 269 187 SCRA 797, 812.
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Art. 1113. All things which are within the commerce of men are susceptible of prescription, unless otherwise provided. Property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription. It has been argued that the afore-quoted provision impliedly authorizes the acquisition of patrimonial properties of the State by way of acquisitive prescription. However, it is an ironclad dictum that prescription can never lie against the Government.270 Thus, it is expressly provided in paragraph (4) of Article 1108 that prescription, both acquisitive and extinctive, does not run against the State and its subdivisions. The provisions of Article 1113 quoted above are not even in conict with paragraph (4) of Article 1108. Far from being in conict with the latter, the former in fact reiterates the rule in the latter that property of the State or any of its subdivision shall not be the object of prescription. The rule that Statutes of Limitation do not run against the State, unless therein expressly provided, is founded on the great principle of public policy, applicable to all governments alike, which forbids that the public interests should be prejudiced by the negligence of the ofcers or agents to whose care they are conded.271 Hence, the rule stated in paragraph (4) of Article 1108 cannot be modied, altered or changed by mere implication. Had Congress really intended to subject patrimonial properties of the State to acquisitive prescription it could have expressly provided the same in Article 1113. In Alonso v. Cebu Country Club, Inc.,272 the Supreme Court held in unequivocal language: Neither may the rewards of prescription be successfully invoked by respondent, as it is an iron-clad dictum that prescription can never lie against the Government. Since respondent failed to present the paper trail of the propertys conversion to private property, the lengthy possession and occupation of the disputed land by respondent cannot be
Alonso v. Cebu Country Club, Inc., supra, 127. Id. 272 Id.
270 271

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counted in its favor, as the subject property being a friar land, remained part of the patrimonial property of the Government. Possession of patrimonial property of the Government, whether spanning decades or centuries, can not ipso facto ripen into ownership. Moreover, the rule that statutes of limitation do not run against the State, unless therein expressly provided, is founded on the great principle of public policy, applicable to all governments alike, which forbids that the public interests should be prejudiced by the negligence of the ofcers or agents to whose care they are conded. (Italics supplied) Consequently, unless the law expressly provides, a patrimonial property of the State is not subject to acquisitive prescription. An example of a law that allows the acquisition of patrimonial properties of the State by way of acquisitive prescription is Commonwealth Act No. 141 which authorizes conrmation of imperfect title. The adverse possession which may be the basis of a grant of title in conrmation of imperfect title cases, however, applies only to alienable lands of the public domain273 which fall under the patrimonial properties of the State.
Art. 422. Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State. (341a)

24. Conversion: From Public Dominion to Patrimonial Property Property of public dominion, when no longer intended for public use or for public service, shall form part of the patrimonial property of the State.274 It should be noted that Article 422 of the New Civil Code does not address the question of who has the authority to effect such conversion and neither does it set out or refer to any procedure for such conversion.275 In other words, no specic formula or procedure of conversion is provided in Article 422. Our case law, however, contains some fairly explicit pronouncements on this point.276
Palomo v. Court of Appeals, supra. Art. 422, NCC. 275 See Dissenting Opinion of J. Feliciano in Laurel v. Garcia, supra, 821. 276 Id.
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When land of the public domain ceases to be one, or when the change takes place, is a question our courts have debated early.277 In Municipality of Oas v. Roa,278 it was held that property of the public dominion, a public plaza in this instance, becomes patrimonial property upon use thereof for purposes other than a plaza. In Municipality of Hinunangan v. Director of Lands,279 it was held that when a fortress ceases to be used for the purpose for which it was constructed, it becomes a patrimonial property of the state. In these two cases, the character of the property, and any change occurring therein, depends on the actual use to which it is dedicated. In Ignacio v. Director of Lands280 case, however, the Supreme Court ruled that a property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government, either through the Executive department or the Legislative, to the effect that the property is no longer needed for public service, for public use or for special industries. Thus, under Ignacio, either the Executive Department or the Legislative Department may convert property of the State of public dominion into patrimonial property of the State. In Cebu Oxygen Acetylene v. Bercilles,281 the City Council of Cebu by resolution declared a certain portion of an existing street as an abandoned road, the same not being included in the city development plan. Subsequently, by another resolution, the City Council of Cebu authorized the acting City Mayor to sell the land through public bidding. Although there was no formal and explicit declaration of conversion of property for public use into patrimonial property, the Supreme Court declared the withdrawal of the property in question from public use and its subsequent sale as valid. Then came the case of Laurel v. Garcia.282 In this case, the property involved (Roponggi property) was acquired from the Japanese
See Concurring Opinion of J. Sarmiento in Laurel v. Garcia, supra, 818. 7 Phil. 20 (1906), cited in the Concurring Opinion of J. Sarmiento in Laurel v. Garcia, supra, 818. 279 24 Phil. 124 (1913), cited in the Concurring Opinion of J. Sarmiento in Laurel v. Garcia, supra, 818. 280 108 Phil. 335 (1960). 281 66 SCRA 481 (1975). 282 187 SCRA 797 (1990).
277 278

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government as indemnication to the Filipino people for their losses and suffering during World War II. As intended, it became the site of the Philippine Embassy in Japan for sometime until the embassy was transferred to another site. Since then, the Philippine Government has failed to develop the Roponggi property. In 1985, the Executive Department passed an administrative order creating a committee to study the disposition or utilization of some properties, including the Roponggi property. In 1987, the President issued Executive Order No. 296 providing that some properties, including the Roponggi property, be made available for sale or lease to non-Filipinos. Answering the question as to whether the Roponggi property has been converted into patrimonial property, the Supreme Court held that abandonment of the intention to use the Roponggi property for public service and to make it a patrimonial property cannot be inferred from the non-use alone specially if the non-use was attributable not to the governments own deliberate and indubitable will but to a lack of nancial support to repair and improve the property. The Court likewise ruled that E.O. No. 296 does not declare that the property has lost its public character since the executive order merely intends to make the properties available to foreigners and not to Filipinos. It was based on the wrong premise or assumption that the Roponggi was earlier converted into alienable real property. The case of Laurel v. Garcia has cleared the uncertainties brought about by earlier interpretations that the nature of property whether public or patrimonial is predicated on the manner it is actually used, or not used. In ne, it is now clear that there must be an afrmative act, either on the part of executive or the legislative, to reclassify property of the public dominion into patrimonial. The intention to reclassify must be clear, denite and must be based on correct legal premises. Hence, the conversion can no longer be inferred from the non-use alone of the property for the purpose to which it is intended.
Art. 423. The property of provinces, cities, and municipalities is divided into property for public use and patrimonial property. (343)

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25. Property of Provinces, Cities and Municipalities


[25.1] Classication of Properties of Political Subdivisions

The property of provinces, cities and municipalities is divided into property for public use and patrimonial property.283 The rst consists of the provincial roads, city streets, municipal streets, squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities or municipalities.284 All other property possessed by said provinces, cities or municipalities is patrimonial.285 The nature of properties owned by cities (municipalities and provinces) in this country is determined by the character of the use or service for which they are intended or devoted.286 Properties which are intended for public use or for some public service are properties for public use.287 All others are patrimonial properties.288 It matters not that the property is not actually devoted for public use or for some public service.289 If it has been intended for such use or service, and the city (municipality or province) has not devoted it to other uses, or adopted any measure which amounted to a withdrawal of the property from public use and service, the same remains property for public use, the fact that it is not actually devoted for public use or service notwithstanding.290
Agripino Capitulo, et al. v. Alejo Aquino No. 15488-R, 53 O.G. 1477 (1956) This case involves a lot owned by the City of Manila and situated around the intersections of Andalucia, Governor Forbes and Aragon Streets, City of Manila. This lot was donated to the City of Manila by the Sulucan Development Company exclusively for street purposes. Since its acquisition, the City of Manila formed the project to construct thereon a trafc circle. For reasons, however, not disclosed by the records, this project had not been carried out. Hence, it remained vacant. In ruling that the lot in question is property for
Art. 423, Civil Code; Macasiano v. Diokno, 212 SCRA 464, 469 (1992); Pilapil v. CA, 216 SCRA 33, 46 (1992). 284 Art. 424, 1st par., Civil Code; cited in Pilapil v. CA, supra, at p. 46. 285 Art. 424, 2nd par., Civil Code. 286 Agripino Capitulo, et al. v. Alejo Aquino, No. 15488-R, 53 O.G. 1477, November 19, 1956. 287 Ibid. 288 Ibid. 289 Ibid. 290 Ibid.
283

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public use of the City of Manila and not its patrimonial property, the Court of Appeals held xxx. The nature of properties owned by cities in this country is determined by the character of the use or service for which they are intended or devoted. Properties which are intended for public use or for some public service are properties for public use. All others are patrimonial properties. Art. 424, new Civil Code. It matters not that the property is not actually devoted for public use or for some public service. If it has been intended for such use or service, and the city has not devoted it to other uses, or adopted any measure which amounted to a withdrawal of the property from public use and service, the same remains property for public use, the fact that it is not actually devoted for public use or service notwithstanding.
Art. 424. Property for public use, in the provinces, cities, and municipalities, consists of the provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities, or municipalities. All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. (344a)

26. Property for Public Use of Provinces, Cities and Municipalities


[26.1] Governed By Same Principles as Property of Public Dominion

The property of provinces, cities and municipalities for public use is governed by the same principles as property of public dominion of the same character.291 Hence, the following jurisprudence or principles are applicable to properties of the political subdivisions (provinces, cities and municipalities) for public use: a. They are outside the commerce of man.292 Being outside the commerce of man, it cannot be alienated or leased or otherwise be the subject matter of contracts.293

Pilapil v. CA, supra, at p. 46, citing Tolentino, Civil Code, Vol. II, 1983 ed., 38. Dacanay v. Asistio, Jr., 208 SCRA 404, 411 (1992). 293 Ibid., citing Villanueva v. Castaeda and Macalino, 15 SCRA 142; Municipality of Cavite v. Rojas, 30 Phil. 602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; and Muyot v. De la Fuente, 48 O.G. 4860.
291 292

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b. c. d.

They cannot be acquired by prescription.294 They are not subject to attachment and execution.295 They cannot be burdened by any voluntary easement.296
Harty v. Municipality of Victoria 13 Phil. 152

When the town of Victoria was formed, a large public plaza was left in the center. This land formerly belonged to one Taedo, who donated part of the land for religious purposes, which portion was later occupied by the church. The remaining portion was kept an open space as a plaza. It is later claimed that the entire plaza was later on donated by the municipality to the church. The Supreme Court ruled that the property could not have been validly donated by the town to the church because the same was property for public use. Even assuming that the property was originally private property of Taedo, it must be assumed that he waived his right thereto for the benet of the townspeople since they have continuously enjoyed the use of the land as a public plaza. The property thus became property for public use. As such, it could not have been the validly donated by the town to the church. The same could not likewise be acquired by prescription. Municipality of Antipolo v. Zapanta 133 SCRA 820 (1984) In this case, the disputed property has been considered to be public land by the Municipality of Antipolo subject to its use and permission to use. It has been the site of the public market as far back as 1908, or at the latest, since 1920. Gradually, additional public structures were built thereon, like the Puericulture and Family Planning Center, the Integrated National Police Building, the Ofce of the Municipal Treasurer, and the public abattoir. Those public structures occupy almost the entire area of the land. Sometime in 1977, an application for the registration of the disputed property was led by two distinct applicants before the Court of First Instance of Rizal alleging that the disputed property was declared for taxation purposes in their names or of their predecessors-in-interest as early as 1918. The applicants claimed that they merely tolerated occupants by the Municipality of Antipolo. The CFI of Rizal approved the application. Thus, the Municipality of Antipolo questioned the approval made by the said court.
Insular Government v. Aldecoa, 19 Phil. 505. Tan Toco v. Municipal Council of Iloilo, 49 Phil. 52. 296 2-II Colin & Capitant 520, cited in Tolentino, Civil Code, Vol. II, 1983 ed., 29-30.
294 295

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In ruling in favor of the Municipality of Antipolo, the Supreme Court explained that at the time the application for registration was led, the disputed property was already devoted to public use and public service. Therefore, it was outside the commerce of man and could no longer be subject to private registration. [26.2] Provincial Roads, City Streets and Municipal Streets

A public street is property for public use and hence outside the commerce of man.297 Being outside the commerce of man, it may not be the subject of lease or other contract.298 Local governments have no authority whatsoever to control or regulate the use of public properties, like roads and streets, unless specic authority is vested upon them by Congress.299 In the case of Cebu Oxygen & Acetylene Co., Inc. v. Bercilles,300 the City Council of Cebu was expressly authorized under its Revised Charter to close any city road, street or alley, boulevard, avenue, park or square. The same Charter likewise expressly states that property thus withdrawn from public servitude may be used or conveyed for any purpose for which other real property belonging to the City may be lawfully used or conveyed. Thus, in that case the Supreme Court held that the withdrawal of an existing road from public use was valid thereby converting the withdrawn property into patrimonial property which can be the object of an ordinary contract. In the case of Favis v. City of Baguio,301 the power of the City Council of Baguio City to close city streets and withdraw them from public use was also assailed. The Supreme Court said: 5. So it is, that appellant may not challenge the city councils act of withdrawing a strip of Lapu-Lapu Street at its dead end from public use and converting the remainder thereof into an alley. These are acts well within the ambit of the power to close a city street. The city council, it would

Dacanay v. Asistio, supra. Ibid. 299 Macasiano v. Diokno, supra, at p. 469. 300 66 SCRA 481 (1975). 301 27 SCRA 1060.
297 298

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seem to us, is the authority competent to determine whether or not a certain property is still necessary for public use. Such power to vacate a street or alley is discretionary. And the discretion will not ordinarily be controlled or interfered with by the courts, absent a plain case of abuse or fraud or collusion. Faithfulness to the public trust will be presumed. So the fact that some private interests may be served incidentally will not invalidate the vacation ordinance. In Macasiano v. Diokno,302 the Court claried the authority of the local governments to close roads, streets and other similar public places. According to the Court, the closure should be for the sole purpose of withdrawing the road or other public property from public use when circumstances show that such property is no longer intended or necessary for public use or public service.303 When it is already withdrawn from public use, the property then becomes patrimonial property of the local government unit concerned.304 It is only then that the property can be the object of an ordinary contract.305 In Macasiano, the Court nullied the ordinance closing several streets in Paraaque for the purpose of establishing ea markets thereon. The Court reasoned that those roads and streets which are available to the public in general and ordinarily used for vehicular trafc are still considered public property devoted to public use. In such case, the local government has no power to use it for another purpose or to dispose of or lease it to private persons.306 In another case,307 the Metropolitan Manila Commission simply designated certain streets as sites for ea markets and pursuant thereto the Caloocan City mayor opened several ea markets in some city streets without withdrawing the same from public use. When the matter was elevated to the Supreme Court, it ruled that the subject streets were properties for public use hence outside of the commerce of man and may not therefore be subjected to lease or other contract. The Court

Supra. At p. 470. 304 Article 422, Civil Code; Cebu Oxygen, etc., et al. v. Bercilles, et al., supra. 305 Macasiano v. Diokno, supra. 306 Ibid., p. 471. 307 Dacanay v. Asistio, supra.
302 303

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further held that the right of the public to use the city streets may not be bargained away through contract.
Dacanay v. Asistio, Jr. 208 SCRA 404 (1992) May public streets or thoroughfares be leased or licensed to market stallholders by virtue of a city ordinance or resolution of the Metro Manila Commission? This is the issue posed in this case. The Supreme Court ruled that a public street is property for public use and hence outside the commerce of man. Being outside the commerce of man, it may not be the subject of lease or other contract. The Court adds: As the stallholders pay fees to the City Government for the right to occupy portions of the public street, the City Government, contrary to law, has been leasing portions of the streets to them. Such leases or licenses are null and void for being contrary to law. The right of the public to use the city streets may not be bargained away through contract. The interests of a few should not prevail over the good of the greater number in the community whose health, peace, safety, good order and general welfare, the respondent city ofcials are under legal obligation to protect. Macasiano v. Diokno 212 SCRA 464 (1992) In this case, the then municipality of Paraaque passed an ordinance authorizing the closure of several municipal streets for purposes of converting them as sites for ea market and/or vending areas. The municipality then entered into an agreement with Palanyag for the operation of ea market in the said streets. Subsequently, Brig. Gen. Macasiano of the PNP ordered the destruction and conscation of the stalls. Palanyag went to court. The trial court upheld the validity of the ordinance passed by the Municipality of Paraaque. Macasiano questioned the ruling of the trial court before the Supreme Court. In sustaining Macasiano, the Court explained We nd the petition meritorious. In resolving the question of whether the disputed municipal ordinance authorizing the ea market on the public streets is valid, it is necessary to examine the laws in force during the time the said ordinance was enacted, namely, Batas Pambansa Blg. 337, otherwise known as Local Government Code, in connection with established principles embodied in the Civil Code on property and settled jurisprudence on the matter. The property of provinces, cities and municipalities is divided into property for public use and patrimonial property (Art.

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423, Civil Code). As to what consists of property for public use, Article 424 of Civil Code states: ART. 424. Property for public use, in the provinces, cities and municipalities, consists of the provincial roads, city streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provinces, cities or municipalities. All other property possessed by any of them is patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws. Based on the foregoing, J. Gabriel, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena streets are local roads used for public service and are therefore considered public properties of respondent municipality. Properties of the local government which are devoted to public service are deemed public and are under the absolute control of Congress (Province of Zamboanga del Norte v. City of Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). Hence, local governments have no authority whatsoever to control or regulate the use of public properties unless specic authority is vested upon them by Congress. One such example of this authority given by Congress to the local governments is the power to close roads as provided in Section 10, Chapter II of the Local Government Code, which states: SEC. 10. Closure of roads. A local government unit may likewise, through its head acting pursuant to a resolution of its sangguniang and in accordance with existing law and the provisions of this Code, close any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any part thereof shall be closed without indemnifying any person prejudiced thereby. A property thus withdrawn from public use may be used or conveyed for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed. (Emphasis ours). However, the aforestated legal provision which gives authority to local government units to close roads and other similar public places should be read and interpreted in accordance with basic principles already established by law. These basic principles have the effect of limiting such authority of the province, city or municipality to close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that properties of public dominion devoted to public use and made available to the

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public in general are outside the commerce of man and cannot be disposed of or leased by the local government unit to private persons. Aside from the requirement of due process which should be complied with before closing a road, street or park, the closure should be for the sole purpose of withdrawing the road or other public property from public use when circumstances show that such property is no longer intended or necessary for public use or public service. When it is already withdrawn from public use, the property then becomes patrimonial property of the local government unit concerned (Article 422, Civil Code; Cebu Oxygen, etc., et al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481). It is only then that the respondent municipality can use or convey them for any purpose for which other real property belonging to the local unit concerned might be lawfully used or conveyed in accordance with the last sentence of Section 10, Chapter II of Blg. 337, known as Local Government Code. In one case, the City Council of Cebu, through a resolution, declared the terminal road of M. Boreas Street, Mabolo, Cebu City as an abandoned road, the same not being included in the City Development Plan. Thereafter, the City Council passed another resolution authorizing the sale of the said abandoned road through public bidding. We held therein that the City of Cebu is empowered to close a city street and to vacate or withdraw the same from public use. Such withdrawn portion becomes patrimonial property which can be the object of an ordinary contract (Cebu Oxygen and Acetylene Co., Inc. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66 SCRA 481). However, those roads and streets which are available to the public in general and ordinarily used for vehicular trafc are still considered public property devoted to public use. In such case, the local government has no power to use it for another purpose or to dispose of or lease it to private persons. xxx [26.3] Squares, Fountains, Public Waters, Promenades, Etc.

Town or public plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general.308 They are beyond the commerce of man and so cannot be the subject of lease or any other contractual undertaking.309 Indeed, this point was
Espiritu v. Municipal Council of Pozorrubio, 101 Phil. 869-870. Villanueva v. Castaeda, 154 SCRA 142, 148 (1987), citing Municipality of Cavite v. Rojas, 30 Phil. 602 and Espiritu v. Municipal Council of Pozorrubio, 101 Phil. 869-870.
308 309

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settled as early as 1915 in the case of Municipality of Cavite v. Rojas,310 where the Supreme Court declared as null and void the lease of a public plaza of the said municipality in favor of a private person. Mr. Justice Torres said in that case: According to Article 344 of the Civil Code: Property for public use in provinces and in towns comprises the provincial and town roads, the squares, streets, fountains, and public waters, the promenades, and public works of general service supported by said towns or provinces. The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907 withdraw or exclude from public use a portion thereof in order to lease it for the sole benet of the defendant Hilaria Rojas. In leasing a portion of said plaza or public place to the defendant for private use the plaintiff municipality exceeded its authority in the exercise of its powers by executing a contract over a thing of which it could not dispose, nor is it empowered so to do. The Civil Code, Article 1271, prescribes that everything which is not outside the commerce of man may be the object of a contract, and plazas and streets are outside of this commerce, as was decided by the supreme court of Spain in its decision of February 12, 1895, which says: Communal things that cannot be sold because they are by their very nature outside of commerce are those for public use, such as the plazas, streets, common lands, rivers, fountains, etc. Therefore, it must be concluded that the contract, Exhibit C, whereby the municipality of Cavite leased to Hilaria Rojas a portion of the Plaza Soledad is null and void and of no force or effect, because it is contrary to the law and the thing leased cannot be the object of a contract. In Espiritu v. Municipal Council of Pozorrubio,311 the Supreme Court held that town plaza cannot be used for the construction of
310 311

Supra. 102 Phil. 869-870.

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market stalls, specially of residences, and that such structures constitute a nuisance subject to abatement according to law. In Muyot v. de la Fuente,312 it was held that the City of Manila could not lease a portion of a public sidewalk on Plaza Sta. Cruz, being likewise beyond the commerce of man. Echoing Rojas, the decision said: Appellants claim that they had obtained permit from the government of the City of Manila, to construct booths Nos. 1 and 2, along the premises in question, and for the use of spaces where the booths were constructed, they had paid and continued paying the corresponding rentals. Granting this claim to be true, one should not entertain any doubt that such permit was not legal, because the City of Manila does not have any power or authority at all to lease a portion of a public sidewalk. The sidewalk in question, forming part of the public plaza of Sta. Cruz, could not be a proper subject matter of the contract, as it was not within the commerce of man (Article 1347, new Civil Code, and Article 1271, old Civil Code). Any contract entered into by the City of Manila in connection with the sidewalk, is ipso facto null and ultra vires. (Municipality of Cavite v. Roxas, et al., 30 Phil. 603.) The sidewalk in question was intended for and was used by the public, in going from one place to another. The streets and public places of the city shall be kept free and clear for the use of the public, and the sidewalks and crossings for the pedestrians, and the same shall only be used or occupied for other purposes as provided by ordinance or regulation; x x x. (Sec. 1119, Revised Ordinances of the City of Manila.) The booths in question served as fruit stands for their owners and often, if not always, blocked the free passage of pedestrians who had to take the plaza itself which used to be clogged with vehicular trafc. 27. Patrimonial Property of Political Subdivisions All other property possessed by provinces, cities or municipalities, which is not intended for public use, is patrimonial.313
312 313

G.R. No. L-6534, 48 O.G. 4860. Art. 424, 2nd par., Civil Code.

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Unlike in the classication regarding State properties, properties for public service in the provinces, cities and municipalities are not classied as public.314 However, the Supreme Court expressed the view that it is not inclined to hold that municipal property held and devoted to public service is in the same category as ordinary private property because of dire consequences detrimental to the local community, i.e., ordinary properties can be levied and attached and they can even be acquired thru adverse possession.315 In Agripino Capitulo, et al. v. Alejo Aquino,316 it was held that properties which are intended for public use or for some public service are properties for public use. All others are patrimonial properties.
[27.1] Reclaimed Lands Belonging To Political Subdivisions

The right to reclaim is a function of the sovereign who owns title to all the lands and waters of the public domain.317 The authority to reclaim is not a right or privilege accorded any person and the land reclaimed does not belong to whosoever undertakes its reclamation.318 Even private owners of lands adjoining bodies of water, especially the sea and navigable waters, cannot motu proprio undertake reclamation of shores and submerged lands and claim title thereto.319 Unless the State, through Congress, grants this right, it is only the National Government that can undertake reclamation work and assert title to reclaimed land.320 In several instances, however, the State delegated to specic municipalities the right to reclaim land. For example, the Philippine Legislature passed laws granting municipalities the right to reclaim foreshore or marshy lands within their respective territories.321 The rule remained, nonetheless, that no person, public or private, could undertake reclamation work and own the land they reclaimed without a specic grant from Congress.322 It was only with the passage of R.A. No. 1899
Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334, 1342 (1968). Ibid., at p. 1346. 316 No. 15488-R, (CA) 53 O.G. 1477, November 19, 1956. 317 Concurring Opinion of J. Puno in Republic v. CA, 299 SCRA 199, 301 (1998). 318 Id. 319 Id. 320 Id. 321 Id., citing R.A. No. 161, Bacolod City; R.A. No. 287, Catbalogan, Samar; R.A. No. 1099, Romblon. 322 Id., 301-302.
314 315

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in 1957 that Congress granted to chartered cities and municipalities a general authority to reclaim foreshore lands bordering their respective territories.323 R.A. No. 7160, otherwise known as the Local Government Code of 1991, likewise empowers local government units to undertake reclamation projects by themselves or through contractors. Whether reclaimed lands transferred to a public or municipal corporation are public in nature or patrimonial depends upon the legislative intent. In Manila Lodge No. 761 v. Court of Appeals,324 for example, where in 1905, the Philippine Commission enacted Act No. 1360 authorizing the City of Manila to reclaim of a portion of the Luneta to form part of the Luneta extension. The Act provided that the reclaimed area shall be the property of the City of Manila. In this case, the Supreme Court held that the legislative intent was to make the reclaimed land part of the property of public dominion of the City of Manila. The Court held that if the reclaimed area is an extension of the Luneta, then it is of the same nature or character as the old Luneta. Since the city or municipality may alienate the land it reclaimed pursuant to R.A. No. 1899325 or it may pay a portion of the reclaimed lands pursuant to Section 302 of the Local Government Code, it appears that the lands reclaimed by the local government pursuant to the aforesaid laws are patrimonial in character unless said local government reserves certain portions of the reclaimed area for public use such as for plazas, schools or hospitals, in which case, the reclaimed land is characterized as land of the public domain. In Chavez v. Public Estates Authority,326 the Supreme Court likewise held that reclaimed alienable lands of the public domain if sold or transferred to a public or municipal corporation for a monetary consideration become patrimonial property in the hands of the public or municipal corporation and once converted to patrimonial property, the land may be sold by the public or municipal corporation to private parties, whether Filipino citizens or qualied private corporations.

Id., 302. Supra. 325 See Ponce cases, supra. 326 Chavez v. PEA, 403 SCRA 1, 32.
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28. Other Classication The classication of properties other than those for public use in the provinces, cities and municipalities as patrimonial under Article 424 of the New Civil Code is without prejudice to the provisions of special laws. For purposes of this article, the principles obtaining under the Law of Municipal Corporation can be considered as special laws.327 Hence, in the case of Province of Zamboanga del Norte v. City of Zamboanga,328 the Supreme Court held that the classication of municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classication. The same principle was applied in the case of Vda. de Tantoco v. Municipal Council of Iloilo.329 In this case, the Court held that municipal properties necessary for governmental purposes are public in nature. Thus, the auto trucks used by the municipality for street sprinkling, the police patrol automobile, police stations and concrete structures with the corresponding lots used as markets were declared exempt from execution and attachment since they were not patrimonial properties. Taking into consideration the cases of Province of Zamboanga del Norte and Vda. de Tantoco, it appears that the properties of the political subdivisions (provinces, cities and municipalities) are classied in accordance with the use to which they are intended or devoted. In effect, what was said by the Court of Appeals in Capitulo v. Aquino330 had been reiterated and adopted by the Supreme Court. In Capitulo, the Court of Appeals held that the nature of properties owned by cities in this country is determined by the character of the use or service for which they are intended or devoted and that properties which are intended for public use or for some public service are properties for public use. All other properties are patrimonial.
Province of Zamboanga del Norte v. City of Zamboanga 22 SCRA 1334 (1968) In this case, Congress passed Commonwealth Act 39 converting the Municipality of Zamboanga into Zamboanga City. Prior to the conversion, the Municipality of Zamboanga used to be the provincial capital of the then
Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968). Supra. 329 Supra. 330 Supra.
327 328

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Zamboanga Province. Thereafter Congress approved R.A. No. 3039 amending C.A. No. 39 by providing that all buildings, properties and assets belonging to the former province of Zamboanga and located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of Zamboanga. The Province of Zamboanga del Norte questioned the constitutionality of R.A. No. 3039 on the ground that it deprived the province of its property without due process and just compensation. In resolving the constitutionality of the law, the Supreme Court laid down this test: If the property is owned by the municipality (meaning municipal corporation) in its public and governmental capacity, the property is public and Congress has absolute control over it. But if the property is owned in its private or proprietary capacity, then it is patrimonial and Congress has no absolute control over it. In applying the test, the Court has to resolve another question: Which norm to use in classifying the properties in question the Civil Code or that obtaining under the law of Municipal Corporations. If the Civil Code is to be applied, all the properties in question, except the two lots used as High School playgrounds, would be considered as patrimonial properties of the former Zamboanga province. On the other hand, applying the norm obtaining under the principles constituting the law of Municipal Corporations, all of the 50 properties in question which are devoted to public service are deemed public. In upholding the latter view, the Court explained We are more inclined to uphold the latter view. The controversy here is more along the domains of the Law of Municipal Corporations the State v. Province than along that of Civil Law. Moreover, this Court is not inclined to hold that municipal property held and devoted to public service is in the same category as ordinary private property. The consequences are dire. As ordinary private properties, they can be levied upon and attached. They can even be acquired thru adverse possession all these to the detriment of the local community. Lastly, the classication of properties other than those for public use in the municipalities as patrimonial under Art. 424 of the Civil Code is x x x without prejudice to the provisions of special laws. For purposes of this article, the principles obtaining under the Law of Municipal Corporations can be considered as special laws. Hence, the classication of municipal property devoted for distinctly governmental purposes as public should prevail over the Civil Code classication in this particular case.
Art. 425. Property of private ownership, besides the patrimonial property of the State, provinces, cities and municipalities, consists of all property belonging to private persons, either individually or collectively. (345a)

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29. Private Property Private properties may belong to the State, to provinces, cities and municipalities or may belong to the private individuals either individually or collectively. Such properties when they belong to the State, provinces, cities and municipalities are called patrimonial property; and when they belong to private entities or individuals, they are called properties of private ownership. All lands are presumed, however, to be public lands until the contrary is established.331 Under Sec. 7, Art. XII of the 1987 Constitution, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualied to acquire or hold lands of the public domain, save in cases of hereditary succession. However, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands subject to limitations as may be provided by law.332 The law that provides for such limitations is B.P. Blg. 185. In J.G. Summit Holdings, Inc. v. Court of Appeals,333 the Court claried that the prohibition in the Constitution applies only to ownership of lands and it does not extend to other real property as dened in Article 415 of the Civil Code. Otherwise, the Court added, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land would be limited to Filipinos and Filipino corporations only.
PROVISIONS COMMON TO THE THREE PRECEDING CHAPTERS Art. 426. Whenever by provision of the law, or an individual declaration, the expression immovable things or property, or movable things or property, is used, it shall be deemed to include, respectively, the things enumerated in Chapter 1 and Chapter 2. Whenever the word muebles, or furniture, is used alone, it shall not be deemed to include money, credits, commercial securities, stocks and bonds, jewelry, scientic or artistic collections, books, medals, arms,
331 Municipality of Antipolo v. Zapanta, supra., citing Oh Cho v. Director of Lands, 75 Phil. (1946); Director of Lands v. CA, 38 SCRA 635 (1971). 332 Sec. 8, Art. XII, 1987 Constitution. 333 G.R. No. 124293, Jan. 31, 2005.

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clothing, horses or carriages and their accessories, grains, liquids and merchandise, or other things which do not have as their principal object the furnishing or ornamenting of a building, except where from the context of the law, or the individual declaration, the contrary clearly appears. (346a)

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Title II. OWNERSHIP


Chapter 1 OWNERSHIP IN GENERAL
Art. 427. Ownership may be exercised over things or rights. (n)

30. Concept of Ownership


[30.1] Property and Ownership, Distinguished

As discussed in supra 1.1, the word property is derived from the Roman word proprius, meaning ones own which, in essence, is the concept of ownership. In fact, the Roman word proprietas1 means ownership in Roman Law, although the more usual word is dominium, which means the mastery or the absolute control over a thing except as may be restrained by law.2 Dominion or ownership, on the other hand, comes from domus or house for in Roman Law the master of the house is called dominus and his domestic power over the household is called dominium.3 Thus, in Roman Law, there appears to be no difference between the concepts of property and ownership. Castan is likewise of the view that between property and ownership, there is really no difference in extent or contents but simply a difference of viewpoint.4 According to him, while ownership implies the power over a thing which belongs to the owner (which concept, therefore, has a predominantly objective meaning); property, on the other hand, accentuates the relation between the thing and the owner

Derived from proprius. The Principles of Roman Law and Their relation to modern law by William L. Burdick, 2004 ed., 325-326. 3 II Caguioa, Civil Code of the Philippines, 1966 ed., 48. 4 2 Castan, 8th ed., 49, 52, 53, cited in II Caguioa, Civil Code of the Philippines, 1966 ed., 48.
1 2

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to whom it belongs (which concept, therefore, has a predominantly objective meaning).5 Our Civil Code, however, clearly differentiates between property and ownership. The concept of property under the Civil Code refers to those things which are susceptible of appropriation while the concept of ownership refers to the mass or bundle of rights that may be exercised over a property. In other words, ownership refers to the bundle of rights that may be exercised over a property while the latter is the object of the exercise of such rights.
[30.2] Ownership, Dened

The Civil Code does not dene ownership. Instead, the Code simply enumerates the rights which are included therein, as follows: (1) (2) (3) (4) (5) (6) the right to enjoy the property (Art. 428, par. 1, NCC); the right to dispose the property (Art. 428, par. 1, NCC); the right to recover the property from any holder or possessor (Art. 428, par. 2, NCC); the right to exclude any person from enjoyment and disposal of the property (Art. 429, NCC); the right to enclose or fence the land or tenement (Art. 430, NCC); the right to demand indemnity for damages suffered due to lawful interference by a third person to avert an imminent danger (Art. 432, NCC); the right to just compensation in case of eminent domain (Art. 435, NCC); the right to construct any works or make any plantations and excavations on the surface or subsurface of the land (Art. 437, NCC); the right to hidden treasure found in the owners property (Art. 438, NCC); and

(7) (8)

(9)

(10) the right to accessions. (Art. 440, NCC)


5

Id.

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At least, in our jurisdiction, the more acceptable denition of ownership is that given by Justice J.B.L. Reyes. He denes ownership as an independent right of exclusive enjoyment and control of the thing for the purpose of deriving therefrom all advantages required by the reasonable needs of the owner (holder of the right) and the promotion of the general welfare but subject to the restrictions imposed by law and the right of others.6
[30.3] Ownership Is A Real Right [30.3.1] Jus In Re and Jus In Personam

Personal right or jus in personam is one which imposes an obligation on a denite person.7 Stated otherwise, personal right or more properly called the right of obligation is the power belonging to one person to demand from another, as a denite passive subject, the fulllment of a prestation to give, to do or not to do.8 A real right or jus in re, on the other hand, has been dened as the power belonging to a person over a specic thing without a denite passive subject against whom such right may be personally enforced.9 A right in rem, therefore, is one which imposes an obligation on persons generally, i.e., either on all the world or on all the world except certain determinate persons. Thus, if I am entitled to exclude all persons from a given piece of land, I have a right in rem in respect of that land; and, if there are one or more persons, A, B and C, whom I am not entitled to exclude from it, my right is still a right in rem.10
[30.3.2] Ownership as Real Right

As can be seen from the discussion above, a real right creates a direct relation between the specic thing and its holder in such a way that it permits the holder to exclude others from the enjoyment of the thing. Correspondingly, it creates an obligation on the part of third persons not to interfere in such enjoyment. These elements are clearly present in ownership. Hence, the owner of a thing has the right

Outline of Civil Law by Reyes and Puno, Vol. II, 20. Blacks Law Dictionary, 5th ed., 1189. 8 3 Sanchez Roman 8. 9 3 Sanchez Roman 6. 10 Blacks Law Dictionary, 5th ed., 1189.
6 7

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to exclude any person from its enjoyment and disposal11 save for the exception mentioned in Article 432 of the Civil Code which will be discussed in subsequent sections of this Book.
[30.4] Other Real Rights Aside From Ownership

Apart from ownership, the Civil Code recognizes the existence of other real rights that may be exercised in relation to property, i.e., possession, usufruct, easement, pledge and mortgage, etc. Of all these rights, however, ownership is considered as the most complete because it provides the owner the most ample power of dominion over the property.12 In contrast, however, the other real rights are necessarily limited since they merely serve as restrictions on ones exercise of ownership. For this purpose, we should classify real rights into two general categories: (1) real rights over ones own property (jus in re propria); and (2) real rights over the property of another (jus in re aliena). These latter rights are lesser rights than the right of ownership yet they make inroads upon and curtail the rights of the owner.13 Examples of jus in re aliena are usufruct, easement, possession and mortgage. In these examples, the owner of the property has for the time being parted with some of his rights, thereby restricting and abridging the right of ownership. Compared to ownership, the other real rights cannot exist independently of ownership. In other words, the other real rights are dependent because they presuppose the existence of ownership. On the other hand, and based from the denition cited in supra 30. 2, ownership is an independent real right since it can exist without the necessity of other rights.
[30.5] Objects of Ownership

As discussed in supra 30.1, the relationship that exists between ownership and property is that the latter is the object of the former. In accordance with Article 427 of the Code, the subject matter of ownership may either be things or rights. But as discussed in supra 1.2, the concept of things under the Civil Code, specically Article
Art. 429, NCC. See Castan, 8th Ed., 90-91. 13 The Principles of Roman Law and Their Relation to Modern Law by William L. Burdick, 2004 ed., 354.
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414, embraces both material objects and rights. In other words, the term things in Article 414 is used, not in its ordinary meaning, but in the juridical sense. In Article 427, however, it is quite obvious that the word things has reference only to material objects as contra distinguished from rights. Then again, Article 428 the Code mentions things only but this time the concept embraces both material objects and rights. Hence, it would have been better if Article 427 simply stated that ownership is exercised over property. After all, the concept of property under the Civil Code embraces both material objects and rights.
Art. 428. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. The owner has also a right of action against the holder and possessor of the thing in order to recover it. (348a)

31. Attributes of Ownership In Roman Law, the attributes of ownership are the following: (1) jus utendi or the right to use property without destroying its substance; (2) jus fruendi or the right to the fruits; (3) jus disponendi or the right to dispose or alienate; (4) jus abutendi or the right to abuse or to consume the thing by its use; (5) jus possidendi or the right to possess; and (6) jus vindicandi or the right to recover. It is noticeable, however, that the present article mentions only three rights the rights to enjoy, dispose and recover. While this may be the case, it is not the intention of the Code to do away with the other rights which are traditionally included in ownership. This is because the right to enjoy already includes in it the right to use (jus utendi), the right to the fruits (jus fruendi), the right to possess (jus possidendi) and the right to abuse or consume (jus abutendi). Another attribute of ownership which is not included in the present article but treated in a separate chapter is the right of accession. The Code deems it t to devote an entirely separate chapter solely for this right because of the importance of the subject. 32. Right to Enjoy The essence of ownership is the right of the owner to freely enjoy either the property itself or the benets derived therefrom, which

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enjoyment may consist simply of its possession (jus possidendi), or its consumption (jus abutendi), or its use (jus utendi), enjoyments of its products or fruits (jus fruendi) or the enjoyment of anything attached or incorporated to it, either naturally or articially (the right of accession).
[32.1] Right To Use and Abuse

To use a thing consists in employing it for the purpose for which it is t, without destroying it, and which employment can therefore be repeated. Hence, the phrase jus utendi is used in contradistinction to the jus abutendi. The latter right involves consumption of the thing by its use. As explained by the late Senator Tolentino, citing Sanchez Roman and Valverde, the jus abutendi should not be understood as the right of the owner to exercise absolute and unlimited power over the thing to the point of destroying it by any means, however inconvenient and prejudicial to the public interest or to the right of others. According to him, jus abutendi properly meant the use that extinguishes, that consumes, by acts of the owner, things which are consumable.14 As a consequence, for example, of the owners right to use his property, it has been held that the purchaser of a house which is leased is entitled to terminate the lease, there being no stipulation to the contrary and the lease not being recorded. This is so because the right to the use of the said house is one of the rights transferred to him by virtue of his ownership.15 Also, the owner may not be prevented from enjoying his property on the mere pretext that the present occupant badly needs the same in view of an acute housing shortage brought about by the destruction of the City of Manila during the Second World War.16 33. Right to Dispose Jus disponendi or the power of the owner to dispose of his property includes the power to alienate, to encumber, to limit, to transform, to destroy and to merge.17

See Footnote No. 2, II Tolentino, Civil Code, 1992 ed., p. 46. Saul v. Hawkins, 1 Phil. 275. 16 Roque v. Cavestani, G.R. No. L-218, Aug. 18, 1946; Villanueva v. Carlos, G.R. No. L329, Sep. 16, 1946. 17 2 Castan, 8th ed., 106.
14 15

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The right to alienate is the right of the owner to transmit either by onerous or gratuitous title his right to another by any act inter vivos or mortis causa. Such right is exclusively vested upon the owner based upon the principle that no one can give what he does not have. Examples of alienation are sale and donation. The right to limit or encumber is the power of the owner to deprive himself of several of the rights included in ownership and transfer them to another. Thus, the owner may deprive himself of the use and possession of his property by entering into contracts of lease and commodatum, for example. He may also deprive himself of the right to enjoy his property, including the right to receive the fruits, by constituting a usufruct in favor of a third person. The right to transform, on the other hand, is the power to change the nature of the thing, or its form or destination and the power to destroy is the power to render useless or to abandon or annihilate the thing. 34. Right to Recover
[34.1] Right to Possession

Possession is essential to both free enjoyment and disposal. Possession, as an incident of ownership or a right included in ownership, must be distinguished from possession, as a right independent and apart from ownership. The former is jus possidendi and the latter is jus possessionis. Some authors refer to jus possidendi as the right to possession and to jus possessionis as the right of possession. The latter concept of possession (jus possessionis) is discussed separately in Title V of Book II. The owner is entitled to the exclusive possession of his property. For this purpose, he may exclude any person from the enjoyment and disposal thereof by force if necessary18 and he may also enclose or fence his property by any means.19 In the event, however, that the possessor is unlawfully deprived of possession he is not justied to take the law into his own hands. Instead, he is required to resort to the proper legal processes for the purpose of obtaining recovery of possession. This principle is embodied in Article 433 of the New Civil Code which
18 19

See Art. 429, NCC. See Art. 430, NCC.

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directs the true owner to resort to judicial process for the recovery of the property and Article 536 of the same Code which states: Art. 536. In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing. (441a) (Italics supplied) Thus, in one case,20 the Supreme Court held that the owners of a property have no authority to use force and violence to eject alleged usurpers who were in prior physical possession of it. The Court held further that the owners must le the appropriate action in court and should not take the law into their own hands.
[34.2] Actions for Recovery of Possession

Under existing laws and jurisprudence, there are three kinds of actions available to recover possession of real property: (a) accion interdictal; (b) accion publiciana; and (c) accion reivindicatoria.21 For the recovery of possession of a personal property, on the other hand, the available remedy is called replevin.22
[34.2.1] Accion Interdictal

Accion interdictal comprises two distinct causes of action, namely, forcible entry (detentacion) and unlawful detainer (desahuico).23 Forcible entry is a summary action to recover material or physical possession of real property when the person who originally held it was deprived of possession by force, intimidation, threat, strategy, or stealth.24 An action for unlawful detainer, on the other hand, may be led when possession by a lessor, vendor, vendee, or other person against whom
Heirs of Pedro Laurora, et al. v. Sterling Technopark III, G.R. No. 148615, April 9,

20

2003.
21 Valdez v. CA, G.R. No. 132424, May 2, 2006, citing Javier v. Veridiano II, 237 SCRA 565, 572-573 (1994). 22 Rule 60, 1997 Rules of Civil Procedure. 23 Valdez v. CA, G.R. No. 132424, May 2, 2006, citing Javier v. Veridiano II, 237 SCRA 565, 572-573 (1994). 24 See Sec. 1, Rule 70, 1997 Rules of Civil Procedure; Dela Cruz v. Panis, 245 SCRA 242 (1995).

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the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied.25 Both actions are within the exclusive and original jurisdiction of the Metropolitan or Municipal Trial Courts26 and which are required to be brought within one year from the date of actual entry, in case of forcible entry, and from the date of the last demand, in case of unlawful detainer.27 The one-year prescriptive period for the ling of an ejectment case is pursuant to the provisions of Article 555(4) of the New Civil Code which states that possession de facto is lost if the possession by another person has lasted for more than one year. Forcible entry and unlawful detainer are quieting processes and the one-year time bar to the suit is in pursuance of the summary nature of the action.28 The use of summary procedure in ejectment cases is intended to provide an expeditious means of protecting actual possession or right to possession of the property.29 They are not processes to determine the actual title to an estate.30 In ejectment cases, the sole question for resolution is the physical or material possession (possession de facto) of the property in question and neither a claim of juridical possession (possession de jure) nor an averment of ownership by the defendant can outrightly deprive the court from taking due cognizance of the case. So that, even if the question of ownership is raised in the pleadings the court may pass upon such issue but only to determine the question of possession especially if the former is inseparably linked with the latter. Thus, all that the trial court may do is to make an initial determination of who is the owner of the property so that it can resolve who is entitled to its possession absent other evidence to resolve the latter. But such determination of ownership is not clothed with nality. Neither will it affect ownership of the property nor constitute a binding and conclusive adjudication on the merits with respect to the issue of ownership. Such judgment shall not bar an action between the same parties respecting title to the land
Id. Sec. 33(2), B.P. Blg. 129, as amended by R.A. No. 7691. 27 Javier v. Veridiano II, 237 SCRA 565 (1994). 28 De Leon v. CA, 245 SCRA 166, 173 (1995). 29 Id. 30 Id.
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or building nor shall it be held conclusive of the facts therein found in the case between the same parties upon a different cause of action not involving possession.31 Forcible entry and unlawful detainer, which deal with physical or de facto possession, may be distinguished as follows: (1) Their main difference lies in the time when possession became unlawful: in forcible entry, the possession by the defendant is unlawful ab initio because he acquires possession by force, intimidation, threat, strategy, or stealth; while in unlawful detainer, possession is originally lawful but becomes illegal by reason of the termination of his right of possession under his contract with the plaintiff.32 (2) In an action for forcible entry, the plaintiff must allege and prove that he was in prior physical possession of the premises until deprived thereof, while in illegal detainer, the plaintiff need not have been in prior physical possession.33 A complaint for unlawful detainer should be distinguished from that of forcible entry. In forcible entry, the plaintiff has prior possession of the property and he is deprived thereof by the defendant through force, intimidation, threat, strategy or stealth. In an unlawful detainer, the defendant unlawfully withholds possession of the property after the expiration or termination of his right thereto under any contract, express or implied; hence, prior physical possession is not required. This is especially so where a vendee seeks to obtain possession of the thing sold.34 (3) The one year period within which to bring an action for forcible entry is generally counted from the date of actual entry on the land, except that when entry was made through stealth, the one year period is counted from the time the plaintiff learned thereof.35 In unlawful detainer, however, the one year prescriptive period is counted from the date of the last demand.36 Hence, in the latter type of action, the plaintiff must rst make such demand, which is jurisdictional in nature.37
Pengson v. Ocampo, 360 SCRA 420, 425-426. Heirs of Demetrio Melchor v. Melchor, 415 SCRA 726. 33 Id. 34 Barba v. CA, 376 SCRA 210, 218-219. 35 Ong v. Parrel, 355 SCRA 691, 696. 36 Valdez v. CA, G.R. No. 132424, May 2, 2006. 37 See Sec. 2, Rule 70, 1997 Rules of Civil Procedure; Medel v. Militante, 41 Phil. 44.
31 32

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[34.2.2]

Accion Publiciana

An accion publiciana is an action for recovery of the right to possess and is a plenary action38 in an ordinary civil proceeding to determine the better right of possession of realty independent of the title39 or ownership of the property. Accion publiciana or plenaria de posesion is also used to refer to an ejectment suit led after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty.40 In other words, if at the time of the ling of the complaint more than one year had elapsed since defendant had turned plaintiff out of possession or defendants possession had become illegal, the action will be, not one of the forcible entry or illegal detainer, but an accion publiciana.41 Unlike ejectment cases which are always within the exclusive jurisdiction of the Metropolitan or Municipal Trial Courts,42 jurisdiction over an accion publiciana shall depend on the location of the realty and its assessed value. If the property is located in Metro Manila and its assessed value does not exceed P50,000.00, jurisdiction is with the Metropolitan Trial Courts. But if the assessed value of the realty exceeds P50,000.00, it is the Regional Trial Court which exercises jurisdiction over an accion publiciana.43 If the realty is, on the other hand, situated outside of Metro Manila, it is the Municipal Trial Courts which has jurisdiction if the assessed value thereof does not exceed P20,000.00, otherwise, it is the Regional Trial Court which has jurisdiction.44
[i] Distinguished From Accion Interdictal

What really distinguishes the summary action of ejectment (accion inderdictal) from the plenary action for recovery of possession (accion publiciana) is that the issue in the former is limited to the question of possession de facto while the issue in the latter is the determination of the better right of possession or possession de jure.

As distinguished from the summary nature of ejectment cases. Cruz v. Torres, 316 SCRA 193, citing Aguilon v. Bohol, 79 SCRA 482 (1977) and Desbarats v. De Laureano, 18 SCRA 116 (1966). 40 Id., citing Bernabe v. Dayrit, 125 SCRA 423, 425 (1983). 41 Valdez v. CA, G.R. No. 132424, May 2, 2006. 42 Sec. 33(2), B.P. Blg. 129, as amended by R.A. No. 7691. 43 Sec. 33(3), B.P. Blg. 129, as amended by R.A. No. 7691. 44 Id.
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[ii] Distinguished From Accion Reivindicatoria

In accion publiciana, the basis of the recovery of possession is the plaintiffs real right of possession or jus possessionis which is the right to the possession of the real estate independent of ownership. In accion reivindicatoria, however, the basis of the action for recovery of possession is ownership itself. Hence, an accion reivindicatoria involves recovery of possession as an incident or attribute of ownership, or what is known as jus possidendi.
[34.2.3] Accion Reivindicatoria

An accion reinvindicatoria is a suit which has for its object the recovery of possession over the real property as owner.45 Also known as accion de reivindicacion, it is thus an action whereby plaintiff alleges ownership over a parcel of land and seeks recovery of its full possession.46 It is different from accion publiciana where plaintiff merely alleges proof of a better right to possess without claim of title.47 In some decisions of the Court, accion reinvindicatoria is often referred as an action to recover ownership.48 Such description is, however, misleading and inaccurate. One of the characteristics of ownership is that it is an exclusive right, meaning, there can be only one ownership although there may be two or more owners.49 As such, it is not correct to say that an accion reivindicatoria involves recovery of ownership which suggests that ownership had already been lost by the plaintiff to another when in fact, it is ownership which is the basis of an accion reivindicatoria. What happens in an accion reivindicatoria is that the plaintiff has been deprived of the exercise of all the rights included in ownership and what he seeks to recover by ling such an action is, in reality, only the exercise of the rights included in ownership. Since possession is essential to the exercise of the other rights included in ownership and it is the most visible expression of the exercise of such rights, an accion reivindicatoria has been associated with the recovery of possession over the real property as owner.
Hilario v. Salvador, 457 SCRA 815, 825 (2005). Javier v. Veridiano II, supra. 47 Id. 48 See De Leon v. CA, 245 SCRA 166, 173 (1995); Valdez v. CA, supra; Custodio v. Corrado, 435 SCRA 500 (2004). 49 See II Caguioa, Civil Code of the Philippines, 1966 ed., 50.
45 46

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As in the case of accion publiciana, jurisdiction over an accion reivindicatoria shall depend on the location of the realty and its assessed value. If the property is located in Metro Manila and its assessed value does not exceed P50,000.00, jurisdiction is with the Metropolitan Trial Courts. But if the assessed value of the realty exceeds P50,000.00, it is the Regional Trial Court which exercises jurisdiction over an accion reivindicatoria.50 If the realty is, on the other hand, situated outside of Metro Manila, it is the Municipal Trial Courts which has jurisdiction if the assessed value thereof does not exceed P20,000.00, otherwise, it is the Regional Trial Court which has jurisdiction.51 The requisites of an accion reivindicatoria are discussed in infra 38 in relation to Articles 433 and 434.
Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property. (n)

35. Doctrine of Self-help


[35.1] Statement of the Doctrine

As a necessary consequence of ownership, the owner has the right of exclusive enjoyment and control over his property, as well as to its exclusive possession. He may, therefore, exclude any person from its enjoyment and disposal.52 This right of the owner is so important that the law deems it appropriate to allow him to use such force as may be reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of his property.53 The employment of such reasonable force in defense of his property is what is known in juridical science as the doctrine of self-help.54
[35.2] Who May Invoke the Doctrine

While Chapter 1, Title II, Book II of the New Civil Code, inclusive of Article 429 thereof, speaks of ownership, the doctrine of self-help
Sec. 33(3), B.P. Blg. 129, as amended by R.A. No. 7691. Id. 52 Art. 429, NCC. 53 Id. 54 People v. Depante (CA), 58 O.G. 926.
50 51

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is available not only to owners of the property but also to any of its lawful possessor.55
[35.3] When May the Doctrine Be Invoked

The use of reasonable force in defense of property under the doctrine of self-help is authorized only if the purpose is to repel or prevent an actual or threatened unlawful physical invasion or usurpation of the said property.56 In Article 429 of the Code, the word repel is, of course, referring to an actual unlawful physical invasion or usurpation of the property; while the word prevent is referring to a threatened unlawful physical invasion or usurpation of the property. It is clear, therefore, that the doctrine of self-help can only be exercised at the time of actual or threatened dispossession, and not when possession has already been lost.57 In the latter case, the owner must resort to judicial process for the recovery of property as required in Article 536 of the Civil Code.58 In other words, the doctrine of selfhelp cannot be invoked for the purpose of recovering property.
German Management & Services, Inc. v. CA 177 SCRA 495 (1989) In this case, the registered owners of a parcel of land situated in Antipolo, Rizal, who were based in the United States of America, authorized the petitioner German Management & Services, Inc. to develop their property into a residential subdivision. Finding that part of the property was occupied by private respondents and twenty other persons, petitioner advised the occupants to vacate the premises but the latter refused. Nevertheless, petitioner proceeded with the development of the subject property which included the portions occupied and cultivated by private respondents. In so doing, the petitioner forcibly removed and destroyed the barbed wire fence enclosing private respondents farmholdings. Petitioner likewise bulldozed the rice, corn, fruit bearing trees and other crops of private respondents. Private respondents, thereafter, sued the petitioner for ejectment (forcible entry). The Municipal Trial Court dismissed the action, which dismissal was sustained by the Regional Trial Court on appeal. Both courts have rationalized the petitioners drastic action of bulldozing and destroying the crops of private respondents on the basis of the doctrine of self-help enunciated in Article 429 of the New Civil
See Art. 429, NCC. Id. 57 German Management & Services, Inc. v. CA, 177 SCRA 495 (1989). 58 Id.
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Code. When the case reached the Supreme Court, the High Court held that what the petitioner did could not be justied under the doctrine of self-help. The Court explained Both the Municipal Trial Court and the Regional Trial Court have rationalized petitioners drastic action of bulldozing and destroying the crops of private respondents on the basis of the doctrine of self-help enunciated in Article 429 of the New Civil Code. Such justication is unavailing because the doctrine of self-help can only be exercised at the time of actual or threatened dispossession which is absent in the case at bar. When possession has already been lost, the owner must resort to judicial process for the recovery of property. This is clear from Article 536 of the Civil Code which states, (I)n no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing. [35.4] Defense of Property as Justifying Circumstance

In the language of Viada, aside from the right to life on which rests the legitimate defense of our own person we have the right to property acquired by us, and the right to honor which is not the least prized of our patrimony.59 Hence, defense of property is deemed included in selfdefense under the provisions of Article 11, paragraph 1, of the Revised Penal Code. In two cases decided by the Court of Appeals,60 it was held that defense of property whether complete or incomplete, to be available, must be coupled with an attack on the person of the owner or lawful possessor. Thus, in People v. Goya, supra, the Court of Appeals did not appreciate the mitigating circumstance of incomplete defense of property because when the appellant (a security guard in the bodega of Cagayan Valley Agricultural Corporation) red a shot at the victim, who was caught in the act of stealing a sack of palay belonging to the appellants employer, the victim did not lay hands on the appellant or made any attempt to attack the latter.

1 Viada, Codigo Penal, 5th ed., pp. 172-173, cited in People v. Jaurigue, 76 Phil. 174. People v. Apolinar, (CA) 38 O.G. 2870 and People v. Goya, CA-GR. No. 16373-R, Sep. 29, 1965.
59 60

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In the case of People v. Narvaez,61 however, the Supreme Court, citing the provisions of Article 429 of the New Civil Code, credited the accused with the special mitigating circumstance of incomplete defense of property even if such defense is not coupled with an attack upon the person of the accused. It thus appears that Article 429 of the New Civil Code plugs the loophole in the Revised Penal Code where it is doubtful whether the defense of property is possible if the unlawful physical invasion of ones property is not accompanied by unlawful aggression against the person of the owner.62 Under this article, defense of property without any aggression against the person of the owner is authorized.63 Thus, in People v. Narvaez, supra, even if the aggression was directed not on the person of the accused-appellant but only on his property, the Court nonetheless considered such unlawful aggression for the purpose of crediting him with the special mitigating circumstance of incomplete self-defense. In order for defense of property to be appreciated as a justifying circumstance, it is necessary that the means employed to prevent or repel the aggression must also be reasonable.64 Note that under the doctrine of self-help in Article 429 of the Civil Code, what is authorized is the use of force as may be reasonably necessary for the purpose of repelling or preventing any actual or threatened unlawful physical invasion or usurpation of ones property. In determining the reasonableness of the means employed, the absence of an attack against the person of the owner or lawful possessor of the property must be considered since defense of property is not of such importance as the right to life and limb. In People v. Narvaez, for example, the Court held that when the appellant red his shotgun from his window, killing his two victims, his resistance was disproportionate to the attack. Hence, he was credited only with special mitigating circumstance of incomplete defense of property.

121 SCRA 389 (1983). II Caguioa, Civil Code of the Philippines, 1966 ed., 58. 63 Id. 64 Art. 11(1), RPC.
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People v. Goya, CA-GR. No. 16373 Sept. 29, 1965 In this case, the accused was a guard in the bodega of the Cagayan Valley Agricultural Corporation. On the night in question, he surprised the private complainant in the act of going out through the door of the warehouse with a sack of palay. To prevent the latter from taking away the sack of palay, the accused-appellant red a shot at complainant. The shot hit complainant on the back for which he was hospitalized for 18 days. The guard was prosecuted and adjudged by the trial court guilty of frustrated homicide. The defense, however, claimed that the mitigating circumstance of incomplete defense of property was present in the commission of the crime. The Court of Appeals, however, found that the accused-appellant was guilty only of less serious physical injuries. The appellate court refused, however, to credit the accused-appellant with the mitigating circumstance of incomplete defense of property since, according to the Court of Appeals, defense of property whether complete or incomplete, to be available, must be coupled with an attack on the person defending the property. People v. Narvaez 121 SCRA 389 (1983) Appellants house was situated on a land awarded to Fleischer and Company by virtue of a sales patent. The validity of the award was, however, questioned before the court by a group of settlers, including the Appellant (Narvaez). On August 22, 1968 or while the case was still pending, a group of men headed by the son (Davis Fleischer) of the landowner (George Fleischer) were fencing the land of the latter. At that time, Appellant was taking his rest but when he heard that the walls of his house were being chiseled, he arose and there he saw the fencing going on. If the fencing would go on, Appellant would be prevented from getting into his house and the bodega of his rice mill. So the Appellant addressed the group, Pare, if possible you stop destroying my house and if possible we will talk it over what is good. Davis Fleischer, however, answered: No, gademit, proceed, go ahead. Appellant apparently lost his equilibrium and he got his gun and shot dead Fleischer and the latters companion, Rubia. On appeal to the Supreme Court, the Court appreciated in favor of the Appellant the special mitigating circumstance of incomplete defense of property, citing the provisions of Article 429 of the Civil Code in relation to paragraph 6, Article 13 of the Revised Penal Code. The Court considered the unlawful physical invasion of Appellants property as unlawful aggression but held that his resistance was disproportionate to the attack.

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Art. 430. Every owner may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon. (388)

36. Right to Enclose or Fence Corollary to the right to exclude others from the enjoyment of his property, the owner of a parcel of land or tenement has the right to enclose or fence the same by whatever means.65 In so doing, the owner is effectively giving notice to everybody that they are not welcome in his property without his consent and he may, therefore, validly consider any unauthorized intrusion into his property as an act of unlawful aggression which will authorize him to resort to self-help. However, it is required that the right to enclose or fence must be legitimately exercised and must not be attended with bad faith. Thus, if the lot owner fenced his property for the purpose of evicting its occupant whose lease contract had already expired, the lot owner is liable to said occupant for damages.66 In such a case, what the lot owner should do is to resort to the proper legal processes for the purpose of obtaining recovery of possession pursuant to the provisions of Article 536 of the Civil Code.67 The right to enclose or fence in Article 430 is also subject to the limitation that it should not work detriment to the servitudes constituted therein. The concept of servitude or easement is discussed in Title VII of this Book. Easement or servitude is dened as a real right constituted in another persons property, corporeal and immovable, by virtue of which the owner of the same has to abstain from doing or to allow somebody else to do something in his property for the benet of another thing or person.68 An example of this is easement of drainage of waters embodied in Article 637 of the New Civil Code, which reads: Art. 637. Lower estates are obliged to receive the waters which naturally and without the intervention of man descend from the higher estates, as well as the stones or earth which they carry with them.
Art. 430, NCC. See Villafuerte v. CA, G.R. No. 134239, May 26, 2005. 67 Id. 68 2 Sanchez Roman 572.
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The owner of the lower estate cannot construct works which will impede this easement; neither can the owner of the higher estate make works which will increase the burden. (552) Pursuant to such kind of easement or servitude, the owner of the lower tenement cannot block or impede the servitude and the owner of the higher tenement cannot construct works to increase the burden of the servitude. Clearly, the existence of this kind of servitude works as a limitation upon the right of the owner of the lower tenement to enclose his property with walls or other means if the same will prevent the passage of the water which naturally falls from the higher tenement.
Villafuerte v. Court of Appeals G.R. No. 134239, May 26, 2005 In this case, the petitioners (Spouses Villafuerte) operated a gasoline station on the premises of three adjoining lots, two of which were owned by private respondents De Mesa and Daleon. Private respondents De Mesa and Daleon acquired their respective lots subject to the lease by Petrophil Corporation which had built thereon the gasoline station being managed by the Villafuerte couple. When the lease of Petrophil Corporation expired on December 31, 1988, the petitioners Villafuertes obtained a new lease on the lot owned by private respondent De Mesa for a period expiring on December 31, 1989. Daleon, on the other hand, refused to enter into a lease contract with the Villafuertes and demanded that they vacate the lot owned by him. Upon the expiration of the lease contract with De Mesa, the latter likewise refused to renew the same. Instead, De Mesa and Daleon, with the aid of several persons and without the knowledge of the Villafuertes, caused the closure of the latters gasoline station by constructing fences around it. Since then, the Villafuertes were unable to operate the gasoline station. Hence, they sued for damages. On appeal to the Supreme Court, the High Court sustained the award of exemplary damages in favor of the Villafuertes. The Court held that Article 536 of the Civil Code explicitly provides for the proper recourse of one who claims to be entitled to the possession of a thing. When private respondents personally took it upon themselves to evict petitioners from their properties, which act was in clear contravention of the law, they became liable for all the necessary and natural consequences of their illegal act. The Court further observed that private respondents arbitrary conduct of fencing their properties under the claim that they own the same brazenly violates the law and circumvents the proper procedure which should be obtained before the court.

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Art. 431. The owner of a thing cannot make use thereof in such manner as to injure the rights of a third person. (n) Art. 432. The owner of a thing has no right to prohibit the interference of another with the same, if the interference is necessary to avert an imminent danger and the threatened damage, compared to the damage arising to the owner from the interference, is much greater. The owner may demand from the person beneted indemnity for the damage to him. (n)

37. Limitations on Ownership Ownership is not an absolute right. Like all other social and conventional rights, rights arising from ownership are subject to such reasonable limitations in their enjoyment as shall prevent them from being injurious, and to such reasonable restraints and regulations, established by law, as the legislature, under the governing and controlling power vested in them by the constitution, may think necessary and expedient. As such, the exercise of rights arising from ownership is always subject to the restrictions imposed by law, the exercise of the inherent powers of the State and the rights of others. Aside from the foregoing restrictions, the owner himself may impose limitations upon his own right.
[37.1] General Limitations Pursuant to the Exercise of the Inherent Powers of the State

There are three inherent powers of government by which the State interferes with the property rights, namely: (1) police power, (2) eminent domain, and (3) taxation.69 These powers are said to exist independently of the Constitution as necessary attributes of sovereignty.70 In other words, these powers need not be clothed with any constitutional gear to exist; instead, the provisions in our Constitution on the subject are meant more to regulate, rather than to grant, the exercise of these powers.71
[37.1.1] Police Power

The police power is a governmental function, an inherent attribute of sovereignty, which was born with civilized government. It is founded
City Government of Quezon City v. Ericta, G.R. No. L-34915, June 24, 1983. Id. 71 Manosca v. CA, G.R. No. 106440, Jan. 29, 1996.
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largely on the maxims, Sic utere tuo et alienum non laedas72 and Salus populi est suprema lex.73 Its fundamental purpose is securing the general welfare, comfort and convenience of the people.74 Freund dened police power as the power of promoting the public welfare by restraining and regulating the use of liberty and property.75 Police power is usually exercised in the form of mere regulation or restriction in the use of liberty or property for the promotion of the general welfare.76 It does not involve the taking or conscation of property with the exception of a few cases where there is a necessity to conscate private property in order to destroy it for the purpose of protecting the peace and order and of promoting the general welfare as for instance, the conscation of an illegally possessed article, such as opium and rearms.77 Thus, in police power, the owner does not recover from the government for injury sustained in consequence thereof.78 The foregoing principles are conrmed in Article 436 of the New Civil Code, which states: Art. 436. When any property is condemned or seized by competent authority in the interest of health, safety or security, the owner thereof shall not be entitled to compensation, unless he can show that such condemnation or seizure is unjustied. There are traditional distinctions between the police power and the power of eminent domain that logically preclude the application of both powers at the same time on the same subject. In the case of City of Baguio v. NAWASA,79 for example, where a law required the transfer of all municipal waterworks systems to the NAWASA in exchange for its assets of equivalent value, the Court held that the power being exercised was eminent domain because the property involved was wholesome and intended for a public use. Property condemned under the police power
So use your own as not to injure anothers property. The welfare of the people is the supreme law. 74 Binay v. Domingo, G.R. No. 92389, Sep. 11, 1991. 75 Taada and Carreon, Political Law, Vol. 11, p. 50, cited in City Government of Quezon City v. Ericta, supra. 76 City Government of Quezon City v. Ericta, supra. 77 Id. 78 Id. 79 106 Phil. 144.
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is noxious or intended for a noxious purpose, such as a building on the verge of collapse, which should be demolished for the public safety, or obscene materials, which should be destroyed in the interest of public morals. The conscation of such property is not compensable, unlike the taking of property under the power of expropriation, which requires the payment of just compensation to the owner.
City Government of Quezon City v. Ericta G.R. No. L-34915, June 24, 1983 This case involves Ordinance No. 6118, Series of 1964, passed by the City Council of Quezon City which required, in Section 9 thereof, private cemeteries in Quezon City to set aside at least six percent (6%) of their total area for charity burial grounds of the citys deceased paupers. Pursuant thereto, the Quezon City Engineer notied Himlayang Pilipino, Inc. that such ordinance would be enforced by the City Government. Himlayang Pilipino, Inc. assailed the validity of the ordinance on the ground that the same involved conscation of private property. The City Government, on the other hand, argued that the taking of the Himlayang Pilipinos property is a valid and reasonable exercise of police power and that the land is taken for a public use as it is intended for the burial ground of paupers. The Supreme Court declared Section 9 of the said ordinance invalid. The Court held that the same is not a mere police power regulation but an outright conscation and deprives a person of his private property without due process of law and without compensation. The Court observed that there is no reasonable relation between the setting aside of at least six percent (6%) of the total area of a private cemeteries for charity burial grounds of deceased paupers and the promotion of health, morals, good order, safety, or the general welfare of the people. In effect, the ordinance is actually a taking without compensation of a certain area from a private cemetery to benet paupers who are charges of the municipal corporation. Instead of building or maintaining a public cemetery for this purpose, the city passes the burden to private cemeteries. [37.1.2] Power of Eminent Domain

Eminent domain is an inherent power of the State that enables it to forcibly acquire private lands intended for public use upon payment of just compensation to the owner.80 Obviously, there is no
80 Association of Small Landowners in the Phil. v. Sec. of Agrarian Reform, G.R. No. 78742, July 14, 1989.

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need to expropriate where the owner is willing to sell under terms also acceptable to the purchaser, in which case an ordinary deed of sale may be agreed upon by the parties.81 It is only where the owner is unwilling to sell, or cannot accept the price or other conditions offered by the vendee, that the power of eminent domain will come into play to assert the paramount authority of the State over the interests of the property owner. Private rights must then yield to the irresistible demands of the public interest on the time-honored justication, as in the case of the police power, that the welfare of the people is the supreme law.82 The exercise of the power of eminent domain is constrained by two constitutional provisions: (1) that private property shall not be taken for public use without just compensation under Article III (Bill of Rights), Section 9; and (2) that no person shall be deprived of his/her life, liberty, or property without due process of law under Art. III, Sec. 1. The foregoing requirement is echoed in Article 435 of the New Civil Code, which states: Art. 435. No person shall be deprived of his property except by competent authority and for public use and always upon payment of just compensation. Should this requirement be not rst complied with, the courts shall protect and, in a proper case, restore the owner in his possession. (349a) In view of the foregoing proscription, the power of eminent domain can only be exercised for public use and with just compensation. This proscription is intended to provide a safeguard against possible abuse and so to protect as well the individual against whose property the power is sought to be enforced.83 Taking an individuals private property is a deprivation which can only be justied by a higher good which is public use and can only be counterbalanced by just compensation.84 Without these safeguards, the taking of property would not only be unlawful, immoral, and null and void, but would also constitute a gross

Noble v. City of Manila, 67 Phil. 1, cited in Association of Small Landowners in the Phil. v. Sec. of Agrarian Reform, supra. 82 Association of Small Landowners in the Phil. v. Sec. of Agrarian Reform, supra. 83 Manosca v. CA, supra. 84 Barangay Sindalan, San Fernando, Pampanga v. CA, G.R. No. 150640, March 22, 2007.
81

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and condemnable transgression of an individuals basic right to property as well.85


[37.1.3] Power of Taxation

Taxation focuses on the power of government to raise revenue in order to support its existence and carry out its legitimate objectives.86 As a general rule, the power to tax is an incident of sovereignty and is unlimited in its range, acknowledging in its very nature no limits, so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay it. Nevertheless, effective limitations thereon may be imposed by the people through their Constitutions.87 Our Constitution, for instance, provides that the rule of taxation shall be uniform and equitable and Congress shall evolve a progressive system of taxation.88 So potent indeed is the power that it was once opined that the power to tax involves the power to destroy.89 Verily, taxation is a destructive power which interferes with the personal and property rights of the people and takes from them a portion of their property for the support of the government.90 Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the taxpayer.91
[37.2] Specic Limitations Imposed By Law

Examples of limitations on ownership which are specically provided by law are the following: (1)
85 86

Legal easements which can be enforced by law and, therefore,

Id. LTO v. City of Butuan, G.R. No. 131512, Jan. 20, 2000. 87 Mactan Cebu International Airport v. Hon. Marcos, G.R. No. 120082, Sep. 11, 1996; citing Cooley on Constitutional Law, 4th ed. (1931), 62. 88 Sec. 28(1), Article VI, 1987 Constitution. 89 Chief Justice Marshall in McCulloch v. Maryland, 4 Wheat, 316, 4 L ed. 579, 607. Later Justice Holmes brushed this aside by declaring in Panhandle Oil Co. v. Mississippi (277 U.S. 218) that the power to tax is not the power to destroy while this Court sits. Justice Frankfurter in Graves v. New York (306 U.S. 466) also remarked that Justice Marshalls statement was a mere ourish or rhetoric and a product of the intellectual fashion of the times to indulge in a free case of absolutes. (See Note 15 in Mactan Cebu International Airport v. Hon. Marcos, supra.). 90 Mactan Cebu International Airport v. Hon. Marcos, supra. 91 Id., citing Agpalo, Ruben E., Statutory Construction [1990 ed.], 216.

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may be established even against the will of the owner of the servient estate.92 (2) During a period of acute public want or emergency, thoughtless extravagance in expenses for pleasure or display may be stopped by order of the courts at the instance of any government or private charitable institution.93 (3) Lands acquired under free patent or homestead cannot be subject to encumbrance or alienation within ve years from the issuance of the patent.94
[37.3] Inherent Limitations Arising From Conicts With Other Similar Rights

It is a well-settled principle, growing out of the nature of wellordered civil society, that every holder of property, however absolute and unqualied may be his title, holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community.95
[37.3.1] Limitations on Owners Right To Use

The classical theory is that he who uses a right injures no one. Traditionally, therefore, it has been held that no person can be held liable for damages occasioned to another by the exercise of a right. The modern tendency, however, is to depart from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of right, even when the act is not illicit. The reason for this is that law cannot be given an anti-social effect. If mere fault or negligence in ones act can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable.96 Our Civil Code, noticeably, has departed from the classical and traditional theory and adopted the view that a person will be protected
See Chapter 2, Title VII, Book II of the New Civil Code. Art. 25, NCC. 94 Sec. 118, C.A. No. 141, as amended. 95 Case v. Board of Health, 24 Phil. 250. 96 See Footnote No. 32, National Power Corp. v. Philipp Brothers Oceanic, Inc., 369 SCRA 629, 642.
92 93

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only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse. The principle is outlined in Article 19 of the Code which provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. In relation to the exercise of the right to use property, Article 431 of the Code specically mandates that the owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person. Not only that, our Constitution even went farther by declaring that the use of property bears a social function, and all economic agents shall contribute to the common good.97 The absence of good faith is essential in determining whether the owner can be held liable for any consequential damage arising from the exercise of his right to use the property. When the owner acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith, he does no actionable injury and cannot be held liable for damages.98 The damage resulting from the legitimate exercise of a persons right is a loss without injury damnum absque injuria. If the right is exercise in bad faith, however, and for the sole intent of prejudicing or injuring another, there is liability under the principle of abuse of right99 for the exercise of a right ends when the right disappears, and it disappears when it is abused especially to the prejudice of others.100 The foregoing principles are best illustrated when we compare the case of Villafuerte v. Court of Appeals, cited in supra., 36, with the case of Sps. Custodio and Sps. Santos v. Court of Appeals,101 both involving the exercise of the owners right to enclose or fence his property. In Villafuerte, the lot owners were held liable to pay damages because the exercise of the right was attended with bad faith it was resorted to for the purpose of evicting the occupants whose lease contract had already expired. In Sps. Santos, however, the Court held that the petitioners were not liable to the private respondents for their act of constructing
Sec. 6, Art. XII, 1987 Phil. Constitution. Amonoy v. Gutierrez, 351 SCRA 731. 99 Albenson Enterprises Corp. v. CA, 217 SCRA 18. 100 MBTC v. Wong, 359 SCRA 608, 618. 101 G.R. No. 116100, Feb. 9, 1996.
97 98

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a fence within their property since at the time of such construction, the lot of the petitioners was not subjected yet to any servitude and there was no easement of way existing in favor of the private respondents, either by law or contract. The private respondents were granted by the court a right of way to petitioners lot only when the former went to court to pray for such access. But prior to the decision of the court, the petitioners were declared to have an absolute right over their property and their act of fencing and enclosing the same was an act which they may lawfully perform in the enjoyment and exercise of said right.
Sps. Custodio and Sps. Santos v. Court of Appeals G.R. No. 116100, Feb. 9, 1996 The private respondents own a parcel of land with a two-door apartment erected thereon situated at Interior P. Burgos St., Palingon, Tipas, Taguig, Metro Manila. They were able to acquire said property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as vendors. Said property may be described to be surrounded by other immovables pertaining to petitioners. Taking P. Burgos Street as the point of reference, on the left side, going to private respondents, the row of houses will be as follows: That of petitioners Spouses Custodio, then that of petitioner Spouses Santos and then that of the private respondents. As an access to P. Burgos Street from private respondents property, there are two possible passageways. The rst passageway is approximately one meter wide and is about 20 meters distant from the private respondents residence to P. Burgos Street. Such path is passing in between the previously mentioned row of houses. The second passageway is about 3 meters in width and length from the private respondents residence to P. Burgos Street; it is about 26 meters. Thereafter, the petitioners constructed an adobe fence in their respective properties such that the entire rst passageway was enclosed. Subsequently, the private respondents led a complaint against the petitioners for the grant of an easement of right of way with prayer for damages. After trial, the trial court ordered the petitioners to grant the private respondents access to the passageway upon payment of just compensation. Not satised with the judgment, the private respondents faulted the trial court for not awarding them damages. On the sole issue of whether the trial court erred in not awarding damages in their favor, the matter reached the High Court. In ruling that the private respondents were not entitled to damages, the Court explained The act of petitioners in constructing a fence within their lot is a valid exercise of their right as owners, hence not contrary to morals, good customs or public policy. The law recognizes in

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the owner the right to enjoy and dispose of a thing, without other limitations than those established by law. It is within the right of petitioners, as owners, to enclose and fence their property. Article 430 of the Civil Code provides that (e)very owner may enclose or fence his land or tenements by means of walls, ditches, live or dead hedges, or by any other means without detriment to servitudes constituted thereon. At the time of the construction of the fence, the lot was not subject to any servitudes. There was no easement of way existing in favor of private respondents, either by law or by contract. The fact that private respondents had no existing right over the said passageway is conrmed by the very decision of the trial court granting a compulsory right of way in their favor after payment of just compensation. It was only that decision which gave private respondents the right to use the said passageway after payment of the compensation and imposed a corresponding duty on petitioners not to interfere in the exercise of said right. Hence, prior to said decision, petitioners had an absolute right over their property and their act of fencing and enclosing the same was an act which they may lawfully perform in the employment and exercise of said right. To repeat, whatever injury or damage may have been sustained by private respondents by reason of the rightful use of the said land by petitioners is damnum absque injuria. A person has a right to the natural use and enjoyment of his own property, according to his pleasure, for all the purposes to which such property is usually applied. As a general rule, therefore, there is no cause of action for acts done by one person upon his own property in a lawful and proper manner, although such acts incidentally cause damage or an unavoidable loss to another, as such damage or loss is damnum absque injuria. When the owner of property makes use thereof in the general and ordinary manner in which the property is used, such as fencing or enclosing the same as in this case, nobody can complain of having been injured, because the inconvenience arising from said use can be considered as a mere consequence of community life. The proper exercise of a lawful right cannot constitute a legal wrong for which an action will lie, although the act may result in damage to another, for no legal right has been invaded. One may use any lawful means to accomplish a lawful purpose and though the means adopted may cause damage to another, no cause of

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action arises in the latters favor. Any injury or damage occasioned thereby is damnum absque injuria. The courts can give no redress for hardship to an individual resulting from action reasonably calculated to achieve a lawful end by lawful means. [37.3.2] Limitations on the Right of Excluding Others

While an owner is entitled to exclusive and undisturbed possession of his property and has the right to exclude other persons from its enjoyment and disposal, such right is unavailing if the interference by a third person is borne out of a state of necessity. This is provided for in Article 432 of the New Civil Code, which states: Art. 432. The owner of a thing has no right to prohibit the interference of another with the same, if the interference is necessary to avert an imminent danger and the threatened damage, compared to the damage arising to the owner from the interference, is much greater. The owner may demand from the person beneted indemnity for the damage to him. (n)
[i] State of Necessity, Explained

The phrase state of necessity is of German origin.102 Articles 228 and 904 of the German Civil Code provide, as follows: Art. 228. He who injures or destroys anothers property in order to avoid an imminent danger to himself or a third person, which danger comes from such property, shall not be acting unlawfully, if the injury or destruction is necessary to avoid the danger, and the damage is not disproportionate to the latter. If the author has caused the danger, he shall be liable to indemnify for losses and damages. Art. 904. The owner of a thing cannot prohibit the interference therein by another, if such interference is necessary to avoid an actual danger, and the injury with which the latter is threatened is much greater than that to be suffered by the owner. The owner can recover indemnity for the damage suffered.
102

People v. Rebutado, G.R. No. 124058, Dec. 10, 2003.

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Under the provisions of Article 432 of the New Civil Code of the Philippines, the interference by a third person with anothers property is justied and cannot be prevented by the latter if such interference is necessary to avert an imminent danger and the threatened damage, compared to the damage arising to the owner from the interference, is much greater. An example of the application of the principle of state of necessity is when a re is threatening to spread and destroy other houses and properties and the destruction of some houses will avert the spread of the re, such destruction is justied and will not be considered as unlawful physical invasion upon anothers property. In order for the interference to be justied under the state of necessity, the following requisites must be present: (1) there must be a situation of grave peril, an actual or imminent danger, either upon the person of the actor or a third person or their property;103 (2) the interference is necessary to avert such danger;104 (3) the threatened damaged, compared to the damage arising to the owner from the interference, is much greater;105 and (4) the state of necessity must not be brought about by the intentional provocation of the party invoking the same.106
[ii] State of Necessity as Justifying Circumstance

The defense of a state of necessity is a justifying circumstance under Article 11, paragraph 4 of the Revised Penal Code, which reads: Art. 11. Justifying circumstances. The following do not incur any criminal liability: xxx xxx xxx 4. Any person who, in order to avoid an evil or injury, does an act which causes damage to another provided that the following requisites are present:

Art. 432, NCC. Id. 105 Id. 106 People v. Rebutado, supra.
103 104

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First. That the evil sought to be avoided actually exists; Second. That the injury feared be greater than that done to avoid it; Third. That there be no other practical and less harmful means of preventing it. Since state of necessity is a justifying circumstance, the accused does not commit a crime in legal contemplation; hence, is not criminally and civilly liable. Civil liability is borne by the person/persons beneted by the act of the accused.107 This is the only case among the justifying circumstances where there is civil liability, but the civil liability is borne by the persons for whose benet the harm has been prevented in proportion to the benet which they may have received.108
[iii] Indemnity For Damages

While interference to ones property pursuant to a state of necessity is justied and does not constitute unlawful aggression, the persons beneted by such interference are duty bound to indemnify the owner for the damage suffered by the latter.109 On this respect, the distinction made by the Senator Tolentino between acts in a state of necessity and defense against unlawful aggression or defense against dangerous objects must be taken into consideration. If the danger comes from anothers property, the case is one of defense against danger,110 in which case, there is no obligation to indemnify the owner for the damage caused if the latter himself was responsible for such damage.111 But if anothers property is used to avert danger not arising from it, the act is essentially one in a state of necessity112 which will entitle the owner to the indemnity provided in Article 432 of the Civil Code.

Id. See Art. 101, 2nd par., RPC. 109 Art. 432, NCC. 110 II Tolentino, Civil Code of the Philippines, 1992 ed., 68. 111 Id., 70. 112 Id., 68.
107 108

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[iv]

Doctrine of Self-help vs. State of Necessity

The doctrine of self-help is invoked by the owner or lawful possessor in protection of his right to prevent other persons from interfering with the property. The state of necessity, on the other hand, is availed of by another person against someone elses property for the purpose of averting an imminent danger to himself or to another person or to their property. Note that it is not possible for the application of both doctrines to result in conict of rights. If the application of one doctrine is proper, it necessarily follows that the application of the other doctrine is not proper. If, for example, all the requisites for the application of the doctrine of state of necessity are present, the owner cannot rightfully invoke the doctrine of self-help to defeat the application of the former. If the application of the doctrine of state of necessity is proper, the same is justied under the provisions of Article 432 of the New Civil Code and it is, in fact, considered a justifying circumstance under Article 11, fourth paragraph, of the Revised Penal Code. Such being the case, the interference made is not considered as an unlawful physical invasion or usurpation of anothers property, which is a requisite for the proper application of the doctrine of self-help under Article 429 of the New Civil Code.
[37.4] Limitations Imposed By the Owner Himself

The owner of the property may impose restrictions or limitations on ownership in two situations: (1) at the time that he transmits the property to another person; or (2) at the time that he continues to be the owner of the property. The owner of the property may, by reason of his right to dispose (jus disponendi) as discussed in supra 33, for the time being part with some of the attributes of ownership, thereby restricting and abridging his right. He may for example, enter into a contract of commodatum wherein he grants to another person the jus utendi over the property during the effectivity of the contract. Or he may constitute a usufruct over his property in favor of another person, in which case, he parts with the right of free enjoyment of his property (jus utendi) and the right to receive the fruits (jus fruendi) thereof. In a contract of lease, the owner parts with the right to the possession of the property. These rights

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which may be exercised by another person against the property of the owner, if they are in the nature of real rights, are referred to in Roman Law as jus in re aliena. The right of the owner to impose reasonable restrictions or limitations on the right of ownership may even affect the property even after it has ceased to belong to the person imposing the limitation113 subject to the qualication that such limitation must not be contrary to the nature of ownership and not prohibited by law. A donor or testator, for example, may prohibit partition of the subject property but such prohibition cannot exceed twenty years.114
[37.4.1] Prohibition to Alienate

Prohibitions to alienate imposed by the will of the transmitting owner are generally valid except when they are forbidden by law or contrary to public policy. A testator, for example, may prohibit alienation of the property given by will but such prohibition cannot exceed twenty years.115 By analogy, therefore, a prohibition to alienate should not exceed at most a period of twenty years whether the transmission of ownership is done gratuitously or onerously, otherwise there would be subversion of public policy, which naturally frowns on unwarranted restrictions on the right of ownership. A perpetual prohibition against alienation is, however, void for being contrary to public policy. When, for example, the vendee of a parcel of land was prohibited from selling the subject property except to the vendor or to the latters heirs or successors, the Court held that such prohibition to sell to third parties is contrary to public policy because the same virtually amounts to a perpetual restriction to the right of ownership, specically the owners right to freely dispose of his properties.116 According to the Court, any such prohibition, indenite and stated as to time, so much so that it shall continue to be applicable even beyond the lifetime of the original parties to the contract, is, without doubt, a nullity.117

II Tolentino, Civil Code, 1992 ed., 61. Art. 494, 3rd par., NCC. 115 Art. 870, NCC. 116 Leal v. CA, G.R. No. L-65425, Nov. 5, 1987. 117 Id.
113 114

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[37.4.2]

Validity of Stipulations In The Deed of Restrictions

The provision in the deed of restrictions which required a purchaser of a parcel of land to pay association fees is a valid stipulation.118 A case in point is Bel Air Village Association, Inc. v. Dionisio119 where the village association led a complaint for collection of the association dues and also claimed for penalty and other charges. The Court afrmed the rule that an annotation to the effect that the lot owner becomes an automatic member of the village association and must abide by such rules and regulations laid down by said association was a valid restraint on ones ownership over the property as the same was for the interest of the sanitation, security and the general welfare of the community. In South Pachem Development, Inc. v. Court of Appeals,120 one of the real estate owners (SPDI) in the Makati commercial area and a member of the Makati Commercial Estate Association, Inc. (MACEA) questioned the validity of the stipulation in the deed of restrictions requiring purchasers of land from Ayala Corporation to pay association dues to MACEA for a period of 47 years from date of purchase. SPDI maintains that the period of 47 years constitutes a restriction on its right to enjoy and dispose of the property under Article 428 of the Civil Code as the non-payment of the association dues would constitute a lien on the subject property. The Court upheld the validity of the deed of restrictions because a contract becomes the law between the parties and each one is bound to comply therewith. In Cariday Investment Corporation v. Court of Appeals,121 it was recognized that residents and lot owners in the subdivision automatically become members of the Forbes Park Association and are bound by its rules and regulations stipulated in the deed of restrictions. A provision in the deed of restrictions annotated at the back of the certicate of title of a lot owner in the Forbes Park Subdivision required the owner to use his lot for residential purposes and stated that not more than one single family residential building will be constructed thereon; that the property would be subject to an easement of two meters within the lot

South Pacem Development, Inc. v. CA, G.R. No. 126260, Dec. 16, 2004. 174 SCRA 589 (1989). 120 Supra. 121 176 SCRA 31 (1989).
118 119

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and adjacent to the rear and two sides thereof for the purpose of drainage, sewerage water and other public facilities as may be necessary and desirable; and that additional restrictions, reservations, or servitudes as the association may, from time to time, adopt and prescribe would be for a period of fty (50) years from January 1, 1949. Therein petitioner allowed the occupancy by two families, thereby violating the singlefamily residential building restriction. The Supreme Court declared that the purpose of the restriction is valid as it avoids overcrowding both in the houses and in the subdivision which would result in pressure upon the common facilities such as water, power and telephone connections; accelerate the deterioration of the roads; and create problems of sanitation and security in the subdivision. Likewise, the restrictions were for aesthetic consideration and for the preservation of the peace, beauty, tranquility, and serenity of living at Forbes Park.
Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The true owner must resort to judicial process for the recovery of the property. (n) Art. 434. In an action to recover, the property must be identied, and the plaintiff must rely on the strength of his title and not on the weakness of the defendants claim. (n) Art. 435. No person shall be deprived of his property except by competent authority and for public use and always upon payment of just compensation. Should this requirement be not rst complied with, the courts shall protect and, in a proper case, restore the owner in his possession. (349a) Art. 436. When any property is condemned or seized by competent authority in the interest of health, safety or security, the owner thereof shall not be entitled to compensation, unless he can show that such condemnation or seizure is unjustied. (n)

38. Recovery of Property


[38.1] Presumption of Ownership

Possession is viewed by the Civil Code as presumed ownership.122 Hence, if a person is in actual possession of a property and claiming to be its owner, the law presumes that he is the owner thereof. This
122

II Caguioa, Civil Code, 1966 ed., 165.

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presumption of ownership arising from actual possession is expressly recognized in Article 433 of the Civil Code which states that actual possession under claim of ownership raises a disputable presumption of ownership. This presumption is a necessary consequence of the existence of presumptions in favor of the innocence of a person from any wrongdoing123 and of his good faith.124 Hence, when a person has actual possession of property under claim of ownership, the law presumes him innocent of any wrongdoing and, therefore, he must be the owner since possession is one of the rights included in ownership.125 The presumption, however, is merely disputable126 and may be overthrown by proof to the contrary. Since actual possession under claim of ownership raises a disputable presumption of ownership, such possession must be respected until it is shown that another person has a better right over the property. This principle is expressly recognized in Article 539 which provides: Art. 539. Every possessor has a right to be respected in his possession; and should he be disturbed therein he shall be protected in or restored to said possession by the means established by the laws and the Rules of Court. A possessor deprived of his possession through forcible entry may within ten days from the ling of the complaint present a motion to secure from the competent court in the action for forcible entry, a writ of preliminary mandatory injunction to restore him in his possession. The court shall decide the motion within thirty (30) days from ling thereof. (446a) Consequently, if another person claims to be the true owner of the property, he cannot recover the property by force if the actual possessor objects thereto.127 Even the true owner is required by law to resort to judicial process in order to recover his property.128 If he resorts to force

See Rule 131, Sec. 3(a), Rules of Court. See Art. 527, NCC. 125 II Caguioa, Civil Code, 1966 ed., 61. 126 Art. 433, NCC. 127 Art. 536, NCC. 128 Art. 433, NCC.
123 124

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or violence in recovering the property, such recovery of possession is not recognized by law as valid.129
[38.2] Requisites of Accion Reivindicatoria

In civil cases, the law requires that the party who alleges a fact and substantially asserts the afrmative of the issue has the burden of proving it.130 This evidentiary rule is based on the principle that the suitor who relies upon the existence of a fact should be called upon to prove it.131 In relation to accion reivindicatoria, Article 434 of the New Civil Code provides that to successfully maintain an action to recover the ownership of a real property, the person who claims a better right to it must prove two (2) things: rst, the identity of the land claimed; and second, his title thereto.132 If the plaintiff is unable to prove any of the foregoing requisites, his action will fail even if the defendant cannot prove his title to the property. In an action to recover real property, the settled rule is that the plaintiff must rely on the strength of his title, not on the weakness of the defendants title.133 This requirement is based on two (2) reasons: rst, it is possible that neither the plaintiff nor the defendant is the true owner of the property in dispute;134 and second, the burden of proof lies on the party who substantially asserts the afrmative of an issue for he who relies upon the existence of a fact should be called upon to prove that fact.135 Failure on the part of the plaintiff to prove his right of ownership will bar an action to recover the property; his right to recover must be founded on positive title or right, and not merely on negative ones, such as the lack or insufciency of title on the part of the defendant.136 The possessor has a presumption of title, and unless the plaintiff proves he has a better right, he cannot recover the property from the defendant.137

Art. 536, NCC. Alonzo v. San Juan, G.R. No. 137549, February 11, 2005. 131 Ramcar, Inc. v. Garcia, 114 Phil. 1026 (1962). 132 Navalle-Hutchison v. Buscas, G.R. No. 158554, May 26, 2005. 133 Art. 434, NCC; see also Turquesa v. Valera, 322 SCRA 573 (2000). 134 Navalle-Hutchison v. Buscas, supra, citing Civil Code of the Philippines, Annotated, Justice Edgardo L. Paras, vol. two, 14th ed. at 130. 135 Navalle-Hutchison v. Buscas, supra, citing Ramcar, Inc. v. Garcia, 114 Phil. 1026 (1962). 136 Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001). 137 Id., see also Art. 433, NCC.
129 130

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[38.2.1]

Proof of Identity

In an accion reinvindicatoria, the person who claims that he has a better right to the property must rst x the identity of the land he is claiming by describing the location, area and boundaries thereof.138 The rule is that he who claims to have a better right to the property must clearly show that the land possessed by the other party is the very land that belongs to him.139 So that when the record does not show that the land subject matter of the action has been exactly determined, the action cannot prosper, inasmuch as the plaintiffs ownership rights in the land claimed do not appear satisfactorily and conclusively proven at the trial.140 What really denes a piece of land is the boundaries therein laid down,141 which boundaries may either be natural or articial.142 The boundaries are considered natural if they are permanent landmarks established by nature such as for example a river, a lake, a stream, etc.143 It is articial if it is through concrete monuments established by the Bureau of Lands or it consists in the property of neighbors.144 However, in order that natural boundaries of land may be accepted for the purpose of varying the extent of the land included in a deed of conveyance, the evidence as to such natural boundaries must be clear and convincing.145 Such natural boundaries must be of such a character as to denitely and accurately segregate the land in question from the adjoining property146 and there must be no doubt left that the land included within the natural boundaries is the same land which was intended to be recovered by the plaintiff. The rule is that when there is a conict between the area and the boundaries of a land, the latter prevails for what really denes a piece of land is not the area mentioned in its description, but the boundaries

Navalle-Hutchison v. Buscas, supra, citing Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001). 139 Beo v. CA, 200 SCRA 575. 140 Bordalba v. CA, G.R. No. 112443, Jan. 25, 2002, citing Beo v. CA, 200 SCRA 575. 141 Intestate of Fausto Bayot v. Director of Lands, G.R. No. L-8536, April 28, 1956. 142 II Caguioa, Civil Code, 1966 ed., 62, citing Rosado v. Director of Lands, 58 Phil. 83. 143 Id. 144 Id., citing Government v. Abad, 47 Phil. 573. 145 Waldroop v. Castaxda, G.R. No. G.R. No. L-6852, 25 Phil. 30, August 9, 1913. 146 Id.
138

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therein laid down, as enclosing the land and indicating its limits.147 However, it is only when the boundaries given are sufciently certain and the identity of the land clearly proved by the boundaries thus indicated that an erroneous statement concerning the area can be disregarded or ignored.148 Otherwise, the area stated should be followed.149 This is the exception to the rule.150
[38.2.2] Proof of Title

As previously stated, the lack or insufciency of title on the part of the defendant does not entitle the plaintiff in an accion reivindicatoria to a favorable decision unless he himself is able to support his claim of ownership by evidence of title. In our jurisdiction, a certicate of title is considered as conclusive evidence of ownership of the land described therein, the validity of which is not subject to collateral attack.151 Hence, as against an array of proofs consisting of tax declarations and/or tax receipts which are not conclusive evidence of ownership nor proof of the area covered therein, an original certicate of title indicates true and legal ownership by the registered owners over the disputed premises.152 However, it has been held that if a person or entity obtains a title which includes by mistake or oversight land which cannot be registered under the Torrens System or over which the buyer has no legal right, said buyer does not, by virtue of said certicate alone, become the owner of the land illegally or erroneously included153 and where there is such an error, the courts may decree that the certicate of title be cancelled and a correct one issued to the buyer.154

147 Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001), citing Vda. de Tan v. IAC, 213 SCRA 95, citing Dichoso v. CA, 192 SCRA 169; Erico v. Chigas, 98 SCRA 575. 148 Intestate of Fausto Bayot v. Director of Lands, supra. 149 Id., citing Sanchez v. Director of Lands, 63 Phil., 378, 386. 150 Id., see also Pamintuan v. Insular Government (1907), 8 Phil., 512; Paras v. Insular Government (1908), 11 Phil. 378; and Waldroop v. Castaxda, 25 Phil. 30. 151 Tubo-Rodriguez v. Rodriguez, G.R. No. 175720, Sept. 11, 2007. 152 Cureg v. IAC, G.R. No. 73465 Sept. 7, 1989; citing Ferrer-Lopez v. Court of Appeals, G.R. No. 50420, May 29, 1987, 150 SCRA 393,401-402 153 Ledesma v. Mun. of Iloilo, 49 Phil. 773 (1926), citing Legarda and Prieto v. Saleeby, 31 Phil. 590. 154 Veterans Federation of the Philippines v. Court of Appeals, 345 SCRA 348 (2000), citing Consul v. Buhay, 64 O.G. 29, July 15, 1968, CA.

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Regarding tax declarations and receipts, they are not conclusive evidence of ownership.155 At most, they constitute mere prima facie proof of ownership or possession of the property for which taxes have been paid.156 In the absence of actual public and adverse possession, the declaration of the land for tax purposes does not prove ownership.157 Yet, when coupled with proof of actual possession, they are strong evidence of ownership.158 Thus, where it was shown that plaintiff has never paid the land tax, while the defendant has faithfully done so for many years, there being no explanation offered, it was held that such payment of taxes should be taken into consideration in favor of defendant.159
Art. 437. The owner of a parcel of land is the owner of its surface and of everything under it, and he can construct thereon any works or make any plantations and excavations which he may deem proper, without detriment to servitudes and subject to special laws and ordinances. He cannot complain of the reasonable requirements of aerial navigation. (350a) Art. 438. Hidden treasure belongs to the owner of the land, building, or other property on which it is found. Nevertheless, when the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half thereof shall be allowed to the nder. If the nder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of interest to science or the arts, the State may acquire them at their just price, which shall be divided in conformity with the rule stated. (351a) Art. 439. By treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear. (352)

39. Right to Sub-surface and Airspace It is a well-known principle that the owner of piece of land has rights not only to its surface but also to everything underneath and the airspace above it up to a reasonable height.160 This principle has its origin
Director of Lands v. IAC, 195 SCRA 38. Heirs of Vencilao v. CA, 288 SCRA 574, 581-582; Deiparine v. CA, 299 SCRA 668, 675; Tiong v. CA, 287 SCRA 102, 115. 157 Cequea v. Bolante, G.R. No. 137944, April 6, 2000. 158 Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001). 159 Id. 160 Republic of the Philippines v. Court of Appeals, 160 SCRA 228 (1988), citing Art. 437, NCC.
155 156

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in the ad coelum rule of the Roman Law Cujus est solum, ejus est usque ad coelum ad infernos (to whomsoever the soil belongs, he owns also to the sky and to the depths). However, the literal construction of the ad coelum doctrine has already been rejected by the courts.161 This formula from the center of the earth to the sky was invented at some remote time in the past when the use of space above land actual or conceivable was conned to narrow limits, and simply meant that the owner of the land could use the overlying space to such an extent as he was able, and that no one could ever interfere with that use.162 This formula was never taken literally, but was a gurative phrase to express the full and complete ownership of land and the right to whatever superjacent airspace was necessary or convenient to the enjoyment of the land.163 Our Civil Code, even as it adopted the ad coelum rule in Article 437, has subjected the same to certain limitations: (1) that it cannot work detriment to servitudes; (2) that it is subject to special laws and ordinances; and (3) that it is subject to reasonable requirements of aerial navigation. As a consequence of the foregoing principle, the owner of the land can make any construction thereon or make any plantation or excavation which he may deem proper provided it does not impair servitudes and, of course, subject to special laws and ordinances and reasonable requirements of aerial navigation.164
[39.1] Right To the Sub-Surface or Subsoil [39.1.1] Rights Over Land Are Indivisible

The ownership of land extends to the surface as well as to the subsoil underneath. In Republic of the Philippines v. Court of Appeals,165 this principle was applied to show that rights over lands are indivisible and, consequently, require a denitive and categorical classication. In the above mentioned case, Jose Dela Rosa led an application for registration of a parcel of land situated in Itogon, Benguet claiming

161 See US v. Causby, 328 U.S. 256, 66 S. Ct. 1062, 90 L.Ed. 1206 (1946); Hinman v. Pacic Air Transport, US Court of Appeals, 9th Circuit, 84 F.2d 755 (1936). 162 Hinman v. Pacic Air Transport, supra. 163 Id. 164 Art. 437, NCC. 165 Id.

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that the same was agricultural land and that he acquired ownership over it by virtue of acquisitive prescription, the same being in possession of his predecessors-in-interest for a period long enough to meet the requirements of the law. Such application was opposed by Benguet Consolidated, Inc., Atok Big Wedge Corporation and the Republic of the Philippines, through the Bureau of Forestry Development. Benguet and Atok each claimed that they acquired minerals claims over certain portions of the land. The Republic, on the other hand, claimed that the land was covered by the Central Cordillera Forest Reserve and, thus, part of public dominion. With respect to the claim of the Republic of the Philippines, the Supreme Court held that while the subject property was considered forest land and included in the Central Cordillera Forest Reserve, the same did not impair the rights already vested in Benguet and Atok at that time. The Court reasoned that under the law then in force, the perfection of the mining claim converted the property to mineral land and removed it from the public domain. By such act, the locators of the mining claims from whom Benguet and Atok acquired their respective claims, already acquired exclusive rights over the land, against even the government, without need of any further act such as the purchase of the land or the obtention of a patent over it. As the land had become the private property of the locators, they had the right to transfer the same, as they did, to Benguet and Atok. With respect to the claim of ownership by Dela Rosa, the Court held that even if it be assumed that his predecessors-in-interest had really been in possession of the subject property, their possession was not in the concept of owner of the mining claim but of the property as agricultural land, which it was not. The property was mineral land, and they were claiming it as agricultural land. The Court noted that said predecessors-in-interest did not dispute the rights of the mining locators nor did they seek to oust them as such and to replace them in the mining land. In fact, one of the predecessors-in-interest testied that she was aware of the diggings being undertaken down below but she did not mind and did not protest the same although she claimed to be the owner of the said land. When the case was decided by the Court of Appeals, the appellate court held that there was no conict of interest between the owners

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of the surface rights (referring to the predecessors-in-interest of Dela Rosa) and the owners of the sub-surface rights (referring to the mining locators). When the case was elevated to the Supreme Court, the High Court found the Court of Appeals ruling to be a strange doctrine for the land would be classied as mineral underneath and agricultural on the surface, subject to separate claims of title. The Supreme Court then held that rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. According to the Court, the classication must be categorical; the land must be either completely mineral or completely agricultural. In this case, the Court categorically classied the land as mineral land. The Court explained, thus The Court of Appeals justied this by saying there is no conict of interest between the owners of the surface rights and the owners of the sub-surface rights. This is rather strange doctrine, for it is a well-known principle that the owner of piece of land has rights not only to its surface but also to everything underneath and the airspace above it up to a reasonable height. Under the aforesaid ruling, the land is classied as mineral underneath and agricultural on the surface, subject to separate claims of title. This is also difcult to understand, especially in its practical application. Under the theory of the respondent court, the surface owner will be planting on the land while the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere with the operations below and the miner cannot blast a tunnel lest he destroy the crops above. How deep can the farmer, and how high can the miner, go without encroaching on each others rights? Where is the dividing line between the surface and the subsurface rights? The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. The classication must be categorical; the land must be either completely mineral or completely agricultural. In the instant case, as already observed, the land which was originally classied as forest land ceased to be so and became mineral and completely mineral once the

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mining claims were perfected. As long as mining operations were being undertaken thereon, or underneath, it did not cease to be so and become agricultural, even if only partly so, because it was enclosed with a fence and was cultivated by those who were unlawfully occupying the surface.166
[39.1.2] Extent of Rights Over The Sub-Surface

With respect to the land owners right to the subsoil, the question that comes to mind is this: up to what extent will the land owners right be with respect to the sub-surface? This is the question that confronts the Supreme Court in the case of National Power Corporation v. Ibrahim.167 In the above-mentioned case, the National Power Corporation constructed underground tunnels on several parcels of land owned in common by Ibrahim and his co-owners situated in Lanao Del Sur. NAPOCOR constructed the tunnels in 1978 but its existence was discovered by the land owners only in 1992. The tunnels were apparently being used by NAPOCOR in siphoning the water of Lake Lanao and in the operation of NAPOCORs other projects located in other parts of Mindanao. The existence of the tunnels came to the attention of the co-owners only when one of them applied for a permit with the Marawi City Water District to construct and/or install a motorized deep well. The application was denied on the ground that the construction of the deep well would cause danger to lives and property because Marawi City lies in an area of local volcanic and tectonic activity and because of the existence of tunnels underneath the surface of their property. He was then informed that underneath the land are underground tunnels of the NAPOCOR. Upon such discovery, the co-owners led an action against NAPOCOR for recovery of land and damages. The trial court denied the prayer of the co-owners for the dismantling of the tunnels but ordered NAPOCOR to pay them just compensation since there was taking of their property. The Court of Appeals sustained the decision of the trial Court. Hence, NAPOCOR elevated the matter to the Supreme Court.

166 167

At pp. 237-238. 526 SCRA 149 (2007).

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NAPOCOR maintains that the sub-terrain portion where the underground tunnels were constructed does not belong to the private respondents (the co-owners) even if they owned the property because their right to the subsoil does not extend beyond what is necessary to enable them to obtain all the utility and convenience that such property can normally give. NAPOCOR also asserts that respondents were still able to use the subject property even with the existence of the tunnels. In nding the arguments of NAPOCOR to be without merit, the Supreme Court held that pursuant to Article 437 of the Civil Code, the ownership of land extends to the surface as well as to the subsoil under it. The Court explained that the argument by the petitioner that the landowners right extends to the sub-soil insofar as necessary for their practical interests serves only to further weaken its case because the theory would limit the right to the sub-soil upon the economic utility which such area offers to the surface owners. Presumably, according to the Court, the landowners right extends to such height or depth where it is possible for them to obtain some benet or enjoyment, and it is extinguished beyond such limit as there would be no more interest protected by law. In this case, the landowners could have dug upon their property motorized deep wells but were prevented from doing so by the authorities precisely because of the construction and existence of the tunnels underneath the surface of their property. Hence, the land owners still had a legal interest in the sub-terrain portion insofar as they could have excavated the same for the construction of the deep well. There was, therefore, in this case, taking of private respondents property which entitled the latter to the payment of just compensation. The Court explained In disregarding this procedure and failing to recognize respondents ownership of the sub-terrain portion, petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that the acquisition of the easement is not without expense. The underground tunnels impose limitations on respondents use of the property for an indenite period and deprive them of its ordinary use. Based upon the foregoing, respondents are clearly entitled to the payment of just compensation. Notwithstanding the fact that petitioner only occupies the sub-terrain portion, it

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is liable to pay not merely an easement fee but rather the full compensation for land. This is so because in this case, the nature of the easement practically deprives the owners of its normal benecial use. Respondents, as the owners of the property thus expropriated, are entitled to a just compensation which should be neither more nor less, whenever it is possible to make the assessment, than the money equivalent of said property.168
[39.2] Right to Hidden Treasure

Since the owner of the land is likewise the owner of its sub-surface or sub-soil, any hidden treasure on the sub-surface also belongs to him.169 The same rule applies if the hidden treasure is located on a building or other property the same belong to the owner of the building or other property on which it is found.170 However, when the discovery is made by a stranger who is not a trespasser and the discovery is by chance, the nder is entitled to one-half of the treasure.171 If the nder is a trespasser, he shall not be entitled to any share of the treasure.172
[39.2.1] Concept of Hidden Treasure

For legal purposes, hidden treasure is understood to be any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.173 Hence, for a property to be considered as hidden treasure the following requisites must be satised: (1) the deposit of money, jewelry or other precious objects must be hidden or unknown; and (2) the lawful ownership of which must not appear. Under the ejusdem generis rule, the term other precious objects should be understood as being similar to money or jewelry.174 Hence, the concept does not include natural wealth, i.e., minerals and petroleum. The Regalian doctrine reserves to the State all natural wealth that may

At pp. 163-164. Art. 438, 1st par., NCC. 170 Id. 171 Art. 438, 2nd par., NCC. 172 Id. 173 Art. 439, NCC. 174 Vitug, Civil Law, Vol. 1, 2003 ed., p. 15.
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be found in the bowels of the earth even if the land where the discovery is made be private.175 As such, the right of the owner of the land with respect to the sub-surface or subsoil is subject to the application of the Regalian doctrine.
EDWARDS v. SIMS Court of Appeals of Kentucky, 1929. 232 Ky. 791, 24 S.W.2d 619. STANLEY, C. This case presents a novel question. In the recent case of Edwards v. Lee, 230 Ky. 375, 19 S.W.2d 992, an appeal was dismissed which sought a review and reversal of an order of the Edmonson circuit court directing surveyors to enter upon and under the lands of Edwards and others and survey the Great Onyx Cave for the purpose of securing evidence on an issue as to whether or not a part of the cave being exploited and shown by the appellants runs under the ground of Lee. The nature of the litigation is stated in the opinion and the order set forth in full. It was held that the order was interlocutory and consequently one from which no appeal would lie. Following that decision, this original proceeding was led in this court by the appellants in that case (who were defendants below) against Hon. N.P. Sims, judge of the Edmonson circuit court, seeking a writ of prohibition to prevent him enforcing the order and punishing the petitioners for contempt for any disobedience of it. It is alleged by the petitioners that the lower court was without jurisdiction or authority to make the order, and that their cave property and their right of possession and privacy will be wrongfully and illegally invaded, and that they will be greatly and irreparably injured and damaged without having an adequate remedy, since the damage will have been suffered before there can be an adjudication of their rights on a nal appeal. It will thus be seen that there are submitted the two grounds upon which this court will prohibit inferior courts from proceeding, under the provisions of Section 110 of the Constitution, namely: (1) Where it is a matter in which it has no jurisdiction and there is no remedy through appeal, and (2) where the court possesses jurisdiction but is exercising or about to exercise its power erroneously, and which would result in great injustice and irreparable injury to the applicant, and there is no adequate remedy by appeal or otherwise. Dufn v. Field, Judge, 208 Ky. 543, 271 S.W. 596; Potter v. Gardner, 222 Ky. 487, 1 S.W.2d 537; Litteral v. Woods, 223 Ky. 582, 4 S.W.2d 395.

175

Republic v. CA, 160 SCRA 228.

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1. There is no question as to the jurisdiction of the parties and the subject matter. It is only whether the court is proceeding erroneously within its jurisdiction in entering and enforcing the order directing the survey of the subterranean premises of the petitioners. There is but little authority of particular and special application to caves and cave rights. In few places, if any, can be found similar works of nature of such grandeur and of such unique and marvelous character as to give to caves a commercial value sufcient to cause litigation as those peculiar to Edmonson and other countries in Kentucky. The reader will nd of interest the address on The Legal Story of Mammoth Cave by Hon. John B. Rodes, of Bowling Green, before the 1929 Session of the Kentucky State Bar Assocation, published in its proceedings. In Cox v. Colossal Cavern Co., 210 Ky. 612, 276 S.W. 540, the subject of cave rights was considered, and this court held there may be a severance of the estate in the property, that is, that one may own the surface and another the cave rights, the conditions being quite similar to but not exactly like those of mineral lands. But there is no such severance involved in this case, as it appears that the defendants are the owners of the land and have in it an absolute right. Cujus est solum, ejus est usque ad coelum ad infernos (to whomsoever the soil belongs, he owns also to the sky and to the depths), is an old maxim and rule. It is that the owner of realty, unless there has been a division of the estate, is entitled to the free and unfettered control of his own land above, upon, and beneath the surface. So whatever is in a direct line between the surface of the land and the center of the earth belongs to the owner of the surface. Ordinarily that ownership cannot be interfered with or infringed by third persons. 17 C.J. 391; 22 R.C.L. 56; Langhorne v. Turman, 141 Ky. 809, 133 S.W. 1008, 34 L.R.A., N.S., 211. There are, however, certain limitations on the right of enjoyment of possession of all property, such as its use to the detriment or interference with a neighbor and burdens which it must bear in common with property of a like kind. 22 R.C.L. 77. With this doctrine of ownership in mind, we approach the question as to whether a court of equity has a transcendent power to invade that right through its agents for the purpose of ascertaining the truth of a matter before it, which fact thus disclosed will determine certainly whether or not the owner is trespassing upon his neighbors property. Our attention has not been called to any domestic case, nor have we found one, in which the question was determined either directly or by analogy. It seems to the court, however, that there can be little differentiation, so far as the matter now before us is concerned, between caves and mines. And as declared in 40 C.J. 947: A court of equity, however, has the inherent power, independent of statute, to compel a mine owner to permit an inspection of his works at the suit of a party who can show reasonable ground for suspicion that his lands are being trespassed upon though them, and may issue an injunction to permit such inspection.

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There is some limitation upon this inherent power, such as that the person applying for such an inspection must show a bona de claim and allege facts showing a necessity for the inspection and examination of the adverse partys property; and, of course, the party whose property is to be inspected must have had an opportunity to be hear in relation thereto. In the instant case it appears that these conditions were met. * * * We can see no difference in principle between the invasion of a mine on adjoining property to ascertain whether or not the minerals are being extracted from under the applicants property and an inspection of this respondents property through his cave to ascertain whether or not he is trespassing under this applicants property. It appears that before making this order the court had before him surveys of the surface of both properties and the conicting opinions of witnesses as to whether or not the Great Onyx Cave extended under the surface of the plaintiffs land. This opinion evidence was of comparatively little value, and as the chancellor (now respondent) suggested, the controversy can be quickly and accurately settled by surveying the cave; and if defendants are correct in their contention this survey will establish it beyond all doubt and their title to this cave will be forever quieted. If the survey shows the Great Onyx Cave extends under the lands of plaintiffs, defendants should be glad to know this fact and should be just as glad to cease trespassing upon plaintiffs lands, if they are in fact doing so. The peculiar nature of these conditions, it seems to us, makes it imperative and necessary in the administration of justice that the survey should have been ordered and should be made. It appearing that the circuit court is not exceeding its jurisdiction or proceeding erroneously, the claim of irreparable injury need not be given consideration. It is only when the inferior court is acting erroneously, and great or irreparable damage will result, and there is no adequate remedy by appeal, that a writ of prohibition will issue restraining the other tribunal, as held by authorities cited above. The writ of prohibition is therefore denied. Whole court sitting.

If the case of Edwards v. Sims, however, will transpire in the Philippines, the ad coelum rule will not apply because caves in this country are considered part of the national wealth, hence, owned by the State by virtue of its regalian right,176 whether the entrance thereof

176

See Sec. 2, Art. XII, 1987 Phil. Constitution.

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is located either in a private or public land and whether such entrance is naturally formed or man made.177 The conservation, protection and management of caves and cave resources in the Philippines is governed by R.A. No. 9072, otherwise known as the National Caves and Caves Resources Management and Protection Act, which directs and empowers the DENR, in coordination with the Department of Tourism (DOT), the National Museum, the National Historical Institute and concerned local government units (LGUs) for specic caves, to implement the provisions of the aforesaid law.
REPUBLIC ACT NO. 9072 (National Caves and Cave Resources Management and Protection Act) AN ACT TO MANAGE AND PROTECT CAVES AND CAVE RESOURCES AND FOR OTHER PURPOSES. Sec. 1. Title. This Act shall be known as the National Caves and Cave Resources Management and Protection Act. Sec. 2. Declaration of Policy. It is hereby declared the policy of the State to conserve, protect and manage caves and cave resources as part of the countrys natural wealth. Towards this end, the State shall strengthen cooperation and exchange of information between governmental authorities and people who utilize caves and cave resources for scientic, educational, recreational, tourism and other purposes. Sec. 3. Denition of Terms. For purposes of this Act, the following terms shall be dened as follows: (a) Cave means any naturally occurring void, cavity, recess or system of interconnected passages beneath the surface of the earth or within a cliff or ledge and which is large enough to permit an individual to enter, whether or not the entrance, located either in private or public land, is naturally formed or man made. It shall include any natural pit, sinkhole or other feature which is an extension of the entrance. The term also includes cave resources therein, but not any vug, mine tunnel, aqueduct or other manmade excavation. (b) Cave resources includes any material or substance occurring naturally in caves, such as animal life, plant life, including paleontological
177 See Sec. 3(a), R.A. No. 9072, otherwise known as the National Caves and Caves Resources Management and Protection Act.

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and archaeological deposits, cultural artifacts or products of human activities, sediments, minerals, speleogems and speleothems. (c) Secretary means the Secretary of the Department of Environment and Natural Resources (DENR). (d) Speleogem means relief features on the walls, ceilings and oor of any cave or lava tube which are part of the surrounding bedrock, including but not limited to anastomoses, scallops, meander niches, petromorphs and rock pendants in solution caves and similar features unique to volcanic caves. (e) Speleothem means any natural mineral formation or deposit occurring in a cave or lava tube, including but not limited to any stalactite, stalagmite, helictite, cave ower, owstone, concretion, drapery, rimstone or formation of clay or mud. (f) Signicant Cave refers to a cave which contains materials or possesses features that have archaeological, cultural, ecological, historical or scientic value as determined by the DENR in coordination with the scientic community and the academe. Sec. 4. Implementing Agency. The DENR shall be the lead agency tasked to implement the provisions of this Act in coordination with the Department of Tourism (DOT), the National Museum, the National Historical Institute and concerned local government units (LGUs) for specic caves, except that in the Province of Palawan, the Palawan Council for Sustainable Development shall be the lead implementing agency pursuant to Republic Act No. 7611 or the Strategic Environmental Plan for Palawan Act. Sec. 5. Powers and Functions of the Department of Environment and Natural Resources (DENR). In the implementation of this Act, the DENR shall exercise the following powers and functions: (a) Formulate, develop and implement a national program for the management, protection and conservation of caves and cave resources; (b) Disseminate information and conduct educational campaign on the need to conserve, protect and manage our caves and cave resources; (c) Issue permits for the collection and removal of guano and other cave resources which shall be determined in coordination with the DOT, National Museum, concerned LGUs, the scientic community and the academe, with regard to specic caves taking into consideration biodiversity as well as the aesthetic and archaeological value of the cave: Provided, That the permittee shall be required to post a bond to ensure compliance with the provisions of any permit: Provided, further, That any permit issued under this Section shall be revoked by the Secretary when the permittee violates any provision of this Act

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or fails to comply with any other condition upon which the permit was issued: Provided, furthermore, That the Secretary cannot issue permits for the removal of stalactites and stalagmites, and when it is established that the removal of the resources will adversely affect the value of a signicant cave: Provided, nally, That caves located within a protected area shall be subjected to the provisions of Republic Act No. 7586 or the National Integrated Protected Area System Act of 1992; (d) Call on any local government unit, bureau, agency, state university or college and other instrumentalities of the government for assistance as the need arises in the discharge of its functions; (e) Enter into a memorandum of agreement with any local government unit (LGU) for the preservation, development and management of cave or caves located in their respective territorial jurisdiction; (f) Tap the cooperation of peoples and non-governmental organizations as active partners in the conservations and protection of our caves and cave resources; and (g) Exercise other powers and perform other functions as may be necessary to implement the provisions of this Act. Sec. 6. Information Concerning the Nature and Location of Signicant Caves. Information concerning the nature and specic location of a potentially signicant cave shall not be made available to the public within one (1) year after its discovery by the DENR, during which time the DENR in coordination with the DOT, the National Museum, the National Historical Institute, concerned LGUs the scientic community and the academe shall assess its archaeological, cultural, ecological, historical and scientic value, unless a written request is made and the Secretary determines that disclosure of such information will further the purpose of this Act and will not create a substantial risk of harm, theft or destruction on such cave. The written request shall contain, among others, the following: (a) sought; (b) sought; a description of the geographic site for which the information is an explanation of the purpose for which the information is

(c) an assurance or undertaking satisfactory to the Secretary that adequate measures are to be taken to protect the condentiality of such information and to ensure the protection of the cave from destruction by vandalism and unauthorized use.

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Sec. 7. Prohibited Acts. The following shall be considered Prohibited Acts: (a) Knowingly destroying, disturbing, defacing, marring, altering, removing, or harming the speleogem or speleothem of any cave or altering the free movement of any animal or plant life into or out of any cave; (b) Gathering, collecting, possessing, consuming, selling, bartering or exchanging or offering for sale without authority any, cave resource; and (c) Counselling, procuring, soliciting or employing any other person to violate any provisions of this Section. Sec. 8. Penalties. Any person found guilty of any of the offenses enumerated under Section 7 hereof shall be punished by imprisonment from two (2) years to six (6) years or a ne ranging from Twenty thousand pesos (P20,000) to ve hundred thousand pesos (P500,000.00) or both at the discretion of the Court: Provided, That the person furnishing the capital to accomplish the acts punishable herein shall be punished by imprisonment from six (6) years and one (1) day to eight (8) years or by a ne ranging from Five hundred thousand pesos (P500,000.00) to One million pesos (P1,000,000.00) or both at the discretion of the Court: Provided, further, That if the area requires rehabilitation or restoration as determined by the Court, the offender shall also be required to restore the same, whenever practicable or compensate for the damage: Provided, nally, That if the offender is a government employee, he or she shall likewise be removed from ofce. Sec. 9. Administrative Conscation and Conveyance. The Secretary shall order the conscation, in favor of the Government of the cave resources gathered, collected, removed, possessed or sold including the conveyance and equipment used in violation of Section 7 hereof. Sec. 10. Fees. Any money collected by the DENR as permit fees for collection and removal of cave resources, as a result of the forfeiture of a bond or other security by a permittee who does not comply with the requirements of such permit issued under this Act or by way of nes for violations of this Act shall be remitted to the National Treasury. Sec. 11. Implementing Rules and Regulations. The DENR shall, within six (6) months from the effectivity of this Act, issue rules and regulations necessary to implement the provisions hereof. Sec. 12. Appropriations. The amount necessary to carry out the provisions of this Act shall be included in the General Appropriations Act of the year following its enactment into law and thereafter.

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Sec. 13. Separability Clause. If any provisions of this Act is subsequently declared unconstitutional, the remaining provisions shall remain in full force and effect. Sec. 14. Repealing Clause. Presidential Decree No. 1726-A is hereby modied. Treasure hunting in caves shall be governed by the provisions of this Act. Except Presidential Decree No. 412 and Republic Act No. 4846, all other laws, decrees, orders and regulations or parts thereof which are inconsistent with any of the provisions of this Act are hereby repealed or amended accordingly. Sec. 15. Effectivity. This Act shall take effect fteen (15) days following its publication in two (2) national newspapers of general circulation. [39.2.2] Rule on Ownership of Hidden Treasure under Article 438

If the nder of the hidden treasure is the owner of the land, building or property on which it is found, the treasure shall belong to him.178 If the nder is a third person, he is entitled to one-half of the treasure if he is not a trespasser and the discovery of the treasure is only by chance; otherwise, he shall not be entitled.179 The same rule shall apply even if the land belongs to the State.180 However, if the thing found be of interest to science or the Arts, the State may acquire them by paying just price, whether the nder of the treasure is the owner of the property on which it is found or a third person.181
[39.2.3] Rule on Treasure Hunting

The provisions of Article 438 of the New Civil Code on hidden treasure shall apply only if the discovery of the treasure is by chance. If the search for the hidden treasure is deliberate, otherwise known as treasure hunting, such activity is governed by the following: (1) Republic Act No. 8492, otherwise known as the National Museum Act of 1998, for issuance of permits for the discovery/recovery of hidden treasures, shipwrecks/sunken vessels recovery exclusively for materials of cultural and historical values, such as objects of arts,
Art. 438, 1st par., NCC. Art. 438, 2nd par., NCC. 180 Id. 181 Art. 438, 3rd par., NCC.
178 179

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archaeological artifacts, ecofacts, relics and other materials embodying the cultural and natural heritage of the Filipino nation, as well as those of foreign origin; (2) As to issuance of permits not covered by R.A. No. 8492, the same shall be governed by DENR Administrative Order No. 200204, as amended by DENR AO No. 2004-2003, in relation to Executive Order No. 35, dated September 15, 2001. Pursuant to EO No. 35, the function to issue licenses and permits for treasure hunting and shipwreck recovery has been transferred from the Ofce of the President to the Department of Environment and Natural Resources. In case of treasure hunting for treasures which are not of cultural and historical values, the same shall require the issuance of a permit for treasure hunting or shipwreck/sunken vessel recovery to be issued by the Department of Environment and Natural Resources, whether the treasure hunting is to be undertaken on private lands or government lands182 and subject to the consent of the private landowners or government agencies concerned.183 Upon discovery of valuable items such as monies, things and articles of value, resulting from treasure hunting and shipwreck/ sunken vessel recovery activities, the National Museum shall be called upon to determine whether or not they are considered to have cultural and/or historical value.184 In the event that the items are considered to have historical and cultural value, it shall be turned over to the National Museum for appropriate action. Otherwise, the same shall be turned to an oversight committee created pursuant to DENR AO No. 2002-04 for valuation and disposition.185 All treasures found shall be allowed for export only upon the approval of the National Heritage Commission and other concerned government agencies.186 After an audited report of expenses has been evaluated and approved by the oversight committee, the sharing of the net proceeds shall be as follows: (1) for treasure hunting within public lands 75% to the Government and 25% to the permit holder;

Sec. 2, DENR AO No. 2002-04, as amended. Sec. 7, DENR AO No. 2002-04, as amended. 184 Sec. 12, DENR AO No. 2002-04, as amended. 185 Id. 186 Id.
182 183

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(2)

for treasure hunting in private lands 30% to the Government and 70% to be shared by the permit holder and the landowner; and for shipwreck/sunken vessel recovery 50% to the Government and 50% to the permit holder.

(3)

[39.3] Right to the Airspace [39.3.1] Extent of Landowners Right to Airspace

The air, like the sea, is by its nature incapable of private ownership, except insofar as one may actually use it.187 While the airspace is a public highway, it is obvious that if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere.188 Otherwise buildings could not be erected, trees could not be planted, and even fences could not be run.189 However, when it is said that man owns, or may own, to the heavens, that merely means that no one can acquire a right to the space above him that will limit him in whatever use he can make of it as a part of his enjoyment of the land.190 In other words, the landowner owns at least as much of the space above the ground as he can occupy or use in connection with the land.191 To this extent his title to the air is paramount.192 No other person can acquire any title or exclusive right to any space above him.193 To the extent that ones land includes air space above the land, any unauthorized physical entry into that space is to be considered a trespass, if done by a private person, or a case of taking of private property, if done under governmental authority. Thus, in the case of United States v. Causby,194 it was held that repeated ights at low levels directly over private land may amount to a taking for which just compensation must be paid to the landowner.

Hinman v. Pacic Air Transport, supra. US v. Causby, 328 U.S. 256 (1946). 189 Id. 190 Hinman v. Pacic Air Transport, supra. 191 US v. Causby, supra. 192 Hinman v. Pacic Air Transport, supra. 193 Id. 194 Supra.
187 188

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Hinman v. Pacic Air Transport United States Court of Appeals, Ninth Circuit, 1936 84 F.2d 755 HANEY, Circuit Judge. From decrees sustaining motions to dismiss led by defendants in two suits, appellants appeal and bring for review by this court the rights of a landowner in connection with the ight of aircraft above his land. Appellant led one bill against Pacic Air Transport, an Oregon corporation, and another bill against United Air Lines Transport Corporation, a Delaware corporation, in each of which the allegations are nearly identical. Although two appeals are before the court, briefs led discuss both cases, and therefore we will consider them together. * * * It is * * * alleged that defendants are engaged in the business of operating a commercial airline, and that at all times after the month of May, 1929, defendants daily, repeatedly and upon numerous occasions have disturbed, invaded and trespassed upon the ownership and possession of plaintiffs tract; that at said times defendants have operated aircraft in, across, and through said airspace at altitudes less than 100 feet above the surface; that plaintiffs notied defendants to desist from trespassing on said airspace; and that defendants have disregarded said notice, unlawfully and against the will of plaintiffs, and continue and threaten to continue such trespasses. * * * The prayer asks an injunction restraining the operation of the aircraft through the airspace over plaintiffs property and for $90,000 damages in each of the cases. Appellees contend that it is settled law in California that the owner of land has no property rights in superjacent airspace, either by code enactments or by judicial decrees and that the ad coelum doctrine * * * does not apply in California. We have examined the statutes of California, particularly California Civil Code, 659 and 829, as well as Grandona v. Lovdal, 21 P. 366; Wood v. Moulton, 80 P. 92; and Kafka v. Bozio, 218 P. 753, but we nd nothing therein to negative the ad coelum formula. Furthermore, if we should adopt this formula as being the law, there might be serious doubt as to whether a state statute could change it without running counter to the Fourteenth amendment to the Constitution of the United States. If we could accept and literally construe the ad coelum doctrine, it would simplify the solution of this case; however, we reject that doctrine. We think it is not the law, and that it never was the law. This formula from the center of the earth to the sky was invented at some remote time in the past when the use of space above land actual or conceivable was conned to narrow limits, and simply meant that the owner of the land could use the overlying space to such an extent as he was able, and that no one could ever interfere with that use.

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This formula was never taken literally, but was a gurative phrase to express the full and complete ownership of land and the right to whatever superjacent airspace was necessary or convenient to the enjoyment of the land. In applying a rule of law, or construing a statute or constitutional provision, we cannot shut our eyes to common knowledge, the progress of civilization, or the experience of mankind. A literal construction of this formula will bring about an absurdity. The sky has no denite location. It is that which presents itself to the eye when looking upward; as we approach it, it recedes. There can be no ownership of innity, nor can equity prevent a supposed violation of an abstract conception. The appellants case, then, rests upon the assumption that as owners of the soil they have an absolute and present title to all the space above the earths surface, owned by them, to such a height as is, or may become, useful to the enjoyment of their land. This height, the appellants assert in the bill, is of indenite distance, but not less than 150 feet. * * * This, then, is appellants premise, and upon this proposition they rest their case. Such an inquiry was never pursued in the history of jurisprudence until the occasion is furnished by the common use of vehicles of the air. We believe, and hold, that appellants premise is unsound. The question presented is applied to a new status and little aid can be found in actual precedent. The solution is found in the application of elementary legal principles. The rst and foremost of these principles is that the very essence and origin of the legal right of property is dominion over it. Property must have been reclaimed from the general mass of the earth, and it must be capable by its nature of exclusive possession. Without possession, no right in it can be maintained. The air, like the sea, is by its nature incapable of private ownership, except insofar as one may actually use it. This principle was announced long ago by Justinian. It is in fact the basis upon which practically all of our socalled water codes are based. We own so much of the space above the ground as we can occupy or make use of, in connection with the enjoyment of our land. This right is not xed. It varies with our varying needs and is co-extensive with them. The owner of land owns as much of the space above him as he uses, but only so long as he uses it. All that lies beyond belongs to the world. When it is said that man owns, or may own, to the heavens, that merely means that no one can acquire a right to the space above him that will limit him in whatever use he can make of it as a part of his enjoyment of the land. To this extent his title to the air is paramount. No other person can acquire any title or exclusive right to any space above him.

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Any use of such air or space by others which is injurious to his land, or which constitutes an actual interference with his possession or his benecial use thereof, would be a trespass for which he would have remedy. But any claim of the landowner beyond this cannot nd a precedent in law, nor support in reason. It would be, and is, utterly impracticable and would lead to endless confusion, if the law should uphold attempts of landowners to stake out, or assert claims to denite, unused spaces in the air in order to protect some contemplated future use of it. Such a rule, if adopted, would constitute a departure never before attempted by mankind, and utterly at variance with the reason of the law. If such a rule were conceivable, how will courts protect the various landowners in their varying claims of portions of the sky? How enforce a right of ejectment or restitution? Such a rule is not necessary for the protection of the landowner in any right guaranteed him by the Constitution in the enjoyment of his property. If a right like this were recognized and upheld by the courts, it would cause confusion worse confounded. It is opposed to common sense and to all human experience. We cannot shut our eyes to the practical result of legal recognition of the asserted claims of appellants herein, for it leads to a legal implication to the effect that any use of airspace above the surface owner of land, without his consent would be a trespass either by the operator of an airplane or a radio operator. We will not foist any such chimerical concept of property rights upon the jurisprudence of this country. We now consider the allegation of the bill that appellees airplanes, in landing, glide through the air, within a distance of less than 100 feet to the surface of appellants land, or possibly to a distance within ve feet thereof, at one end of his tract. This presents another question for discussion. Whether such close proximity to appellants land may constitute an impairment of his full enjoyment of the same is a question of fact. If it does, he may be entitled to relief in a proper case. Appellants are not entitled to injunctive relief upon the bill led here, because no facts are alleged with respect to circumstances of appellants use of the premises which will enable this court to infer that any actual or substantial damage will accrue from the acts of the appellees complained of. The case differs from the usual case of enjoining a trespass. Ordinarily, if a trespass is committed upon land, the plaintiff is entitled to at least nominal damages without proving or alleging any actual damage. In the instant case, traversing the airspace above appellants land is not, of itself, a trespass at all, but it is a lawful act unless it is done under circumstances which will cause injury to appellants possession.

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Appellants do not, therefore, in their bill state a case of trespass, unless they allege a case of actual and substantial damage. The bill fails to do this. It merely draws a naked conclusion as to damages without facts or circumstances to support it. It follows that the complaint does not state a case for injunctive relief. * * * The decree of the District Court is afrmed. MATHEWS, Circuit Judge, dissents. UNITED STATES v. CAUSBY Supreme Court of the United States, 1946. 328 U.S. 256, 66 S. Ct. 1062, 90 L. Ed. 1206 Mr. Justice DOUGLAS delivered the opinion of the Court. This is a case of rst impression. The problem presented is whether respondents property was taken within the meaning of the Fifth Amendment by frequent and regular ights of army and navy aircraft over respondents land at low altitudes. The Court of Claims held that there was a taking and entered judgment for respondent, one judge dissenting. 60 F. Supp. 751. The case is here on a petition for a writ of certiorari which we granted because of the importance of the question presented. Respondents own 2.8 acres near an airport outside of Greensboro, North Carolina. It has on it a dwelling house, and also various outbuildings which were mainly used for raising chickens. The end of the airports northwestsoutheast runway is 2,220 feet from respondents barn and 2,275 feet from their house. The path of glide to this runway passes directly over the property which is 100 feet wide and 1,200 feet long. The 30 to 1 safe glide angle1 approved by the Civil Aeronautics Authority passes over this property at 83 feet, which is 67 feet above the house, 63 feet above the barn and 18 feet above the highest tree. The use by the United States of this airport is pursuant to a lease executed in May, 1942, for a term commencing June 1, 1942 and ending June 30, 1942, with a provision for renewals until June 30, 1967, or six months after the end of the national emergency, whichever is the earlier. Various aircraft of the United States use this airport bombers, transports and ghters. The direction of the prevailing wind determines when a particular runway is used. The north-west-southeast runway in question is used about four per cent of the time in taking off and about seven per cent of the time in landing. Since the United States began operations in May, 1942, its four-motored heavy bombers, other planes of the heavier type, and its ghter planes have frequently passed over respondents land buildings in considerable numbers and rather close together. They come close enough at times to appear

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barely to miss the tops of the trees and at times so close to the tops of the trees as to blow the old leaves off. The noise is startling. And at night the glare from the planes brightly lights up the place. As a result of the noise, respondents had to give up their chicken business. As many as six to ten of their chickens were killed in one day by ying into the walls from fright. The total chickens lost in that manner was about 150. Production also fell off. The result was the destruction of the use of the property as a commercial chicken farm. Respondents are frequently deprived of their sleep and the family has become nervous and frightened. Although there have been no airplane accidents on respondents property, there have been several accidents near the airport and close to respondents place. These are the essential facts found by the Court of Claims. On the basis of these facts, it found that respondents property had depreciated in value. It held that the United States had taken an easement over the property on June 1, 1942, and that the value of the property destroyed and the easement taken was $2,000. The United States relies on the Air Commerce Act of 1926, 44 Stat. 568, 49 U.S.C. 171 et seq., 49 U.S.C.A. 171 et seq., as amended by the Civil Aeronautics Act of 1938, 52 Stat. 973, 49 U.S.C. 401 et seq., 49 U. S.C.A. 401 et seq. * * * It is, therefore, argued that since these ights were within the minimum safe altitudes of ight which had been prescribed, they were an exercise of the declared right of travel through the airspace. The United States concludes that when ights are made within the navigable airspace without any physical invasion of the property of the landowners, there has been no taking of property. It says that at most there was merely incidental damage occurring as a consequence of authorized air navigation. It also argues that the landowner does not own super-adjacent airspace which he has not subjected to possession by the erection of structures or other occupancy. Moreover, it is argued that even if the United States took airspace owned by respondents, no compensable damage was shown. Any damages are said to be merely consequential for which no compensation may be obtained under the Fifth Amendment. It is ancient doctrine that at common law ownership of the land extended to the periphery of the universe Cujus est solum ejus est usque ad coelum. But that doctrine has no place in the modern world. The air is a public highway, as Congress has declared. Were that not true, every transcontinental ight would subject the operator to countless trespass suits. Common sense revolts at the idea. To recognize such private claims to the airspace would clog these highways, seriously interfere with their control and development in the public interest, and transfer into private ownership that to which only the public has a just claim. But that general principle does not control the present case. For the United States conceded on oral argument that if the ights over respondents

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property rendered it uninhabitable, there would be a taking compensable under the Fifth Amendment. * * * If, by reason of the frequency and altitude of the ights, respondents could not use this land for any purpose, their loss would be complete. It would be as complete as if the United States had entered upon the surface of the land and taken exclusive possession of it. We agree that in those circumstances there would be a taking. Though it would be only an easement of ight which was taken, that easement, if permanent and not merely temporary, normally would be the equivalent of a fee interest. It would be a denite exercise of complete dominion and control over the surface of the land. The fact that the planes never touched the surface would be as irrelevant as the absence in this day of the feudal livery of seisin on the transfer of real estate. The owners right to possess and exploit the land that is to say, his benecial ownership of it would be destroyed. It would not be a case of incidental damages arising from a legalized nuisance such as was involved in Richards v. Washington Terminal Co., 233 U.S. 546, 34 S. Ct. 654, L.R.A.1915A, 887. In that case property owners whose lands adjoined a railroad line were denied recovery for damages resulting from the noise, vibrations, smoke and the like, incidental to the operations of the trains. In the supposed case the line of ight is over the land. And the land is appropriated as directly and completely as if it were used for the runways themselves. There is no material difference between the supposed case and the present one, except that here enjoyment and use of the land are not completely destroyed. But that does not seem to us to be controlling. The path of glide for airplanes might reduce a valuable factory site to grazing land, an orchard to a vegetable patch, a residential section to a wheat eld. Some value would remain. But the use of the airspace immediately above the land would limit the utility of the land and cause a diminution in its value. * * * The fact that the path of glide taken by the planes was that approved by the Civil Aeronautics Authority does not change the result. The navigable airspace which Congress has placed in the public domain is airspace above the minimum safe altitudes of ight prescribed by the Civil Aeronautics Authority. 49 U.S.C. 180, 49 U.S.C.A. 180. If that agency prescribed 83 feet as the minimum safe altitude, then we would have presented the question of the validity of the regulation. But nothing of the sort has been done. The path of glide governs the method of operating of landing or taking off. The altitude required for that operation is not the minimum safe altitude of ight which is the downward reach of the navigable airspace. The minimum prescribed by the authority is 500 feet during the day and 1000 feet at night for air carriers (Civil Air Regulations, Pt. 61, 61.7400, 61.7401, Code Fed. Reg. Cum. Supp., Tit. 14, ch. 1) and from 300 to 1000 feet for other aircraft depending on the type of plane and the character of the terrain. Id., Pt. 60, 60.350-60.3505, Fed.

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Reg. Cum. Supp., supra. Hence, the ights in question were not within the navigable airspace which Congress placed within the public domain. If any airspace needed for landing or taking off were included, ights which were so close to the land as to render it uninhabitable would be immune. But the United States concedes, as we have said, that in that event there would be a taking. Thus, it is apparent that the path of glide is not the minimum safe altitude of ight within the meaning of the statute. The Civil Aeronautics Authority has, of course, the power to prescribe air trafc rules. But Congress has dened navigable airspace only in terms of one of them the minimum safe altitudes of ight. We have said that the airspace is a public highway. Yet it is obvious that if the landowner is to have full enjoyment of the land, he must have exclusive control of the immediate reaches of the enveloping atmosphere. Otherwise buildings could not be erected, trees could not be planted, and even fences could not be run. The principle is recognized when the law gives a remedy in case overhanging structures are erected on adjoining land. The landowner owns at least as much of the space above the ground as the can occupy or use in connection with the land. See Hinman v. Pacic Air Transport, 9 Cir., 84 F.2d 755. The fact that he does not occupy it in a physical sense by the erection of buildings and the like is not material. As we have said, the ight of airplanes, which skim the surface but do not touch it, is as much an appropriation of the use of the land as a more conventional entry upon it. We would not doubt that if the United States erected an elevated railway over respondents land at the precise altitude where its planes now y, there would be a partial taking, even though none of the supports of the structure rested on the land. The reason is that there would be an intrusion so immediate and direct as to subtract from the owners full enjoyment of the property and to limit his exploitation of it. While the owner does not in any physical manner occupy that stratum of airspace or make use of it in the conventional sense, he does use it in somewhat the same sense that space left between buildings for the purpose of light and air is used. The super-adjacent airspace at this low altitude is so close to the land that continuous invasions of it affect the use of the surface of the land itself. We think that the landowner, as an incident to his ownership, has a claim to it and that invasions of it are in the same category as invasions of the surface. * * * The airplane is part of the modern environment of life, and the inconveniences which it causes are normally not compensable under the Fifth Amendment. The airspace, apart from the immediate reaches above the land, is part of the public domain. We need not determine at this time what those precise limits are. Flights over private land are not a taking, unless they are so low and so frequent as to be a direct and immediate interference with the enjoyment and use of the land. We need not speculate on that phase of the present case. For the ndings of the Court of Claims plainly establish that

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there was a diminution in value of the property and that the frequent, low-level ights were the direct and immediate cause. We agree with the Court of Claims that a servitude has been imposed upon the land. * * * The Court of Claims held, as we have noted, that an easement was taken. But the ndings of fact contain no precise description as to its nature. It is not described in terms of frequency of ight, permissible altitude, or type of airplane. Nor is there a nding as to whether the easement taken was temporary or permanent. Yet an accurate description of the property taken is essential, since that interest vests in the United States. United States v. Cress, supra., 243 U.S. 328, 329, 37 S.Ct. 385, 386, and cases cited. * * * Since on this record it is not clear whether the easement taken is a permanent or a temporary one, it would be premature for us to consider whether the amount of the award made by the Court of Claims was proper. The judgment is reversed and the cause is remanded to the Court of Claims so that it may make the necessary ndings in conformity with this opinion. Reversed. Mr. Justice JACKSON took no part in the consideration or decision of this case. Mr. Justice BLACK, dissenting. The Fifth Amendment provides that private property shall not be taken for public use, without just compensation. The Court holds today that the Government has taken respondents property by repeatedly ying Army bombers directly above respondents land at a height of eighty-three feet where the light and noise from these planes caused respondents to lose sleep and their chickens to be killed. Since the effect of the Courts decision is to limit, by the imposition of relatively absolute Constitutional barriers, possible future adjustments through legislation and regulation which might become necessary with the growth of air transportation, and since in my view the Constitution does not contain such barriers, I dissent. * * * It is inconceivable to me that the Constitution guarantees that the airspace of this Nation needed for air navigation, is owned by the particular persons who happen to own the land beneath to the same degree as they own the surface below. 3 No rigid Constitutional rule, in my judgment, commands that the air must be considered as marked off into separate compartments by imaginary metes and bounds in order to synchronize air ownership with land ownership. * * * Old concepts of private ownership of land should not be introduced into the eld of air regulation. I have no doubt that Congress will, if not handicapped by judicial interpretations of the Constitution, preserve the

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freedom of the air, and at the same time, satisfy the just claims of aggrieved persons. The noise of newer, larger, and more powerful planes may grow louder and louder and disturb people more and more. But the solution of the problems precipitated by these technological advances and new ways of living cannot come about through the application of rigid Constitutional restraints formulated and enforced by the courts. What adjustments may have to be made, only the future can reveal. It seems certain, however, the courts do not possess the techniques or the personnel to consider and act upon the complex combinations of factors entering into the problems. The contribution of courts must be made through the awarding of damages for injuries suffered from the ying of planes, or by the granting of injunctions to prohibit their ying. When these two simple remedial devices are elevated to a Constitutional level under the Fifth Amendment, as the Court today seems to have done, they can stand as obstacles to better adapted techniques that might be offered by experienced experts and accepted by Congress. Todays opinion is, I fear, an opening wedge for an unwarranted judicial interference with the power of Congress to develop solutions for new and vital and national problems. In my opinion this case should be reversed on the ground that there has been no taking in the Constitutional sense.

Mr. Justice BURTON joins in this dissent.


[39.3.2] Limitations Upon Landowners Right to Airspace

The landowners right over the airspace is limited by the following: (1) He is bound by height restrictions annotated on the certicate of title if he acquired the property subject to such restrictions following the principle that contractual obligations between parties have the force of law between them.195 (2) For properties situated near the airport, their owners cannot complain of the reasonable requirements of aerial navigation. They are required to secure a height clearance permit from the Air Transportation Ofce (ATO), which permit is a pre-requisite for the issuance of a building permit. This permit allows the owner to construct the proposed structure height approved by ATO. In addition, building ofcials of local municipalities/provinces implement their own zoning ordinance,
195 Ayala Corporation v. Ray Burton Dev. Corp., G.R. No. 126699, Aug. 7, 1998; see also Ayala Corporation v. Rosa Diana Realty and Development Corp., G.R. No. 134284, Dec. 1, 2000.

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and therefore, may require the property owners to apply for a Height Clearance Permit if the proposed site of the building/structure is covered by any restrictions. (3) For properties far from the airport, they are subject to the provisions of the National Building Code196 and local ordinances. Chapter 2 RIGHT OF ACCESSION GENERAL PROVISIONS
Art. 440. The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or articially. (353)

40. Accession
[40.1] Denition and Concept

The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, either naturally or articially.197 Accession, therefore, is the right of an owner of a thing to the products of said thing as well as to whatever is inseparably attached thereto as an accessory.198 From the provisions of Article 440, it is clear that accession presupposes a previously existing ownership by the owner over the principal, such that it is considered merely as an incident or an attribute of ownership. It is not, therefore, a mode of acquiring ownership but a right included in ownership. At any rate, Article 712 of the New Civil Code which enumerates the seven modes of acquiring ownership (occupation, intellectual creation, law, donation, succession, tradition and prescription) does not consider accession as one of such modes. In addition, the concept of accession is discussed by the Code only in relation to the right of ownership.

R.A. No. 6541. Art. 440, NCC. 198 Sanchez Roman, Vol. II, p. 89.
196 197

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[40.2] Kinds of Accession

Based from the provisions of Article 440, accession is classied into two: (1) accesion discreta; and (2) accesion continua. The rst part of the article denes the concept of accesion discreta or the right of the owner to anything which is produced by his property. The second part of the article, on the other hand, denes the concept of accesion continua or the right of the owner to anything which is incorporated or attached to his property, whether such attachment is through natural or articial causes. Accesion discreta is subdivided into: (1) natural fruits, (2) industrial fruits, and (3) civil fruits. Accesion continua, in turn, may refer to either immovable property or movable property. With regard to immovable property, accesion continua is classied into either industrial accession or natural accession depending on the manner by which the attachment or incorporation takes place. In industrial accession, the incorporation takes place articially; while natural accession takes place through natural means. Industrial accession, in turn, may take the form of either building, planting or sowing. Natural accession, on the other hand, has four forms: (1) alluvion, (2) avulsion; (3) change of course of river; and (4) formation of islands. With respect to movable property, accesion continua may either be: (1) adjunction or conjunction, (2) commixtion or confusion, and (3) specication. Adjunction or conjunction, in turn, may take place by: (1) inclusion (engraftment), (2) soldadura (attachment); (3) tejido (weaving); (4) pintura (painting); or (5) escritura (writing). Section 1. Right of Accession with Respect to What is Produced by Property
Art. 441. To the owner belongs: (1) (2) (3) The natural fruits; The industrial fruits; The civil fruits. (354)

Art. 442. Natural fruits are the spontaneous products of the soil, and the young and other products of animals.

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Industrial fruits are those produced by lands of any kind through cultivation or labor. Civil fruits are the rents of buildings, the price of leases of lands and other property and the amount of perpetual or life annuities or other similar income. (355a) Art. 443. He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation. (356) Art. 444. Only such as are manifest or born are considered as natural or industrial fruits. With respect to animals, it is sufcient that they are in the womb of the mother, although unborn. (357)

41. Accesion Discreta


[41.1] Basic Rule

As dened, accesion discreta is the right of the owner to the products of his property or to the fruits of the same. In our Civil Code, the basic rule on accesion discreta is stated in Article 441, which provides that to the owner belongs: (1) the natural fruits, (2) the industrial fruits, and (3) the civil fruits.
[41.2] Exceptions to the Rule

The rule in Article 441 is not absolute inasmuch as there are cases where the owner is not entitled to the fruits of his property. The exceptions to the rule are the following: (a) in usufruct

It is the essence of usufruct that the usufructuary199 is entitled not only to the enjoyment of the property subject matter thereof but also to its fruits. Thus, Article 566 of the New Civil Code provides: Art. 566. The usufructuary shall be entitled to all the natural, industrial and civil fruits of the property in usufruct. With respect to hidden treasure which may be found on the land or tenement, he shall be considered a stranger.

199

He is the person in whose favor the usufruct was constituted.

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(b) in lease of rural lands In lease of rural land, the lessee is entitled to the natural and industrial fruits of the thing leased while the lessor is entitled to civil fruits in the form of the rent paid by the lessee.200 (c) in antichresis

By the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit.201 (d) in possession in good faith According to Article 544 of the New Civil Code, a possessor in good faith is entitled to the fruits received by him before his possession is legally interrupted. (e) fruits naturally falling

According to Article 681 of the New Civil Code, fruits naturally falling upon adjacent land belong to the owner of the said land and not to the owner of the tree.
[41.3] Kinds of Fruits

In our Civil Code, fruits are classied into: (1) natural; (2) industrial, and (3) civil. It has been held that the term natural, industrial and civil fruits are highly technical, and are authoritatively dened in Article 442 of the Civil Code so that, therefore, there can be no question as to the meaning which should be given them when they occur in a decree entered by the court.202
[41.3.1] Natural Fruits

There are two kinds of natural fruits,203 namely: (a) the spontaneous products of the soil those that appear without the intervention of human labor, such as the wild fruits in the forest, herbs, and common
Arts. 1654, 1676, par. 2, NCC. Art. 2123, Civil Code. 202 Pamintuan v. Garcia, 39 Phil. 746. 203 Art. 442, par. 1, NCC.
200 201

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grass; and (b) the young and other products of animals, such as milk, hair, wool, horn, hide, eggs, and animals dung or manure. With respect to the natural fruit of the rst kind, it is required that the same must be spontaneous product of the soil. In other words, it is necessary that there must be no human labor which has intervened in its generation. If human labor intervenes in the production of the fruit, the same is classied as an industrial fruit. Trees which grew spontaneously on the soil and adhering thereto are not considered as natural fruits in contemplation of the rst paragraph of Article 442 because they are themselves immovables. Trees may, however, be exceptionally considered as fruits if they are being exploited for an industry.204 In such a case, they are classied as industrial fruits because human labor intervenes. With regard to the natural fruit of the second kind, there may be a situation where the young or offspring is a product of animals belonging to different owners. Note that our Civil Code is silent with respect to the ownership of the young if the male and female parents belonged to different owners. There is no problem if the mating of the parentanimals is agreed upon by their respective owners and they provided for the ownership of the offspring. In the absence of any agreement to settle the ownership of the offspring, the rule is that the young belongs to the owner of the female parent. This is the rule enunciated by the Supreme Court in the early case of US v. Caballero205 in consonance with the express provisions of the Partidas based on the maxim partus sequitur ventrem the offspring follows the condition of the mother.206
[41.3.2] Industrial Fruits

Industrial fruits are those produced by lands of any kind through cultivation or labor.207 Hence, for a fruit to be classied as an industrial fruit, it must satisfy two requirements: (1) it is produced by the land; and (2) it is produced through cultivation or labor. Both the natural fruits of the rst kind and industrial fruits are products of the land. They differ, however, in the manner of their coming into existence. The former is
3 Manresa, 6th ed., p. 191. 25 Phil. 356 (1913). 206 Bouviers Law Dict., 1934 ed., p. 784. 207 Art. 442, par. 2, NCC.
204 205

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produced naturally and spontaneously by the soil; while the latter is produced through cultivation or through human labor. Examples of industrial fruits are the coffee beans in a coffee plantation; mango fruits in a mango plantation; palay, corn or sugar cane produced by farmers. By express provisions of the law, it is required that industrial fruits, like natural fruits of the rst kind, must come from the soil. Therefore, manufactured products such as clothes, jeans, watches and cell phones, although produced through human labor, are not considered industrial fruits.208
[41.3.3] Civil Fruits

Civil fruits, under the Civil Code, refers to rents of building, the price of leases of lands and other property and the amount of perpetual or life annuity or other similar income.209 Civil fruits, therefore, are the income or revenues derived from the property itself. Hence, a dividend, whether in the form of cash or stock, is considered as civil fruit because it is declared out of the prots of a corporation and not out of the capital stock.210 But a bonus which is paid to the owner of a piece of land for undertaking the risk of securing with his property a loan given to a sugar central is not civil fruits of the mortgaged property since it is not income derived from the property itself but a compensation for the risk assumed by the owner.211
[41.4] Existence of Fruits, When Recognized

When does the law recognize the existence of fruits? This question is answered by the provisions of Article 444 of the New Civil Code. With respect to natural and industrial fruits, only those manifest or born are considered as such.212 In relation to the offspring or young of animals, they are deemed existing at the beginning of the maximum period of gestation, this being the surest criterion of their existence in the mothers womb.213 Hence, the offspring is already considered as a natural fruit even during the time that it is inside the womb of its mother
3 Manresa, 6th ed., 191-192. Art. 442, par. 3, NCC. 210 Bachrach v. Seifert, 87 Phil. 483; Orozco v. Araneta, 90 Phil. 399. 211 Bachrach Motor Co. v. Talisay-Silay Milling Co., 56 Phil. 117. 212 Art. 444, par. 1, NCC. 213 3 Manresa, 6th ed., 199, cited in II Caguioa, Civil Code, 1966 ed., 78.
208 209

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so long as the latters pregnancy is already manifest or evident. In the case of plants which produce only a single crop and then perish, they are deemed manifest or existing from the time the seedlings appear on the ground, without waiting for the grains to appear.214 As to plants and trees that live for years and yield periodic fruits, the latter are not deemed existing until they actually appear on the plants and trees.215 42. Production Expenses
[42.1] Situation Contemplated in Article 443

Article 443 of the New Civil Code contemplates a situation where the recipient of the fruits was not the same person who incurred the expenses in connection with its production, gathering and preservation. This may happen, for example, if the property was previously in the possession of a possessor in bad faith and the latter incurred expenses in connection with the production, gathering and preservation of the fruits but subsequently the owner recovered possession of the property and the possessor turned over to the owner such fruits he already gathered. In such a situation, Article 443 provides that the recipient of the fruits has the obligation to pay the expenses made by a third person in their production, gathering and preservation. This rule is but proper in order that no one may unjustly enrich himself at the expense of another.216
[42.2] Applicability of Article 443

Article 443 applies only when the fruits are already harvested and gathered since the article refers to persons who receives the fruits. Hence, the article does not apply to a situation where the fruits are still pending. At the same time, the article refers to a recipient who did not incur the expenses for the production, gathering and preservation of the fruits. This may happen only if the property was previously in the possession of a possessor bad in faith but not if the possessor was in good faith. Under the Civil Code, a possessor in good faith is entitled to the fruits received by him before his possession is legally interrupted.217 Hence, he cannot be compelled by the owner to return whatever fruits

Ibid. Ibid. 216 3 Manresa, 6th ed., 196. 217 Art. 544, par. 1, NCC.
214 215

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he received prior to the interruption of his good faith. On the other hand, the possessor in bad faith is required to reimburse to the legitimate possessor the fruits received by him and those which the legitimate possessor could have received.218 Such being the case, the provisions of Article 443 nds application in a case where the true owner recovers possession of the property from a possessor in bad faith who is required by law to return to the owner not only the fruits he already received but also the fruits which the owner could have received. This is conrmed by the provisions of Article 549 of the New Civil Code which states that while the possessor in bad faith is obligated to reimburse the fruits received by him and those which the legitimate possessor could have received, he is, at the same time, entitled to recover the expenses mentioned in Article 443.
[42.3] Article 443 Does Not Apply To Pending Fruits

As discussed above, Article 443 does not apply to a situation where the fruits are still pending. In a situation where the fruits are still pending (or ungathered) at the time the owner recovers possession from a possessor in bad faith, it is the provisions of Article 449 of the New Civil Code that will apply. Under the provisions of Article 449, the planter or sower in bad faith on the land of another loses what is planted or sown. Except for the necessary expenses incurred for the preservation of the land,219 the planter or sower in bad faith is not entitled to recover any indemnity, including the expenses mentioned in Article 443.
[42.4] When Refundable

In order for the production expenses to be refundable, such expenses must have the following characteristics: (1) that they are dedicated to the annual production and not merely for purposes of improvement; (2) that they be not superuous, excessive or for luxury but rather that they be commensurate with that required by the products.220 If the foregoing requisites are complied with, the same must be refunded by the recipient of the fruits to the one who incurred it irrespective of whether the amount of the expenses far exceed the value of the fruits. This must be the rule because Article 443 does not make any distinction
Art. 549, NCC. Art. 452, NCC. 220 3 Manresa, 6th ed., 196-197, cited in II Caguioa, Civil Code, 1966 ed., 76.
218 219

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and because if the owner himself had made the expenses he would have spent the same amount.221 Section 2. Right of Accession with Respect to Immovable Property
Art. 445. Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belong to the owner of the land, subject to the provisions of the following articles. (358) Art. 446. All works, sowing, and planting are presumed made by the owner and at his expense, unless the contrary is proved. (359)

43. Accesion Continua As dened, accesion continua is the right of the owner to anything which is incorporated or attached to his property, whether the attachment is by reason of natural or articial causes.222 As discussed in supra 40.2, with respect to immovable property, accesion continua is classied into either industrial accession or natural accession. In industrial accession, the incorporation is caused by the act of man while natural accession takes place independently of the act of man.
[43.1] Presupposes Absence of Agreement

Accesion continua involves the union of two or more things belonging to different owners in such a manner that they cannot be separated from each other or from one another without causing a substantial injury to any of the things involved. The application of the law on accesion continua presupposes, however, the absence of any agreement, whether express or implied, between or among the owners of the different things involved. If there is such agreement before the attachment or incorporation, the situation shall be governed primarily by the agreement of the parties and secondarily by the pertinent law on the matter not by the law on accesion continua. In other words, the law on accesion continua applies only to situations where there is a controversy as to who shall be entitled to the resulting union of two or
221 222

II Caguioa, Civil Code, 1966 ed., 76. Art. 440, NCC.

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more things belonging to different owners. It is not so applicable where there is no such controversy.
[43.2] Basic Principles Governing Accesion Continua

Accesion continua is based on the following basic principles: (1) That the union or attachment or the incorporation of two or more things belonging to different owners to each other or to one another must be such that they cannot be separated from each other or from one another without causing a substantial physical or juridical injury to any one, to some, or to all of the things involved. If such separation is possible without injury, their respective owners retain their ownership without effects on the others. This principle is shown, for example, in Article 447 of the New Civil Code where the owner of the materials is allowed to demand for the removal of his materials in case the same can be done without injury to the work constructed or without the plantings, constructions or works being destroyed. If separation is indeed possible without injury, there is no accesion continua. Hence, the owner of the materials retains ownership over his property. (2) That the accessory follows the principal (accessio cedit principali). This means that the owner of the principal thing has the right to claim ownership of the accessory thing and not vice versa. This principle is shown, for example, in the provisions of Article 466 the New Civil Code which states that the owner of the principal thing acquires the accessory whenever two movable things belonging to different owners are, without bad faith, united in such a way that they form a single object. (3) That no one shall unjustly enrich himself at the expense of another. In Article 466, for example, even if the owner of the principal thing can appropriate the accessory thing that has been attached or incorporated to his property, he must, nonetheless, pay for its value if no bad faith intervenes on the part of the owner of the accessory thing. (4) That good faith exonerates a person from punitive liability and damages. He who acts in good faith may be held responsible for his act, but he should not be penalized. In Article 447 of the New Civil Code, for example, if the owner of the land made use of the materials of

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another in good faith, he can appropriate the materials upon payment of its value but he is not liable to pay damages. (5) That bad faith subjects a person to damages and other unfavorable consequences. In Articles 449 and 451 of the New Civil Code, for example, the builder in bad faith not only loses what he has built without right to indemnity but is likewise liable to the owner of the land for damages. (6) That bad faith of one party neutralizes the bad faith of the other and, therefore, both should be considered as having acted in good faith. This principle is recognized for example in Article 453 of the New Civil Code which states that if there was bad faith not only on the part of the person who built, planted or sowed on the land of another but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. A. INDUSTRIAL ACCESSION 44. Industrial Accession
[44.1] Three Forms

Industrial accession may take the form of building, planting or sowing. (1) Building

The term building is a generic term for all architectural work with roof, built for the purpose of being used as mans dwelling, or for ofces, clubs, theaters, etc.223 The term, however, does not refer to partitions, railings, counters, shelves and other xtures made in a building belonging to the owner of the land.224 This is because the Spanish text of the provision uses the word edicar which means to undertake the construction of an edice such as a house, stable or similar structure.225 While one may build a partition, door, window or

223 II Tolentino, Civil Code, 107, cited in Songcuya v. Mr. & Mrs. Lim, CA-G.R. No. 57357, Aug. 31, 2006. 224 II Caguioa, Civil Code, 1966 ed., 83. 225 Id.

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even a chair or desk, it is improper to use the verb edicar to describe the making of such partition, door, window, etc.226 (2) Planting and Sowing

Planting refers to trees, big or small, while sowing refers to crops and plants caused by the scattering or strewing of seeds upon the soil. The distinction between planting and sowing is material in applying the second option available to the landowner in good faith under the provisions of Article 448 of the New Civil Code. In Article 448, the option of compelling the builder or the planter to pay the price of the land is not available against the sower.
[44.2] Building, Planting or Sowing on Ones Own Land

Under the articles of the Civil Code on industrial accession by edication on the principal land (Articles 445 to 456), such accession is limited either to buildings erected on the land of another, or buildings constructed by the owner of the land with materials owned by someone else.227 Nowhere in these articles on industrial accession is there any mention of the case of a landowner building on his own land with materials owned by him.228 The reason for the omission is readily apparent: recourse to the rules on accession is totally unnecessary and inappropriate where the ownership of the land and of the materials used to build thereon are concentrated on one and the same person.229 Even if the law did not provide for accession, the landowner would necessarily own the building, because he has paid for the materials and labor used in constructing it.230 Thus, the Civil Code limits the cases of industrial accession to those involving land and materials belonging to different owners231 for in these cases a controversy arises as to the rights and obligations of the parties to each other or to one another. At any rate, in the absence of proof to the contrary, the law presumes that all works, sowing and planting are made by the owner and

Id., citing Lao Chit v. Security Bank & Trust Co., L-11028, April 17, 1959. Gaboya v. Cui, 38 SCRA 85, 92 (1971). 228 Id. 229 Id. 230 Id. 231 Id.
226 227

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at his expense.232 Hence, the burden of proving that the works, sowing and planting are not made by the landowner at his expense is incumbent upon those who are alleging such fact. Hence, as a rule, whatever is built, planted or sown on the land of another and the improvements or repairs made thereon, belonged to the owner of the land.233 This rule, however, is subject to the provisions of Articles 448 up to 456 upon presentation of proof that the works, sowing or planting is not made by the owner of the land nor made at his expense.
[44.3] Controversial Cases

In general, there are three possible persons involved in industrial accession: (1) the landowner; (2) the builder, planter or sower; and (3) the owner of the materials. As discussed in supra 44.2, if these three persons are merged into one, such that the landowner is at the same time the builder, planter or sower with materials belonging to him, there is no controversy since it is clear that whatever has been built, planted or sown belonged to him. A controversy will arise only if the landowner is not the builder, planter or sower nor the owner of the materials. Hence, there are three possible controversial situations in industrial accession: (1) When the landowner builds, plants or sows on his land but using materials belonging to another; (2) When a person builds, plants or sows on anothers land but he made use of materials belonging to him; and (3) When a person builds, plants or sows on anothers land but he made use of materials belonging to another.
Art. 447. The owner of the land who makes thereon, personally or through another, plantings, constructions or works with the materials of another, shall pay their value; and, if he acted in bad faith, he shall also be obliged to the reparation of damages. The owner of the materials shall have the right to remove them only in case he can do so without injury to the work constructed, or without the plantings, constructions or works being destroyed. However, if the landowner acted in bad faith, the owner of the materials may remove them in any event, with a right to be indemnied for damages. (360a)

232 233

Art. 446, NCC. Art. 445, NCC.

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45. Using Materials Belonging To Another


[45.1] Situation Contemplated in Article 447

Article 447 of the New Civil Code contemplates a situation where the landowner, either personally or through the instrumentality of an agent, makes plantings, constructions or works on his own land but he made use of materials belonging to another person. In such a situation, the following questions may arise: (1) Who can claim the ownership of what has been built, planted or sown? (2) What are the rights and obligations of the landowner and the owner of the materials as against each other? These and other questions are addressed by the provisions of Article 447.
[45.2] Determining the Legal Consequences

The legal effects of the situation contemplated in Article 447 shall depend on the good faith or bad faith of the landowner in making use of the materials belonging to a third person. Note that in this article, the law presumes that the owner of the materials is in good faith because the rights of the parties when the owner of the materials is in bad faith are determined by the provisions of Article 455 of the Civil Code. While Article 455 refers to a situation of building, planting or sowing on anothers land with the materials belonging to another person, there is no reason why the effects of the presence of good faith or bad faith on the part of the owner of the materials should not be applied to the situation contemplated in Article 447. Hence, if Article 447 is interpreted in conjunction with the provisions of Article 455, we will have the following possible scenarios: (1) (2) (3) (4) Both the landowner and the owner of the materials acted in good faith; Both of them acted in bad faith; The owner of the materials acted in good faith while the landowner acted in bad faith; and The owner of the materials acted in bad faith while the landowner acted in good faith.
[45.2.1] Both Acted In Good Faith

As stated earlier, Article 447 presumes that the owner of the materials is in good faith. Hence, where both the landowner and the

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owner of the materials acted in good faith, the legal effects of such a situation are determined by the provisions of Article 447. Applying the provisions of Article 447 and the principles governing accesion continua, the following are the legal effects of a situation where both parties acted in good faith: [i] Since the one responsible for the attachment or incorporation (the landowner) acted in good faith, he is exonerated from punitive liability and damages. [ii] Being the owner of the principal (the land) and following the principle of accesio cedit principali, the land owner is given the right to appropriate what has been built, planted or sown but with the obligation to indemnify the owner for the value of the materials234 following the principle that no person should unjustly enrich himself at the expense of another. Instead of appropriating the materials, can the landowner choose to return the same to its owner? Article 447 grants the right to demand for the removal and return of the materials only to the owner of the materials if such removal can be done without injury to the work constructed or without the plantings, constructions or works being destroyed. Notwithstanding the fact that the same right is not expressly granted to the landowner, it is believed, however, that the landowner may likewise choose to return the materials to its owner if removal is possible without causing injury to the work constructed or without the plantings, constructions or works being destroyed. In such a situation, there is really no accesion continua. As discussed in supra 43.2, there is accesion continua only if the union or attachment or the incorporation of two or more things belonging to different owners to each other or to one another is in such a way that they cannot be separated from each other or from one another without causing substantial physical or juridical injury to any one, to some, or to all of the things involved. There being no accession, the provision of Article 447 limiting the option of the landowner to the payment of the value of the materials does not apply. On the contrary, there being no accession, the owners of the things attached or joined retain ownership over their respective properties.
234

Art. 447, NCC.

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[45.2.2]

Both Acted In Bad Faith

Following the principle that the bad faith of one party is neutralized by the bad faith of the other and, therefore, both should be considered as having acted in good faith, the legal effects discussed in supra 45.2.1 shall likewise apply in the present situation. But what constitutes good faith or bad faith on the part of the landowner and the owner of the materials in the situation contemplated in Article 447? The landowner is considered to have acted in good faith if he honestly believed that the materials were his at the time that he made use of them. If he was aware that he had no right to make use of the materials at the time that he made use of them, he is considered to have acted in bad faith. On the part of the owner of the materials, he is considered to have acted in good faith if he was not aware that his materials were being used by the landowner at the time of the construction, planting or work. He came to know of it only after the materials have already been used by the landowner. If he knew at the time of the construction, planting or work that his materials were being used by another but he did not object thereto, he is considered to have acted in bad faith.
[45.2.3] Landowner In Bad Faith; Owner of the Materials In Good Faith

Again, this situation is governed by the provisions of Article 447. Applying the provisions of Article 447 and the principles governing accesion continua, the following are the legal effects of a situation where the landowner acted in bad faith while the owner of the materials was in good faith: [i] Being in bad faith, the landowner is liable to the owner of the materials for damages.235 [ii] Having acted in bad faith, the landowner shall also suffer the other unfavorable consequences of his act, such that the law grants the owner of the materials the options of either: (1) demanding for the value of the materials, with a right to be indemnied for damages; or (2) demanding for the removal of the materials in any event even

235

Art. 447, NCC.

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if it will cause injury to the land or to the materials with a right to be indemnied for damages.236 [iii] The foregoing is without prejudice to the criminal liability of the landowner for the unlawful taking and use of the materials of another without the latters knowledge and consent.
[45.2.4] Landowner In Good Faith; Owner of the Materials In Bad Faith

This situation is not governed by Article 447 since the latter article presumes that the owner of the materials is in good faith. Instead, what applies, by analogy, are the provisions of Articles 455 and 449 to the effect that the owner of the materials who acted in bad faith loses his materials without any right whatsoever and is furthermore liable to the landowner for damages.
Pacic Farms, Inc. v. Esguerra 30 SCRA 684 (1969) From 1956 to 1957, Carried Lumber Company sold and delivered lumber and construction materials to the Insular Farms, Inc. which the latter used in the construction of six buildings at its compound in Bolinao, Pangasinan. For failure of Insular Farms to pay the full purchase price, Carried Lumber instituted in October 1958 a civil case against Insular Farms for the recovery of the unpaid balance. In 1961, the trial court rendered judgment in favor of Carried Lumber. Insular Farms did not appeal. In 1962, Carried Lumber levied upon six buildings in Bolinao, Pangasinan. At this point, Pacic Farms, Inc. led a third-party claim, asserting ownership over the levied buildings which it had allegedly acquired from Insular Farms by virtue of a deed of absolute sale executed sometime in March 1958. The sheriff proceeded, however, with the public auction and eventually sold the buildings to Carried Lumber as the highest bidder. Thereafter, Pacic Farms led a complaint against Carried Lumber and the sheriff for the nullication of the auction and for damages. The trial court, after trial, rendered judgment annulling the levy and the certicate of sale. Carried Lumber appealed from said judgment alleging, inter alia, that there exists a materialmans lien over the six buildings in its favor. In resolving the controversy, the Supreme Court opted not to rule on the issue of the materialmans lien but applied by analogy the rules of accession, thus

236

Art. 447, NCC.

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Article 447 of the Civil Code provides: The owner of the land who makes thereon personally or through another, plantings, constructions or works with the materials of another, shall pay their value; and, if he acted in bad faith, he shall also be obliged to the reparation of damages. The owner of the materials shall have the right to remove them only in case he can do so without injury to the work constructed, or without the plantings, constructions or works being destroyed. However, if the landowner acted in bad faith, the owner of the materials may remove them in any event with a right to be indemnied for damages. The above-quoted legal provision contemplates a principal and an accessory, the land being considered the principal, and the plantings, constructions or works, the accessory. The owner of the land who in good faith whether personally or through another makes constructions or works thereon, using materials belonging to somebody else, becomes the owner of the said materials with the obligation however of paying for their value. The owner of the materials, on the other hand, is entitled to remove them, provided no substantial injury is caused to the landowner. Otherwise, he has the right to reimbursement for the value of his materials. Although it does not appear from the records of this case that the land upon which the six buildings were built is owned by the appellee, nevertheless, that the appellee claims that it owns the six buildings constructed out of the lumber and construction materials furnished by the appellant, is indubitable. Therefore, applying Article 447 by analogy, we perforce consider the buildings as the principal and the lumber and construction materials that went into their construction as the accessory. Thus the appellee, if it does own the six buildings, must bear the obligation to pay for the value of the said materials; the appellant which apparently has no desire to remove the materials, and, even if it were minded to do so, cannot remove them without necessarily damaging the bui1dings has the corresponding right to recover the value of the unpaid lumber and construction materials. Well-established in jurisprudence is the rule that compensation should be borne by the person who has been beneted by the accession. No doubt, the appellee beneted from the accession, i.e., from the lumber and materials that went into the construction of the six buildings. It should therefore shoulder the compensation due to the appellant as unpaid furnisher of materials.

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Of course, the character of a buyer in good faith and for value, if really possessed by the appellee, could possibly exonerate it from making compensation. But the appellees stance that it is an innocent purchaser for value and in good faith is open to grave doubt because of certain facts of substantial import (evident from the records) that cannot escape notice.
Art. 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 x the terms thereof. (361a) Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. (362) Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent. (363a) Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower. (n) Art. 452. The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land. (n) Art. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part. (364a) Art. 454. When the landowner acted in bad faith and the builder, planter or sower proceeded in good faith, the provisions of Article 447 shall apply. (n)

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46. Building With Ones Own Materials on the Land of Another Articles 448 up to 454 of the New Civil Code contemplate a situation where a person built, planted or sown on the land of another but he made use of materials belonging to him. This is the second of the controversial cases mentioned in supra 44.3. In this situation, there are actually two persons involved: (1) the landowner; and (2) the builder, planter or sower (who is at the same time the owner of the materials). In determining the legal effects of this situation, it is necessary to take into consideration the good faith or bad faith of both parties. Such being the case, there are four possible scenarios: (1) Both the landowner and the builder, planter or sower (who is at the same time the owner of the materials) acted in good faith; Both of them acted in bad faith; The landowner acted in good faith while the builder, planter or sower (who is at the same time the owner of the materials) acted in bad faith; and The landowner acted in bad faith while the builder, planter or sower (who is at the same time the owner of the materials) acted in good faith.

(2) (3)

(4)

47. Both Acted In Good Faith


[47.1] Concept of Good Faith [47.1.1] Good Faith of the Builder, Planter or Sower

Article 448 of the New Civil Code governs the situation where both the landowner and the builder, planter or sower (who is at the same time the owner of the materials) acted in good faith. However, this article applies only when the builder, planter or sower believes he had the right so to build, plant or sow because he thinks he owns the land or believes himself to have a claim of title.237 To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he builds, i.e., it is essential that he be a possessor in concept of
237 Floreza v. Evangelista, 96 SCRA 130, 136 (1980); citing Alburo v. Villanueva, 7 Phil. 277 (1907); Quemuel v. Olaes, 1 SCRA 1159 (1961); Racaza v. Susana Realty, Inc., 18 SCRA 1172 (1966).

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owner and that he be unaware that there exists in his title or mode of acquisition any aw which invalidates it.238 However, as already previously intimated, the concept of builder in good faith or bad faith presupposes ownership in another.239 If a person builds on his own land with his own materials, he is not merely a builder in good faith he is a builder-owner.
Pershing Tan Queto v. CA 148 SCRA 54 (1987) In this case, a parcel of land was acquired by the spouses Juan and Restituta Pombuena from the latters mother through onerous title (sale). Thereafter, Juan led for himself and his co-owner Restituta an application for a Torrens title over the land. Subsequently, a decision was promulgated in the cadastral proceedings pronouncing Juan (married to Restituta) as the owner of the land. Some years after, a contract of lease over the land was entered into between Pershing Tan Queto and Restituta (with the consent of Juan) for a period of ten years. After the expiration of the lease, Juan and Restituta sued Pershing for unlawful detainer. In the meantime, an Original Certicate of Title was issued in the name of Juan (married to Restituta) as a consequence of the cadastral case. During the pendency of the ejectment case, Juan entered into a barter agreement with Pershing whereby the latter became the owner of the leased premises, and the spouses Juan and Restituta in turn became the owners of a parcel of land with improvements previously owned by Pershing. Subsequently, Pershing constructed a concrete building on the property previously owned by Juan and Restituta. The construction of the building was without any objection on the part of Restituta. Later, however, Restituta sued both Juan and Pershing for reconveyance of title over the disputed land, for the annulment of the barter, and for recovery of the land with damages. One of the issues that crop up in the case was whether Pershing is a builder in good faith or in bad faith. The Supreme Court ruled that he is neither a builder in good faith nor a builder in bad faith. The Court explained (2) Was Tan Queto a possessor and builder in good faith or in bad faith? Even assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that the lot was actually RESTlTUTAs (making him in bad faith), still RESTITUTAs failure to prohibit
238 Mercado v. CA, 162 SCRA 75, 85 (1988); cited in Manotok Realty, Inc. v. Tecson, 164 SCRA 587, 592 (1988). 239 Pershing Tan Queto v. CA, 148 SCRA 54 (1987).

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him from building despite her knowledge that construction was actually being done, makes her also in bad faith. The net resultant of mutual bad faith would entitle TAN QUETO to the rights of a builder in good faith (Art. 448, Civil Code), ergo, reimbursement should be given him if RESTITUTA decides to appropriate the building for herself (Art. 448, Civil Code). However, as already previously intimated, TAN QUETO having bartered his own lot and small house with the questioned lot with JUAN (who has been adverted to by a court decision and by the OCT a conjugal owner) may be said to be the OWNERPOSSESSOR of the lot. Certainly he is not merely a possessor or builder in good faith (this phrase presupposes ownership in another); much less is he a builder in bad faith. He is a builderpossessor (jus possidendi) because he is the OWNER himself. Please note that the Chapter on Possession (jus possessionis, not jus possidendi) in the Civil Code refers to a possessor other than the owner. Please note further that the difference between a builder (or possessor) in good faith and one in bad faith is that the former is NOT AWARE of the defect or aw in his title or mode of acquisition while the latter is AWARE of such defect or aw (Art. 526, Civil Code). But in either case there is a aw or defect. In the case of TAN QUETO there is no such aw or defect because it is he himself (not somebody else) who is the owner of the property. Pleasantville Development Corporation v. CA 253 SCRA 10 (1996) In this case, Edith Robillo purchased from Pleasantville Development Corp. (PDC) a parcel of land designated as Lot 9, Phase II in Pleasantville Subdivision, Bacolod City. In 1975, Eldred Jardinico bought the rights to the lot from Robillo. At that time, lot 9 was vacant. Upon completing payments, Jardinico secured from the Register of Deeds in 1978 title in his name. It was then that he discovered that improvements had been introduced on lot 9 by Wilson Kee, who had taken possession thereof. It appears that in 1974, Kee bought on installment lot 8 of the same subdivision from C.T. Toress Enterprises, Inc. (CTTEI), the exclusive real estate agent of PDC. CCTEI through its employee, accompanied Kees wife to inspect lot 8. Unfortunately, the parcel of land pointed by CCTEIs employee was lot 9. Thereafter, Kee proceeded to construct his residence, a store, an auto repair shop and other improvements on the lot. Is Kee a builder in good faith? The Supreme Court answered in the afrmative. The Court held

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Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or aw in his title. And as good faith is presumed, petitioner has the burden of proving bad faith on the part of Kee. At that time he built improvements on lot 8, Kee believed that said lot was what he bought from petitioner. He was not aware that the lot delivered to him was not lot 8. Thus, Kees good faith. Petitioner failed to prove otherwise. Baltazar v. Caridad 17 SCRA 460 (1966) In this case, the trial court rendered a decision in a cadastral proceeding awarding Lot No. 8864 to spouses Julio Baltazar and Constancia Valencia as their conjugal partnership property. Said decision having become nal, the corresponding decree was issued on July 12, 1941, and pursuant thereto, said lot was registered in the names of the applicant spouses under Original Certicate of Title No. O-1445. In the meanwhile, Julio Baltazar died. In 1961, his surviving wife and children led a motion in the cadastral case for writ of possession against Silvina Caridad and her daughter, Eduarda Caridad, who had been in possession of the southern portion of Lot No. 8864 since 1939, while the cadastral case involving the lot was pending before the trial court, and before the decision and the corresponding decree issued in 1941. The Caridads refused to remove their houses from the southern portion of Lot No. 8864 insisting that they are builders in good faith and, as such, they are accorded rights under article 448 of the new Civil Code. The houses were built in 1958 and 1959. In debunking the contention of the Caridads, the Court explained Appellants can not be regarded as builders in good faith because they are bound by the 1941 decree of registration that obligated their parents and predecessors-in-interest. Good faith must rest on a colorable right in the builder, beyond a mere stubborn belief in ones title despite judicial adjudication. The fact that in 1959 appellants demolished and replaced their old house with new and bigger ones cannot enervate the rights of the registered owners. Otherwise, the rights of the latter to enjoy full possession of their registered property could be indenitely defeated by an unsuccessful opponent through the simple subterfuge of replacing his old house with a new one from time to time.

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[47.1.2]

A Lessee Is Not A Builder In Good Faith

Article 448 applies only to a case where one builds on land in the belief that he is the owner thereof and it does not apply where ones only interest in the land is that of a lessee under a rental contract.240 As ruled by the Court in Lopez, Inc. v. Phil. and Eastern Trading Co.,241 the principle of possessor in good faith refers only to a party who occupies or possess property in the belief that he is the owner thereof and said good faith ends only when he discovers a aw in his title so as to reasonably advise or inform him that after all he may not be the legal owner of said property. It cannot apply to a lessee because as such lessee he knows that he is not the owner of the leased premises. Neither can he deny the ownership or title of his lessor. A lessee who introduces improvements in the leased premises, does so at his own risk in the sense that he cannot recover their value from the lessor, much less retain the premises until such reimbursement.242 In a plethora of cases,243 the Supreme Court has held that Article 448 of the New Civil Code, in relation to Article 546 of the same Code, which allows full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to improve his landlord out of his property.244 The law applicable to the lessee who introduced improvement on the leased premises is Article 1678 of the New Civil Code, which provides: Art. 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
Bulacanag v. Francisco, 122 SCRA 498, 502 (1983). 98 Phil. 348. 242 Bulacanag v. Francisco, supra. 243 Alburo v. Villanueva, 7 Phil. 277, 280 (1907) (referring to the provisions of the Old Civil Code); Racaza v. Susana Realty, Inc., supra note 17, at 1177-1178; Bulacanag v. Francisco, Ibid.; Gabrito v. Court of Appeals, 167 SCRA 771, 778-779 (1988); Cabangis v. Court of Appeals, 200 SCRA 414, 419-421 (1991); Heirs of the late Jaime Binuya v. Court of Appeals, 211 SCRA 761, 766 (1992). 244 Geminiano v. CA, 259 SCRA 344 (1996).
240 241

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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. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished. This article gives the lessor the option to appropriate the useful improvements by paying one-half of their value, and the lessee cannot compel the lessor to appropriate the improvements and make reimbursement, for the lessees right under the law is to remove the improvements even if the leased premises may suffer damage thereby. But he shall not cause any more damage upon the property than is necessary.245 A lessee, in order to be entitled to one half the value of the improvements introduced by him in the leased premises, or to remove them should the lessor refuse to reimburse the half value thereof, must show that the same were introduced in good faith; are useful; suitable to the use for which the lease is intended without altering the form and substance of the premises.246
Geminiano v. Court of Appeals 259 SCRA 344 (1996) In this case, Lot No. 3765-B-1 was originally owned by the petitioners mother, Paulina Geminiano. On a portion of the said lot stood the petitioners unnished bungalow which they sold in 1978 to Dominador and May Nicolas. Subsequently, the petitioners mother subsequently executed a contract of lease over a 126 square meter portion of the lot, including that portion on which the house stood, in favor of Dominador and Mary Nicolas (private respondents) for a period of seven years commencing on November 15, 1978. The Nicolases then introduced additional improvements and registered the house in their
245 246

Ibid. Imperial Insurance, Inc. v. Simon, 14 SCRA 855.

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names. After the expiration of the lease in 1985, the petitioners mother refused to accept the monthly rentals. It turned out that the lot in question was the subject of a suit, which resulted in its acquisition by one Maria Lee in 1972. In 1982, Lee sold the lot to Lily Salcedo, who in turn sold it in 1984 to the spouses Agustin and Ester Dionisio. In 1992, the Dionisio spouses executed a Deed of Quitclaim over the said property in favor of the petitioners. As such, the lot was registered in the latters names. In 1993, the petitioners led an ejectment case against Mary Nicolas. The issue in this case is whether the lessees were builders in good faith and entitled to reimbursement of the value of the houses and improvements. The Supreme Court ruled in the negative. The Court explained Being mere lessees, the private respondents knew that their occupation of the premises would continue only for the life of the lease. Plainly, they cannot be considered as possessors nor builders in good faith. In a plethora of cases (Alburo v. Villanueva, 7 Phil. 277, 280 [1907] referring to the provisions of the Old Civil Code; Racaza v. Susana Realty, Inc., supra., note 17, at 1177-1178; Bulacanag v. Francisco, 122 SCRA 498, 502 [1983]; Gabrito v. Court of Appeals, 167 SCRA 771, 778 779 [1988]; Cabangis v. Court of Appeals, 200 SCRA 414, 419-421 [1991]; Heirs of the late Jaime Binuya v. Court of Appeals, 211 SCRA 761, 766 [1992]), this Court has held that Article 448 of the Civil Code, in relation to Article 546 of the same Code, which allows full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. It does not apply where ones only interest is that of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to improve his landlord out of his property. Anent the alleged promise of the petitioners to sell the lot occupied by the private respondents house, the same was not substantiated by convincing evidence. Neither the deed of sale over the house nor the contract of lease contained an option in favor of the respondent spouses to purchase the said lot. And even if the petitioners indeed promised to sell, it would not make the private respondents possessors or builders in good faith so as to be covered by the provisions of Article 448 of the Civil Code. The latter cannot raise the mere expectancy of ownership of the aforementioned lot because the alleged promise to sell was not fullled nor its existence even proven. The rst thing that the private respondents

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should have done was to reduce the alleged promise into writing, because under Article 1403 of the Civil Code, an agreement for the sale of real property or an interest therein is unenforceable, unless some note or memorandum thereof be produced. Not having taken any steps in order that the alleged promise to sell may be enforced, the private respondents cannot bank on that promise and profess any claim nor color of title over the lot in question. There is no need to apply by analogy the provisions of Article 448 on indemnity as was done in Pecson v. Court of Appeals (244 SCRA 407 [1995]), because the situation sought to be avoided and which would justify the application of that provision, is not present in this case. Sufce it to say, a state of forced co-ownership would not be created between the petitioners and the private respondents. For, as correctly pointed out by the petitioners, the rights of the private respondents as lessees are governed by Article 1678 of the Civil Code which allows reimbursement to the extent of one-half of the value of the useful improvements. It must be stressed, however, that the right to indemnity under Article 1678 of the Civil Code arises only if the lessor opts to appropriate the improvements. Since the petitioners refused to exercise that option, the private respondents cannot compel them to reimburse the one-half value of the house and improvements. Neither can they retain the premises until reimbursement is made. The private respondents sole right then is to remove the improvements without causing any more impairment upon the property leased than is necessary. Sps. Lacap v. Ong Lee G.R. No. 142131, December 11, 2002 In this case, a certain Facundo mortgaged two parcels of land to Monte de Piedad Savings Bank. In 1981, the spouses Lacap assumed to pay Facundos mortgage obligation to the bank. Due to their failure to pay their obligation to the bank, the latter foreclosed on the mortgage. During the auction sale, the bank emerged as the highest bidder and title passed on to it. The bank, however, allowed the spouses to stay in the premises as lessees paying a monthly rental. The spouses thereafter introduced improvements thereon after relying on the banks assurance that the property would be sold back to them. In 1996, when the spouses tried to pay their monthly rental, the bank refused to accept the payment inasmuch as the property had already been sold to another person. When the spouses offered to buy the property, the bank turned down their offer. Sometime thereafter, the spouses received a letter demanding that they vacate

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the premises because it was already owned by Ong Lee. The spouses instituted a civil case against Ong Lee for cancellation of sale and damages. Ong Lee, on the other hand, led a complaint for unlawful detainer. May the spouses be considered as a builder in good faith pursuant to Article 448 of the Civil Code? The Supreme Court said no. The Court explained In the event that their rst assigned error is not resolved in their favor, the petitioner spouses assert that their right to be indemnied for the improvements they introduced should be based on Article 448 of the Civil Code which provides that: Art. 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 disagreements the courts shall x the terms thereof. Article 546 of the Civil Code provides that builders in good faith are entitled to reimbursement for necessary and useful expenses, with right of retention in both cases. The petitioners insist that they should be treated as builders in good faith inasmuch as they stepped into the shoes of Victor Facundo, the former ownermortgagor, when the latter assigned to them the obligation to pay the bank the balance due on the mortgage. Since then, they occupied the subject property and introduced improvements thereon. They contend that they were not lessees and paid no rentals thereon. We do not think so. Article 528 of the Civil Code provides that possession in good faith continues to subsist until facts exist which show that the possessor is already aware that he wrongfully possesses the thing. Although, in the beginning, the petitioners were made to believe that they had a claim of title over the said property by assuming the mortgage and possessing the subject property, all this changed

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when they started paying monthly rentals to the mortgagee bank after the foreclosure of the said property. We nd this nding of the courts a quo conclusive on us in this petition for review. A conclusive presumption arises from the fact that, during the tenancy relationship, the petitioner spouses admitted the validity of the title of their landlord. This negated their previous claim of title. If, indeed, they believed in good faith they had at least an imperfect title of dominion over the subject premises, they should have tried to prevent the foreclosure and objected to the acquisition of title by the bank. In other words, their supposed belief in good faith of their right of dominion ended when the bank foreclosed and acquired title over the subject premises. Hence, the applicable provision in the instant case is Article 1678 of the Civil Code which provides that: Art. 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. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is cause to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished. The petitioner spouses are therefore entitled to be paid only one-half of the value of the useful improvements at the time of the termination of the lease or to have the said improvements removed if the respondent refuses to reimburse them. [47.1.3] As A Rule, Art. 448 Cannot Apply To A Co-Owner

Article 448 of the New Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did

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not build, plant or sow upon land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership.247 However, when the co-ownership is terminated by a partition and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner which was however made in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties.248
Spouses Del Campo v. Abesia 160 SCRA 379 (1988) This case involves a parcel of land co-owned by the plaintiffs and defendants in the proportion of 2/3 and 1/3 each, respectively. An action for partition was led by plaintiffs in the CFI of Cebu. The trial court appointed a commissioner in accordance with the agreement of the parties. The said commissioner conducted a survey, prepared a sketch plan and submitted a report to the court, recommending that the property be divided into two lots: lot 1161-A with an area of 30 square meters for plaintiffs and lot no-1161-B for the defendants with an area of 15 square meters. The houses of plaintiffs and defendants were surveyed and shown on the sketch plan. The house of defendants occupied the portion of lot 1161-A of plaintiffs. The parties manifested their conformity to the report and asked the trial court to nally settle and adjudicate who among the parties should take possession of the 5 square meters of the land in question. The trial court thereafter rendered a decision which states that since Article 448 cannot be applied to a case where one has built, planted or sown on the land owned in common, the defendants should remove and demolish, at their expense, the part of their house which encroached upon the land of the plaintiffs. The defendants appealed from said decision. On appeal, the Supreme Court held that Article 448 of the Civil Code is applicable. The Court explained The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon land that exclusively belongs to another but of which he is a coowner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership.

247 248

Spouses Del Campo v. Abesia, 160 SCRA 379, 382 (1988). Ignao v. IAC, 193 SCRA 17, 23 (1991); Sps. Del Campo v. Abesia, supra.

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However, when, as in this case, the co-ownership is terminated by the partition and it appears that the house of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the New Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when there was co-ownership if good faith has been established. Applying the aforesaid provision of the Civil Code, the plaintiffs have the right to appropriate said portion of the house of defendants upon payment of indemnity to defendants as provided for in Article 546 of the Civil Code. Otherwise, the plaintiffs may oblige the defendants to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the house of defendants built thereon, then the latter cannot be obliged to buy the land. The defendants shall then pay the reasonable rent to the plaintiffs upon such terms and conditions that they may agree. In case of disagreement, the trial court shall x the terms thereof. Of course, defendants may demolish or remove the said portion of their house, at their own expense, if they so decide. WHEREFORE, the decision appealed from is hereby MODIFIED by ordering plaintiffs to indemnify defendants for the value of the said portion of the house of defendants in accordance with Article 546 of the Civil Code, if plaintiffs elect to appropriate the same. Otherwise, the defendants shall pay the value of the 5 square meters of land occupied by their house at such price as may be agreed upon with plaintiffs and if its value exceeds the portion of the house that defendants built thereon, the defendants may choose not to buy the land but defendants must pay a reasonable rental for the use of the portion of the land of plaintiffs as may be agreed upon between the parties. In case of disagreement, the rate of rental shall be determined by the trial court. Otherwise, defendants may remove or demolish at their own expense the said portion of their house. Ignao v. IAC 193 SCRA 17 (1991) In this case, Florencio Ignao and his uncles, Juan Ignao and Isidro Ignao, were co-owners of a parcel of land with an area of 534 square meters. Pursuant to an action for partition, the CFI of Cavite in 1975 directed the partition of the

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aforesaid land, allotting 133.5 square meters or 2/8 thereof to Juan and Isidro, and giving the remaining portion with a total area of 266.5 square meters to Florencio. However, no actual partition was effected. In 1978, Florencio instituted a complaint for recovery of possession of real property against Juan and Isidro alleging that the area occupied by the two houses built by Juan and Isidro exceeded the 133.5 square meters previously allotted to them by the trial court. When the property was surveyed upon the agreement of the parties, it was disclosed that the house of Juan occupied 42 square meters while that of Isidro occupied 59 square meters of Florencios land or a total of 101 square meters. The trial court applied article 448 of the Civil Code in resolving the conicting rights of the parties, which decision was afrmed by the Court of Appeals. Florencio appealed to the Supreme Court contending that the CA erred in applying Article 448 of the Civil Code since this article contemplates a situation wherein the land belongs to one person and the thing built, sown or planted belongs to another. In holding that Article 448 applies in this particular case, the Supreme Court explained Whether or not the provisions of Article 448 should apply to a builder in good faith on a property held in common has been resolved in the afrmative in the case of Spouses del Campo v. Abesia (160 SCRA 379 [1988]) wherein the Court ruled that: The court a quo correctly held that Article 448 of the Civil Code cannot apply where a co-owner builds, plants or sows on the land owned in common for then he did not build, plant or sow upon land that exclusively belongs to another but of which he is a co-owner. The co-owner is not a third person under the circumstances, and the situation is governed by the rules of co-ownership. However, when, as in this case, the ownership is terminated by the partition and it appears that the home of defendants overlaps or occupies a portion of 5 square meters of the land pertaining to plaintiffs which the defendants obviously built in good faith, then the provisions of Article 448 of the New Civil Code should apply. Manresa and Navarro Amandi agree that the said provision of the Civil Code may apply even when there is a co-ownership if good faith has been established. In other words, when the co-ownership is terminated by a partition and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another co-owner which

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was however made in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties. Petitioners second assigned error is however well taken. Both the trial court and the Appellate Court erred when they peremptorily adopted the workable solution in the case of Grana v. Court of Appeals (109 Phil. 260), and ordered the owner of the land, petitioner Florencio, to sell to private respondents, Juan and Isidro, the part of the land they intruded upon, thereby depriving petitioner of his right to choose. Such ruling contravened the explicit provisions of Article 448 to the effect that (t)he owner of the land xxx shall have the right to appropriate xxx or to oblige the one who built xxx to pay the price of the land xxx. The law is clear and unambiguous when it confers the right of choice upon the landowner and not upon the builder and the courts. Thus, in Quemuel v. Olaes (1 SCRA 1159 [1961]), the Court categorically ruled that the right to appropriate the works or improvements or to oblige the builder to pay the price of the land belongs to the landowner. As to the third assignment of error, the question on the price to be paid on the land need not be discussed as this would be premature inasmuch as petitioner Florencio has yet to exercise his option as the owner of the land. WHEREFORE, the decision appealed from is hereby MODIFIED as follows: Petitioner Florencio Ignao is directed within thirty (30) days from entry of judgment to exercise his option to either appropriate as his own the portions of the houses of Juan and Isidro Ignao occupying his land upon payment of indemnity in accordance with Articles 546 and 548 of the Civil Code, or sell to private respondents the 101 square meters occupied by them at such price as may be agreed upon. Should the value of the land exceed the value of the portions of the houses that private respondents have erected thereon, private respondents may choose not to buy the land but they must pay reasonable rent for the use of the portion of petitioners land as may be agreed upon by the parties. In case of disagreement, the rate of rental and other terms of the lease shall be determined by the trial court. Otherwise, private respondents may remove or demolish at their own expense the said portions of their houses encroaching upon petitioners land.

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[47.1.4]

Art. 448 Made Applicable Under Peculiar Circumstances

In Sarmiento v. Agana,249 the Supreme Court, deviating from the general rule that Article 448 applies only when a builder builds in the concept of an owner, ruled that the Valentino spouses were builders in good faith in view of the peculiar circumstances under which they constructed their residential house. As far as the couple knew, the land was owned by the husbands mother-in-law who, having stated they could build on the property, could reasonably be expected to later on give them the land. It turned out that the land had been titled in the name of another person. The Supreme Court, however, applied in this case the provisions of Article 448. In Macasaet v. Macasaet,250 the Court also held that the children have the right to be indemnied for the useful improvements constructed in good faith on a lot owned by the parents, applying the provisions of Article 448. In this case, the parents invited their children to occupy the formers lots, out of parental love and desire to foster family solidarity. Because of that invitation, the children constructed their residential house on the property. Unfortunately, an unresolved conict terminated this situation and out of pique, the parents asked the children to vacate the premises. Deviating again from the general rule that Article 448 applies only when a builder builds in the concept of an owner, the Court held that the children were builders in good faith. The Macasaet case is factually similar to Javier v. Javier.251 In that case, the Court deemed the son to be in good faith for building the improvement (the house) with the knowledge and consent of his father, to whom belonged the land upon which it was built. Thus, Article 448 (then Article 361 of the Old Civil Code) was applied. Ordinarily, Article 448 does not apply to a case where the owner of the land is the builder, sower or planter who then later loses ownership of the land by sale or donation,252 for then there can be no question as to good or bad faith on the part of the builder.253 In the case of Pecson v.
129 SCRA 122 (1984). 439 SCRA 625. 251 7 Phil. 261 (1907). 252 Pecson v. CA, 244 SCRA 407 (1995). 253 Colengco v. Regalado, 92 Phil. 387, 395 (1952).
249 250

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Court of Appeals,254 however, the Court applied by analogy the provision of Article 448 on indemnity to a builder who loses ownership of his land when the same was auctioned off by a local government unit for failure of the landowner to pay the real estate taxes.
Pecson v. Court of Appeals 244 SCRA 407 (1995) In this case, Pedro Pecson was the owner of a commercial lot located in Kamias Street, Quezon City, on which he built a four-door two-storey apartment building. For his failure to pay realty taxes, the lot was sold at public auction by the City Treasurer of Quezon City to Mamerto Nepomuceno whoin turn sold it in 1983 to the spouses Juan and Erlinda Nuguid. Pecson challenged the validity of the auction sale. The trial court dismissed the complaint but held that the apartment building was not included in the auction sale. Both parties appealed. The Court of Appeals, on the other hand, afrmed in toto the decision of the trial court. When the decision became nal, the spouses Nuguid led with the trial court a motion for the delivery of possession of the lot and the apartment building citing Article 546 of the Civil Code. The trial court granted the motion. Pecson elevated the matter to the CA in a special civil action for certiorari. The Court of Appeals afrmed in part the order of the trial court citing Article 448 of the Civil Code. Aggrieved by the decision of the CA, Pecson went to the Supreme Court on appeal. The parties agree that Pecson was a builder in good faith of the apartment building on the theory that he constructed it at the time when he was still the owner of the lot. The key issue in this case is the application of Articles 448 and 546 of the Civil Code. The Court held By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one of whom has built some works, or sown or planted something. The building, sowing or planting may have been made in good faith or in bad faith. The rule on good faith laid down in Article 526 of the Civil Code shall be applied in determining whether a builder, sower or planter had acted in good faith. Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or donation. This Court said so in Coleongco v. Regalado (92 Phil. 387, 395 [1952]):

254

Supra.

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Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the house on his own land before he sold said land to Coleongco. Article 361 applies only in cases where a person constructs a building on the land of another in good or in bad faith, as the may be. It does not apply to a case where a person constructs a building on his own land, for then there can be no question as to good or bad faith on the part of the builder. Elsewise stated, where the true owner himself is the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant. Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe that the provision therein on indemnity may be applied by analogy considering that the primary intent of Article 448 is to avoid a state of forced co-ownership and that the parties, including the two courts below, in the main agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for the improvements may be paid although they differ as to the basis of the indemnity. Article 546 does not specically state how the value of the useful improvements should be determined. The respondent court and the private respondents espouse the belief that the cost of construction of the apartment building in 1965, and not its current market value, is sufcient reimbursement for necessary and useful improvements made by the petitioner. This position is, however, not in consonance with previous rulings of this Court in similar cases. In Javier v. Concepcion, Jr. (94 SCRA 212 [1979]), this Court pegged the value of the useful improvements consisting of various fruits, bamboos, a house and camarin made of strong material based on the market value of the said improvements. In Sarmiento v. Agana (129 SCRA 122 [1984]), despite the nding that the useful improvement, a residential house, was built in 1967 at a cost of between Eight thousand pesos (P8,000.00) to Ten thousand pesos (P10,000.00), the landowner was ordered to reimburse the builder in the amount of Forty thousand pesos (P40,000.00), the value of the house at the time of the trial. In the same way, the landowner was required to pay the present value of the house, a useful improvement, in the case of De Guzman v. De la Fuente (55 Phil. 501 [1930]), cited by the petitioner. The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had long ago stated in Rivera v. Roman Catholic Archbishop of

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Manila (40 Phil. 717 [1920]) that the said provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its nding as to the amount of reimbursement to be paid by the landowner. The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentals paid by the lessees of the apartment building. Since the private respondents have opted to appropriate the apartment building, the petitioner is thus entitled to the possession and enjoyment of the apartment building, until he is paid the proper indemnity, as well as of the portion of the lot where the building has been constructed. This is so because the right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or sown. The petitioner not having been so paid, he was entitled to retain ownership of the building and, necessarily, the income therefrom. It follows, too, that the Court of Appeals erred not only in upholding the trial courts determination of the indemnity, but also in ordering the petitioner to account for the rentals of the apartment building from 23 June 1993 to 23 September 1993. WHEREFORE, the decision of the Court of Appeals in CAG.R. SP No. 32679 and the Order of 15 November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470 are hereby SET ASIDE. The case is hereby remanded to the trial court for it to determine the current market value of the apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on the current market value of the apartment building. The value so determined shall be forthwith paid by the private respondents to the petitioner otherwise the petitioner shall be restored to the

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possession of the apartment building until payment of the required indemnity. Sarmiento v. Agana 129 SCRA 122 (1984) While Ernesto Valentino was still courting his wife, Rebecca, the latters mother had told him the couple could build a residential house on a certain lot of a subdivision in Paraaque. Assuming that the wifes mother was the owner of the land, Ernesto did construct a house on the said land in 1967 at a cost of P8,000 to P10,000. It turned out that the land had been titled in the name of Mr. & Mrs. Jose Santos, Jr., who in 1974, sold the same to Leonila Sarmiento. In 1975, Sarmiento asked the spouses Valentino to vacate the land. Thereafter, Sarmiento led an ejectment case against the spouses. The Municipal Court found that the spouses Valentino had built the house in good faith and that it had a value of P20,000.00. It then ordered the spouses to vacate after Sarmiento has paid them the mentioned sum of P20,000.00. On appeal, the CFI of Pasay modied the decision pursuant to Article 448 of the Civil Code. Sarmiento was required, within 60 days, to exercise the option to reimburse the spouses Valentino the sum of P40,000.00 as the value of the residential house, or the option to allow them to purchase the land for P25,000.00. Sarmiento did not exercise any of the two options within the indicated period, and Ernesto was then allowed to deposit the sum of P25,000.00 with the court as the purchase price for the land. Subsequently, Sarmiento questioned the action of the court. (1) Are the spouses Valentino builders in good faith? The Supreme Court ruled in the afrmative. The Court said We agree that ERNESTO and wife are builders in good faith in view of the peculiar circumstances under which they had constructed the RESIDENTIAL HOUSE. As far as they knew, the LAND was owned by ERNESTOs mother-in-law who, having stated they could build on the property, could reasonably expected to later on give them the LAND. (2) Can Sarmiento refuse either to pay for the building or to sell the land and insist on the removal of the building? NO. The owner of the building erected in good faith on a land owned by another, is entitled to retain the possession of the land until he is paid the value of his building, under Article 453 (now Article 546). The owner of the land, upon the other hand, has the option, under Article 361 (now Article 448), either to pay for the building or to sell his land to the owner of the building. But he cannot, as respondents did here, refuse both to pay for the building and to sell the land and compel the owner of the building to remove it from the land where it is erected. He is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.

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[47.1.5] Art. 448 Can Be Invoked By Successor-In-Interest

In the case of Technogas Philippines Manufacturing Corp. v. Court of Appeals,255 Technogas was allowed to invoke the benets of Article 448 of the New Civil Code, i.e., to compel the landowner to make a choice between two options: (1) to appropriate the building by paying the indemnity required by law, or (2) sell the land to the builder, although it is not the builder of the buildings and/or improvements but merely acquired the same, by sale, from the builder in good faith.
Technogas Philippines Manufacturing Corp. v. CA 268 SCRA 5 (1997) In 1970, Technogas purchased a parcel of land, with all the buildings and improvements including the wall existing thereon, from Pariz Industries, Inc. Eduardo Uy, on the other hand, owns the adjoining parcel of land which he acquired from a certain Enrile Antonio in 1970. In 1971, Uy purchased another lot also adjoining Technogas land from a certain Miguel Rodriguez. It turned out that portions of the buildings and wall bought by Technogas are occupying portions of Uys adjoining land. Upon learning of the encroachment, Technogas offered to buy from Uy that particular portion of Uys land occupied by portions of its buildings and wall. Uy, however, refused the offer. Technogas led an action in court to compel Uy to sell the portions of Uys land occupied by its buildings and wall. (1) Can the benet of Article 448 of the Civil Code be invoked by Technogas even if it is not the builder of the offending structures but merely possessors of the same as buyers? The Supreme Court ruled in the afrmative. Said the Court The question, however, is whether the same benet can be invoked by petitioner who, as earlier stated, is not the builder of the offending structures but possesses them as buyer. We answer such question in the afrmative. In the rst place, there is no sufcient showing that petitioner was aware of the encroachment at the time it acquired the property from Pariz Industries. We agree with the trial court that various factors in evidence adequately show petitioners lack of awareness thereof. In any case, contrary proof has not overthrown the

255

268 SCRA 5 (1997).

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presumption of good faith under Article 527 of the Civil Code, as already stated, taken together with the disputable presumptions of the law on evidence. These presumptions state, under Section 3(a) of Rule 131 of the Rules of Court, that the person is innocent of a crime or wrong; and under Section 3(ff) of Rule 131, that the law has been obeyed. In fact, private respondent Eduardo Uy himself was unaware of such intrusion into his property until after 1971 when he hired a surveyor, following his purchase of another adjoining lot, to survey all his newly acquired lots. Upon being apprised of the encroachment, petitioner immediately offered to buy the area occupied by its building a species of conduct consistent with good faith. In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner, as buyer, the latter acquired ownership of the property. Consequently and as earlier discussed, petitioner is deemed to have stepped into the shoes of the seller in regard to all rights of ownership over the immovable sold, including the right to compel the private respondent to exercise either of the two options provided under Article 448 of the Civil Code.256 (2) Uy contends that Technogas cannot be considered in good faith because as landowner, it is presumed to know the metes and bounds of its own property? Is the contention correct? The Supreme Court said no. Bad faith cannot be imputed to a registered owner of land when a part of his building encroaches upon a neighbors land simply because he is supposedly presumed to know the boundaries of his land as prescribed in his certicate of title. Unless one is versed in the science of surveying, no one can determine the precise extent or location of his property by merely examining his paper title.257 (3) May Technogas lose its rights under Article 448 on the basis merely of the fact that some years after acquiring the property in good faith, it learned about and recognized the right of Uy to a portion of the land occupied by its buildings? NO. The supervening awareness of the encroachment by (Technogas) does not militate against its right to claim the status of a builder in good faith. In fact, a judicious reading of said Article 448 will readily show that the landowners exercise of his option can only take place after the builder shall
256 257

At p. 17. At pp. 14-15.

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have come to know of the intrusion in short, when both parties shall have become aware of it. Only then will the occasion for exercising the option arise, for it is only then that both parties will have been aware that a problem exists in regard to their property rights. [47.2] Good Faith of the Landowner

The landowner, on the other hand, is said to have acted in good faith if he did not know or was not aware that something was being built, planted or sown on his land; he learned of it only after the act was done. This is clear from the provisions of the second paragraph of Article 453 of the New Civil Code which states it is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part.
[47.3] Legal Effects Where Both Parties Are In Good Faith

What then are the legal effects of a situation where both the landowner and the builder, planter or sower (who is at the same time the owner of the materials) acted in good faith? Article 448 governs such a situation. Under Article 448, the landowner, as owner of the principal thing, is given two alternative rights: (1) to appropriate as his own the works, sowing or planting after payment to the builder, planter or sower of the necessary and useful expenses, and in the proper cases, expenses for pure luxury or mere pleasure, incurred by the latter; or (2) to oblige the one who built or planted to pay the price of the land, if the value of the land is not considerably more than that of the building or trees, and the one who sowed, the proper rent. The essential fairness of this codal provision has been pointed out by Mme. Justice Ameurna MelencioHerrera, citing Manresa and applicable precedents, in the case of Depra v. Dumlao,258 to wit: Where the builder, planter or sower has acted in good faith, a conict 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 impracticality 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
258

136 SCRA 475, 483 (1985).

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payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower to pay the proper rent. 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. (3 Manresa 213; Bernardo v. Bataclan, 37 Off. Gaz. 1382; Co Tao v. Chan Chico, G.R. No. 49167, April 30, 1949; Article applied; see Cabral, et al. v. Ibaez [S.C.] 52 Off. Gaz. 217; Marfori v. Velasco, [CA] 52 Off. Gaz. 2050).
[47.3.1] Option Is Given To the Landowner

Under Article 448, the right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner of the land,259 a rule that accords with the principle of accession, i.e., that the accessory follows the principal.260 The only right given to the builder in good faith is the right to reimbursement for the improvements; the builder cannot compel the owner of the land to sell such land to the former.261 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.262
Quemel v. Olaes 1 SCRA 1159 (1961) The Olaes spouses (Angel and Juliana) sued the Quemuel spouses (Alejandro and Ruperta) for recovery of possession of a parcel of land. In their answer, the Quemel spouses admitted plaintiffs ownership but contended that their occupation was gratuitous. In 1954, the trial court ordered the Quemel spouses to return the possession of the land to the Olaes spouses and to pay the latter P20.00 a month from January 1954, until they shall have vacated the premises. The Quemel spouses did not appeal. To forestall the execution of

259 Ballatan v. CA, 304 SCRA 34, 46 (1999), citing Grana and Torralba v. CA, 109 Phil. 260, 263 (1960); Acuna v. Furukawa Plantation Co., 93 Phil. 957, 961 (1953); Aringo v. Arena, 14 Phil. 263, 269 (1909); also in Quemuel v. Olaes, 1 SCRA 1159 (1961). 260 Rosales v. Castelltort, 472 SCRA SCRA 144, 155 (2005). 261 Quemuel v. Olaes, supra., at p. 1163 262 Depra v. Dumlao, 136 SCRA 475, 483 (1985).

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the judgment, the Quemel spouses led a complaint against the Olaes spouses seeking to reduce the monthly rental and to compel the Olaes spouses to sell to them the portion of the lot where their house is erected. The Olaes spouses led a motion to dismiss the complaint on the ground of lack of cause of action and res judicata. The trial court dismissed the complaint. The Quemel spouses appealed to the Court of Appeals. The appeal, however, was certied to the Supreme Court. The plaintiffs (Quemel spouses) claim that their cause of action to compel the Olaes spouses to sell to them the land is based on Article 448 in connection with Article 546 of the New Civil Code. On this issue, the Supreme Court held On the assumption that the allegations of the second cause of action are true, what would be the rights of the parties? The plaintiffs claim that their second cause of action is based on Article 448 in connection with Article 546, of the New Civil Code. A cursory reading of these provisions, however, will show that they are not applicable to plaintiffs case. Under Article 448, the right to appropriate the works or improvements or to oblige the one who built or planted to pay the price of the land belongs to the owner of the land. The only right given to the builder in good faith is the right to reimbursement for the improvements; the builder, cannot compel the owner of the land to sell such land to the former. This is assuming that the plaintiffs are builders in good faith. But the plaintiffs are not builders in good faith. xxx San Diego v. Montesa 6 SCRA 207 (1962) After trial in Civil Case No. 770 for recovery of a parcel of land led by Jose, Maria and Urbano, all surnamed de la Cruz, against Gil San Diego and Runo San Diego, the trial court rendered a decision. Under the dipositive portion of said decision, the defendants and third-party plaintiffs were ordered to vacate the land in question upon payment to them by the plaintiffs and third-party defendants, within thirty days after the decision has become nal, of the sum of P3,500.00. The judgment became nal and executory. The defendants and third-party plaintiffs, who were in possession of the land in litigation, moved to execute the portion of the decision which required the payment of P3,500.00. The plaintiffs opposed the motion on the ground that, as owners, they have the right to exercise the option to either pay the value of improvements or demand reasonable rent if they do not choose to appropriate the building. We nd the petition meritorious. The judgment afrmed by the Court of Appeals, and now nal, explicitly ordains the payment

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by the respondents dela Cruz of the amount of P3,500.00 within 30 days after this decision becomes nal to petitioners San Diego. If it also orders petitioners to vacate only upon the payment, it did so in recognition of the right of retention granted to possessors in good faith by Article 546 of the Civil Code of the Philippines. This provision is expressly made applicable to builders in good faith (Article 448). The right of retention thus granted is merely a security for the enforcement of the possessors right to indemnity for the improvements made by him. As a result, the possessor in good faith, in retaining the land and its improvements pending reimbursement of his useful expenditures, is not bound to pay any rental during the period of retention; otherwise, the value of his security would be impaired (cf. Tufexis v. Chunaco [C.A.], 36 O.G. 2455). Normally, of course, the landowner has the option to either appropriate the improvement or to sell the land to the possessor. This option is no longer open to the respondent landowners because the decision in the former suit limits them to the rst alternative by requiring the petitioners to vacate the land (and surrender the improvements) upon payment of P3,500.00. Evidently, the Courts of First Instance and of Appeals opined that the respondents suit to recover the property was an exercise of their right to choose to appropriate the improvements and pay the indemnity xed by law. The respondents acquiesced in this view, since they did not ask for a modication of the judgment, and allowed it to become nal. Consequently, they can no longer insist on selecting another alternative; nor can they be heard now to urge that the value of the indemnity, set at P3,500.00, is exorbitant, for the same reason that the judgment xing that amount is no longer subject to alteration. [47.3.2] Landowner Cannot Refuse To Exercise Either Option

Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.263 He must choose one.264 Hence, the landowner cannot refuse to exercise either option and compel instead the owner of the building or improvement to remove it from the land.265 The remedy
263

Rosales v. Castelltort, 472 SCRA 144 citing PNB v. De Jesus, 411 SCRA 557, 560

(2003). PNB v. De Jesus, supra. Id., Technogas Philippines Manufacturing Corp. v. CA, 268 SCRA 5, 17 (1997), citing Ignacio v. Hilario, 76 Phil. 605 (1946) and Sarmiento v. Agana, 129 SCRA 122 (1984).
264 265

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of remotion is available only if and when the owner of the land chooses to compel the builder to buy the land at a reasonable price but the latter fails to pay such price.266 In a situation where the landowner is refusing to exercise any of the options granted him under Article 448, the builder in good faith can, under the same Article, compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land.267
Technogas Philippines Manufacturing Corp. v. CA 268 SCRA 5 (1997) In 1970, Technogas purchased a parcel of land, with all the buildings and improvements including the wall existing thereon, from Pariz Industries, Inc. Eduardo Uy, on the other hand, owns the adjoining parcel of land which he acquired from a certain Enrile Antonio in 1970. In 1971, Uy purchased another lot also adjoining Technogas land from a certain Miguel Rodriguez. It turned out that portions of the buildings and wall bought by Technogas are occupying portions of Uys adjoining land. Upon learning of the encroachment, Technogas offered to buy from Uy that particular portion of Uys land occupied by portions of its buildings and wall. Uy, however, refused the offer. Technogas led an action in court to compel Uy to sell the portions of Uys land occupied by its buildings and wall. In resolving the respective rights and obligations of the parties, the Supreme Court held What then is the applicable provision in this case which private respondent may invoke as his remedy: Article 448 or Article 450 of the Civil Code? In view of the good faith of both petitioner (Technogas) and private respondent (Uy), their rights and obligations are to be governed by Art. 448. The essential fairness of this codal provision has been pointed out by Mme. Justice Ameurna MelencioHerrera, citing Manresa and applicable precedents, in the case of Depra v. Dumlao (136 SCRA 475, 483 [1985]) to wit: Where the builder, planter or sower has acted in good faith, a conict 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 impracticality of creating a state of forced co-ownership, the law has provided a just
266 267

Technogas Philippines Manufacturing Corp. v. CA, supra. PNB v. De Jesus, supra.

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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 to pay the proper rent. 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. (3 Manresa 213; Bernardo v. Bataclan, 37 Off. Gaz. 1382; Co Tao v. Chan Chico, G.R. No. 49167, April 30, 1949; Article applied; see Cabral, et al. v. Ibaez [S.C.] 52 Off. Gaz. 217; Marfori v. Velasco, [CA] 52 Off. Gaz. 2050). The private respondents insistence on the removal of the encroaching structures as the proper remedy, which respondent Court sustained in its assailed Decisions, is thus legally awed. This is not one of the remedies bestowed upon him by law. It would be available only if and when he chooses to compel the petitioner to buy the land at a reasonable price but the latter fails to pay such price. (Ignacio v. Hilario, supra.) This has not taken place. Hence, his options are limited to: (1) appropriating the encroaching portion of petitioners building after payment of proper indemnity, or (2) obliging the latter to buy the lot occupied by the structure. He cannot exercise a remedy of his own liking. Neither is petitioners prayer that private respondent be ordered to sell the land the proper remedy. While that was dubbed as the more workable solution in Grana and Torralba v. The Court of Appeals, et al. (109 Phil. 260, 264 [1960]), it was not the relief granted in that case as the landowners were directed to exercise within 30 days from this decision their option to either buy the portion of the petitioners house on their land or sell to said petitioners the portion of their land on which it stand. Moreover, in Grana and Torralba, the area involved was only 87 square meters while this case involves 520 square meters. In line with the case of Depra v. Dumlao, this case will have to be remanded to the trial court for further proceedings to fully implement the mandate of Art. 448. It is a rule of procedure for the Supreme Court to strive to settle the entire controversy in a single proceeding leaving no root or branch to bear the seeds of future litigation. Petitioner, however, must also pay the rent for the property occupied by its building as prescribed by respondent Court from October 4, 1979, but only up to the date private respondent serves notice of its option upon petitioner and the trial court; that is, if such option is for private respondent to appropriate the encroaching

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structure. In such event, petitioner would have a right of retention which negates the obligation to pay rent. The rent should however continue if the option chosen is compulsory sale, but only up to the actual transfer of ownership. The award of attorneys fees by respondent Court against petitioner is unwarranted since the action appears to have been led in good faith. Besides, there should be no penalty on the right to litigate. WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed Decision and the Amended Decision are REVERSED and SET ASIDE. In accordance with the case of Depra v. Dumlao, this case is REMANDED to the Regional Trial Court of Pasay City, Branch 117, for further proceedings consistent with Articles 448 and 546 of the Civil Code, as follows: The trial court shall determine: a) the present fair price of private respondents 520 square meter area of land; b) the increase in value (plus value) which the said area of 520 square meters may have acquired by reason of the existence of the portion of the building on the area; c) the fair market value of the encroaching portion of the building; and d) whether the value of said area of land is considerably more than the fair market value of the portion of the building thereon. 2. After said amounts shall have been determined by competent evidence, the regional trial court shall render judgment as follows: a) The private respondent shall be granted a period of fteen (15) days within which to exercise his option under the law (Article 448, Civil Code), whether to appropriate the portion of the building as his own by paying to petitioner its fair market value, or to oblige petitioner to pay the price of said area. The amounts to be respectively paid by petitioner and private respondent, in accordance with the option thus exercised by written notice of the other party and to the court, shall be paid by the obligor within fteen (15) days from such notice of the option by tendering the amount to the trial court in favor of the party entitled to receive it;

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b) If private respondent exercises the option to oblige petitioner to pay the price of the land but the latter rejects such purchase because, as found by the trial court, the value of the land is considerably more than that of the portion of the building, petitioner shall give written notice of such rejection to private respondent and to the trial court within fteen (15) days from notice of private respondents option to sell the land. In that event, the parties shall be given a period of fteen (15) days from such notice of rejection within which to agree upon the terms of the lease, and give the trial court formal written notice of the agreement and its provisos. If no agreement is reached by the parties, the trial court, within fteen (15) days from and after the termination of the said period xed for negotiation, shall then x the terms of the lease provided that the monthly rental to be xed by the Court shall not be less than Two thousand pesos (P2,000.00) per month, payable within the rst ve (5) days of each calendar month. The period for the forced lease shall not be more than two (2) years, counted from the nality of the judgment, considering the long period of time since 1970 that petitioner has occupied the subject area. The rental thus xed shall be increased by ten percent (10%) for the second year of the forced lease. Petitioner shall not make any further constructions or improvements on the building. Upon expiration of the two-year period, or upon default by petitioner in the payment of rentals for two (2) consecutive months, private respondent shall be entitled to terminate the forced lease, to recover his land, and to have the portion of the building removed by petitioner or at latters expense. The rentals herein provided shall be tendered by petitioner to the trial court for payment to private respondent, and such tender shall constitute evidence of whether or not compliance was made within the period xed by the said court. c) In any event, petitioner shall pay private respondent an amount computed at Two thousand pesos (P2,000.00) per month as reasonable compensation for the occupancy of private respondents land for the period counted from October 4, 1979, up to the date private respondent serves notice of its option to appropriate the encroaching structures; otherwise up to the actual transfer of ownership to petitioner or, in case a forced lease has to be imposed, up to the commencement date of the forced lease referred to in the preceding paragraph;

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d) The periods to be xed by the trial court in its decision shall be non-extendible, and upon failure of the party obliged to tender to the trial court the amount due to the obligee, the party entitled to such payment shall be entitled to an order of execution for the enforcement of payment of the amount due and for compliance with such other acts as maybe required by the prestation due the obligee. PNB v. De Jesus 411 SCRA 557 (2003) Petitioner Philippine National Bank disputes the decision handed down by the Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No. 56001, entitled Generoso De Jesus, represented by his Attorney-in-Fact, Christian De Jesus, versus Philippine National Bank. The assailed decision has afrmed the judgment rendered by the Regional Trial Court, Branch 44, of Mamburao, Occidental Mindoro, declaring respondent Generoso de Jesus as being the true and lawful owner of the 124-square-meter portion of the land covered by Transfer Certicate of Title (TCT) No. T-17197 and ordering petitioner bank to vacate the premises, to deliver possession thereof to respondent, and to remove the improvement thereon. It would appear that on 10 June 1995, respondent led a complaint against petitioner before the Regional Trial Court of Occidental Mindoro for recovery of ownership and possession, with damages, over the questioned property. In his complaint, respondent stated that he had acquired a parcel of land situated in Mamburao, Occidental Mindoro, with an area of 1,144 square meters covered by TCT No. T-17197, and that on 26 March 1993, he had caused a verication survey of the property and discovered that the northern portion of the lot was being encroached upon by a building of petitioner to the extent of 124 square meters. Despite two letters of demand sent by respondent, petitioner failed and refused to vacate the area. Petitioner, in its answer, asserted that when it acquired the lot and the building sometime in 1981 from then Mayor Bienvenido Ignacio, the encroachment already was in existence and to remedy the situation, Mayor Ignacio offered to sell the area in question (which then also belonged to Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed to have accepted. The sale, however, did not materialize when, without the knowledge and consent of petitioner, Mayor Ignacio later mortgaged the lot to the Development Bank of the Philippines. The trial court decided the case in favor of respondent declaring him to be the rightful owner of the disputed 124-square-meter portion of the lot and

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ordering petitioner to surrender possession of the property to respondent and to cause, at its expense, the removal of any improvement thereon. The Court of Appeals, on appeal, sustained the trial court but it ordered to be deleted the award to respondent of attorneys fees, as well as moral and exemplary damages, and litigation expenses. Petitioner went to this Court, via a petition for review, after the appellate court had denied the banks motion for reconsideration, here now contending that 1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A BUILDER IN BAD FAITH OVER THE ENCROACHED PROPERTY IN QUESTION; 2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN FAVOR OF PNB THE PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND THE RULING IN TECNOGAS PHILIPPINES MANUFACTURING CORP. V. COURT OF APPEALS, G.R. No. 108894, February 10, 1997, 268 SCRA 7. The Regional Trial Court and the Court of Appeals have both rejected the idea that petitioner can be considered a builder in good faith. In the context that such term is used in particular reference to Article 448, et seq., of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land believing himself to be its owner and unaware of any defect in his title or mode of acquisition. The various provisions of the Civil Code, pertinent to the subject, read: 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 a 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 x the terms thereof. Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity.

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Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent. A builder in good faith can, under the foregoing provisions, compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords 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. He much choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. In order, however, that the builder can invoke that accruing benet and enjoy his corresponding right to demand that a choice be made by the landowner, he should be able to prove good faith on his part. Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory denition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any aw which invalidates it. Given the ndings of both the trial court and the appellate court, it should be evident enough that petitioner would fall much too short from its claim of good faith. Evidently, petitioner was quite aware, and indeed advised, prior to its acquisition of the land and building from Ignacio that a part of the building sold to it stood on the land not covered by the land conveyed to it. Equally signicant is the fact that the building, constructed on the land by Ignacio, has in actuality been part of the property transferred to petitioner. Article 448, of the Civil Code refers to a piece of land whose ownership is claimed by two or more parties, one of whom has built some works (or sown or planted something) and not to a case where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or otherwise

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for, elsewise stated, where the true owner himself is the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant. In ne, petitioner is not in a valid position to invoke the provisions of Article 448 of the Civil Code. The Court commiserates with petitioner in its present predicament; upon the other hand, respondent, too, is entitled to his rights under the law, particularly after having long been deprived of the enjoyment of his property. Nevertheless, the Court expresses hope that the parties will still be able to come up with an arrangement that can be mutually suitable and acceptable to them. WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is AFFIRMED. No costs. SO ORDERED. [47.4] Option to Appropriate [47.4.1] What Indemnity Consists Of

If the landowner chooses to acquire the building, he must pay the builder the indemnities provided for in Articles 546 and 548 of the New Civil Code.268 In short, the landowner must pay the necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure.269
[47.4.2] Basis of Indemnity

What shall be the basis of the indemnity to be paid by the landowner? In Javier v. Concepcion, Jr.,270 the Supreme Court pegged the value of the useful improvements consisting of various fruits, bamboos, a house and camarin made of strong materials based on the market value of the said improvements. In Sarmiento v. Agana,271 despite the nding that the useful improvement, a residential house, was built in 1967 at a cost of between Eight thousand pesos (P8,000.00) to Ten thousand pesos (P10,000.00), the landowner was ordered to reimburse the builder in the amount of Forty thousand pesos (P40,000.00), the value of the house at the time of the trial. In the same way, the landowner was required to

Art. 448, Civil Code. Ballatan v. CA, supra, at p. 46. 270 94 SCRA 212 (1979). 271 Supra.
268 269

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pay the present value of the house, a useful improvement, in the case of De Guzman v. Dela Fuente.272 In Pecson v. Court of Appeals,273 the Supreme Court categorically held that it is the current market value of the improvements which should be made the basis of reimbursement. The Court explained The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had long ago stated in Rivera v. Roman Catholic Archbishop of Manila (40 Phil. 717 [1920]) that the said provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its nding as to the amount of reimbursement to be paid by the landowner.274
[47.4.3] Pending Reimbursement, Builder Has Right of Retention

In addition to the right of the builder in good faith to be paid the value of his improvement, Article 546 of the New Civil Code gives him the corollary right of retention of the property until he is indemnied by the owner of the land.275 The builder in good faith may not, therefore, be required to pay rentals.276 This is so because the right to retain the improvements while the corresponding indemnity is not

55 Phil. 501 (1930). Supra, at p. 416. 274 At p. 416. 275 Filipinas Colleges, Inc. v. Garcia Timbang, et al., 106 Phil. 247, 253 (1959). 276 Miranda v. Fadullon, 97 Phil. 801, 806 (1955).
272 273

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paid implies the tenancy or possession in fact of the land on which it is built, planted or sown.277 However, Article 448 of the New Civil Code, in relation to Article 546, which provides for full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on a land in the belief that he is the owner thereof. It does not apply to a mere lessee, otherwise, it would always be in his power to improve his landlord out of the latters property.278 While the law aims to concentrate in one person the ownership of the land and the improvements thereon in view of the impracticability of creating a state of forced co-ownership, it guards against unjust enrichment insofar as the good faith builders improvements are concerned.279 The right of retention is considered as one of the measures devised by the law for the protection of builders in good faith.280 Its object is to guarantee full and prompt reimbursement as it permits the actual possessor to remain in possession while he has not been reimbursed (by the person who defeated him in the case for possession of the property) for those necessary expenses and useful improvements made by him on the things possessed.281 Accordingly, a builder in good faith cannot be compelled to pay rentals during the period of retention282 nor be disturbed in his possession by ordering him to vacate. In addition, the owner of the land is prohibited from offsetting or compensating the necessary and useful expenses with the fruits received by the builderpossessor in good faith.283 Otherwise, the security provided by law would be impaired. This is so because the right to the expenses and the right to the fruits both pertain to the possessor, making compensation juridically impossible; and one cannot be used to reduce the other.284

Pecson v. CA, supra, at p. 416. Chua v. CA, 301 SCRA 356, 364 (1999). 279 Nuguid v. CA, 452 SCRA 243, 252 (2005), citing Ortiz v. Kayanan, 92 SCRA 146, 159
277 278

(1979). Id. Id. 282 Id., citing San Diego v. Hon. Montesa, 6 SCRA 208, 210 (1962). 283 Id. 284 Id.
280 281

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[47.4.4]

Time of Transfer of Ownership

In Bataclan v. CFI,285 the Supreme Court ruled that the ownership of the building does not pass to the landowner until after the payments mentioned under Articles 546 and 548 has been given to the builder.
[47.5] Option To Sell the Land [47.5.1] Option To Compel Builder or Planter To Buy the Land

If the landowner elected to compel the builder or planter to pay the price of the land, then said builder or planter must do so, unless the value of land is considerably more than that of the building or trees, in which case, the builder or planter must pay reasonable rent if the landowner does not choose to appropriate the building or trees.286 If the parties cannot come to terms over the conditions of the lease, the courts must x the terms thereof.287 Note that this option is available only against the builder or planter because with respect to the sower, the landowner can only compel him to pay the proper rent,288 in case the landowner does not choose to appropriate the crops.
[47.5.2] Remedy If Builder or Planter Refuses To Pay

In the event the builder or the planter refuses to pay the price of the land (on the assumption that said price is not considerably more than the value of the building or trees), will the landowner automatically become the owner of the improvements without paying any indemnity? This question was answered in the negative by the Supreme Court in the case of Filipinas Colleges, Inc. v. Garcia Timbang, et al.,289 where the Court held x x x. There is nothing in the language of these two articles, 448 and 546, which would justify the conclusion of appellants that, upon the failure of the builder to pay the value of the land, when such is demanded by the landowner, the latter becomes automatically the owner of the improvement
61 Phil. 428. Art. 448, Civil Code. 287 Ibid. 288 Art. 448, Civil Code. 289 106 Phil. 247 (1959).
285 286

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under Article 445. The case of Bernardo v. Bataclan, 66 Phil. 590 cited by appellants is no authority for this conclusion. Although it is true it was declared therein that in the event of the failure of the builder to pay the land, after the owner thereof has chosen this alternative, the builders right of retention provided in Article 546 is lost, nevertheless there was nothing said that as a consequence thereof, the builder loses entirely all rights over his own building. x x x290 What then is the recourse or remedy left to the parties in such eventuality where the builder fails to pay the value of the land? While the Code is silent on this point, guidance may be derived from the decisions of the Supreme Court in the cases of Miranda v. Fadullon,291 Ignacio v. Hilario,292 and Bernardo v. Bataclan.293 In Miranda v. Fadullon, supra, the Court suggested xxx A builder in good faith may not be required to pay rentals. He has a right to retain the land on which he has built in good faith until he is reimbursed the expenses incurred by him. Possibly he might be required to pay rental only when the owner of the land chooses not to appropriate the improvement and requires the builder in good faith to pay for the land, but that the builder is unwilling or unable to buy the land, and then they decide to leave things as they are and assume the relation of lessor and lessee, and should they disagree as to the amount of the rental then they can go to the court to x that amount. xxx.294 Note, however, that in this situation a forced lease may not be resorted to since such remedy is available only in situations where the landowner cannot oblige the builder or planter to pay the price of the land because its value is considerably more than that of the building or trees. But if the landowner can compel the builder or planter to pay the price of the land because its value is not considerably more than that of
At p. 253. 97 Phil. 801 (1955). 292 76 Phil. 605 (1946). 293 66 Phil. 590. 294 At p. 806, cited in Filipinas Colleges, Inc. v. Garcia Timbang, et al., at pp. 253-254.
290 291

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the building or trees and the builder or planter fails to pay such price, the parties may agree to assume the relation of lessor and lessee but they must do so voluntarily. Should the parties do not agree to leave things as they are and to assume the relation of lessor and lessee, another remedy is suggested in the case of Ignacio v. Hilario, supra, wherein the Court held that the owner of the land is entitled to have the improvement removed when after having chosen to sell his land to the other party, i.e., the builder in good faith, fails to pay for the same.295 In this situation, the builders right of retention provided in Article 546 is lost.296 A further remedy is indicated in the case of Bernardo v. Bataclan, supra, where the Court approved the sale of the land and improvement in a public auction applying the proceeds thereof rst to the payment of the value of the land and the excess, if any, was ordered to be delivered to the owner of the house in payment thereof.297
[47.5.3] Basis in Determining Price of the Land

In Ballatan v. Court of Appeals,298 it was ruled that in the event the landowner elects to sell the land to the builder in good faith, the price must be xed at the prevailing market value at the time of payment. In the event of the failure of the builder to pay the land, after the owner thereof has chosen this alternative, the builders right of retention provided in Article 546 is also lost.299
Ballatan v. CA 304 SCRA 37 (1999) In this case, the parties are owners of adjacent lots lots 24, 25, 26 and 27. Lot 24 is co-owned by Eden Ballatan and spouses Betty Martinez and Chong Chy Ling. Lots 25 and 26 are owned by Gonzalo Go, Sr. while lot 27 is owned by Li Ching Yao. Li Ching Yao built his house on his lot before any of the parties did. He constructed his house in 1982. Li Ching Yao was not aware that when he built his house a portion thereof encroached on Gos adjoining

See Filipinas Colleges, Inc. v. Garcia Timbang, et al., at p. 254. See Bernardo v. Bataclan, supra. 297 See Filipinas Colleges, Inc. v. Garcia Timbang, et al., at p. 254. 298 304 SCRA 37 (1999). 299 Bernardo v. Bataclan, supra.
295 296

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land. In 1983, the son of Gonzalo Go, Winston, constructed his house on lot no. 25. At the time of construction, Winston was not aware that he encroached on a portion of land owned by Ballatan and the spouses Betty Martinez and Chong Chy Ling. In 1985, Ballatan constructed her house on lot 24. During the construction, she noticed that Go encroached on her property. Since then, the parties had been aware of the encroachments on each others properties. Apparently, it was the erroneous survey of the geodetic engineer commissioned by the subdivision developer that caused these discrepancies. In determining the rights of the parties, the Supreme Court applied Article 448 of the Civil Code since all the parties had acted in good faith. The Court ruled xxx petitioners (Ballatan and the spouses Betty Martinez and Chong Chy Ling), as owners of Lot No. 24, may choose to purchase the improvement made by respondents Go on their land, or sell to respondents Go the subject portion. If buying the improvement is impractical as it may render the Gos house useless, then petitioners may sell to respondents Go that portion of Lot No. 24 on which their improvement stands. If the Gos are unwilling or unable to buy the lot, then they must vacate the land and, until they vacate, they must pay rent to petitioners. Petitioners, however, cannot compel respondents Go to buy the land if its value is considerably more than the portion of their house constructed thereon. If the value of the land is much more than the Gos improvement, then respondents Go must pay reasonable rent. If they do not agree on the terms of the lease, then they must go to court to x the same. In the event that petitioners elect to sell to respondents Go the subject portion of their lot, the price must be xed at the prevailing market value at the time of payment. The Court of Appeals erred in xing the price at the time of taking, which is the time the improvements were built on the land. The time of taking is determinative of just compensation in expropriation proceedings. The instant case is not for expropriation. It is not a taking by the State of private property for a public purpose upon payment of just compensation. This is a case of an owner who has been paying real estate taxes on his land but has been deprived of the use of a portion of this land for years. It is but fair and just to x compensation at the time of payment. Article 448 and the same conditions above-stated also apply to respondents Go as owners and possessors of their land and respondent Li Ching Yao as builder of the improvement that encroached on thirty-seven (37) square meters of respondents Gos land.

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[47.5.4]

Rule If Only a Portion of the Land Has Been Encroached

Article 448 has been applied to improvements or portions of improvements built by mistaken belief on land belonging to the adjoining owner.300 48. Landowner In Good Faith; Builder In Bad Faith
[48.1] Concept of Bad Faith

If good faith consists in the belief of the builder that the land he is building on is his and his ignorance of any defect or aw in his title,301 a fortiori, the builder, planter or sower (who is at the same time the owner of the materials) is deemed to have acted in bad faith if he knows that the land is not his, or if he has knowledge of any aw or defect in his title or mode of acquisition of the land.
[48.2] Legal Consequences; Alternative Rights of the Landowner

If the landowner has acted in good faith, i.e., he was not aware that something was being built, planted or sown on his land and he learned about only after it was done, and the builder, planter or sower (who is at the same time the owner of the materials) has acted in bad faith, the landowner can exercise any of the following three rights and/ or remedies under Articles 449, 450 and 451:
[48.2.1] Right to Appropriate

He can appropriate what has been built, planted or sown on his land in bad faith without any obligation to pay indemnity because Article 449 of the New Civil Code provides that he who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. And in addition to this right of conscation of the improvements, he can also demand damages from the builder, planter or sower in bad faith pursuant to Article 451. With respect to the fruits, it must be understood that the landowner can appropriate them without paying indemnity if said fruits are still

300 Ballatan v. CA, supra; Technogas Philippines Manufacturing Corp. v. CA, supra; Depra v. Dumlao, supra; and Grana and Torralba v. CA, 109 Phil. 260 (1960). 301 Pleasantville Development Corp. v. CA, supra., at p. 18.

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ungathered (pending) at the time of recovery of possession of the land, for if said fruits have already been separated from the land, the principle of accesion continua no longer applies. Instead, Article 443 of the New Civil Code will apply, in which case, the planter or sower (in bad faith) can be compelled to deliver to the landowner in good faith the fruits he has gathered, or their value, minus the expenses incurred by the former in their production, gathering and preservation.
[48.2.2] Right of Remotion

The second right or remedy of the landowner is to exercise the right of remotion pursuant to Article 450, i.e., he can demand that what has been built, planted or sown in bad faith on his land be removed or demolished and that the land be restored to its original condition all at the expense of the builder, planter or sower plus damages suffered by the landowner pursuant to Article 451.
Santos v. Mojica 26 SCRA 703 (1969) In this case, eleven brothers and sisters, all surnamed Allanigue, brought an action against their sister, Lorenzana Allanigue, her husband, Simeon Santos, Maria San Agustin and Felicidad San Agustin for partition of a 360square meter lot and for the annulment of certain conveyances involving the same. After the spouses Simeon and Lorenzana Santos were summons, their son (Leonardo Santos) built and reconstructed his house into a bigger one. The plaintiffs eventually won the case. When the judgment became nal and executory, a writ of execution was issued ordering the defendants to vacate the lot and deliver the same to the plaintiffs. Leonardo refused to vacate. May his house be demolished? The Supreme Court ruled 1. Petitioner Leonardo Santos is bound by the judgment in Civil Case No. 217-R because he is a successor-in-interest of his parents, Simeon Santos and Lorenzana Allanigue, defendants in Civil Case No. 217-R, and his right, if any, is claimed under them. Hence, the judgment in said civil case binds not only Simeon Santos and Lorenzana Allanigue but also their son, Leonardo Santos, who is their successor-in-interest and who claims under them. The fact that the sale to Leonardo Santos from his parents was registered, is of no moment because, as pointed out, he is bound by the judgment against them.

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Leonardo Santos house having been built and reconstructed (after March, 1962) into a bigger one after his predecessors-ininterests, his parents, had been summoned in 1959 in Civil Case No. 217-R, he must be deemed a builder in bad faith. As builder in bad faith he lost the improvement made by him consisting of the reconstructed house to the owners of the land without right to indemnity, pursuant to Article 449 of the Civil Code, which provides: xxx xxx xxx The Allanigue brothers and sisters therefore became owners of the improvements consisting of the house built in bad faith by Leonardo Santos if they choose to appropriate the accession. (Articles 445 and 449, Civil Code) However, said owners could choose instead the demolition of the improvement or building at the expense of the builder, pursuant to Article 450 of the Civil Code which in part, provides: xxx xxx xxx It is of record in Civil Case No. 217-R that the owners of the land chose to have the house or improvement demolished pursuant to their motion for demolition which was granted by respondent Judge Mojica on December 9, 1965. [48.2.3] Right To Compel Payment of the Price of the Land

The third possible right of the landowner is to compel the builder or planter to pay the price of the land, and the sower the proper rent, pursuant to Article 450, plus damages under Article 451. There being no exception provided in the law, it is submitted that the landowner can exercise this right even if the value of the land is considerably more than that of the building or trees. But then again, this remedy is available against the builder and planter only. With respect to the sower, the landowner may only compel him to pay the proper rent.
[48.3] Limited Rights of Builder, Planter or Sower in Bad Faith

The foregoing rights of the landowner are alternative, i.e., he can exercise only one of them as his option. But in all cases, the builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land,302 otherwise the
302

Art. 452, Civil Code.

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landowner would be enriching himself at the expense of the former. A builder in bad faith has no right, however, to be indemnied for useful improvements.303 Neither has he any right to remove them.304 The right given a possessor in bad faith to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time he enters into possession.305 In Lumungo v. Usman,306 it was ruled that a planter in bad faith is not entitled to be reimbursed for the value of the coconut trees planted by him as said coconut trees are improvements, not necessary expenses of preservation. 49. Both Acted In Bad Faith
[49.1] Rules That Will Govern If Both Parties Acted In Bad Faith

One basic principle of accesion continua is that the bad faith of one person neutralizes the bad faith of another and both should be considered as having acted in good faith. This principle is embodied in the rst paragraph of Article 453 of the New Civil Code, which provides: Art. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the owner of such land, the rights of one and the other shall be the same as though both had acted in good faith. Therefore, Article 448 of the New Civil Code governs this situation such that whatever has been discussed therein shall likewise apply in this situation.
[49.2] Bad Faith of the Landowner

It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition
Sabido v. CA, 165 SCRA 498 (1988). MWSS v. CA, 143 SCRA 623 (1986). 305 Ibid., citing Art. 549, Civil Code. 306 25 SCRA 255, 261 (1968).
303 304

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on his part.307 Thus, when one in possession of property of another erects buildings and makes other improvements thereon in bad faith, but with knowledge of the owner who does not object, the case must be treated as if both parties had acted in good faith.308 50. Landowner In Bad Faith; Builder In Good Faith Article 454 of the New Civil Code provides: When the landowner acted in bad faith and the builder, planter or sower proceeded in good faith, the provisions of Art. 447 shall apply. As a consequence, whatever has been discussed under Article 447 shall likewise apply in this situation. Article 447 governs the case of building, planting or sowing on ones own land with materials of another either in good faith or in bad faith. The reason why said article applies may be explained as follows: that if the landowner knew that something was being built, planted or sown on his land by another and he did not interpose any objection thereto, it is as if he was the one building, planting or sowing in bad faith on his own land with materials belonging to another, using the owner of the materials as his worker. As a consequence, and pursuant to the provisions of Article 447, the owner of the materials (who is at the same time the builder, planter or sower in this case) acquires two alternative rights, namely: (1) to demand the value of his materials, plus damages; or (2) to demand the return of his materials in any event, plus damages.
Art. 455. If the materials, plants or seeds belong to a third person who has not acted in bad faith, the owner of the land shall answer subsidiarily for their value and only in the event that the one who made use of them has no property with which to pay. This provision shall not apply if the owner makes use of the rights granted by Article 450. If the owner of the materials, plants or seeds has been paid by the builder, planter or sower, the latter may demand from the landowner the value of the materials and labor. (365a) Art. 456. In the cases regulated in the preceding articles, good faith does not necessarily exclude negligence, which gives right to damages under Article 2176. (n)
307 308

Art. 453, 2nd par., Civil Code. Municipality of Oas v. Roa, 7 Phil. 20.

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51. Building on Anothers Land Using Anothers Materials


[51.1] Situation Contemplated in Art. 455

Article 455 of the New Civil Code contemplates of a situation where the builder, planter or sower has built, planted or sown on anothers land using materials belonging to another person. In such a situation, there are actually three persons whose good faith or bad faith must all be taken into account, namely: (1) the landowner; (2) the builder, planter or sower; and (3) the owner of the materials. To simplify the resolution of this controversial situation, Article 455 offers to settle rst the right of the owner of the materials whose only interest, of course, is the recovery of the value of his materials. Such recovery, however, shall depend on whether he acted in good faith or in bad faith.
[51.2] If the Owner of the Materials Acted In Bad Faith [51.2.1] He Loses His Materials Without Indemnity

If the owner of the materials acted in bad faith, he loses his materials without any right whatsoever. This is so because if he knew that his materials were being used by another but did not object thereto, it is as if he was the one who built, planted or sowed with his materials in bad faith on the land of another. The builder, planter or sower would be considered merely an agent of the owner of the materials. Therefore, the provisions of Article 449 of the Civil Code will apply by analogy, in which case, he loses what he has built, planted or sown without right to indemnity. He is even liable for damages.309 The only exception to this rule is if all the parties acted in bad faith because then their rights would be governed as if they were in good faith.
[51.2.2] Rights of the Landowner

If the owner of the materials acted in bad faith, the landowner can claim what has been built, planted or sown on his land without any obligation to indemnify the owner of the materials. This is in pursuance to the principles stated in Articles 449 and 445 of the Civil Code.

309

Art. 451, NCC.

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[51.2.3] Rights of the Builder, Planter or Sower

The rights of the builder, planter or sower shall be determined depending on his good faith or bad faith. (a) If he acted in good faith. If he acted in good faith in that he thought honestly that both the land and the materials belonged to him, he may claim from the landowner a reasonable compensation for his labor. This is based on the principle that no person should be unjustly enriched at the expense of another. (b) If he acted in bad faith. If he acted in bad faith in that he knew that the materials he was using belonged to somebody else or that he had no right to the land, then he is not entitled to anything. He may instead be made to pay damages to the landowner.
[51.3] If the Owner of the Materials Acted In Good Faith [51.3.1] He Must Be Reimbursed For the Value of His Materials

If the owner of the materials acted in good faith, in that he did not know that his materials were used by another, the law says that he is entitled to recover the value of his materials. This is expressly recognized in Article 455 of the New Civil Code.
[51.3.2] Builder, Planter or Sower Is Primarily Liable

The builder, planter or sower is primarily liable to make such payment to the owner of the materials310 without damages if he (builder, planter or sower) acted in good faith and with damages if he acted in bad faith. If such payment is made by the builder, planter or sower, he becomes the owner of the materials and the case would be the same as the second controversial case discussed in supra 46-50 that of building, planting or sowing with ones own materials on the land of another. Hence, to determine the rights and obligations of the builder, planter or sower and the landowner against each other, we will again apply the rules in the following four situations: (1) if both the landowner and the builder, planter or sower acted in good faith (Art. 448); (2) if the landowner acted in good faith and the builder, planter or sower acted in bad faith (Arts. 449, 450 and 451); (3) if both
310

Art. 455, NCC.

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parties acted in bad faith (Art. 448, in relation to Art. 453); and (4) if the landowner acted in bad faith and the builder, planter or sower acted in good faith (Art. 447, in relation to Art. 454).
[51.3.3] Subsidiary Liability of the Landowner

The landowner is subsidiarily liable for the payment of the value of the materials.311 This subsidiary liability, however, of the owner of the land is only available if the following conditions are met: (1) in case of insolvency of the builder, planter or sower; and (2) the owner of the land appropriates the building, planting or sowing.312 A fortiori, the owner of the land is not liable to the owner of the materials if the former chooses to order the demolition of the construction or the removal of the building, planting or sowing which he has the right to do in case the builder, planter or sower acted in bad faith.313 If the landowner pays for the value of the materials, he becomes the owner thereof. In such a situation, he may demand damages from the builder, planter or sower if the latter acted in bad faith, or pay the builder, planter or sower a reasonable compensation for his labor if the latter acted in good faith. B. NATURAL ACCESSION 52. Natural Accession
[52.1] Four Forms

As discussed in supra 40.2, there are four forms of natural accession: (1) (2) (3) (4) Alluvion; Avulsion; Natural change of course of river; and Formation of island.

Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. (366)
Art. 455, NCC. Id. 313 Id.
311 312

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Art. 458. The owners of estates adjoining ponds or lagoons do not acquire the land left dry by the natural decrease of the waters, or lose that inundated by them in extraordinary oods. (367)

53. Alluvion
[53.1] Denition

Alluvium or alluvion has been dened as the gradual and imperceptible addition to the banks of rivers314 or as the increment which lands abutting rivers gradually receive as a result of the current of the waters.315 Alluvium is the soil deposited on the estate fronting the river bank, while accretion is the process whereby the soil is deposited.316
[53.2] Riparian Owners Distinguished From Littoral Owners

The owner of the estate fronting the river bank is called the riparian owner. Riparian owners are, strictly speaking, distinct from littoral owners, the latter being owners of lands bordering the shore of the sea or lakes or other tidal waters.317
[53.3] Rule on Alluvion

The rule on alluvion is embodied in Article 457 of the New Civil Code which states that to the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. The riparian land, or the land adjoining the bank of the river is the principal and the alluvial deposits accumulated gradually along such riparian land constitute the accessory. The alluvium, by mandate of Article 457 of the New Civil Code, is automatically owned by the riparian owner from the moment the soil deposit can be seen.318 The same rule applies even if the riparian land was bought under installment plan, in which case, the benets of accretion belong to the purchaser even when said accretion took place before the last installment was paid.319
3 Manresa, 6th ed., 235. 2 Castan, 8th ed., 218. 316 Heirs of Emiliano Navarro v. IAC, 268 SCRA 74, 85 (1997). 317 Id., at p. 85, citing Santulan v. The Executive Secretary, 80 SCRA 548, 556 (1977). 318 Id., at pp. 85-86. 319 Assistant Executive Secretary for Legal Affairs of the Ofce of the President v. CA, 169 SCRA 27 (1989).
314 315

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The reason behind the law giving the riparian owner the right to any land or alluvion deposited by a river is to compensate him for the danger of loss that he suffers because of the location of his land.320 If estates bordering on rivers are exposed to oods and other evils produced by the destructive force of the waters and if by virtue of lawful provisions, said estates are subject to encumbrances and various kinds of easements, it is proper that the risk or danger which may prejudice the owners thereof should be compensated by the right of accretion.321
[53.4] Requisites of Alluvion

Accretion as a mode of acquiring property under Article 457 requires the concurrence of the following requisites: (1) that the accumulation of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river; and (3) that the land where the accretion takes place is adjacent to the banks of the river.322 These are called the rules on alluvion which if present in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion gradually received from the effects of the currents of waters.323
[53.4.1] First Requisite

A sudden and forceful action like that of ooding is hardly the alluvial process contemplated under Article 457 of the New Civil Code. It is the slow and hardly perceptible accumulation of soil deposits that the law grants to the riparian owner.324 This is what distinguishes alluvion from avulsion. In alluvion, the deposit of soil is gradual and imperceptible; whereas in avulsion, it is sudden and abrupt.
[53.4.2] Second Requisite

The requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Article 457 of the New Civil Code all deposits caused by human intervention. Alluvion
Republic v. CA, 132 SCRA 514 (1984). Id. 322 Heirs of Emiliano Navarro v. IAC, supra., at p. 85; Vda. De Nazareno v. CA, 257 SCRA 589 (1996); Meneses v. CA, 246 SCRA 374 (1995); Reynante v. CA, 207 SCRA 794 (1992); Binalay v. Manalo, 195 SCRA 374 (1991). 323 Vda. De Nazareno v. CA, supra., at p. 597. 324 Binalay v. Manalo, supra., at p. 386.
320 321

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must be the exclusive work of nature.325 Hence, the riparian owner does not acquire the additions to his land caused by special works expressly intended or designed to bring about accretion.326 Thus, in Tiongco v. Director of Lands, et al.,327 where the land was not formed solely by the natural effect of the water current of the river bordering said land but is also the consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such, part of the public domain.328
Vda. de Nazareno v. CA 257 SCRA 598 (1996) In this case, Antonio Nazareno, the predecessor-in-interest of Desamparado Vda. De Nazareno, caused the approval by the Bureau of Lands of the survey plan designated as Plan Csd-106-00571 with a view to perfecting his title over the accretion area being claimed by him. The accretion was formed by the dumping of boulders, soil and other lling materials on portions of the Balacanas Creek and the Cagayan River bounding Nazarenos land. Before the approved survey plan could be released to Nazareno, it was protested by his lessees. Acting upon such protest, the Regional Director of the Bureau of Lands ordered the amendment of the survey plan by segregating therefrom the areas occupied by the lessees. Thereafter, the Director of Lands ordered Nazareno to vacate the portions adjudicated to the lessees. Upon the death of Antonio, Vda. De Nazareno went to court to question the action taken by the Bureau of Lands. The resolution of this case hinges on the question of whether or not the subject land is public land. Vda. De Nazareno claims that the subject land is private land being an accretion on Antonio Nazarenos titled property, applying Article 457 of the Civil Code. The Supreme Court HELD: Since the subject land was the direct result of the dumping of sawdust by the Sun Valley Lumber Co., the accretion was man-made, hence, Art. 457 does not apply. Ergo, the subject land is part of the public domain. Republic v. CA 132 SCRA 514 (1984) In this case, the Tancincos were the registered owners of a parcel of land bordering on the Meycauayan and Bocaue rivers. In 1973, they led an application for the registration of three lots adjacent to their shpond property.
Republic v. CA, 132 SCRA 514, 520 (1984). Id. 327 16 C.A. Rep. 211. 328 Cited in Vda. De Nazareno v. CA, supra., at pp. 598-599.
325 326

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The Assistant Provincial Fiscal opposed the application. Upon the advise of the Commissioner appointed by the court, the applicants withdrew their application with respect to one of the lots. Thereafter, the lower court rendered a decision granting the application. The Republic appealed to the Court of Appeals which afrmed the decision of the lower court in toto. The Republic appealed to the Supreme Court. The Republic claimed that there was no accretion to speak of under Article 457 of the New Civil Code because what actually happened was that the Tancincos simply transferred their dikes further down the river bed of the Meycauayan River, and thus, if there was any accretion to speak of, it was man-made and articial and not the result of the gradual and imperceptible sedimentation by the waters of the river. In ruling for the Republic, the Supreme Court held Article 457 of the New Civil Code provides: To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. The above-quoted article requires the concurrence of three requisites before an accretion covered by this particular provision is said to have taken place. They are: (1) that the deposit be gradual and imperceptible; (2) that it be made through the effects of the current of the water; and (3) that the land where accretion takes place is adjacent to the banks of rivers. The requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Art. 457 of the New Civil Code all deposits caused by human intervention. Alluvion must be the exclusive work of nature. In the instant case, there is no evidence whatsoever to prove that the addition to the said property was made gradually through the effects of the current of the Meycauayan and Bocaue rivers. We agree with the observation of the Solicitor General that it is preposterous to believe that almost four (4) hectares of land came into being because of the effects of the Meycauayan and Bocaue rivers. The lone witness of the private respondents who happens to be their overseer and whose husband was rst cousin of their father noticed the four hectare accretion to the twelve hectare shpond only in 1939. The respondents claim that at this point in time, accretion had already taken place. If so, their witness was incompetent to testify to a gradual and imperceptible increase to their land in the years before 1939. However, the witness testied that in that year, she observed an increase in the area of the original shpond which is now the land in question. If she was telling the

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truth, the accretion was sudden. However, there is evidence that the alleged alluvial deposits were articial and man-made and not the exclusive result of the current of the Meycauayan and Bocaue rivers. The alleged alluvial deposits came into being not because of the sole effect of the current of the rivers but as a result of the transfer of the dike towards the river and encroaching upon it. The land sought to be registered is not even dry land cast imperceptibly and gradually by the rivers current on the shpond adjoining it. It is under two meters of water. The private respondents own evidence shows that the water in the shpond is two meters deep on the side of that pilapil facing the shpond and only one meter deep on the side of the pilapil facing the river. The reason behind the law giving the riparian owner the right to any land or alluvion deposited by a river is to compensate him for the danger of loss that he suffers because of the location of his land. If estates bordering on rivers are exposed to oods and other evils produced by the destructive force of the waters and if by virtue of lawful provisions, said estates are subject to encumbrances and various kinds of easements, it is proper that the risk or danger which may prejudice the owners thereof should be compensated by the right of accretion. (Cortes v. City of Manila, 10 Phil. 567). Hence, the riparian owner does not acquire the additions to his land caused by special works expressly intended or designed to bring about accretion. When the private respondents transferred their dikes towards the river bed, the dikes were meant for reclamation purposes and not to protect their property from the destructive force of the waters of the river. We agree with the submission of the Solicitor General that the testimony of the private respondents lone witness to the effect that as early as 1939 there already existed such alleged alluvial deposits, deserves no merit. It should be noted that the lots in question were not included in the survey of their adjacent property conducted on May 10, 1940 and in the Cadastral Survey of the entire Municipality of Meycauayan conducted between the years 1958 to 1960. The alleged accretion was declared for taxation purposes only in 1972 or 33 years after it had supposedly permanently formed. The only valid conclusion therefore is that the said areas could not have been there in 1939. They existed only after the private respondents transferred their dikes towards the bed of the Meycauayan river in 1951. What private respondents claim as accretion is really an encroachment of a portion of the Meycauayan river by reclamation.

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The lower court cannot validly order the registration of Lots 1 and 2 in the names of the private respondents. These lots were portions of the bed of the Meycauayan river and are therefore classied as property of the public domain under Article 420, paragraph 1 and Article 502, paragraph 1 of the Civil Code of the Philippines. They are not open to registration under the Land Registration Act. The adjudication of the lands in question as private property in the names of the private respondents is null and void. [53.4.3] Third Requisite

Under Article 457, the accretion must take place on a land adjacent to the banks of the river. Note, however, that while Article 457 mentions only of accretions on the banks of rivers, this must be interpreted in conjunction with Article 84 of the Spanish Law of Waters which provides: Accretions deposited gradually upon land contiguous to creeks, streams, rivers and lakes, by accessions or sediments from the water thereof, belong to the owners of such lands. But with respect to a creek, it must have regular and continuous current. The rule does not apply to canals or esteros which are not creeks and have no current but are simply drainage system.329 In the case of Ignacio v. Director of Lands and Valeriano,330 the Supreme Court considered the Manila Bay as a sea for purposes of determining which law on accretion is to be applied. Hence, an accretion that takes place on the shore of the Manila Bay, it being an inlet or an arm of the sea, is part of the public domain pursuant to Article 4 of the Spanish Law of Waters of 1866, which provides as follows: Lands added to the shores by accretions and alluvial deposits caused by the action of the sea, form part of the public domain. When they are no longer washed by the water of the sea and are not necessary for purposes of public utility,

329

Guison v. City of Manila, (CA) 40 O.G. 3835; Ronquillo v. CA, 195 SCRA 433, 443 108 Phil. 335 (1960).

(1991).
330

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or for the establishment of special industries, or for the coast guard service, the Government shall declare them to be the property of the owner of the estates adjacent thereto and as increment thereof. The Laguna de Bay, on the other hand, is a lake, the accretion on which, by the express mandate of Article 84 of the Spanish Law of Waters cited above, belongs to the owners of the land contiguous thereto.331
Heirs of Emiliano Navarro v. IAC 268 SCRA 74 (1997) Sometime in 1960, Sinfroso Pascual, the predecessor-in-interest of the heirs of Emiliano Navarro, led an application to register and conrm his title to a parcel of land situated in Sibocan, Balanga, Bataan, described in Plan Psu175181 and said to have an area of 146,611 square meters. Pascual claimed that this land is an accretion to his property situated in Barrio Perto Rivas, Balanga, Bataan. It is bounded on the eastern side by the Talisay River, on the western side by the Bulacan River, on the northern side by the Manila Bay. The Director of Lands opposed the application contending that the subject land is part of the public domain. The evidence, however, shows that the accretion took place on the northern portion of Pascuals land which is adjacent to the Manila Bay. It was HELD: The third requisite of accretion, which is, that the alluvion is deposited on the portion of claimants land which is adjacent to the river bank, is lacking. The claimants own tract of land where the accretion has taken place adjoins the Manila Bay, which is not a river but a sea. The disputed land, thus, is not an accretion on a river bank but on a sea bank, or on what used to be the foreshore of Manila Bay. As such, the applicable law is not Art. 457 of the Civil Code but Art. 4 of the Spanish Law of Waters of 1866 which provides that lands added to the shores by accretions and alluvial deposits caused by the action of the sea, form part of the public domain. Government of the P.I. v. Colegio de San Jose 53 Phil. 423 (1929) The plaintiff opposed the registration by defendant of a parcel of land which borders the Laguna de Bay. The plaintiff claimed that the parcel of land belonged to the public domain. According to the evidence, the waters of the
331 Government of the P.I. v. Colegio de San Jose, 53 Phil. 423 (1929); Republic v. CA, 131 SCRA 532 (1984).

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Laguna de Bay receded from the land in question but during rainy season the land was ooded by its water. Inasmuch as under the Civil Code, the owners of tenements bordering on ponds or lagoons do not acquire the land left dry by the natural decrease of the waters, then it is of primary importance to determine whether the body of water called the Laguna de Bay is naturally and legally a lake or a lagoon. It was HELD: Laguna de Bay is a body of fresh water formed in depressions of the earth; it contains fresh water coming from rivers and brooks or springs, and is connected with Manila Bay by the Pasig River. It is a lake. Lakes and their beds belong to the public domain. The bed of a lake is the ground covered by its waters at their highest ordinary depth. The waters of Laguna de Bay at their highest depth reach no further than the north eastern boundary of the land in question and therefore said land is outside the bed, and belongs to the defendant, who continues to be the owner of same, even if accidentally inundated by the waters of the lake. Even if the land in question had been formed by alluvion, it still belongs to the defendant as owner of the land which borders on the lake. [53.5] Right of Riparian Owner to Alluvium Is Ipso Jure

The right of the owners of the bank adjacent to rivers to the accretion which they receive by virtue of the action of the waters of the river is ipso jure and there is no need of an action of the owner of the bank to possess the new addition since it belongs to him by the very fact of the addition.332 However, such accretion does not automatically become registered land just because the lot which receives the same is covered by Torrens title.333 Thus, the accretion to registered land does not preclude acquisition of the additional area by another person through prescription.334 In Grande, et al. v. Court of Appeals,335 the Supreme Court explained Ownership of a piece of land is one thing; registration under the Torrens system of that ownership is another. Ownership over the accretion received by the land adjoining a river is governed by the Civil Code. Imprescriptibility of registered land is provided in the registration law. Registration under the Land Registration and Cadastral Act does not vest

Roxas v. Tuason, 9 Phil. 408. Cureg v. IAC, 177 SCRA 313 (1989). 334 Reynante v. CA, 207 SCRA 794, 799-800 (1992). 335 5 SCRA 524, 530 (1962).
332 333

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or give title to the land, but merely conrms and, thereafter, protects the title already possessed by the owner, making it imprescriptible by occupation of third parties. But to obtain this protection, the land must be placed under the operation of the registration laws, wherein certain judicial procedures have been provided. In the same vein, the registration under the Torrens system does not protect the riparian owner against the diminution of the area of his registered land through gradual changes in the course of an adjoining stream.336
[53.6] Exception to the Rule on Alluvion

Article 458 of the New Civil Code serves as an exception to the general rule on alluvion.337 It is noteworthy that this article refers only to ponds and lagoons but is not applicable to a lake since with regard to a lake the rule of alluvion is applicable in accordance with the Spanish Law of Waters.338 A lake has been dened as body of water formed in depressions of the Earth, ordinarily fresh water, coming from rivers, brooks or springs and connected to the sea by them. A pond or lagoon on the other hand is a small body of water, ordinarily of fresh water, and not very deep, fed by oods, the hollow bed of which is bounded by elevations of land.339
Art. 459. Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided that he removes the same within two years. (368a) Art. 460. Trees uprooted and carried away by the current of the waters belong to the owner of the land upon which they may be cast, if the owners do not claim them within six months. If such owners claim them, they shall pay the expenses incurred in gathering them or putting them in a safe place. (369a)

Viajar v. CA, 168 SCRA 405, 413 (1988), citing Payatas Estate Improvement Co. v. Tuazon, 53 Phil. 55 and C.N. Hodges v. Garcia, 109 Phil. 132. 337 3 Manresa, 6th ed., 239-240. 338 Government of the P.I. v. Colegio de San Jose, 53 Phil. 423. 339 Ibid.
336

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54. Avulsion
[54.1] Denition

Avulsion has been dened as the accretion which takes place when the current of a river, creek or torrent segregates a known portion of land from an estate on its banks and transfers it to another estate.340 Or, the accretion taking place in the estate on the bank of a river caused not by the slow and constant action of the waters but by the violent and sudden action of a torrent.341
[54.2] Comparison With Alluvion

Alluvion and avulsion share the following similarities: (1) that they both take place only along the banks of rivers, creeks, streams and lakes; and (2) that they are caused only by the force of the current of the waters independently of the act of man. But they differ, as follows: (1) In alluvion the deposit of soil is gradual; whereas, in avulsion it is sudden and abrupt; (2) In alluvion the deposit of soil belongs to the owner of the property where the same was deposited but in avulsion the owner of the property from which a part was detached retains the ownership thereof; (3) In alluvion, accession takes place immediately upon the deposit of the soil; whereas, in avulsion the right of accession takes place only after two years from the attachment or incorporation of the segregated portion of land to the riparian land and only if its owner fails to remove the same within said period; and (4) In alluvion, the soil cannot be identied; in avulsion, the detached portion can be identied. In the absence, however, of evidence that the change in the course of river was sudden or that it occurred through avulsion, the presumption is that the change was gradual and caused by accretion and erosion.342

3 Manresa, 6th ed., 243. 2 Castan, 8th ed., 218-219, citing Sanchez Roman. 342 C.N. Hodges v. Garcia, 109 Phil. 133.
340 341

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[54.3] Rule on Avulsion

According to Article 459 of the New Civil Code, avulsion takes place whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate. In such a case, the owner of the land from where the portion is detached retains the ownership of the segregated portion but he is required to remove the same within two years.343 Note that the article requires the owner to physically remove the portion detached from his land, a mere claim being insufcient.344 Should the owner fail to remove the detached portion within two years, the same shall belong to the owner of the land to which it is attached following the principle of accession. In the case of avulsion, therefore, accession does not as yet take place at the time the segregated portion is transferred to another estate since the owner of the land from where the portion is detached retains ownership of the same. In avulsion, accession takes place only after two years from the attachment or incorporation of the segregated portion of land to the riparian land upon failure of its owner to remove the same within said period.
[54.4] Avulsion With Respect To Uprooted Trees

If trees are uprooted and carried away by the current of the waters to another estate, the owner of the tree retains ownership of the same but he is required to claim them within a period of six months.345 Note that while avulsion with respect to a segregated portion of land requires actual physical removal of the portion detached within two years, the avulsion with respect to uprooted trees merely require the owner of the tree to make a claim for the same within a period of six months. If the uprooted trees have been transplanted by the owner of the land upon which the trees may have been cast and said trees have taken root in said land, then the owner of the trees, upon making the claim, is required to refund the expenses incurred in gathering them or in putting them in a safe place, including the expenses incurred by the owner of the land for the preservation of the trees.346
Art. 459, NCC. II Caguioa, Civil Code, 1966 ed., 103-14. 345 Art. 460, NCC. 346 Id.
343 344

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Art. 461. River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost. However, the owners of the lands adjoining the old bed shall have the right to acquire the same by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed. (370a) Art. 462. Whenever a river, changing its course by natural causes, opens a new bed through a private estate, this bed shall become of public dominion. (372a)

55. Change of Course of River


[55.1] Effect of Change of Course of River

If there is a natural change in the course of the waters of the river, the abandoned riverbeds shall ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost.347 For example, if a river passing through the property of A changed its course due to natural causes and opened a new bed on the adjoining land belonging to X, the abandoned river bed (which is inside the property of A) automatically or ipso facto belongs to X in proportion to the area lost by the latter. This is an innovation of the old rule under Article 370 of the Spanish Civil Code of 1889 where the abandoned river beds shall belong to the owners of the riparian lands throughout the respective length of each.348 According to the Code Commission,349 the new solution is by way of compensation for the loss of the land occupied by the new bed and that it is more equitable to compensate the actual losers than to add land to those who have lost nothing. Note, however, that at this point, no accession has yet taken place because the owner of the land occupied by the new course is merely compensated for the area that he lost. Since nothing has been added to his property, there is no accession yet since this concept connotes an addition to ones property. Accesion continua takes place only if the owner of the land adjoining the old bed will exercise his option to acquire the abandoned bed by paying the value thereof, which value shall not exceed the value of the area occupied by the new bed.350 In

Art. 461, NCC. Art. 370, Spanish Civil Code of 1889. 349 Report of the Code of Commission, 96. 350 Art. 461, NCC.
347 348

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the above example, while X automatically becomes the owner of the abandoned river bed, A, however, can compel X to sell to him the abandoned bed at a price not exceeding the value of the area occupied by the new bed. Note that under Article 461, the owners of the land adjoining the old bed have the right to compel the owners of the land occupied by the new bed to sell to them the old bed at a price not greater than the value of the land occupied by the new bed. Such option is granted to them by law and not to the owners of the land onto which the river changed its course. In other words, the owners of the land onto which the river changed its course cannot compel the riparian owners (the owners of the land adjoining the old bed) to buy the old bed. The reason for the law in giving the riparian owner the right to buy the abandoned river bed is because the latter is in a better position to make use of the land for agricultural purposes.
[55.2] Applicability of Article 461

The present article (Article 461), as well as Article 370 of the Spanish Civil Code of 1889, speaks of a natural change in the course of the waters. Hence, in the case of Ronquillo v. Court of Appeals,351 a case applying the provisions of Article 370 of the Spanish Civil Code of 1889, it was held that Article 370 applies only if there is a natural change in the course of the waters and since the drying up of the Estero Calubcub was actually caused by the active intervention of man due to the dumping of garbage therein by the people of the surrounding neighbourhood the said law was not applied and the dried-up portion of Estero Calubcub was instead declared as forming part of the land of the public domain. In the subsequent case of Baes v. Court of Appeals,352 however, the Court applied the provisions of Article 461 of the Civil Code even if the change in the course of the waters was effected through articial means. The Court explained that if the riparian owner is entitled to compensation for the damage to or loss of his property due to natural causes, there is all the more reason to compensate him when the change in the course of the river is effected though articial means.
351 352

195 SCRA 433 (1991). 224 SCRA 562 (1993).

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Note, however, that the factual milieu in Ronquillo and Baes are not the same. In Baes, the change in the course of the waters of the creek was the result of a deliberate act on the part of the government resulting in a prejudice to the interest of Baes because the man-made canal totally occupied his property. In Ronquillo, however, there is no showing that the change in the course of Estero Calubcub prejudiced the Del Rosarios. Moreover, the change in Ronquillo was without the intervention of the government. It was, in fact, due to the dumping of garbage therein by the people of the surrounding neighborhood. Hence, if the change in the course of the waters is due to a deliberate act of the government resulting in prejudice to a private individual, the latter is entitled to avail himself of the benets under Article 461 of the Civil Code.
Baes v. CA 224 SCRA 562 (1993) In this case, a portion of the Tripa de Gallina creek was diverted to a manmade canal which totally occupied Lot 2958-B (with an area of 3,588 sq.m.) belonging to Felix Baes. The diversion was resorted to by the government to improve the ow of the Tripa de Gallina creek. Baes and his wife claim that they became the owners of the old bed (which was eventually lled up by soil excavated from Lot 2958-B) by virtue of Article 461. In agreeing to the contention of the Baes spouses, the Supreme Court explained If the riparian owner is entitled to compensation for the damage to or loss of his property due to natural causes, there is all the more reason to compensate him when the change in the course of the river is effected though articial means. The loss to the petitioners of the land covered by the canal was the result of a deliberate act on the part of the government when it sought to improve the ow of the Tripa de Gallina creek. It was therefore obligated to compensate the Baeses for their loss. Ronquillo v. CA 195 SCRA 433 (1991) In this case, Rosendo del Rosario was a registered owner of a parcel of land at Sampaloc, Manila. Adjoining said lot is a dried-up portion of the old Estero Calubcub occupied by Mario Ronquillo. The Del Rosarios claim that long before the year 1930, Rosendo had been in possession of his parcel of land including the adjoining dried-up portion of the old Estero Calubcub. Because Ronquillo refused to vacate, the Del Rosarios led an action in court to be

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declared the rightful owners of the dried-up portion. Ronquillo, on the other hand, argued that the dried-up portion is part of the land of the public domain. After trial, the lower court rendered a judgment in favor of the Del Rosarios, which judgment was afrmed by the Court of Appeals. Hence, Ronquillo appealed to the Supreme Court. The Supreme Court required the Solicitor General to comment on behalf of the Director of Lands. In his comment, the Solicitor General contends that the subject land is part of the public domain. It was HELD: The change in the course of Estero Calubcub was caused, not by natural courses, but due to the dumping of garbage therein by the people surrounding the neighborhood. Hence, Art. 370 of the Old Civil Code (now Art. 461) does not apply. It applies only if there is a natural change in the course of the waters. Consequently, the dried-up portion of Estero Calubcub should be considered as forming part of the land of the public domain. [55.3] Extension of Ownership Ipso Jure

Once the river bed has been abandoned through the natural change of the course of the waters, the owners of the land through which the new river bed passes become the owners of the abandoned bed to the extent provided by Article 461. There need be no act on their part to subject the old river bed to their ownership, as it is subject thereto ipso jure from the moment the mode of acquisition becomes evident, without need of any formal act of acquisition.353 Such abandoned river bed had fallen to the private ownership of the owner of the land through which the new river bed passes even without any formal act of his will and any unauthorized occupant thereof will be considered as a trespasser.354 The right in re to the principal is likewise a right in re to the accessory, as it is a mode of acquisition provided by law, as the result of the right of accretion.355 Since the accessory follows the nature of the principal, there need not be any tendency to the thing or manifestation of the purpose to subject it to our ownership, as it is subject thereto ipso jure from the moment the mode of acquisition becomes evident.356 And the failure of the owners of the land through which the new river bed passes to register the accretion in their names and declare it for purposes of taxation does not divest it of its character as a private property.357
353 Agne v. Director of Lands, 181 SCRA 793, 805 (1990), citing Sanchez v. Pascual, 11 Phil. 395 (1908); Pascual v. Sarmiento, et al., 37 Phil. 170 (1917). 354 Ibid. 355 Ibid. 356 Ibid., citing Villanueva v. Castro, 23 Phil. 54. 357 Ibid., at p. 806.

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[55.4] Restoration of the River to Its Former Course

In interpreting the provisions of Article 370 of the Spanish Civil Code of 1889, our Supreme Court held in Panlilio v. Mercado358 that in the event of the change of the course of the stream, its former bed cannot be regarded as denitely abandoned and the public divested of its ownership therein until there is some indication of an intention of the government to acquiesce to the change of the stream. Hence, it was held that there was no abandonment of the old bed if the government took practicable steps to return the stream back to its old course. According to Dean Capistrano,359 a member of the Code Commission, the word ipso facto was introduced in Article 461 in order to precisely repudiate the ruling of the Court in the Panlilio case because the Commission considered it unsound. Hence, after the enactment of the New Civil Code, there was doubt as to whether the government can return the river bed back to its old course since in so doing, the government would be invading private property because the owner of the land through which the new river bed passes ipso facto owns the old river bed. The foregoing uncertainty was settled with the enactment of Presidential Decree 1067, otherwise known as The Water Code of the Philippines, which modied the provisions of Article 461 of the Civil Code.360 Under Article 58 of the Water Code of the Philippines, the owners of the affected lands (referring to the owners of the land where the new river bed passes) cannot restrain the government from taking steps to revert the river or stream to its former course but they may not compel the government to restore the river to its former bed. And if the government decides to revert back the river or stream to its former course, the owners of the lands thus affected are not entitled to compensation for any damage sustained thereby. In fact, under the provisions of Article 58361 of the Water Code of the Philippines, the
44 Phil. 695. Capistrano, Civil Code of the Philippines, Annotated, Vol. 1, 430. 360 See Footnote No. 56 in Celestial v. Cachopero, 413 SCRA 469, 487. 361 Art. 58. When a river or stream suddenly changes its course to traverse private lands, the owners or the affected lands may not compel the government to restore the river to its former bed; nor can they restrain the government from taking steps to revert the river or stream to its former course. The owners of the lands thus affected are not entitled to compensation for any damage sustained thereby. However, the former owners of the new bed shall be the owners of the abandoned bed in proportion to the area lost by each.
358 359

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affected landowners may themselves undertake the return of the river to its old bed subject to the following conditions: (1) they shall secure a permit from the Department of Public Works and Highways; (2) the undertaking shall be at their expenses; and (3) the work pertaining thereto must be commenced within two years from the change in the course of the river or stream.
[55.5] When River Dries Up

If the river simply dries up and did not change its course or without opening a new bed, it is clear that the provisions of Article 461 will not apply. To whom will the dried up river bed belong? According to Senator Tolentino, the dry bed will continue to remain property of public dominion.362 Since rivers and their natural beds are property of public dominion, in the absence of any provision vesting the ownership of the dried up river bed in some other person, it must continue to belong to the State.363 The foregoing opinion of Senator Tolentino was quoted with approval by the Supreme Court in the case of Celestial v. Cachopero,364 where the Court held Furthermore, both provisions pertain to situations where there has been a change in the course of a river, not where the river simply dries up. In the instant Petition, it is not even alleged that the Salunayan Creek changed its course. In such a situation, commentators are of the opinion that the dry river bed remains property of public dominion.365
[55.6] Status of New Bed

In event of a natural change in the course of the waters of the river, Article 462 of the New Civil Code expressly declares that the
The owners of the affected lands may undertake to return the river or stream to its old bed at their own expense; Provided, That a permit therefore is secured from the Minister of Public Works, Transportation and Communication and work pertaining thereto are commenced within two years from the change in the course of the river or stream. 362 II Tolentino, Civil Code, 1992 ed., 137-138. 363 Id. 364 413 SCRA 469, 489 (2003). 365 Id., citing II Tolentino,Civil Code, 1992 ed., 137-138; II Paras, Civil Code, 2002 ed., 275.

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new bed passing through a private estate shall become property of public dominion. This rule is consistent with the provisions of Article 502(1) of the New Civil Code and Article 5(a) of the Water Code of the Philippines.
Art. 463. Whenever the current of a river divides itself into branches, leaving a piece of land or part thereof isolated, the owner of the land retains his ownership. He also retains it if a portion of land is separated from the estate by the current. (374) Art. 464. Islands which may be formed on the seas within the jurisdiction of the Philippines, on lakes, and on navigable or oatable rivers belong to the State. (371a) Art. 465. Islands which through successive accumulation of alluvial deposits are formed in non-navigable and non-oatable rivers, belong to the owners of the margins or banks nearest to each of them, or to the owners of both margins if the island is in the middle of the river, in which case it shall be divided longitudinally in halves. If a single island thus formed be more distant from one margin than from the other, the owner of the nearer margin shall be the sole owner thereof. (373a)

56. Formation of Island


[56.1] Three Kinds of Islands

In connection with accesion continua, there are three kinds of islands that may be formed pursuant to the provisions of the Civil Code:
[56.1.1] Island Formed Under Article 463

In Article 463, the current of a river simply divides itself into branches, leaving a piece of land or part thereof isolated, thereby forming an island. Since the land has not been permanently invaded by the waters of the river, no natural expropriation will occur. The island thus formed remains to be the property of the owner of the land where such island has been formed. This is expressly recognized in Article 463. Under the provisions of the same article, he also retains ownership of the portion of his land separated from the estate by the current. This rule is an extension of the rule on avulsion since the process takes place abruptly and the segregated portion is required to be identiable. Hence, if known portions of land are segregated from a tenement and deposited

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in the middle of a river, thus forming an island, the provisions of Article 463 and not Article 465 will apply.366 Note that the rule in this article applies whether the river is navigable or oatable or not since the article does not make any distinction. Strictly speaking, however, no accession has taken place in the situation contemplated in Article 463 because no new property has been added or attached to the property of any person. As stated earlier, the owner of the property simply retains ownership of his land, with the difference that it has just been converted into an island.
[56.1.2] Island Formed Under Article 464

Article 464 provides for a real case of accession compared to the previous article (Article 463). In Article 464, an island is formed on a sea, lake or navigable or oatable river through whatever cause. Thus, the article clearly speaks of an addition to the property of the State since the island thus formed is expressly declared to be property of the latter. It has been said that the island formed pursuant to the provisions of Article 464 forms part of the patrimonial property of the State and, therefore, may be sold by the State.367 Article 464 speaks of an island formed on a navigable or oatable river. A river is considered to be navigable or oatable if it is able to carry the produce of the land along its banks to the market.368
[56.1.3] Island Formed Under Article 465

Article 465, in turn, speaks of an island formed in non-navigable or non-oatable rivers through successive accumulation of deposit in the same manner as alluvion. Hence, if the island is formed in navigable or oatable rivers, it is Article 464 that will apply and not this article. If the island is formed through a sudden and abrupt process due to segregation of identiable portions of land from an estate, it is Article 463 that will likewise apply and not this article, whether the river is navigable or oatable or not.

II Caguioa, Civil Code, 1966 ed., 110. 3 Manresa, 6th ed., 256. 368 Commonwealth v. Meneses, (CA) 38 O.G. No. 23, 2839.
366 367

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If the requisites of Article 465 are complied with, the ownership of the island thus formed shall be governed by the following rules: (1) (2) It shall belong to the owner of the margins or banks nearest to the island; If the island is in the middle of the river, the same shall be owned by the owners of both margins, in which case it shall be divided longitudinally in halves; or If the island be more distant from one margin than from the other, the owner of the nearer margin shall be the sole owner thereof.

(3)

The reason for this article is the same as in alluvion in that the owners of the bank nearer the islands are in the best position to cultivate and attend to the exploitation of the same.369 In fact, no specic act of possession over the accretion is required. If, however, the riparian owner fails to assert his claim thereof, the same may yield to the adverse possession of third parties, as indeed even accretion to land titled under the Torrens system must itself be registered.370
Jagualing v. CA 194 SCRA 607 (1991) Between the one who has actual possession of an island that forms in a non-navigable and non-oatable river (who has been in possession of the same for 15 years) and the owner of the land along the margins nearest to the island, who has the better right thereto? Under Art. 465 of the Civil Code, the island belongs to the owner of the land along the nearer margin as sole owner thereof. His ownership, however, may yield to the adverse possession of third parties. But in this case, the third parties were presumed to have notice of the status of the owner of the land along the nearer margin as riparian owners, hence, they did not qualify as possessors in good faith. They may acquire ownership of the island only through uninterrupted adverse possession for a period of thirty (30) years. By their own admission, they have been in possession of the property for only about fteen years. Hence, the island can properly be adjudicated to the owner of the land along the nearer margin.

369 370

Jagualing v. CA, 194 SCRA 608, 614-615 (1991). Ibid.

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Section 3. Right of Accession with Respect to Movable Property


Art. 466. Whenever two movable things belonging to different owners are, without bad faith, united in such a way that they form a single object, the owner of the principal thing acquires the accessory, indemnifying the former owner thereof for its value. (375) Art. 467. The principal thing, as between two things incorporated, is deemed to be that to which the other has been united as an ornament, or for its use or perfection. (376) Art. 468. If it cannot be determined by the rule given in the preceding article which of the two things incorporated is the principal one, the thing of the greater value shall be so considered, and as between two things of equal value, that of the greater volume. In painting and sculpture, writings, printed matter, engraving and lithographs, the board, metal, stone, canvas, paper or parchment shall be deemed the accessory thing. (377) Art. 469. Whenever the things united can be separated without injury, their respective owners may demand their separation. Nevertheless, in case the thing united for the use, embellishment or perfection of the other, is much more precious than the principal thing, the owner of the former may demand its separation, even though the thing to which it has been incorporated may suffer some injury. (378) Art. 470. Whenever the owner of the accessory thing has made the incorporation in bad faith, he shall lose the thing incorporated and shall have the obligation to indemnify the owner of the principal thing for the damages he may have suffered. If the one who has acted in bad faith is the owner of the principal thing, the owner of the accessory thing shall have a right to choose between the former paying him its value or that the thing belonging to him be separated, even though for this purpose it be necessary to destroy the principal thing; and in both cases, furthermore, there shall be indemnity for damages. If either one of the owners has made the incorporation with the knowledge and without the objection of the other, their respective rights shall be determined as though both acted in good faith. (379a) Art. 471. Whenever the owner of the material employed without his consent has a right to an indemnity, he may demand that this consist in the delivery of a thing equal in kind and value, and in all other respects, to that employed, or else in the price thereof, according to expert appraisal. (380)

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57. Adjunction or Conjunction


[57.1] Forms of Accesion Continua With Respect To Movables

As discussed in supra 40.2, there are three forms of accesion continua with respect to movable property: (1) (2) (3) adjunction or conjunction; commixtion or confusion; or specication

[57.2] Adjunction or Conjunction, Explained

Adjunction (or conjunction) takes place when two or more movable things belonging to different owners are so united that they cannot be separated without causing injury to one or both them, thereby giving rise to a new thing.371 If separation is possible without causing a substantial physical or juridical injury to any of the movables, then there is no accession. Hence, in the rst paragraph of Article 469 which contemplates of adjunction through inclusion and soldering,372 the respective owners may demand separation whenever the things united can be separated without injury. The distinguishing features of adjunction are the following: (1) that the two or more movables form a distinctive new thing; and (2) that each one of the things making up the new one preserves its own nature.373 The latter characteristic serves to distinguish it from confusion which implies a greater degree of identication and in certain cases even a decomposition of the things which have been confused.374
[57.3] How It Takes Place

Adjunction may take place in either of the following ways: (1) (2) (3)
371 372

inclusion or engraftment; soldadura or attachment; tejido or weaving;

3 Sanchez Roman, 98. 3 Manresa, 6th ed., 284-285. 373 3 Manresa 272. 374 II Caguioa, Civil Code, 1966 ed., 111, citing 3 Manresa, 6th ed., 275.

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(4) (5)

pintura or painting; and escritura or writing.375

[57.4] Legal Effects of Adjunction

The legal effects of adjunction will depend on how the union or attachment was effected whether in good faith or in bad faith.
[57.4.1] If Effected In Good Faith

This situation is governed by Article 466 of the New Civil Code, which reads: Art. 466. Whenever two movable things belonging to different owners are, without bad faith, united in such a way that they form a single object, the owner of the principal thing acquires the accessory, indemnifying the former owner thereof for its value. (375) Thus, if the union or attachment was effected in good faith whether by the owner of the principal or by the owner of the accessory the rule is that the owner of the principal thing acquires the accessory376 following the principle in accesion continua that the accessory follows the principal (accession cedit principali), but he must indemnify the owner of the accessory for its value following the principle that no one shall unjustly enrich himself at the expense of another. The union or attachment is deemed to be effected in good faith if the person responsible therefore honestly thought that the movables involved really belonged to him. However, if the accessory is much more precious than the principal thing, its owner may demand its separation, even though the principal may suffer injury.377
[57.4.2.] If Effected In Bad Faith

If the union or attachment was effected in good faith, it is immaterial as to who was responsible for it. The rule shall be the same as stated above in supra 57.4.1 regardless of who was responsible for such
3 Manresa, 6th ed., 275-276. See Art. 466, NCC. 377 Art. 469, 2nd par., NCC.
375 376

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union or attachment. But if the union or attachment was effected in bad faith, the legal effects shall vary depending as to who was responsible for it, as follows:
[i] If Effected In Bad Faith By the Owner of the Principal

This situation is governed by the second paragraph of Article 470 of the New Civil Code, which reads: Art. 470. xxx If the one who has acted in bad faith is the owner of the principal thing, the owner of the accessory thing shall have a right to choose between the former paying him its value or that the thing belonging to him be separated, even though for this purpose it be necessary to destroy the principal thing; and in both cases, furthermore, there shall be indemnity for damages. Following the principle of accesion continua that bad faith subjects a person to damages and other unfavorable consequences, the options in this situation are given to the owner of the accessory and not to the owner of the principal as a way of penalizing the latter. Hence, the owner of the accessory may choose between the following options: (1) to demand payment for the value of the accessory, with a right to be indemnied for damages; or (2) to demand for the separation of the accessory, even though for this purpose it be necessary to destroy the principal thing, with a right to be indemnied for damages. The second option, however, does not apply if the same is not practicable as in the case of painting (which cannot be separated from the canvass) or writing (which cannot be separated from the paper). In such a situation, the owner of the accessory is limited only to the rst option mentioned above.378
[ii] If Effected In Bad Faith By the Owner of the Accessory

This situation is governed by the rst paragraph of Article 470, which reads:

378

3 Manresa, 6th ed., 289.

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Art. 470. Whenever the owner of the accessory thing has made the incorporation in bad faith, he shall lose the thing incorporated and shall have the obligation to indemnify the owner of the principal thing for the damages he may have suffered. x x x. Following the principle of accesion continua that bad faith subjects a person to damages and other unfavorable consequences, if the union or attachment was effected by the owner of the accessory in bad faith, he shall lose the thing incorporated (the accessory) and shall be liable to pay damages to the owner of the principal.
[iii] If Both Acted In Bad Faith

The third paragraph of Article 470 provides that if either one of the owners has made the incorporation with the knowledge and without the objection of the other, their respective rights shall be determined as though both acted in good faith. In such a case, the provisions of Article 466 will apply. Hence, whatever has been discussed in supra 57.4.1 shall also apply to this situation. In the foregoing situations, whenever the owner of the material employed without his consent has a right to an indemnity, he may demand that the same consist either: (1) in the delivery of a thing equal in kind and value, and in all other respects, to that employed; or (2) in the payment of the price thereof according to expert appraisal.379
[57.5] Tests In Determining The Principal

In determining which of the movables so united is the principal (and which is the accessory), the following tests shall be applied: (1) First test that to which the other has been united as ornament or for its use or perfection is the principal, the thing added is the accessory;380 (2) Second test if the rst test cannot be applied, then the thing of greater value is the principal and the other the accessory;381
Art. 471, NCC. Art. 467, NCC. 381 Art. 468, NCC.
379 380

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(3) Third test if both things are of equal value, then the one of greater volume is the principal and the other the accessory.382 However, in the case of painting, sculpture, writings, printed matter, engraving and lithographs, the board, metal, stone, canvas, paper or parchment shall be deemed the accessory thing.383
Art. 472. If by the will of the owners two things of the same or different kinds are mixed, or if the mixture occurs by chance, and in the latter case the things are not separable without injury, each owner shall acquire a right proportional to the part belonging to him, bearing in mind the value of the things mixed or confused. (381) Art. 473. If by the will of only one owner, but in good faith, two things of the same or different kinds are mixed or confused, the rights of the owners shall be determined by the provisions of the preceding article. If the one who caused the mixture or confusion acted in bad faith, he shall lose the thing belonging to him thus mixed or confused, besides being obliged to pay indemnity for the damages caused to the owner of the other thing with which his own was mixed. (382)

58. Commixtion or Confusion


[58.1] Commixtion or Confusion, Explained

Commixtion or confusion refers to mixture of two or more things belonging to different owners. If the things mixed are solid, it is called commixtion; if the things are liquid, it is called confusion.
[58.2] Legal Effects of Commixtion or Confusion

The legal effects of commixtion or confusion are provided in Articles 472 and 473 of the New Civil Code. Based from these two Articles, the effects of commixtion or confusion shall depend on the manner by which the mixture occurs:
[58.2.1] Co-ownership

If the mixture takes place by reason of the following: (1) by will of both or all owners of the things mixed;384 (2) by will of only one owner

Art. 468, NCC. Art. 468, 2nd par., NCC. 384 Art. 472, NCC.
382 383

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acting in good faith;385 or (3) by chance or fortuitous event,386 a state of co-ownership with respect to the mixture shall arise and each owner shall acquire a right proportional to the part belonging to him, bearing in mind the value of the thing mixed or confused.387 Strictly speaking, the situations contemplated are not really cases of accession since the persons involved did not gain anything. Instead, these situations will give rise to a state of co-ownership.
[58.2.2] If Caused By Only One Owner Acting In Bad Faith

This situation, on the other hand, is a true case of accession. Pursuant to the provisions of the second paragraph of Article 473 of the New Civil Code, if the mixture is caused by only one owner acting in bad faith, he loses the thing belonging to him thus mixed or confused, besides being obliged to pay indemnity for the damages caused to the owner of the thing with which his own was mixed or confused.388
Art. 474. One who in good faith employs the material of another in whole or in part in order to make a thing of a different kind, shall appropriate the thing thus transformed as his own, indemnifying the owner of the material for its value. If the material is more precious than the transformed thing or is of more value, its owner may, at his option, appropriate the new thing to himself, after rst paying indemnity for the value of the work, or demand indemnity for the material. If in the making of the thing bad faith intervened, the owner of the material shall have the right to appropriate the work to himself without paying anything to the maker, or to demand of the latter that he indemnify him for the value of the material and the damages he may have suffered. However, the owner of the material cannot appropriate the work in case the value of the latter, for artistic or scientic reasons, is considerably more than that of the material. (383a) Art. 475. In the preceding articles, sentimental value shall be duly appreciated. (n)

Art. 473, 1st par., NCC. Art. 472, 1st par., NCC. 387 Arts. 472 and 473, 1st par., NCC. 388 Art. 473, 2nd par., NCC.
385 386

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59. Specication
[59.1] Specication, Explained

Specication takes place whenever the work of a person is done on the material of another, such material, in consequence of the work itself, undergoing a transformation.389 It is the imparting of a new form to the material of another person.390 Hence, specication involves: (1) the labor of the worker, and (2) the materials of another.
[59.2] Legal Effects

The legal effects of specication shall depend on the good faith or bad faith of the worker. Of course, the worker is in good faith if he honestly believed that the materials were his at the time that he made use of them; otherwise, he shall be considered in bad faith.
[59.2.1] If the Worker Acted In Good Faith

One who in good faith employs the material of another in whole or in part in order to make a thing of a different kind, shall appropriate the thing thus transformed as his own, indemnifying the owner of the material for its value.391 The exception to the foregoing rule is when the material is more precious than the transformed thing or more valuable, in which case, its owner may, at his option: (1) appropriate the new thing to himself after paying indemnity for the value of the work; or (2) demand indemnity for the material.392
[59.2.2] If the Worker Acted In Bad Faith

If in the making of the thing bad faith intervened, the owner of the material has two options: (1) to appropriate the work for himself without paying anything to the maker; or (2) to demand of the latter (worker) that he indemnify him for the value of the material and the damages he may have suffered.393

3 Manresa, 6th ed., 297. 3 Sanchez Roman 100. 391 Art. 474, 1st par., NCC. 392 Art. 474, 2nd par., NCC. 393 Art. 474, 3rd par., NCC.
389 390

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However, if the value of the work, for artistic or scientic reasons, is considerably more than that of the material, the owner of the material cannot appropriate the work.394 In such a case, the owner of the material can only demand from the worker the value of his materials and the damages he may have suffered. Chapter 3 QUIETING OF TITLE (n)
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subject matter of the action. He need not be in possession of said property. Art. 478. There may also be an action to quiet title or remove a cloud therefrom when the contract, instrument or other obligation has been extinguished or has terminated, or has been barred by extinctive prescription. Art. 479. The plaintiff must return to the defendant all benets he may have received from the latter, or reimburse him for expenses that may have redounded to the plaintiffs benet. Art. 480. The principles of the general law on the quieting of title are hereby adopted insofar as they are not in conict with this Code. Art. 481. The procedure for the quieting of title or the removal of a cloud therefrom shall be governed by such rules of court as the Supreme Court shall promulgate.

60. Quieting of Title


[60.1] Action to Quiet Title

Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real
394

Art. 474, last par., Civil Code.

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property.395 Originating in equity jurisprudence, its purpose is to secure an adjudication that a claim of title to or an interest in property, adverse to that of the complainant, is invalid, so that the complainant and those claiming under him may be forever afterward free from any danger of hostile claim.396 In an action for quieting of title, the competent court is tasked to determine the respective rights of the complainant and other claimants, not only to place things in their proper place, to make the one who has no rights to said immovable respect and not disturb the other, but also for the benet of both, so that he who has the right would see every cloud of doubt over the property dissipated, and he could afterwards without fear introduce the improvements he may desire, to use, and even to abuse the property as he deems best.397 Such remedy may be availed of under the circumstances enumerated in Article 476 of the New Civil Code, as follows: Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon title to real property or any interest therein. In Realty Sales Enterprises v. IAC,398 the Supreme Court held that suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res, these proceedings are characterized as quasi in rem and the judgment in such proceedings is conclusive only between the parties.399

395 Baricuatro v. CA, 325 SCRA 137 (2000), citing Vda. de Aviles v. Court of Appeals, 264 SCRA 473, 478 (1996); see also Divinagracia v. Cometa, 482 SCRA 648, 654 (2006) and Calacala, et al. v. Republic of the Philippines, G.R. No. 154415, July 28, 2005. 396 Id., citing II Tolentino, Civil Code, 137. 397 Id., citing II Paras, Civil Code, 13th ed., 270. 398 154 SCRA 328, 348 (1987). 399 See also Seville v. National Development Company, 351 SCRA 112.

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[60.2] Requisites of Action to Quiet Title

For an action to quiet title to prosper, the following indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action;400 (2) there is a cloud on title to real property or any interest therein;401 and (3) the deed, claim, encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efcacy.402
[60.2.1] Legal or Equitable Title

For an action for quieting of title to prosper, it is essential for the plaintiff or complainant to have a legal title or an equitable title to or interest in the real property which is the subject matter of the action.403 On this score, the Civil Code of the Philippines provides: Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property which is the subjectmatter of the action. He need not be in possession of said property. It is not necessary, therefore, that the person seeking to quiet his title be the registered owner of the property in question.404 When Article 477 speaks of title to property, it does not necessarily denote a certicate of title issued in favor of the person ling the suit.405 It can connote acquisitive prescription by possession in the concept of an owner thereof.406 Hence, in Chacon Enterprises v. Court of Appeals,407 the Court considered the action to be one for quieting of title where the plaintiffs alleged ownership and actual possession since time immemorial of the property in question by themselves and through their predecessors-ininterest, while defendants secured a certicate of title over said property through fraud, misrepresentation and deceit. Indeed, under Article 477,
Calacala, et al. v. Republic of the Philippines, supra. MBTC v. Alejo, 364 SCRA 812. 402 Calacala, et al. v. Republic of the Philippines, supra. 403 Id., See also Robles v. CA, 328 SCRA 97, 108-109. 404 Mamadsual v. Moson, 190 SCRA 82. 405 Maestrado v. CA, 327 SCRA 678, 689; also in Mamadsual v. Moson, supra. 406 Mamadsual v. Moson, supra. 407 124 SCRA 784 (1983).
400 401

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one who has an equitable right or interest in the property may also le an action to quiet title.408
[60.2.2] Cloud on Title

Equally important, an action for quieting of title is led only when there is a cloud on title to real property or any interest therein.409 As dened, a cloud on title is a semblance of title which appears in some legal form but which is in fact unfounded.410 In the case of Metropolitan Bank and Trust Company v. Alejo,411 the Supreme Court held that an action to quiet title is not an appropriate remedy there being no cloud on Metrobanks title. In this case, the Spouses Acampado were borrowers of Metrobank, for which reason they executed a real estate mortgage in favor of the bank as security for their mortgage indebtedness. The said mortgage was registered and annotated on the title of the property subject matter thereof. Subsequently thereafter, a third person led an action against the Spouses Acampado for declaration of the latters title, for which a favorable judgment was obtained by said third person. Despite being the registered mortgagee of the subject property, Metrobank was not notied of the existence of the said proceedings. Because of the failure of the Spouses Acampado to pay their mortgage obligation, Metrobank foreclosed the mortgage and when it was about to consolidate its ownership over the foreclosed property, it learned of the existence of the decision annulling the title of the Spouses Acampado. Upon such discovery, Metrobank led a petition for annulment of judgment before the Court of Appeals to declare the judgment of the Regional Trial Court null and void. However, the Court of Appeals dismissed the petition of Metrobank on the ground, among others, that the bank should have led a petition for relief from judgment or an action for quieting of title before the Regional Trial Court instead of the petition for annulment of judgment. On appeal, the Supreme Court held that an action to quite title is not an appropriate remedy in this situation. The Court explained Equally important, an action for quieting of title is led only when there is a cloud on title to real property or any
Mamadsual v. Moson, supra. MBTC v. Alejo, supra. 410 Id., citing II Tolentino, Civil Code, 1992 ed., 150. 411 Supra.
408 409

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interest therein. As dened, a cloud on title is a semblance of title which appears in some legal form but which is in fact unfounded. In this case, the subject judgment cannot be considered as a cloud on petitioners title or interest over the real property covered by TCT No. V-41319, which does not even have a semblance of being a title. It would not be proper to consider the subject judgment as a cloud that would warrant the ling of an action for quieting of title, because to do so would require the court hearing the action to modify or interfere with the judgment or order of another co-equal court. Well-entrenched in our jurisdiction is the doctrine that a court has no power to do so, as that action may lead to confusion and seriously hinder the administration of justice. Clearly, an action for quieting of title is not an appropriate remedy in this case. In ne, to avail of the remedy of quieting of title, a plaintiff must show that there is an instrument, record, claim, encumbrance or proceeding which constitutes or casts a cloud, doubt, question or shadow upon the owners title to or interest in real property.412 The ground or reason for ling a complaint for quieting of title must therefore be an instrument, record, claim, encumbrance or proceeding.413 Under the maxim expresio unius est exclusio alterius, these grounds are exclusive so that other reasons outside of the purview of these reasons may not be considered valid for the same action. Consequently, in the cases of Vda. de Aviles v. Court of Appeals, supra, and Titong v. Court of Appeals, supra, the Court held that an action for quieting of title may not be brought for the purpose of settling a boundary dispute. In Vda. de Aviles, the Court explained further From another perspective, we hold that the trial court (and likewise the respondent Court) cannot, in an action for quieting of title, order the determination of the boundaries of the claimed property, as that would be tantamount to awarding to one or some of the parties the disputed property in an

412 413

Vda. de Aviles v. CA, 264 SCRA 473; also in Titong v. CA, 278 SCRA 102. Titong v. CA, supra., citing Vda. de Aviles v. CA, supra.

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action where the sole issue is limited to whether the instrument, record, claim, encumbrance or proceeding involved constitutes a cloud upon the petitioners interest or title in and to said property. Such determination of boundaries is appropriate in adversarial proceedings where possession or ownership may properly be considered and where evidence aliunde, other than the instrument, record, claim, encumbrance or proceeding itself, may be introduced. An action for forcible entry, whenever warranted by the period prescribed in Rule 70, or for recovery of possession de facto, also within the prescribed period, may be availed of by the petitioners, in which proceeding the boundary dispute may be fully threshed out. The foregoing rule, however, is subject to qualication. As a general rule, a cloud which may be removed by suit to quiet title is not created by mere verbal or parol assertion of ownership of or an interest in property.414 Where there is a written or factual basis for the asserted right, the same will be sufcient.415 Thus, a claim of right based on acquisitive prescription or adverse possession has been held to constitute a removable cloud on title.416
[60.2.3] Deed, Claim, Etc. Must Be Invalid or Inoperative

Also, for an action for quieting of title to prosper the deed, claim, encumbrance or proceeding that is being alleged as a cloud on plaintiffs title must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal efcacy.417 This requirement is clear from the provision of Article 476.
[60.3] Prescription

In an action to quiet title, the plaintiff need not be in possession of the property.418 If the plaintiff in an action for quieting of title,

414 Tandog, et al. v. Macapagal, et al., G.R. No. 144208, Sep. 11, 2007; citing II Tolentino, Civil Code, 152. 415 Id. 416 Id. 417 Calacala, et al. v. Republic of the Philippines, supra. 418 Art. 477, NCC.

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however, is in possession of the property being litigated, the action is imprescriptible.419 The rationale for this rule has been aptly stated thus: The owner of real property who is in possession thereof may wait until his possession is invaded or his title is attacked before taking steps to vindicate his right. A person claiming title to real property, but not in possession thereof, must act afrmatively and within the time provided by the statute. Possession is a continuing right as is the right to defend such possession. So it has been determined that an owner of real property in possession has a continuing right to invoke a court of equity to remove a cloud that is a continuing menace to his title. Such a menace is compared to a continuing nuisance or trespass which is treated as successive nuisances or trespasses, not barred by statute until continued without interruption for a length of time sufcient to affect a change of title as a matter of law.420 The rule that the Statute of Limitations is not available as a defense to an action to remove a cloud from title can only be invoked by a complainant when he is in possession. One who claims property which is in the possession of another must, it seems, invoke his remedy within the statutory period.421 Even if the complaint of the plaintiff is captioned or denominated as one for Annulment of Title and/or Reconveyance422 or one to compel the defendant to execute a deed of conveyance423 but the averments therein show that plaintiff is claiming lawful ownership of the property, is in actual possession and seeks to remove a cloud over his title, the action is to be considered as an action for quieting of title or removal of a cloud over such title and as plaintiff is in possession of the land, the action is imprescriptible.424 It is a settled rule that it is not the caption of the pleading, but the allegations thereof that determines the nature of

419 Sapto v. Fabiana, 103 Phil. 683; Faja v. CA, 75 SCRA 441, 446 (1977); David v. Malay, 318 SCRA 711. 420 Pingol v. CA, 226 SCRA 118, 129-130; See also Faja v. CA, supra. 421 Mamadsual v. Moson, supra, 88. 422 See Chacon Enterprises v. CA, G.R. No. L-46418-19, Sept. 29, 1983. 423 See Gallar v. Husain, 20 SCRA 186. 424 Id.

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the action; that even without the prayer for a specic remedy, proper relief may nevertheless be granted by the court if the facts alleged in the complaint and the evidence introduced so warrant.425 Chapter 4 RUINOUS BUILDINGS AND TREES IN DANGER OF FALLING
Art. 482. If a building, wall, column, or any other construction is in danger of falling, the owner shall be obliged to demolish it or to execute the necessary work in order to prevent it from falling. If the proprietor does not comply with this obligation, the administrative authorities may order the demolition of the structure at the expense of the owner, or take measures to insure public safety. (389a) Art. 483. Whenever a large tree threatens to fall in such a way as to cause damage to the land or tenement of another or to travellers over a public or private road, the owner of the tree shall be obliged to fell and remove it; and should he not do so, it shall be done at his expense by order of the administrative authorities. (390a)

61. Ruinous Buildings and Falling Trees


[61.1] Exercise of Police Power

The provisions of Articles 482 and 483 are necessary consequences of the limitations inherent in the exercise of the right of ownership. As discussed in supra 37.3, every holder of property holds it under the implied liability that his use of it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community.426 As a consequence, if the property of a person poses danger to other people or their property, such as in the situations contemplated in Articles 482 and 483, the State may validly exercise its police power to prevent the occurrence of such injury.

Chacon Enterprises v. CA, supra, citing Ras v. Sua, L-23302, Sept. 25, 1968, 25 SCRA 153, 158-159, citing People v. Matondo, February 24, 1961; Cajefe v. Fernandez, Oct. 19, 1960; Rosales v. Reyes, 25 Phil. 495; Ibaez de Baranueva v. Fuster, 29 Phil. 606; Cabigao v. Lim, 50 Phil. 844. 426 Case v. Board of Health, 24 Phil. 250.
425

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[61.2] Obligations of Owners of Ruinous Buildings

Owners of buildings, walls, columns or other constructions in danger of falling are obliged to either demolish it or to execute the necessary work in order to prevent it from falling.427 If he does not comply with this obligation, the administrative authorities may order the demolition of the structure at his expense, or to take measures to insure public safety.428 Since this is an exercise of the police power of the State intended to secure public safety, the condemnation of the property is not compensable. As stated in supra 37.1.1, in police power, if property is condemned for the purpose of promoting the general welfare, the owner does not recover from the government for injury sustained in consequence thereof. Further, if by reason of lack of necessary repairs, a building or structure causes damage resulting from its total or partial collapse, the proprietor thereof shall be responsible for the damages.429 However, if the reason for the collapse should be any defect in the construction mentioned in Article 1723,430 the liability shall fall upon the engineer or architect or contractor in accordance with the said article, within the period therein xed.431
[61.3] Obligations of Owners of Falling Trees

Whenever a large tree threatens to fall in such a way as to cause damage to the land or tenement of another or to travellers over a public or private road, the owner of the tree shall be obliged to fell and remove it; and should he not do so, it should be done at his expense by order of the administrative authorities.432
Art. 482, par. 1, NCC. Art. 482, par. 2, NCC. 429 Art. 2190, NCC. 430 Art. 1723. The engineer or architect who drew up the plans and specications for a building is liable for damages if within fteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor. Acceptance of the building, after completion, does not imply waiver of any of the cause of action by reason of any defect mentioned in the preceding paragraph. The action must be brought within ten years following the collapse of the building. (n) 431 Art. 2192, NCC. 432 Art. 483, NCC.
427 428

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In paragraph 3 of Article 2191 of the New Civil Code, proprietors are liable for the falling of trees situated at or near highways or lanes, if the same is not caused by force majeure. Note, however, that if it is the tree contemplated under Article 483 which falls and causes damage to another, the owner thereof shall be deemed liable even if the reason for the fall be fortuitous event, such as typhoon or earthquake, because in this case the owner is already negligent for failing to take the necessary measures to insure public safety.
Capili v. Sps. Cardaa G.R. No. 157906, Nov. 2, 2006 On February 1, 1993, Jasmin Cardaa was walking along the perimeter fence of the San Roque Elementary School when a branch of a caimito tree located within the school premises fell on her, causing her instantaneous death. Her parents sued the principal of the school for damages. It turned out that as early as December 15, 1992, a resident of the barangay already reported to the said principal on the possible danger the tree posed to passersby but the latter did nothing. The Court, in this case, held the principal liable for damages because of her negligence. The Court explained: The probability that the branches of a dead and rotting tree could fall and harm someone is clearly a danger that is foreseeable. As the school principal, petitioner was tasked to see to the maintenance of the school grounds and safety of the children within the school and its premises. That she was unaware of the rotten state of a tree whose falling branch had caused the death of a child speaks ill of her discharge of the responsibility of her position.

oOo

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Title III. CO-OWNERSHIP


Art. 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. In default of contracts, or of special provisions, co-ownership shall be governed by the provisions of this Title. (392)

62. In General
[62.1] Denition

Sanchez Roman denes co-ownership as the right of common dominion which two or more persons have in a spiritual part of a thing, not materially or physically divided.1 Manresa, on the other hand, denes it as the manifestation of the private right of ownership, which instead of being exercised by the owner in an exclusive manner over the thing subject to it, it is exercised by two or more owners and the undivided thing or right to which it refers is one and the same.2
[62.2] Requisites of Co-ownership

There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons.3 Hence, in order that a coownership may exist the following requisites must concur:
[62.2.1] Plurality of Subjects

There must be plurality of subjects, who are the co-owners.4 The regime of co-ownership exists when ownership of an undivided thing or right belongs to different persons.5 Thus, co-ownership is a
1 3 Sanchez Roman 162, cited in Sanchez v. Court of Appeals, 404 SCRA 540, 547 (June 20, 2003). 2 3 Manresa 401, cited in Sanchez v. CA, supra, 547. 3 Art. 484, 1st par., NCC. 4 Sanchez v. Court of Appeals, supra, 547. 5 Vda. de Ape v. Court of Appeals, 456 SCRA 193, 2007 (2005), citing Felices v. Colegado, 35 SCRA 173.

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manifestation of the private right of dominion, where in lieu of its being exercised by the owner in an inclusive manner over things or rights, there are two or more owners.6
[62.2.2] Unity of the Object

There must be unity of the object (or material indivision), which means that there is a single object which is not materially divided, and which is the element which binds the subjects.7 The juridical concept of co-ownership is unity of the object or property and plurality of subjects.8 As a consequence, a co-owner of an undivided parcel of land is an owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract.9 Hence, each co-owner of property which is held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners.10 The underlying rationale is that until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his co-participants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.11 The foregoing being the case, there is no coownership when the different portions owned by different people are already concretely determined and separately identiable, even if not yet technically described.12
[62.2.3] Recognition of Ideal Share

There must be recognition of ideal shares, which determines the rights and obligations of the co-owners.13 It is a basic principle in civil law that before a property owned in common is actually partitioned, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire property.14
3 Manresa, 6th ed., 386. Sanchez v. Court of Appeals, supra, p. 547. 8 Gapacan v. Omipet, 387 SCRA 383. 9 De Guia v. Court of Appeals, 413 SCRA 114, 124, Oct. 8, 2003. 10 Alejandrino v. Court of Appeals, 295 SCRA 536, 548, Sept. 17, 1998. 11 Id., citing Aguilar v. Court of Appeals, 227 SCRA 472, 480, Oct. 29, 1993. 12 Si v. Court of Appeals, 342 SCRA 653, 661, Oct. 12, 2000, citing Dela Cruz v. Cruz, 32 SCRA 307, 311 (1970). 13 Sanchez v. Court of Appeals, supra, p. 547. 14 Engreso v. Court of Appeals, 401 SCRA 217, 220, April 9, 2003.
6 7

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[62.3] Dual Nature of Ownership in Co-Ownership

There are two kinds of ownership that exists in any co-ownership, as follows:
[62.3.1] Ownership Over the Ideal Share

There exists in favor of each co-owner a portion which is denite in amount but not physically and actually identied, the same being merely ideal.15 With respect to this ideal or abstract share, a co-owner exercises absolute ownership and he may, therefore, dispose of it in any manner he pleases.16 This is recognized in Article 493 of the Code which says that each co-owner shall have the full ownership of his part and of the fruits and benets pertaining thereto and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. x x x
[62.3.2] Joint Ownership Over the Whole

At the same time, each co-owner is also considered as the owner of the whole and over the whole he exercises the right of dominion.17 The underlying reason for this is that until a division is made, the respective share of each cannot be determined.18 However, with respect to the whole or the pro indiviso property, every co-owner exercises joint ownership together with his co-participants.19 For this reason, mutual respect is observed by the co-owners in regard to the use, enjoyment and preservation of the thing as a whole.20 This principle is recognized in Article 486 of the Code which says that each co-owner may use the thing owned in common, provided he does so in accordance with the purpose for which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights. xxx
[62.4] Effect of Division or Partition

The co-ownership exists so long as the property remains undivided. Once partition is effected or once the property is subdivided
3 Manresa, 6th ed., 344. Id. 17 De Guia v. Court of Appeals, supra, 124. 18 Alejandrino v. Court of Appeals, supra, 548. 19 Id. 20 3 Manresa, 6th ed., 344.
15 16

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and distributed among the co-owners, the co-ownership is terminated.21 Thus, there is no co-ownership when the different portions owned by different people are already concretely determined and separately identiable, even if not yet technically described.22 By way of illustration, the exercise of the right of legal redemption granted under Article 1620 of the Civil Code presupposes the existence of co-ownership at the time the conveyance is made by a co-owner and when it is demanded by the other co-owner or co-owners.23 Hence, where the property had already been partitioned judicially or extrajudicially24 or where the portion belonging to the parties has been identied and localized,25 the right of legal redemption cannot be invoked. [62.5] A Co-Owner Cannot Claim A Denite Portion

By the nature of co-ownership, a co-owner cannot point to specic portion of the property owned in common as his own because his share therein remains intangible.26 During the existence of the co-ownership, therefore, no co-owner can claim title to any denite portion of the community property until the partition thereof, and prior to the partition, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire land or thing.27 In Vda. de Cabrera v. Court of Appeals,28 however, the Supreme Court had the occasion to hold that where the transferees of an undivided portion of the land allowed a co-owner of the property to occupy a denite portion thereof, the possessor is in a better condition or right than said transferees. (Potior est condition possidentis). Such undisturbed possession, according to the Court, had the effect of a partial partition of the co-owned property which entitles the possessor to the denite portion which he occupies.

21 See Dela Cruz v. Cruz, 32 SCRA 307 (April 17, 1970); Umengan v. Butacan, 7 SCRA 311 (Feb. 28, 1963); Salatandol v. Retes, G.R. No. L-38120, June 28, 1988; Hernandez v. Quitain, 168 SCRA 92 (Nov. 29, 1988). 22 De Guia v. Court of Appeals, 413 SCRA 114, 124-125, Oct. 8, 2003, citing Si v. CA, 342 SCRA 653, Oct. 12, 2000. 23 Uy v. CA, 246 SCRA 703, 711, July 20, 1995. 24 Umengan v. Butacan, 7 SCRA 311, Feb. 28, 1963. 25 Salatandol v. Retes, 162 SCRA 568, June 28, 1988. 26 Vda. de Ape v. Court of Appeals, supra, 207. 27 City of Mandaluyong v. Aguilar, supra, p. 499. 28 267 SCRA 339, February 3, 1997; see also Del Campo v. Court of Appeals, 351 SCRA 1, February 1, 2001.

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Vda. de Cabrera v. Court of Appeals 267 SCRA 339, Feb. 3, 1997 The siblings Daniel, Albertana and Felicidad, all surnamed Teokemian, owned in common a parcel of land which they inherited from their father. On January 16, 1950, Daniel and Albertana, without the participation of Felicidad, executed a deed of sale in favor of Andres Orais, over a parcel of unregistered land with an area described as 7.3720 hectares. On January 26, 1950, the land was surveyed in the name of Virgilia Orais, daughter of Andres, and denominated as Lot No. 2239, PLS-287, Cateel Cadastre. As surveyed, it had an area of 11.1000 hectares. On June 24, 1957, Virgilia Orais was issued a free patent over the land. Thereafter, she was likewise issued an original certicate of title. Notwithstanding such sale and issuance of title in the name of Virgilia Orais, Felicidad Teokemian remained in possession of the one-third possession of the inherited property. She had been in possession of that portion since it was left to her by her father in 1941. On July 27, 1972, the one-third portion occupied by Felicidad Teokemian was sold to Elano Cabrera, husband of Felicidad Cabrera, who immediately took possession of the same. When Virgilia Orais learned that the Cabreras were occupying a portion of the subject property, the former led an action for quieting of title against Felicidad Cabrera, who was already a widow at that time. The Supreme Court held that the action led, which is actually for reconveyance, was already barred by laches considering that it was led only after thirty years from the time that the certicate of title was obtained in 1950. Responding to the contention raised by Virgilia Orais that laches does not apply since what was sold to the Cabreras was a denite portion of the community property, and, therefore, void, the Court held The argument that laches does not apply because what was sold to the Cabreras was a denite portion of the community property, and, therefore, void, is likewise untenable. Under Article 493 of the Civil Code: Each co-owner shall have the full ownership of his part and of the fruits and benets pertaining thereto, and even he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the coownership.

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In Go Ong v. Court of Appeals, this Court ruled that the heirs, as co-owners, shall each have the full ownership of his part and the fruits and benets pertaining to it. An heir may, therefore, alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. Undisputed is the fact that since the sale of the two-third portion of the subject property to the plaintiff, the latter had allowed Felicidad Teokemian to occupy that one-third portion allotted to her. There has, therefore, been a partial partition, where the transferees of an undivided portion of the land allowed a coowner of the property to occupy a denite portion thereof and has not disturbed the same, for a period too long to be ignored the possessor is in a better condition or right (Potior est conditio possidentis). Clearly, the plaintiff in this instance is barred from asserting her alleged right over the portion subject matter in the instant case on the ground that their right has been lost by laches. In BailonCasilao v. Court of Appeals, we ruled that: As early as 1923, this Court has ruled that even if a coowner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale (Punzalan v. Boon Liat, 44 Phil. 320 [1923]). This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the things owned in common (Ramirez v. Bautista, 14 Phil. 528 [1909]). xxx For Article 494 of the Civil Code explicitly declares: No prescription shall lie in favor of a co-owner or co-heir so long as he expressly or impliedly recognizes the co-ownership. [62.6] Distinguished From Partnership

Co-ownership does not of itself establish a partnership, whether such co-owners do or do not share any prots made by the use of the property.29 These two concepts are not identical and they may be distinguished from each other, as follows:

29

Art. 1769(2), NCC.

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(1) As to creation: Co-ownership may exist without the necessity of a contract. As will be discussed in infra 62.7, a co-ownership is created not only by reason of contracts. A partnership, on the other hand, requires the existence of a contract in order to arise. The denition by the Civil Code of a partnership refers to it as a contract.30 (2) As to personality: A co-ownership does not possess a juridical personality distinct from the co-owners. On the other hand, the partnership has a juridical personality separate and distinct from that of each of the partners.31 (3) As to purpose: In order to constitute a partnership, it is important that there must be an agreement to divide the prots among the partners.32 Hence, the idea of common prot that may be derived from the things or services contributed to the partnership is an essential feature thereof. This is absent, however, in co-ownership, which is only for the purpose of common enjoyment of the thing owned in common. (4) As to duration: In co-ownership, an agreement not to divide the property for more than ten (10) years is not valid with respect to the excess;33 whereas, in partnership there is no limit as to the time of its existence. (5) As to the effect of death: In co-ownership, the death of a coowner does not dissolve the co-ownership, but in partnership the death of a partner brings about the dissolution of the partnership.34 (6) As to the disposal of share: In co-ownership, a co-owner may freely dispose of his share35 but a partner has no power of disposal so as to make the buyer a partner unless agreed upon by all the other partners.36

30 Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the prots among themselves. Two or more persons may also form a partnership for the exercise of a profession. (1665a) 31 Art. 1768, NCC. 32 Art. 1767, NCC. 33 Art. 494, 2nd par., NCC. 34 Art. 1830(5), NCC. 35 Art. 493, NCC. 36 Art. 1813, NCC.

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(7) As to the power to act with third persons: In co-ownership, a co-owner does not represent the co-ownership but a partner usually represents the partnership and may bind the partnership.
[62.7] Sources of Co-ownership

Co-ownership may be created by any of the following causes: (1) By law: Examples: (a) Co-ownership will arise if by the will of their owners two things of the same kind or different kinds are mixed.37 Co-ownership will likewise arise if by the will of only one owner, but in good faith, two things of the same or different kinds are mixed or confused.38 When a man and woman who are capacitated to marry each other, live exclusively with each other as husband and wife without the benet of marriage or under a void marriage, the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.39 In cases of cohabitation not falling under Article 147 of the Family Code, only the properties acquired by both of the parties though their actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions.40

(b)

(2) By contract: An agreement to keep the thing undivided for a certain period, not exceeding ten years, shall be valid. This term may be extended by a new agreement.41 (3) By succession: Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased.42 The testator may

Art. 472, NCC. Art. 473, NCC. 39 Art. 147, Family Code of the Philippines. 40 Art. 148, Family Code of the Philippines. 41 Art. 494, 2nd par., NCC. 42 Art. 1078, NCC.
37 38

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likewise prohibit the partition of the estate among the heirs for a period not to exceed twenty (20) years.43 (4) By fortuitous event or chance: Co-ownership will arise if two things of the same kind or different kinds are mixed by chance and the things are not separable without injury.44 (5) By occupancy: As when two or more persons catch a wild pig or get forest products45 or when a hidden treasure is accidentally discovered by a stranger, who is not a trespasser, on the land of another.46
[62.8] Rules Governing Co-Ownership

The rules that shall govern a particular co-ownership will depend on the source thereof, as follows:
[62.8.1] Contract

If the source of co-ownership is a contract, such co-ownership is to be governed primarily by the contract between the parties and, in default thereof, by the provisions of Articles 484 to 501 of the New Civil Code.47
[62.8.2] Special Provisions of Law

If the co-ownership is governed by special provisions of law, such provisions shall primarily govern the co-ownership while the provisions of Articles 484 to 501 shall be applied only in a suppletory character.48 In the property regime known as the absolute community, for example, the spouses are considered co-owners of all property brought into and acquired during the marriage which are not otherwise excluded from the community property either by the provisions of the Family Code or by the marriage settlement.49 If the regime of absolute community applies to the spouses by default pursuant to the provisions of Article 75 of the Family Code, then the provisions of the Family Code on absolute
Art. 1083, NCC. Art. 472, NCC. 45 Punzalan v. Boon Liat, 44 Phil. 320. 46 Art. 438, 2nd par., NCC. 47 See Art. 484, 2nd par., NCC. 48 Art. 484, 2nd par., NCC. 49 See Rabuya, The Law on Persons and Family Relations, 2006 ed., 421.
43 44

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community shall primarily govern50 and the provisions of the Civil Code on co-ownership shall apply in a suppletory manner.51 The applicability of the provisions of the Civil Code on co-ownership to the regime of absolute community is recognition that this regime is a special kind of co-ownership.52 Under the provisions of the Civil Code on co-ownership, it is provided that if the co-ownership is created by law, such kind of coownership shall be governed primarily by the special provisions of law creating it and the provisions of the Civil Code on co-ownership shall only apply in a suppletory manner.53
Art. 485. The share of the co-owners, in the benets as well as in the charges, shall be proportional to their respective interests. Any stipulation in a contract to the contrary shall be void. The portions belonging to the co-owners in the co-ownership shall be presumed equal, unless the contrary is proved. (393a)

63. Share in Benets and Charges


[63.1] Determining the Ideal Share of Each Co-Owner

The share of each co-owner in the co-ownership is that provided for in the law governing such kind of co-ownership. For example, in confusion or commixtion that occurs through chance or through the will of one of the parties acting in good faith, the share of each co-owner is in proportion to the part belonging to him, bearing in mind the value of the things mixed or confused.54 Also, the share of the nder, who is not a trespasser, and the owner of the property where the hidden treasure is found by chance, is provided for by law, in that, each shall be entitled to one-half of such treasure.55 If the source of co-ownership, however, is contract, the share of the co-owner in the thing itself may depend on their agreement and, in default thereof, it is presumed to be equal in the absence of proof to the contrary.56 To illustrate: Pedro, Juan and Jose decide to buy a house
Id., 422, citing Art. 74(2), Family Code. Id., 422, citing Art. 90, Family Code. 52 Id., 422. 53 Id., 422, citing Art. 484, 2nd par., NCC. 54 Arts. 472 and 473, NCC. 55 Art. 438, 2nd par., NCC. 56 Art. 485, 2nd par., NCC; see also Lavadia v. Cosme, 72 Phil. 196.
50 51

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and lot in the amount of P900,000.00. They may agree in any manner as to how much each shall contribute. They may agree, for example, that Pedro shall contribute P450,000 (50%), Juan P225,000 (25%) and Jose P225,000 (25%). Notwithstanding such manner of contribution, the parties may nonetheless agree that their respective share in the coownership shall be equal. In the absent of such contrary agreement, it is understood that the share of each co-owner shall be in proportion to their respective contributions. The presumption of equal sharing does not apply in this case since there is proof to the contrary.
[63.2] Determining the Share In Benets and Charges

The Civil Code declares that the share of the co-owners, in the benets as well as in the charges, shall be proportional to their respective interests in the co-ownership.57 In the above example, if the co-owners have agreed that their share in the co-ownership shall be in proportion to their respective contributions, then all benets and charges shall likewise be divided among them in proportion to their share in the capital. Thus, if they will earn monthly rental income in the amount of P30,000 from the co-owned property, Pedro shall be entitled to P15,000 (50%), Juan P7,500 (25%) and Jose P75,000 (25%). In the same way, if they will incur real estate tax obligation in the sum of P9,000, Pedro will have to shoulder P4,500 (50%), Juan P2,250 (25%) and Jose P2,250 (25%).
[63.3] Any Stipulation To The Contrary Is Void

As discussed earlier, the share of each co-owner in the benets as well as in the charges should be proportional to their respective interests in the co-ownership. The Civil Code further declares that any stipulation to the contrary shall be void.58 Thus, in the above example, Pedro, Juan and Jose may not agree that they shall share equally in the rental income and in the payment of the real estate tax. Such agreement is void.
Art. 486. Each co-owner may use the thing owned in common, provided he does so in accordance with the purpose for which it is intended

57 58

Art. 485, 1st par., NCC. Id.

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and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according to their rights. The purpose of the co-ownership may be changed by agreement, express or implied. (394a)

64. Right Over the Entire Property


[64.1] Nature of Co-Owners Right Over the Entire Thing or Right

A co-owner of an undivided thing or right is an owner of the whole and over the whole he exercises the right of dominion.59 However, with respect to the whole, a co-owner exercises, together with his coparticipants (or co-owners) joint ownership over the co-owned property, the reason being that until a division is made, the respective share of each cannot as yet be determined.60 As a consequence, each co-owner has the right to make use of the entire thing owned in common61 subject to the limitations provided for in Article 486 of the Civil Code. Thus, the right of enjoyment by each co-owner is limited by a similar right of the other co-owners.62
[64.2] Use of the Thing Owned in Common

A co-owner may use the entire thing so long as the use is in accordance with the purpose for which it is intended and in a manner not injurious to the interest of the other co-owners.63 Each co-owner of property held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners, the reason being that until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his co-participants joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.64

De Guia v. CA, 413 SCRA 114, 124 (2003). Aguilar v. CA, 227 SCRA 473, 480 (1993). 61 Art. 486, NCC. 62 De Guia v. CA, supra, p. 127. 63 Art. 486, NCC. 64 Aguilar v. CA, 227 SCRA 473, 480, Oct. 29, 1993, citing Pardell v. Matilde, 23 Phil. 450
59 60

(1912).

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PROPERTY

Pardell v. Bartolome 23 Phil. 450 (1912) In this case, the sisters Matilde and Vicenta Ortiz (plaintiff) were coowners of a two-storey house designed as a dwelling. Matilde (defendant) and her husband occupied the upper oor as their dwelling. The husband also occupied the upper oor on the ground oor as an ofce while the other rooms were rented as stores. Meanwhile, plaintiff and her husband were living abroad and upon their return an accounting of rents was made to them. The question arose as to whether or not defendants should pay rent for the upper oor occupied by them as well as that portion occupied by the husband. Ruling: With regard to that part occupied by Matilde as dwelling, no rental can be collected inasmuch as she, being the co-owner, is entitled to use the same. With respect, however, to that portion occupied by the husband, Bartolome, the latter must pay one-half of the rentals which said quarters could and should have produced had they have been rented to strangers, inasmuch as he is not a co-owner of the property. [64.3] Limitations on the Right to Use

Although each co-owner is the owner of the whole thing prior to partition and may make use of the entire thing, such use is, however, subject to the following limitations: (1) such use must be in accordance with the purpose for which the thing is intended; (2) such use must be without prejudice to the rights of the other co-owners; and (3) such use must not be in a manner as to prevent the other co-owners from using the thing according to their own right.65 The right of enjoyment by each co-owner is limited by a similar right of the other co-owners. Thus, a co-owner cannot devote common property to his exclusive use to the prejudice of the co-ownership.66 Hence, if the subject is a residential house, all the co-owners may live there with their respective families to the extent possible. However, if one co-owner alone occupies the entire house without opposition from the other co-owners, and there is no lease agreement, the other coowners cannot demand the payment of rent.67 Conversely, if there is an

Art. 486, NCC. De Guia v. Court of Appeals, 413 SCRA 114, 127, Oct. 8, 2003, citing Tolentino, Civil Code of the Philippines, Vol. II, 1992 ed. 67 Id.
65 66

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agreement to lease the house, the co-owners can demand rent from the co-owner who dwells in the house.68 The co-owners can either exercise an equal right to live in the house, or agree to lease it. If they fail to exercise any of these options, they must bear the consequences. It would be unjust to require the coowner to pay rent after the co-owners by their silence have allowed him to use the property.69 In case the co-owners agree to lease a building owned in common, a co-owner cannot retain it for his use without paying the proper rent.70 Moreover, where part of the property is occupied exclusively by some co-owners for the exploitation of an industry, the other co-owners become co-participants in the accessions of the property and should share in its net prots.71
Aguilar v. Court of Appeals 227 SCRA 473 (1993) In this case, the brothers Virgilio and Senen Aguilar purchased a house and lot in 1968 for the use of their father. The brothers agreed that Senen (respondent) shall assume the remaining obligation of the original owners with the Social Security System in exchange for his possession and enjoyment of the house together with their father. Since Virgilio (petitioner) was then disqualied from obtaining a loan from SSS, the brothers agreed that the deed of sale would be executed and the title registered in the meantime in the name of Senen. After their father died in 1974, Virgilio demanded from Senen that the latter vacate the house and that the property be sold and the proceeds thereof divided among them. Because of the refusal of Senen to give in to Virgilios demands, the latter led in 1979 an action to compel the sale of the co-owned property so that they could divide the proceeds between them. A question arose as to whether or not Senen should pay rent from the time their father died in 1975. The Supreme Court held We uphold the trial court in ruling in favor of petitioner, except as to the effectivity of the payment of monthly rentals by respondent as co-owner which we here declare to commence only after the trial court ordered respondent to vacate in accordance with its order of 26 July 1979.
Id. Id., p. 128, citing Tolentino, Civil Code of the Philippines, Vol. II, 1992 ed. 70 Id. 71 Id.
68 69

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Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the co-ownership, and that each co-owner may demand at any time partition of the thing owned in common insofar as his share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever the thing is essentially, indivisible and the co-owners cannot agree that it be, allotted to one of them who shall indemnify the others, it shall be sold and its proceeds accordingly distributed. This is resorted to (a) when the right to partition the property is invoked by any of the co-owners but because of the nature of the property it cannot be subdivided or its subdivision would prejudice the interests of the co-owners, and (b) the co-owners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement of the co-owners. In one case, this Court upheld the order of the trial court directing the holding of a public sale of the properties owned in common pursuant to Art. 498 of the Civil Code. However, being a co-owner respondent has the right to use the house and lot without paying any compensation to petitioner, as he may use the property owned in common so long as it is in accordance with the purpose for which it is intended and in a manner not injurious to the interest of the other co-owners. Each co-owner of property held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners, the reason being that until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his co-participants joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same. Since petitioner has decided to enforce his right in court to end the co-ownership of the house and lot and respondent has not refuted the allegation that he has been preventing the sale of the property by his continued occupancy of the premises, justice and equity demand that respondent and his family vacate the property so that the sale can be effected immediately. In fairness to petitioner, respondent should pay a rental of P1,200.00 per month, with legal interest; from the time the trial court ordered him to vacate, for the use and enjoyment of the other half of the property appertaining to petitioner. When petitioner led an action to compel the sale of the property and the trial court granted the petition and ordered the ejectment of respondent, the co-ownership was deemed terminated

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and the right to enjoy the possession jointly also ceased. Thereafter, the continued stay of respondent and his family in the house prejudiced the interest of petitioner as the property should have been sold and the proceeds divided equally between them. To this extent and from then on, respondent should be held liable for monthly rentals until he and his family vacate. De Guia v. Court of Appeals 413 SCRA 114 (2003) The subject of the dispute in this case are two undivided parcels of land used as a shpond situated in Meycauayan, Bulacan. The property is registered under the names of Primitiva Lejano and Lorenza Araniego under TCT No. 6358 of the Bulacan Register of Deeds, as follows: Primitiva Lejano (1/2 share) and Lorenza Araniego (1/2 share). The 1/2 undivided share of Lorenza Araniego Abejo was acquired by her sole heir, Teolo Abejo, through intestate succession. Teolo Abejo, in turn, sold this 1/2 undivided share to his son, Jose Abejo, on November 22, 1983. The 1/2 undivided share of Primitiva Lejano, on the other hand, was passed on to her heirs. Prior to the sale in favor of Jose Abejo, the heirs of Primitiva Lejano entered into a lease contract with Manuel De Guia in 1974 over the entire shpond, with the knowledge and consent of Teolo Abejo. The lease contract was effective from 1974 to November 30, 1979. Subsequently, De Guia acquired the 1/2 undivided share of the heirs of Primitiva Lejano. Thus, after the expiration of the lease contract in 1979, De Guia remained in possession of the entire shpond. On November 27, 1983, Jose Abejo demanded from De Guia that the latter vacate the shpond and pay the back rentals. When De Guia refused, Abejo instituted on May 12, 1986 an action for recovery of possession with damages against De Guia. After trial, the trial court ruled that Abejo has the right to demand that De Guia vacate and surrender an area equivalent to Abejos undivided share in the shpond. The trial court likewise ruled that pending partition, De Guia should pay a reasonable amount as rental for the use of Abejos share in the shpond. Not satised with the decision of the trial court, De Guia led an appeal before the Court of Appeals. The Court of Appeals, however, sustained the decision of the trial court. Thus, De Guia led his appeal before the Supreme Court. In his appeal, De Guia contends, among others, that the trial and appellate courts erred when they ordered the recovery of rent when the exact identity of the portion in question had not yet been clearly dened and delineated. He contends that an order to pay damages in the form of rent is premature before partition. In denying his contention, the Supreme Court explained

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The right of enjoyment by each co-owner is limited by a similar right of the other co-owners. A co-owner cannot devote common property to his exclusive use to the prejudice of the coownership. Hence, if the subject is a residential house, all the coowners may live there with their respective families to the extent possible. However, if one co-owner alone occupies the entire house without opposition from the other co-owners, and there is no lease agreement, the other co-owners cannot demand the payment of rent. Conversely, if there is an agreement to lease the house, the co-owners can demand rent from the co-owner who dwells in the house. The co-owners can either exercise an equal right to live in the house, or agree to lease it. If they fail to exercise any of these options, they must bear the consequences. It would be unjust to require the co-owner to pay rent after the co-owners by their silence have allowed him to use the property. In case the co-owners agree to lease a building owned in common, a co-owner cannot retain it for his use without paying the proper rent. Moreover, where part of the property is occupied exclusively by some co-owners for the exploitation of an industry, the other co-owners become co-participants in the accessions of the property and should share in its net prots. The Lejano Heirs and Teolo Abejo agreed to lease the entire FISHPOND to DE GUIA. After DE GUIAs lease expired in 1979, he could no longer use the entire FISHPOND without paying rent. To allow DE GUIA to continue using the entire FISHPOND without paying rent would prejudice ABEJOs right to receive rent, which would have accrued to his 1/2 share in the FISHPOND had it been leased to others. Since ABEJO acquired his 1/2 undivided share in the FISHPOND on 22 November 1983, DE GUIA should pay ABEJO reasonable rent for his possession and use of ABEJOs portion beginning from that date. The compensatory damages of P25,000 per year awarded to ABEJO is the fair rental value or the reasonable compensation for the use and occupation of the leased property, considering the circumstances at that time. DE GUIA shall continue to pay ABEJO a yearly rent of P25,000 corresponding to ABEJOs 1/2 undivided share in the FISHPOND. However, ABEJO has the option either to exercise an equal right to occupy the FISHPOND, or to le a new petition before the trial court to x a new rental rate in view of changed circumstances in the last 20 years.

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ABEJO made an extrajudicial demand on DE GUIA by sending the 27 November 1983 demand letter. Thus, the rent in arrears should earn interest at 6% per annum from 27 November 1983 until nality of this decision pursuant to Article 2209 of the Civil Code. Thereafter, the interest rate is 12% per annum from nality of this decision until full payment. [64.4] Determining the Purpose

To determine the purpose for which the property held in common is intended the agreement, express or implied, of the parties will rst govern. In default of such an agreement, it is understood that the thing is intended for that use for which it is ordinarily adapted according to its nature.72 Thus, if the co-owners of a residential house agree that it shall be used as a warehouse then each co-owner must use it only for that purpose but, if there is no purpose agreed upon, then such house may be used according to its nature and that is for dwelling purposes.
Art. 487. Any one of the co-owners may bring an action in ejectment. (n)

65. Action in Ejectment


[65.1] Scope of Term Ejectment

Article 487 of the New Civil Code provides that anyone of the co-owners of an immovable may bring an action in ejectment. A coowner may thus bring an ejectment action without joining the other co-owners, the suit being deemed instituted for the benet of all.73 And the term, action in ejectment, not only includes a suit of forcible entry (detentacion) or unlawful detainer (desahucio),74 but all kinds of actions for the recovery of possession, including an accion publiciana and a reinvindicatory action.75

3 Manresa, 6th ed., 424. Sering v. Plazo, 166 SCRA 84, 85 (1988), citing Tolentino, Civil Code, 1983 ed., Vol. II, p. 157. 74 Id. 75 See De Guia v. Court of Appeals, 413 SCRA 114, 125 (2003); Baloloy v. Hular, 438 SCRA 80, Sep. 9, 2004; and Adlawan v. Adlawan, 479 SCRA 275, Jan. 20, 2006.
72 73

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[65.2] Action Must Be Instituted For All

However, if the action is for the benet of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other co-owners who are indispensable parties.76 As noted by Former Supreme Court Associate Justice Edgrado L. Paras [i]t is understood, of course, that the action [under Article 487 of the Civil Code] is being instituted for all. Hence, if the co-owner expressly states that he is bringing the case only for himself, the action should not be allowed to prosper.77 In Baloloy v. Hular,78 for example, the respondent therein led a complaint for quieting of title claiming exclusive ownership of the property, but the evidence showed that respondent has co-owners over the property. In dismissing the complaint for want of respondents authority to le the case, the Supreme Court held that Under Article 487 of the New Civil Code, any of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession, including an accion publiciana and a reinvidicatory action. A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benet of all. Any judgment of the court in favor of the co-owner will benet the others but if such judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners. If the action is for the benet of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other coowners who are indispensable parties. In this case, the respondent alone led the complaint, claiming sole ownership over the subject property and praying that he be declared the sole owner thereof. There is no proof that the other co-owners had waived their rights over the subject property or conveyed the same to the respondent or
Baloloy v. Hular, supra, 91; also in Adlawan v. Adlawan, supra. Paras, Civil Code of the Philippines Annotated, Vol. II, 1999 ed., p. 294, cited in Adlawan v. Adlawan, supra, 286. 78 Supra.
76 77

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such co-owners were aware of the case in the trial court. The trial court rendered judgment declaring the respondent as the sole owner of the property and entitled to its possession, to the prejudice of the latters siblings. Patently then, the decision of the trial court is erroneous. Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his siblings, being coowners of the property, as parties. The respondent failed to comply with the rule. It must, likewise, be stressed that the Republic of the Philippines is also an indispensable party as defendant because the respondent sought the nullication of OCT No. P-16540 which was issued based on Free Patent No. 384019. Unless the State is impleaded as partydefendant, any decision of the Court would not be binding on it. It has been held that the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the ling of the complaint including the judgment. The absence of the respondents siblings, as parties, rendered all proceedings subsequent to the ling thereof, including the judgment of the court, ineffective for want of authority to act, not only as to the absent parties but even as to those present.79 In Adlawan v. Adlawan,80 the Court likewise sustained the dismissal of the complaint for ejectment on the ground that the suit was brought in the name of the plaintiff alone and for his own benet to the exclusion of the other co-owners. In fact, the plaintiff therein did not recognize the co-ownership and, in fact, vigorously asserted absolute and sole ownership of the questioned lot. The Adlawan and Baloloy cases must therefore be distinguished from other cases where the Court upheld the right of a co-owner to le a suit pursuant to Article 487 of the Civil Code. In Resuena v. Court of Appeals,81 and Sering v. Plazo,82 for example, the co-owners who led the ejectment case did not represent themselves as the exclusive owner
At pp. 90-92. Supra. 81 454 SCRA 42 (2005). 82 Supra.
79 80

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of the property. In Celino v. Heirs of Alejo and Teresa Santiago,83 the complaint for quieting of title was brought in behalf of the co-owners precisely to recover lots owned in common. Similarly in Vencilao v. Camarenta,84 the amended complaint specied that the plaintiff is one of the heirs who co-owns the controverted properties. In all these cases, the plaintiff never disputed the existence of a co-ownership nor claimed to be the sole or exclusive owner of the litigated lot. Thus, a favorable decision therein would of course inure to the benet not only of the plaintiff but to his co-owners as well.
[65.3] Action Available Even Against A Co-Owner

Any co-owner may le an action under Article 487 not only against a third person, but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property.85 In the latter case, however, the only purpose of the action is to obtain recognition of the co-ownership.86 The plaintiff cannot seek exclusion of the defendant from the property because as co-owner he has a right of possession.87 In other words, the plaintiff cannot recover any material or determinate part of the property.88 This is based on the principle that a co-owner has no right to demand a concrete, specic or determinate part of the thing owned in common because until division is effected his right over the thing is represented only by an ideal portion.89 Such being the case, the court cannot, in the action led by a co-owner against another co-owner under Article 487, proceed with the actual partitioning of the co-owned property.90 Judicial or extra-judicial partition is still necessary to effect such physical division.91

435 SCRA 690 (2004). 140 Phil. 99. 85 De Guia v. Court of Appeals, supra, 125, citing Arturo M. Tolentino, Civil Code of the Philippines, Vol. II, 1992 Ed. See also Engreso v. Dela Cruz, 401 SCRA 217 (2003). 86 Id. 87 Id. 88 Id. 89 Engreso v. Dela Cruz, 401 SCRA 217 (2003). 90 De Guia v. Court of Appeals, supra. 91 Id.
83 84

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De Guia v. Court of Appeals 413 SCRA 114 (Oct. 8, 2003) The subject of the dispute in this case are two undivided parcels of land used as a shpond situated in Meycauayan, Bulacan. The property is registered under the names of Primitiva Lejano and Lorenza Araniego under TCT No. 6358 of the Bulacan Register of Deeds, as follows: Primitiva Lejano (1/2 share) and Lorenza Araniego (1/2 share). The 1/2 undivided share of Lorenza Araniego Abejo was acquired by her sole heir, Teolo Abejo, through intestate succession. Teolo Abejo, in turn, sold this 1/2 undivided share to his son, Jose Abejo, on November 22, 1983. The 1/2 undivided share of Primitiva Lejano, on the other hand, was passed on to her heirs. Prior to the sale in favor of Jose Abejo, the heirs of Primitiva Lejano entered into a lease contract with Manuel De Guia in 1974 over the entire shpond, with the knowledge and consent of Teolo Abejo. The lease contract was effective from 1974 to November 30, 1979. Subsequently, De Guia acquired the 1/2 undivided share of the heirs of Primitiva Lejano. Thus, after the expiration of the lease contract in 1979, De Guia remained in possession of the entire shpond. On November 27, 1983, Jose Abejo demanded from De Guia that the latter vacate the shpond and pay the back rentals. When De Guia refused, Abejo instituted on May 12, 1986 an action for recovery of possession with damages against De Guia. After trial, the trial court ruled that Abejo has the right to demand that De Guia vacate and surrender an area equivalent to Abejos 1/2 undivided share in the shpond. The trial court likewise ruled that pending partition, De Guia should pay a reasonable amount as rental for the use of Abejos share in the shpond. Not satised with the decision of the trial court, De Guia led an appeal before the Court of Appeals. The Court of Appeals, however, sustained the decision of the trial court. Thus, De Guia led his appeal before the Supreme Court. In his appeal, De Guia contends, among others, that a co-owner cannot claim a denite portion from the property owned in common until there is a partition. De Guia argues that Abejo should have led an action for partition instead of recovery of possession since the court cannot implement any decision in the latter case without rst a partition. Finding merit in this argument, the Supreme Court ruled, as follows: Article 487 of the Civil Code provides, [a]ny one of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion). The summary actions of forcible entry and unlawful detainer seek the recovery of physical

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possession only. These actions are brought before municipal trial courts within one year from dispossession. However, accion publiciana, which is a plenary action for recovery of the right to possess, falls under the jurisdiction of the proper regional trial court when the dispossession has lasted for more than one year. Accion de reivindicacion, which seeks the recovery of ownership, also falls under the jurisdiction of the proper regional trial court. Any co-owner may le an action under Article 487 not only against a third person, but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property. In the latter case, however, the only purpose of the action is to obtain recognition of the co-ownership. The plaintiff cannot seek exclusion of the defendant from the property because as coowner he has a right of possession. The plaintiff cannot recover any material or determinate part of the property. In Hermogena G. Engreso with Spouse Jose Engreso v. Nestoria De la Cruz and Herminio De La Cruz (401 SCRA 217), we reiterated the rule that a co-owner cannot recover a material or determinate part of a common property prior to partition as follows: It is a basic principle in civil law that before a property owned in common is actually partitioned, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire property. A coowner has no right to demand a concrete, specic or determinate part of the thing owned in common because until division is effected his right over the thing is represented only by an ideal portion. As such, the only effect of an action brought by a co-owner against a co-owner will be to obtain recognition of the co-ownership; the defendant cannot be excluded from a specic portion of the property because as a co-owner he has a right to possess and the plaintiff cannot recover any material or determinate part of the property. Thus, the courts a quo erred when they ordered the delivery of one-half (1/2) of the building in favor of private respondent. Indisputably, DE GUIA has been in exclusive possession of the entire FISHPOND since July 1974. Initially, DE GUIA disputed ABEJOs claim of ownership over the 1/2 undivided portion of the FISHPOND. Subsequently, he implicitly recognized ABEJOs 1/2

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undivided share by offering to settle the case for P300,000 and to vacate the property. During the trial proper, neither DE GUIA nor ABEJO asserted or manifested a claim of absolute and exclusive ownership over the entire FISHPOND. Before this Court, DE GUIA limits the issues to the propriety of bringing an action for recovery of possession and the recovery of compensatory damages. Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have equal shares in the FISHPOND quantitatively speaking, they have the same right in a qualitative sense as co-owners. Simply stated, ABEJO and DE GUIA are owners of the whole and over the whole, they exercise the right of dominion. However, they are at the same time individual owners of a 1/2 portion, which is truly abstract because until there is partition, such portion remains indeterminate or unidentied. As co-owners, ABEJO and DE GUIA may jointly exercise the right of dominion over the entire FISHPOND until they partition the FISHPOND by identifying or segregating their respective portions. Since a co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition is the proper recourse. An action to demand partition is imprescriptible and not subject to laches. Each co-owner may demand at any time the partition of the common property unless a co-owner has repudiated the coownership under certain conditions. Neither ABEJO nor DE GUIA has repudiated the co-ownership under the conditions set by law. To recapitulate, we rule that a co-owner may le an action for recovery of possession against a co-owner who takes exclusive possession of the entire co-owned property. However, the only effect of such action is a recognition of the co-ownership. The courts cannot proceed with the actual partitioning of the co-owned property. Thus, judicial or extra-judicial partition is necessary to effect physical division of the FISHPOND between ABEJO and DE GUIA. An action for partition is also the proper forum for accounting the prots received by DE GUIA from the FISHPOND. However, as a necessary consequence of such recognition, ABEJO shall exercise an equal right to possess, use and enjoy the entire FISHPOND. [65.4] Effect of Judgment Upon the Other Co-Owners

While a co-owner may bring an action in ejectment under Article 487 without the necessity of joining all the other co-owners as co-

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plaintiffs because the suit is deemed to be instituted for the benet of all, any adverse judgment cannot prejudice the rights of the unimpleaded co-owners.92 However, any judgment of the court in favor of the coowner will benet the others.93
Art. 488. Each co-owner shall have a right to compel the other coowners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. (395a) Art. 489. Repairs for preservation may be made at the will of one of the co-owners, but he must, if practicable, rst notify his co-owners of the necessity for such repairs. Expenses to improve or embellish the thing shall be decided upon by a majority as determined in Article 492. (n)

66. Expenses for Preservation


[66.1] Right To Demand Contribution

The law grants each co-owner the right to demand contribution from the other co-owners for any and all expenses he incurred for the purpose of preserving the thing or right owned in common,94 even if the repairs for preservation were made without the consent of the other coowners. Note that under Article 489, a co-owner who desires to make the necessary repairs is not required to secure the consent of all the coowners. What the law requires is that he must, if practicable, notify the other co-owners of the necessity of such repair prior to undertaking the same. Consequently, any opposition on the part of the other co-owners for the making of such necessary repairs does not deprive the co-owner who made the advances from demanding contributions from the other co-owners. Note that under the law,95 repairs for preservation may be made at the will of only one of the co-owners.
[66.2] When Notice Required

As stated earlier, what the law requires prior to the undertaking of any repair on the property owned in common for the purpose of
Baloloy v. Hular, supra; see also Resuena v. Court of Appeals, supra. Id. 94 Art. 488, NCC. 95 Art. 489, NCC.
92 93

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preserving it is mere notice to the other co-owners of the necessity of such repair. In other words, a co-owner who desires to undertake such repair is not required to secure the consent of the other co-owners. The giving of notice, however, is required only if the same is practicable given the circumstances by which the repair is to be undertaken. Hence, if the repairs are urgent and any delay will be detrimental to the interest of the co-ownership, prior notication is no longer necessary and a coowner may already undertake such repairs without need of giving prior notice to the other co-owners.
[66.3] Effect of Failure to Comply With the Notice Requirement

If the giving of notice is practicable and the co-owner who undertook the repair for preservation failed to previously notify the other co-owners of the necessity of such repair, will the absence of such notice deprive him of the right to demand contribution from the other co-owners for the expenses he incurred? According to Senator Tolentino,96 such failure does not deprive the co-owner who incurred the expenses of the right to recover the proportionate shares of the other co-owners in the expenses. The only effect of such failure is to place upon the co-owner who incurred the expenses the burden of proving the necessity of the repairs and the reasonableness of the expenses.
[66.4] Renunciation By A Co-Owner

While the other co-owners can be compelled to contribute proportionately to the expenses incurred for the purpose of preserving the thing or right owned in common, they are given by law97 an option of renouncing so much of (their) undivided interest as may be equivalent to (their) share of the expenses and taxes, in lieu of paying their proportionate contribution to such expenses. For example, A, B and C are co-owners of a car valued at P300,000.00. Assuming that A had the car repaired for the purpose of preserving it and incurred the sum of P30,000.00 in the process. Assuming that the interest of the three in the co-ownership is equal (or P100,000.00 each), B and C is required to contribute P10,000.00 each to the expenses so incurred. If B, for example, does not want to shell
96 97

II Tolentino, Civil Code, 1992 ed., 178-179. Art. 488, NCC.

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out P10,000.00 and opts, instead, to renounce so much of his undivided interest as may be equivalent to his share of the expenses, he is required to renounce 1/10 of his share in favor of the co-owner who incurred the expenses.
[66.5] Requirement of Consent in Renunciation

Under Article 488, renunciation is an option that belongs to a coowner who may be compelled to contribute to the expenses incurred for the purpose of preserving the property owned in common. Hence, such option may not be compelled by the co-owner who made the advances if another co-owner refuses to pay his share in the expenses. In such a situation, the remedy of the co-owner who made the advances is an ordinary action for collection of sum of money. If the non-paying coowner, however, chooses to exercise the option of renunciation, can he compel the co-owner who made the advances to accept the same? Stated otherwise, is the consent of the co-owner who made the advances necessary for the renunciation to be considered effective? From the language of Article 488, it appears that the consent of the co-owner who made the advances is not required when a co-owner opts to renounce, in lieu of paying his share in the expenses. Note that the law gives such option only to the co-owner who may be compelled to contribute to such expenses without requiring the consent of the coowner who made the advances. Senator Tolentino98 and Justice J.B.L. Reyes99 consider this, however, as a juridical error. According to these two eminent civilists, since the renunciation is intended as payment for expenses already made, it is in the nature of dation in payment and should, therefore, require the consent of the creditor, i.e., the co-owner who made the advances.
[66.6] Limitation on the Exercise of the Option of Renunciation

Article 488 prohibits the exercise of the option of renunciation if it is prejudicial to the interest of the co-ownership. For example, if A, B and C are co-owners of a property which is in need of immediate repairs for preservation but the amount thereof is more than A and B, together,

98 99

II Tolentino, Civil Code, 1992 ed., 173-176. Lawyers Journal, October 31, 1950, pp. 499-500.

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can sustain, the law will not allow C to opt for renunciation, in lieu of his contribution to the expenses.100 Such waiver is not allowed because it will be prejudicial to the interest of the co-ownership.101
[66.7] Includes Payment of Taxes

Under Article 488, the expenses for the preservation of the thing include payment of taxes due on the property owned in common, i.e., real estate tax on the land owned in common. Ordinarily, however, a real estate tax is not considered as a necessary expense, as the term is used in Article 546 of the New Civil Code. The concept of necessary expenses under Article 546 refers to those incurred for the purpose of preserving the thing or those expenses which seek to prevent the waste, deterioration or loss of the thing.102 A real estate tax is not a necessary expense under the provisions of Article 546 because if the same is not paid, the property will not be destroyed nor impaired, although its possession may be lost by the possessor. Under Article 488, however, the expenses for the preservation of the thing also include taxes.
Art. 490. Whenever the different stories of a house belong to different owners, if the titles of ownership do not specify the terms under which they should contribute to the necessary expenses and there exists no agreement on the subject, the following rules shall be observed: (1) The main and party walls, the roof and the other things used in common, shall be preserved at the expense of all the owners in proportion to the value of the story belonging to each; (2) Each owner shall bear the cost of maintaining the oor of his story; the oor of the entrance, front door, common yard and sanitary works common to all, shall be maintained at the expense of all the owners pro rata; (3) The stairs from the entrance to the rst story shall be maintained at the expense of all the owners pro rata, with the exception of the owner of the ground oor; the stairs from the rst to the second story shall be preserved at the expense of all, except the owner of the ground oor and the owner of the rst story; and so on successively. (396)

II Caguioa, Civil Code, 1966 ed., 136. Id. 102 Id., 199.
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67. Different Stories Belonging to Different Owners


[67.1] Applicability of Article 490

Article 490 of the New Civil Code applies to a situation where the house consists of several stories and the different stories belong to different owners. This article nds no application to a condominium project, the latter being governed by Republic Act No. 4276, otherwise known as The Condominium Act.
[67.2] Rules Governing Necessary Expenses

In a situation where the different stories of a house belong to different owners, the payment of necessary expenses shall be governed by the following rules: (1) if the manner of contribution is specied in the title of ownership, the same shall govern; (2) in the absence of such provision in the title of ownership, the agreement of the parties shall control; or (3) in the absence of such agreement, the following rules shall be observed: (a) The main and party walls, the roof and the other things used in common, shall be preserved at the expense of all the owners in proportion to the value of the story belonging to each.103 (b) The oor of the entrance, front door, common yard and sanitary works common to all, shall be maintained at the expense of all the owners pro rata.104 (c) story.105 Each owner shall bear the cost of maintaining the oor of his

(d) The stairs from the entrance to the rst story shall be maintained at the expense of all the owners pro rata, with the exception of the owners of the ground oor, the stairs from the rst to the second story shall be preserved at the expense of all, except the owner of the ground oor and the owner of the rst story; and so on successively.106

Art. 490(1), NCC. Art. 490(2), NCC. 105 Id. 106 Art. 490(3), NCC.
103 104

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[67.3] Condominium, Dened

A condominium is an interest in real property consisting of a separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common directly or indirectly, in the land on which it is located and in other common areas of the building.107 Common areas in a condominium project refer to the entire project excepting all units separately granted or held or reserved;108 while unit means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more oors (or part or parts of oors) in a building or buildings and such accessories as may be appended thereto.109
[67.4] Nature of Ownership in Condominium Projects

With respect to the condominium unit, the same is owned separately and individually by the unit owner. With respect, however, to the land and to the common areas in the condominium project, there are two situations contemplated in Sections 2 and 5 of the Condominium Act. The rst contemplates of a situation where the land and other common areas in the condominium project are held by the owners of separate units as co-owners thereof.110 In such a situation, there is co-ownership among the unit owners, with respect to the undivided interest in the land and common areas. The second contemplates of a situation where the land and other common areas are to be held by the condominium corporation, in which case, the owners of the individual units are automatically considered members or shareholders of the corporation.111 Under the provisions of the Condominium Act, the undivided interest in the common areas or the shareholding in the common areas is inseparable from the unit to which it is only an appurtenant.112
[67.5] Rules Governing Expenses on the Common Areas

The owner of the project is required by law, prior to the conveyance of any condominium therein, to register a declaration of restrictions
Sec. 2, R.A. No. 4726. Sec. 3(d), R.A. No. 4726. 109 Sec. 3(b), R.A. No. 4726. 110 Sec. 5, R.A. No. 4726. 111 Sec. 2, R.A. No. 4726. 112 Sec. 5, R.A. No. 4726.
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relating to such project, which restrictions shall constitute a lien upon each condominium in the project, and shall inure to and bind all condominium owners in the projects.113 Such declaration of restrictions may, among other things, provide for the following: (a) For maintenance of insurance policies insuring condominium owners against loss by re, casualty, liability, workmens compensation and other insurable risks, and for bonding of the members of any management body;114 (b) Provisions for maintenance, utility, gardening and other services beneting the common areas, for the employment of personnel necessary for the operation of the building, and legal, accounting and other professional and technical services;115 (c) For purchase of materials, supplies and the like needed by the common areas;116 (d) For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for the discharge of any encumbrance levied against the entire project or the common areas;117 (e) For reconstruction of any portion or portions of any damage to or destruction of the project;118
[67.6] Assessment as Lien Upon Unit

An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made.119 The amount of any such assessment plus any other charges thereon, such as interests, cost (including attorneys fees) and penalties, as such as may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Registered of Deeds of the city or
Sec. 9, R.A. No. 4726. Sec. 9(a)(2), R.A. No. 4726. 115 Sec. 9(a)(3), R.A. No. 4726. 116 Sec. 9(a)(4), R.A. No. 4726. 117 Sec. 9(a)(5), R.A. No. 4726. 118 Sec. 9(a)(6), R.A. No. 4726. 119 Sec. 20, R.A. No. 4726.
113 114

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province where such condominium project is located.120 Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens121 and may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgages of real property.122
Art. 491. None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benets for all would result therefrom. However, if the withholding of the consent by one or more of the co-owners is clearly prejudicial to the common interest, the courts may afford adequate relief. (397a) Art. 492. For the administration and better enjoyment of the thing owned in common, the resolutions of the majority of the co-owners shall be binding. There shall be no majority unless the resolution is approved by the co-owners who represent the controlling interest in the object of the coownership. Should there be no majority, or should the resolution of the majority be seriously prejudicial to those interested in the property owned in common, the court, at the instance of an interested party, shall order such measures as it may deem proper, including the appointment of an administrator. Whenever a part of the thing belongs exclusively to one of the coowners, and the remainder is owned in common, the preceding provisions shall apply only to the part owned in common. (398)

68. Acts of Alteration


[68.1] Rule as to Acts of Alterations

The law123 prohibits the making of alterations in the thing owned in common without the consent of the other co-owners. In other words, the law requires the consent of all co-owners to the making of the alteration on the thing owned in common. This rule shall apply even though benets for all would result from such act of alteration.124 In case, however, any of the co-owners should unreasonably withholds his

Id. Id. 122 Id. 123 Art. 491, NCC. 124 Id.
120 121

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consent and the same is clearly prejudicial to the common interest, the other co-owners may go to court for appropriate relief.125
[68.2] Meaning of Act of Alteration

An act of alteration has been dened as the act by virtue of which a co-owner, in opposition to the express agreement, if there is any, or, in default thereof, to the tacit agreement of all the co-owners, and violating their will, changes the thing from that state in which the others believe it should remain or withdraws it from the use to which they wish it to be intended.126 An act of alteration, therefore, is one that affects the substance of the thing127 and changes its essence and nature.128
[68.3] Form of Consent

The law does not clarify the kind of consent necessary for the making of alterations. What is clearly required, however, is that the act of alteration must be authorized by all the co-owners, whether such authorization be given prior to or after the commission of the act. In other words, the consent of all co-owners may be given expressly or tacitly, previous to the act or even after its commission.
[68.4] Effect of Unauthorized Alterations

If the alteration is made without the consent of all the co-owners, the act is illegal and invalid, being an act executed against the provision of a mandatory law.129 The other co-owners can compel the erring coowner to undo what has been done, at the latters expense. This remedy is explicitly authorized by the provisions of Article 1168 of the New Civil Code which provides that when the obligation consists in not doing, and the obligor does what has been forbidden him, it shall also be undone at his expense. In addition, the erring co-owner shall likewise be liable for any losses or damages which the co-ownership may have suffered.

Id. 3 Manresa, 6th ed., 447; cited in II Caguioa, 1966 ed., 137. 127 Id. 128 II Tolentino, Civil Code, 1992 ed., 192. 129 Art. 5, NCC, in relation to Art. 491, NCC.
125 126

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69. Acts of Administration


[69.1] Rule as to Acts of Administration

With respect to acts of administration and better enjoyment of the thing owned in common, the resolution of the majority of the coowners shall be sufcient.130 Under the law on co-ownership, the terms majority of the co-owners do not refer to numerical majority but to majority of interest. The law provides that there shall be no majority unless the resolution is approved by the co-owners who represent the controlling interest in the object of the co-ownership.131 For example, if A, B and C are co-owners of a parcel of land where the share of A is 3/5 while the share of B and C is 1/5 each, the consent of A alone will be sufcient for the making of an act of administration. In this example, A represents the controlling interest in the co-ownership, thus, A alone shall be considered as the majority of the co-owners for the purpose of approving an act of alteration.
[69.2] Meaning of Acts of Administration

Repairs for preservation of the thing owned in common may be made at the will of only one of the co-owners.132 Hence, the resolution of the majority of the co-owners is not necessary. The act of repairing the thing owned in common for the purpose of preserving it is not considered, therefore, as an act of administration. On the other hand, expenses to improve or embellish the thing shall be decided upon by a majority as determined in Article 492.133 Hence, an act of administration refers to the improvement or embellishment of the thing owned in common134 for the purpose of better enjoyment.135 As distinguished from acts of alteration, which have a more permanent result and relate to the substance or form of the thing, acts of simple administration refer to the enjoyment of the thing and are of a transitory character.136 In determining whether an act is that of administration or alteration, the nature of the thing itself must be considered. When the enjoyment of the thing does not require its modication, whatever modication or
Art. 492, 1st par., NCC. See Art. 492, 2nd par., NCC. 132 Art. 489, NCC. 133 Id. 134 Art. 489, NCC. 135 Art. 492, 1st par., NCC. 136 II Tolentino, Civil Code, 1992 ed., 195.
130 131

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change that is done will be considered an alteration within the terms of Article 491.137 However, when the thing in its nature requires changes in its exploitation, such modications and variations should be considered as falling under the acts of simple administration.138
[69.3] No Majority or Act Of Majority Is Seriously Prejudicial

Should there be no majority, or should the resolution of the majority be seriously prejudicial to those interested in the property owned in common, the court, at the instance of an interested party, shall order such measures as it may deem proper, including the appointment of an administrator.139 According to Manresa,140 the following acts of the majority are considered prejudicial to the co-ownership: (1) when the resolution calls for a substantial change or alteration of the common property or of the use to which it has been dedicated by agreement or by its nature; (2) when the resolution goes beyond the limit of mere administration or invades proprietary rights of the co-owners in violation of Article 491; (3) when the majority authorizes lease, loans or other contracts without security, exposing the thing to serious danger to the prejudice of the other co-owners; and (4) when the majority refuses to dismiss an administrator who is guilty of fraud or negligence in his management, or he does not have the respectability, aptitude, and solvency required of persons holding such positions.
Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benets pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (399)

70. Right Over the Ideal Share


[70.1] Nature of Co-Owners Right Over His Pro Indiviso Share

A co-owner has absolute ownership of his undivided share in the common property.141 Article 493 of the New Civil Code spells out
3 Manresa, 6th ed., 457, cited in II Caguioa, Civil Code, 1966 ed., 140. 3 Manresa 476-477; cited in II Tolentino, Civil Code, 1992 ed., 195. 139 Art. 492, 3rd par., NCC. 140 3 Manresa, 6th ed., 461-462. 141 City of Mandaluyong v. Aguilar, 350 SCRA 499, Jan. 29, 2001.
137 138

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his rights over his pro indiviso share. Pursuant to said article, a coowner shall have full ownership of his part and of the fruits and benets pertaining thereto.142 He has the right to alienate, assign or mortgage it, and even to substitute another person in its enjoyment, except when personal rights143 are involved.144 As a consequence, a co-owner has the right to alienate his pro indiviso share in the co-owned property even without the consent of the other co-owners145 and his co-owners cannot enjoin him if he intends to alienate his share to a third party.146 He may also validly lease his undivided interest to a third party independently of the other co-owners.147
[70.2] Effect of Alienation or Mortgage of Undivided Share

While a co-owner has the right to alienate or mortgage his undivided share, the effect of such alienation or mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership.148 In other words, what the transferee obtains by virtue of such alienation or mortgage are the same rights as the transferor had as a co-owner, in an ideal share equivalent to the consideration given under their transaction.149 In essence, the transferee merely steps into the shoes of the transferor as co-owner and acquires a proportionate share in the property held in common, thereby making the transferee a co-owner of the property.150
[70.3] Alienation of Denite or Concrete Portion

In a long line of decisions, the Supreme Court has held that before the partition of a land or thing held in common, no individual or coowner can claim title to any denite portion. All that the co-owner has
Nufable v. Nufable, 309 SCRA 692, 700, July 2, 1999. The term personal rights refers to the personal relations of one co-owner to the others, as when the family residence is used by the children as co-owners. see Padilla, Civil Code, Vol. II, pp. 300-301 (1972); Tolentino, Civil Code, Bk. II, p. 203 (1992). 144 Nufable v. Nufable, supra, 700. 145 Mercado v. CA, 240 SCRA 616, 621, Jan. 26, 1995. 146 Reyes v. Concepcion, 190 SCRA 171, 179, Oct. 1, 1990. 147 Vda. de Castro v. Atienza, 53 SCRA 264, Oct. 17, 1973, cited in Sanchez v. CA, supra, and City of Mandaluyong v. Aguilar, supra. 148 Art. 493, NCC. 149 Del Campo v. CA, 351 SCRA 1, 7-8, Feb. 1, 2001. 150 Id.
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is an ideal or abstract quota or proportionate share in the entire land or thing.151 As such, a co-owner has no right to sell or alienate a concrete, specic or determinate part of the thing owned in common.152 If the coowner sells a concrete portion, this, nonetheless, does not render the sale void.153 Such a sale affects only his own share, subject to the results of the partition but not those of the other co-owners who did not consent to the sale.154 In the words of the Supreme Court in Del Campo v. Court of Appeals155 We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular portion of a coowned property prior to partition among all the co-owners. However, this should not signify that the vendee does not acquire anything at all in case a physically segregated area of the co-owned lot is in fact sold to him. Since the co-owner/ vendors undivided interest could properly be the object of the contract of sale between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given under their transaction. In other words, the vendee steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the property held in common. As discussed above, a co-owner has no right to sell a divided part, by metes and bounds, of the real estate owned in common.156 Hence, the buyer cannot claim title to that denite portion of the land owned in common.157 What the vendee obtains by virtue of such sale are the same rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given under their transaction.158 In other words, such
151 Oliveras v. Lopez, 168 SCRA 431, 437, Dec. 14, 1988, citing Diversied Credit Corporation v. Rosado, L-27983, December 24, 1968, 26 SCRA 470. 152 City of Mandaluyong v. Aguilar, supra, at p. 500, citing Abad v. CA, 179 SCRA 826 (1989); Bailon-Casilao v. CA, 160 SCRA 738 (1988); Santos v. Buenconsejo, 14 SCRA 407 (1965); Ramirez v. Batutaista, 14 Phil. 528 (1909). 153 Id., also in Del Campo v. Court of Appeals, 351 SCRA 1 (2001). 154 Id. 155 351 SCRA 1, 7-8, Feb. 1, 2001. 156 See Abad v. Court of Appeals, 179 SCRA 817, December 4, 1989. 157 Id. 158 Id.

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sale will only transfer the rights of said co-owner to the buyer, thereby making the buyer a co-owner of the property.159 As a consequence, the effect of such alienation, with respect to the other co-owners, shall be limited to the portion which may be allotted to the vendee, as successorin-interest of the selling co-owner, in the division of the property upon the termination of the co-ownership.160 In one case,161 however, the buyer of a concrete or specic portion sold by one of the co-owners was held to be entitled to the specic portion which she purchased because the said buyer was allowed by the other co-owner to occupy said denite portion without disturbance for a period too long to be ignored. According to the Court in said case, such undisturbed possession had the effect of a partial partition of the co-owned property which entitles the buyerpossessor to the denite portion which she occupies.162
Del Campo v. Court of Appeals 351 SCRA 1, Feb. 1, 2001 Salome Bornales, together with her siblings, were the original coowners of a certain parcel of land, known as Lot 162 of the Cadastral Survey of Ponteverda, Capiz under OCT No. 18407. On July 14, 1940, Salome sold part of her share in favor of Soledad Daynolo. The portion sold to Soledad was, however, concrete and specic. Immediately, thereafter, Soledad took possession of the land described in the sale. In 1948, Salome, together with the other co-owners, sold 24,933 of Lot 162 to Jose Regalado, Sr. In 1951, the heirs of Soledad sold the land to the spouses Manuel Del Campo and Salvacion Quiachon, who succeeded in the possession of said land. Meanwhile, Jose Regalado, Sr. caused the reconstitution of OCT No. 180407, which initially reected the shares of the original co-owners in Lot 162, but the title was eventually transferred in the name of Jose Regalado, Sr.. The latter, thereafter, subdivided the entire property into smaller lots, each covered by a respective title in his name. One of these small lots included the portion occupied by the spouses Del Campo. Thus, the spouses Del Campo led a complaint for repartition, resurvey and reconveyance against the heirs of Regalado claiming that their land was erroneously included in the title of Regalado. After addressing the issue of the validity of the sale in 1940 between Salome and Soledad, from where the right of the Spouses Del Campo was derived, the

Id. Art. 493, NCC. 161 Del Campo v. Court of Appeals, supra. 162 Id., 9.
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Court further held that the Del Campos are entitled to the possession of the specic portion sold to them. The Court explained On the rst issue, it seems plain to us that the trial court concluded that petitioners could not have acquired ownership of the subject land which originally formed part of Lot 162, on the ground that their alleged right springs from a void sale transaction between Salome and Soledad. The mere fact that Salome purportedly transferred a denite portion of the co-owned lot by metes and bounds to Soledad, however, does not per se render the sale a nullity. This much is evident under Article 493 of the Civil Code and pertinent jurisprudence on the matter. More particularly in Lopez v. Vda. De Cuaycong, et al. which we nd relevant, the Court, speaking through Mr. Justice Bocobo, held that: The fact that the agreement in question purported to sell a concrete portion of the hacienda does not render the sale void, for it is a well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so. Quando res non valet ut ago, valeat quantum valere potest. (When a thing is of no force as I do it, it shall have as much force as it can have.) Applying this principle to the instant case, there can be no doubt that the transaction entered into by Salome and Soledad could be legally recognized in its entirety since the object of the sale did not even exceed the ideal shares held by the former in the coownership. As a matter of fact, the deed of sale executed between the parties expressly stipulated that the portion of Lot 162 sold to Soledad would be taken from Salomes 4/16 undivided interest in said lot, which the latter could validly transfer in whole or in part even without the consent of the other co-owners. Salomes right to sell part of her undivided interest in the co-owned property is absolute in accordance with the well-settled doctrine that a coowner has full ownership of his pro-indiviso share and has the right to alienate, assign or mortgage it, and substitute another person in its enjoyment. Since Salomes clear intention was to sell merely part of her aliquot share in Lot 162, in our view no valid objection can be made against it and the sale can be given effect to the full extent. We are not unaware of the principle that a co-owner cannot rightfully dispose of a particular portion of a co-owned property prior to partition among all the co-owners. However, this should not signify that the vendee does not acquire anything at all in case

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a physically segregated area of the co-owned lot is in fact sold to him. Since the co-owner/vendors undivided interest could properly be the object of the contract of sale between the parties, what the vendee obtains by virtue of such a sale are the same rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given under their transaction. In other words, the vendee steps into the shoes of the vendor as co-owner and acquires a proportionate abstract share in the property held in common. Resultantly, Soledad became a co-owner of Lot 162 as of the year 1940 when the sale was made in her favor. It follows that Salome, Consorcia and Alfredo could not have sold the entire Lot 162 to Jose Regalado, Sr. on April 14, 1948 because at that time, the ideal shares held by the three co-owners/vendors were equivalent to only 10/16 of the undivided property less the aliquot share previously sold by Salome to Soledad. Based on the principle that no one can give what he does not have, Salome, Consorcia and Alfredo could not legally sell the shares pertaining to Soledad since a co-owner cannot alienate more than his share in the coownership. We have ruled many times that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner will only transfer the rights of said co-owner to the buyer, thereby making the buyer a co-owner of the property. In this case, Regalado merely became a new co-owner of Lot 162 to the extent of the shares which Salome, Consorcia and Alfredo could validly convey. Soledad retained her rights as co-owner and could validly transfer her share to petitioners in 1951. The logical effect of the second disposition is to substitute petitioners in the rights of Soledad as co-owner of the land. Needless to say, these rights are preserved notwithstanding the issuance of TCT No. 14566 in Regalados name in 1977. Be that as it may, we nd that the area subject matter of this petition had already been effectively segregated from the mother lot even before title was issued in favor of Regalado. It must be noted that 26 years had lapsed from the time petitioners bought and took possession of the property in 1951 until Regalado procured the issuance of TCT No. 14566. Additionally, the intervening years between the date of petitioners purchase of the property and 1987 when petitioners led the instant complaint, comprise all of 36

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years. However, at no instance during this time did respondents or Regalado, for that matter, question petitioners right over the land in dispute. In the case of Vda. de Cabrera v. Court of Appeals, we had occasion to hold that where the transferees of an undivided portion of the land allowed a co-owner of the property to occupy a denite portion thereof and had not disturbed the same for a period too long to be ignored, the possessor is in a better condition or right than said transferees. (Potior est condition possidentis.) Such undisturbed possession had the effect of a partial partition of the co-owned property which entitles the possessor to the denite portion which he occupies. Conformably, petitioners are entitled to the disputed land, having enjoyed uninterrupted possession thereof for a total of 49 years up to the present. [70.4] Alienation of Entire Co-owned Property

As a mere part owner, a co-owner cannot alienate the shares of the other co-owners. The prohibition is premised on the elementary rule that no one can give what he does not have nemo dat quod non habet.163 As a person can sell only what he owns or is authorized to sell, the buyer can as a consequence acquire no more than what the seller can legally transfer.164 Based from this principle, no co-owner has the right to alienate the entire property owned in common. However, even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale,165 following the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so quando res non valet ut ago, valeat quantum valere potest (when a thing is of no effect as I do it, it shall have effect as far as [or in whatever way] it can).166 Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void. However, only
163 Mercado v. CA, 240 SCRA 616, 620, Jan. 26, 1995; also in Nufable v. Nufable, 309 SCRA 692, July 2, 1999. 164 Segura v. Segura, 165 SCRA 368, 374, Sept. 19, 1988. 165 Del Campo v. CA, 351 SCRA 1, 8, Feb. 1, 2001, citing Tomas Claudio Memorial College, Inc. v. CA, 316 SCRA 501 (1999). See also Aguirre v. CA, 421 SCRA 310, 323-324 (2004); Corinthian Realty, Inc. v. CA, 394 SCRA 260, 268 (2002); Tomas Claudio Memorial College, Inc. v. CA, 316 SCRA 502, 509 (1999); Paulmitan v. CA, 215 SCRA 866, 872-873 (1992); BailonCasilao v. CA, 160 SCRA 738, 745 (1988). 166 Acabal v. Acabal, 454 SCRA 555, 582.

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the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property.167 Since the sale is not null and void, the proper action in cases like this is not for the nullication of the sale.168 And since such sale had the effect of making the buyer a co-owner of the property, an action for the recovery of possession of the thing owned in common from the buyer who substituted the co-owner or co-owners who alienated their shares is likewise not proper169 since the possession by the buyer, being a new co-owner, will not be regarded as adverse to the other coowners but is, in fact, benecial to all of them.170 It is now settled that the appropriate recourse of co-owners in cases where their consent were not secured in a sale of the entire property as well as in a sale merely of the undivided shares of some of the co-owners is an action for partition under Rule 69 of the Revised Rules of Court.171 Such partition should result in segregating the portion belonging to the seller and its delivery to the buyer.172 Neither recovery of possession nor restitution can be granted since the buyer is a legitimate proprietor and possessor in joint ownership of the common property claimed.173
[70.5] Applicability of Doctrine of Buyer in Good Faith

Will the rule mentioned in supra 70.4 applies if the co-owned property alienated is registered under the Torrens system solely in the name of the selling co-owner? In Cruz v. Leis,174 the Court had the occasion to rule that where a parcel of land, forming past of the undistributed properties of the dissolved conjugal partnership of gains, is sold by a widow to a purchaser who merely relied on the face of the certicate of title thereto, issued solely in the name of the widow, the purchaser acquires a valid title to the land even as against the heirs of the deceased spouse. In this case, Gertrudes Isidro, during her marriage with Adriano Isidro, acquired a parcel of land in 1955. In the deed
Bailon-Casilao v. CA, 160 SCRA 738, 745, April 15, 1988. Id. 169 Id. 170 Pangan v. Court of Appeals, 166 SCRA 375, 381. 171 Bailon-Casilao v. Court of Appeals, supra; see also Aguirre v. Court of Appeals, 421 SCRA 310. 172 Tomas Claudio Memorial College, Inc. v. Court of Appeals, Oct. 12, 1999. 173 Id., citing Ramirez v. Batutaista, 14 Phil. 528 (1909). 174 327 SCRA 97.
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of sale and in the title (TCT No. 43100) that was issued in the name of Gertrudes Isidro, she was described as a widow. Her husband, however, died only on December 2, 1973. In 1985, Gertrudes obtained a loan from the spouses Alexander and Adelaida Cruz, secured by the property covered by TCT No. 43100. When Gertrudes failed to pay the loan, she executed a pacto de retro sale in favor of the spouses Cruz. When Gertrudes failed to repurchase the property within the period agreed upon, ownership thereof was consolidated in the name of Alexander Cruz in whose name TCT No. 130584 was issued. On 9 June 1987, Gertrudes died. Thereafter, her heirs, received demands to vacate the premises from the spouses Cruz, the new owners of the property. The heirs of Gertrudez responded by ling a complaint for the nullication of the sale and the title of Alexander Cruz. The Supreme Court held that while, as a rule, Gertrudes could only dispose of her share in the property owned in common pursuant to Article 493, the purchaser acquires a valid title to the entire property even as against the heirs of the spouses Isidro based on the principle that a person dealing with registered land is not required to go behind the register to determine the condition of the property. The Court explained that (the purchaser) is only charged with notice of the burdens on the property which are noted on the face of the register or the certicate of title and to require him to do more is to defeat one of the primary objects of the Torrens system. In Segura v. Segura,175 however, the Supreme Court followed the general rule that no one can give what he does not have nemo dat quod non habet. The Court further declared, albeit in obiter, that even if it is to be assumed that the purchaser bought the land in good faith from the selling co-owners (who were the registered owners of the property as appearing on the title), only so much of the share of the selling coowners could be validly acquired by the purchaser, with the rest of the property remaining under the ownership of the excluded co-heirs or co-owners. In other words, the purchaser became merely a pro indiviso co-owner of the land with the other excluded co-owners, who retained title to their respective shares although the purchaser had possession of the entire property. It was further held that the portion pertaining to the excluded co-owners should be deemed held by the purchaser under an implied trust for their benet.
175

165 SCRA 368.

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[COMMENTS: Note, however, that the buyer of the property in the case of Segura v. Segura, supra, may not really be considered a purchaser in good faith since when the land was registered in his name following the sale of the same in his favor by the parties to the extra-judicial partition, the same still carried an express reservation of whatever rights that may pertain to other excluded heirs. The existence of this annotation on his title should thus make him aware of the possibility that a portion of the property may not truly belong to him. Such annotation is in the nature of a commitment on his part to hold any such portion as impliedly convey to him in trust by and for its true owner.] It is clear, however, that when the purchaser knew of, could have known, the existence of the co-ownership and yet did not seek the consent or authorization of the other co-owners in the sale of the entire property, he may not be considered a purchaser in good faith. Hence, the rule stated in supra 68.4 applies, in which case, he only acquires what the selling co-owner could validly transfer following the rule that no one can give what he does not have nemo dat quod non habet. In Bailon-Casilao v. Court of Appeals,176 for example, the purchaser of the entire property was held to be guilty of bad faith in purchasing the property as he knew that the property was co-owned by six persons and yet, there were only two signatories to the deeds of sale and no special authorization to self was granted to the two sellers by the other co-owners. Likewise, in Robles v. Court of Appeals,177 the mortgage of the entire co-owned property was declared to be valid only with respect to the share of the mortgaging co-owner, but not with respect to the share of the other co-owners who had no knowledge thereof. The Court held that the bank should not have relied solely on the Deed of Sale purportedly showing that the ownership of the disputed property had been transferred from Exequiel Ballena to the Robles spouses, or that it had subsequently been declared in the name of Hilario. Because it was dealing with unregistered land, and the circumstances surrounding the transaction between Hilario and his father-in-law Exequiel were suspicious, the bank should have exerted more effort to fully determine the title of the Robleses. In addition, the rule that persons dealing with

176 177

Supra. 328 SCRA 97.

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registered lands can rely solely on the certicate of title does not apply to banks.
[70.6] Sale of Conjugal Property Without the Consent of the Other Spouse

Any alienation or encumbrance of the conjugal partnership property made after the effectivity of the Family Code on August 3, 1988 without the consent of the other spouse is null and void.178 In such a situation, may the transaction be considered as valid, at least insofar as the share of the consenting spouse in the conjugal partnership property is concerned? This is the issue in Homeowners Savings & Loan Bank v. Dailo.179 In this case, the trial and appellate courts declared as void the mortgage in favor of the bank on the subject property, which is conjugal in nature, because it was constituted without the knowledge and consent of the wife, in accordance with Article 124 of the Family Code. On appeal, the bank contended that the mortgage constituted by the husband on the subject property as co-owner thereof is valid as to his undivided share. The bank contends that Article 124 of the Family Code should be construed in relation to Article 493 of the Civil Code. The bank argued that although Article 124 of the Family Code requires the consent of the other spouse to the mortgage of conjugal properties, the framers of the law could not have intended to curtail the right of a spouse from exercising full ownership over the portion of the conjugal property pertaining to him under the concept of co-ownership. In upholding the nullity of the mortgage in its entirety, the Court held The rules on co-ownership do not even apply to the property relations of respondent and the late Marcelino Dailo, Jr. even in a suppletory manner. The regime of conjugal partnership of gains is a special type of partnership, where the husband and wife place in a common fund the proceeds, products, fruits and income from their separate properties and those acquired by either or both spouses through their efforts or by chance. Unlike the absolute community of property wherein the rules on co-ownership apply in a suppletory

178 Art. 124, FC; Sps. Guiang v. Court of Appeals, 353 Phil. 578 (1998); see also Rabuya, Law on Persons and Family Relations, 2006 ed., 485-486. 179 453 SCRA 283 (2005).

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manner, the conjugal partnership shall be governed by the rules on contract of partnership in all that is not in conict with what is expressly determined in the chapter (on conjugal partnership of gains) or by the spouses in their marriage settlements. Thus, the property relations of respondent and her late husband shall be governed, foremost, by Chapter 4 on Conjugal Partnership of Gains of the Family Code and, suppletorily, by the rules on partnership under the Civil Code. In case of conict, the former prevails because the Civil Code provisions on partnership apply only when the Family Code is silent on the matter. The basic and established fact is that during his lifetime, without the knowledge and consent of his wife, Marcelino Dailo, Jr. constituted a real estate mortgage on the subject property, which formed part of their conjugal partnership. By express provision of Article 124 of the Family Code, in the absence of (court) authority or written consent of the other spouse, any disposition or encumbrance of the conjugal property shall be void. The afore-quoted provision does not qualify with respect to the share of the spouse who makes the disposition or encumbrance in the same manner that the rule on coownership under Article 493 of the Civil Code does. Where the law does not distinguish, courts should not distinguish. Thus, both the trial court and the appellate court are correct in declaring the nullity of the real estate mortgage on the subject property for lack of respondents consent.
[70.7] Sale of Community Property Without the Consent of Other Spouse

While the absolute community is a form of co-ownership between the spouses, neither spouse can dispose of their respective interest in the community property by way of disposition inter vivos. In this respect, the rules on co-ownership embodied in Article 493 of the Civil Code do not nd application in the case of the co-ownership that exists in absolute community. The reason for this is because prior to liquidation of the absolute community, the interest of each spouse in the community assets is inchoate, a mere expectancy, which constitutes neither a legal

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nor an equitable estate, and does not ripen into title until it appears that there are assets in the community as a result of the liquidation and settlement. Hence, any disposition of the spouses respective shares or interest in the absolute community shall be void since such right to onehalf of the community assets does not vest until the liquidation of the absolute community. Nemo dat qui non habet. No one can give what he has not.180 This is also the reason why dispositions of community property made by one spouse without the consent of the other or without court authorization may not likewise be deemed valid even insofar as the share of the consenting spouse in the community property is concerned. Such alienation or disposition must be regarded as invalid in its entirety and not only with respect to the share of the non-consenting spouse in the property.181
[70.8] Co-ownership in Article 147 of the Family Code

As discussed in supra 62.7, when a man and a woman who are capacitated to marry each other live exclusively with each other as husband and wife without the benet of marriage or under a void marriage, the property acquired by both of them through their work or industry shall be governed by the rules on co-ownership.182 In this kind of co-ownership, however, the rule stated in Article 493 that a co-owner has the right to alienate or encumber his ideal share without the consent of the other co-owners does not apply. Article 147 of the Family Code expressly prohibits any of the parties to encumber or dispose by acts inter vivos of his or her share in the co-owned property without the consent of the other prior to the termination of the cohabitation. 71. Right of Legal Redemption
[71.1] Legal Redemption in Co-Ownership

A co-owner of a thing may exercise the right of legal redemption in case the shares of all the other co-owners or of any of them, are sold to a third person.183 Should two or more co-owners desire to exercise the right
See Rabuya, Law on Persons and Family Relations, 2006 ed., 440-441. Id., 441. 182 See Art. 147, Family Code. 183 Art. 1620, 1st par., NCC.
180 181

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of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common.184 Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benet and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or inconvenient association into which he has been trust.185 It is intended to minimize co-ownership186 by reducing the number of the participants until the community is done away with.187
[71.2] Requisites For the Exercise of Legal Redemption

From the provisions of Articles 1620 and 1623 of the New Civil Code, the following are the requisites for the exercise of legal redemption: (1) There must be a co-ownership; (2) one of the co-owners sold his right to a stranger; (3) the sale was made before the partition of the co-owned property; (4) the right of redemption must be exercised by one or more co-owners within a period of thirty days to be counted from the time that he or they were notied in writing by the vendee or by the co-owner vendor; and (5) the vendee must be reimbursed for the price of the sale.188
[71.3] Presupposes Existence of Co-Ownership

The basis and origin of the right of legal redemption granted under Article 1620 of the New Civil Code is the existence of a coownership.189 Thus, the exercise of a right of legal redemption thereunder presupposes the existence of co-ownership at the time the conveyance is made by a co-owner and when it is demanded by the other co-owner or co-owners.190 Inasmuch as the purpose of the law in establishing the right of legal redemption between co-owners is to reduce the number of the participants until the community is done away with,191 once the property is subdivided and distributed among the co-owners, the

Art. 1620, 2nd par., NCC. Basa v. Aguilar, 117 SCRA 128, 130, Sept. 30, 1982. 186 Id. 187 Viola v. Tecson, 49 Phil. 808. 188 Aguilar v. Aguilar, 478 SCRA 187, Dec. 16, 2005. 189 Hernandez v. Quitain, 168 SCRA 92, 95, Nov. 29, 1988; also in Mendoza I v. CA, 199 SCRA 778, 787, July 31, 1991. 190 Uy v. CA, 246 SCRA 703, 711, July 20, 1995. 191 Viola v. Tecson, 49 Phil. 808.
184 185

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community has terminated and there is no reason to sustain any right of legal redemption.192 This doctrine has been applied in a host of cases.193
[71.4] Share Must Be Sold To A Third Party

The law grants a co-owner the exercise of the said right of redemption when the shares of the other co-owners are sold to a third person. A third person, within the meaning of this Article, is anyone who is not a co-owner.194 When the portion is sold to a co-owner, the right does not arise because a new participant is not added to the coownership.195 However, the right to redeem is granted not only to the original co-owners, but also to all those who subsequently acquire their respective shares while the community subsists.196
[71.5] A Co-Owner Has Right of Redemption, Not Pre-Emption

In this jurisdiction, the legal provisions on co-ownership do not grant to any of the owners of a property held in common a pre-emptive right to purchase the pro indiviso shares of his co-owners.197 Article 1620 of the New Civil Code contemplates a situation where a co-owner has alienated his pro indiviso shares to a stranger.198 By the very nature of the right of legal redemption, a co-owners right to redeem is invoked only after the shares of the other co-owners are sold to a third party or stranger to the co-ownership, not before.199
[71.6] Period of Redemption

The right of legal redemption shall not be exercised except within thirty (30) days from the notice in writing by the vendor.200 Thus, for the
Caram v. CA, 101 Phil. 315, 319 (1957), cited in Hernandez v. Quitain, supra, at p. 96; also in Caro v. CA, 113 SCRA 10, March 25, 1982. 193 Saturnino v. Paulino, 97 Phil. 50 (1955); Umengan v. Butacan, 7 SCRA 311 (1963); Estoque v. Pajimula, 24 SCRA 59 (1968); Dela Cruz v. Cruz, 32 SCRA 307 (1970); Seechung Federis v. Sunga, 134 SCRA 16 (1985); Salatandol v. Retes, G.R. No. L-38120, June 28, 1988; Hernandez v. Quitain, supra, and Mendoza I v. CA, supra. 194 Basa v. Aguilar, 117 SCRA 128, 130-131, Sep. 30, 1982, cited in Pilapil v. CA, 250 SCRA 566, 576, Dec. 4, 1995 and Fernandez v. Tarun, 391 SCRA 653, 659, Nov. 14, 2002. 195 Fernandez v. Tarun, G.R. No. 143868, Nov. 14, 2002. 196 Viola v. Tecson, 49 Phil. 808, 810, Dec. 24, 1926, cited in Fernandez v. Tarun, supra, 659 197 Reyes v. Concepcion, 190 SCRA 171, 178. Oct. 1, 1990. 198 Id. 199 Id. 200 Art. 1623, 1st par., NCC.
192

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legal and effective exercise of the right of legal redemption one must make the offer within the period set down in Article 1623. In other words, if no claim or offer is made within said period, no action will be allowed to enforce the right of redemption. It is necessary however to determine rst if and when the written notice of sale was duly served by the vendors to their co-owner.201
[71.7] Written Notice Not Necessary If There Is Actual Notice

The old rule is that a written notice of the sale by the vendor to his co-owners is indispensable for the latter to exercise their retracto legal de comuneros.202 More recently, however, the Supreme Court has relaxed the written notice requirement. Thus, in Si v. Court of Appeals,203 the Court ruled that a co-owner with actual notice of the sale is not entitled to a written notice for such would be superuous.204 The law does not demand what is unnecessary205 since the only purpose of such written notice is to insure that all the co-owners shall be actually notied of the sale and to remove all doubt as to the perfection of the sale.206 Hence, in a case where the co-owner was actually present and was even an active intermediary in the consummation of the sale of the property, he is considered to have had actual notice of the sale and a written notice is no longer necessary.207
[71.8] Article 1620 Distinguished From Article 1088

Article 1088 of the New Civil Code provides that should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by reimbursing him for the price of the sale, provided they do so within the period of the month from the time they were notied in writing of the sale by the vendor. According to Tolentino,208 the ne distinction between Article 1088 and Article 1620 is that when the sale consists of
Cabrera v. Villanueva, 160 SCRA 672, 677, April 15, 1988. Aguilar v. Aguilar, 478 SCRA 187, 193 (2005), citing Butte v. Manuel Uy & Sons, Inc., 4 SCRA 526. 203 342 SCRA 463. 204 Aguilar v. Aguilar, supra, 193. 205 Id. 206 Distrito v. Court of Appeals, 197 SCRA 606. 207 Id. 208 Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. III, pp. 607-608, cited in Mariano v. Court of Appeals, May 28, 1993.
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an interest in some particular property or properties of the inheritance, the right of redemption that arises in favor of the other co-heirs is that recognized in Article 1620. On the other hand, if the sale is the hereditary right itself, fully or in part, in the abstract sense, without specifying any particular object, the right recognized in Article 1088 exists.209
Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time the partition of the thing owned in common, insofar as his share is concerned. Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years, shall be valid. This term may be extended by a new agreement. A donor or testator may prohibit partition for a period which shall not exceed twenty years. Neither shall there be any partition when it is prohibited by law. No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. (400a)

72. Extinguishment of Co-ownership


[72.1] Causes of Extinguishment of Co-ownership

Co-ownership may be extinguished or terminated by any of the following causes: (1) By the merger in one person of all the interest of the coownership; (2) By prescription of the thing or right in favor of third persons or a co-owner; (3) By destruction of the thing or loss of the right which is owned in common; and (4) By partition of the property owned in common.210

[72.2] Merger

Merger, as a mode of terminating the co-ownership, takes place when all the interests in a co-ownership are consolidated in one person.
209 210

Mariano v. Court of Appeals, 222 SCRA 736, May 28, 1993. 3 Manresa, 6th ed., 486; 2 Castan, 8th ed., 318.

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This may happen, for example, when the shares of the other co-owners are acquired by one co-owner either by way of purchase or through the exercise of the right of legal redemption.
[72.3] Destruction of Thing or Lost of Right

A state of co-ownership exists only because there is unity of the object or property and plurality of subjects.211 Note that a co-ownership is only a state of fact which exists so long as the property remains materially undivided. Hence, the moment that the state of fact no longer exists because the object of the co-ownership is either destroyed or lost, the co-ownership also ceases.
[72.4] Redemption By One Co-Owner of the Entire Property

The rule in this jurisdiction is that the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it since redemption is not a mode of terminating a co-ownership.212 A redemption by a co-owner within the period prescribed by law inures to the benet of all the other co-owners.213 In such a situation, therefore, the redemption made by one co-owner will simply entitle him to collect reimbursement from the remaining co-owners pursuant to the provisions of Article 488 considering that redemption entails a necessary expense.214 This is exemplied in the case of Adille v. Court of Appeals.215 In this case, the land in question originally belonged to one Feliza Alzul as her own private property. Sometime in 1939, Feliza sold the property in pacto de retro to certain third persons, the period of repurchase being three years. During the period of redemption, her son in the rst marriage repurchased the subject property, who thereafter was able to secure title to the property only in his name. Subsequently, however, the other children of Felisa in her second marriage led an action for partition and accounting claiming that they were co-owners of the subject property, being heirs. The son of Felisa in the rst marriage contends that the subject property devolved upon him upon the failure of his co-heirs to join him in its redemption
Gapacan v. Omipet, 387 SCRA 383. Adille v. Court of Appeals, 157 SCRA 455, Jan. 29, 1988. See also Paulmitan v. Court of Appeals, 215 SCRA 866, Nov. 25, 1992; Mariano v. Court of Appeals, 222 SCRA 736, May 28, 1993; Cruz v. Leis, 327 SCRA 570, March 9, 2000. 213 Mariano v. Court of Appeals, supra, 740. 214 Adille v. Court of Appeals, supra. 215 Supra.
211 212

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within the period required by law. Answering this particular contention, the Supreme Court held The right of repurchase may be exercised by a coowner with aspect to his share alone. While the records show that the petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership. Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining co-owners. There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the coownership. The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, may not be compelled to consent to a partial redemption, the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name. But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership. Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name terminate the existing co-ownership. While his half-brothers and sisters are, as we said, liable to him for reimbursement as and for their shares in redemption expenses, he cannot claim exclusive right to the property owned in common. Registration of

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property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one. The petitioner must then be said to be a trustee of the property on behalf of the private respondents. The Civil Code states: ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benet of the person from whom the property comes. We agree with the respondent Court of Appeals that fraud attended the registration of the property. The petitioners pretension that he was the sole heir to the land in the afdavit of extrajudicial settlement he executed preliminary to the registration thereof betrays a clear effort on his part to defraud his brothers and sisters and to exercise sole dominion over the property. The afore-quoted provision therefore applies. It is the view of the respondent Court that the petitioner, in taking over the property, did so either on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under Article 2144 of the Civil Code, or for his exclusive benet, in which case, he is guilty of fraud, and must act as trustee, the private respondents being the beneciaries, under the Article 1456. The evidence, of course, points to the second alternative the petitioner having asserted claims of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot therefore be said to have assume the mere management of the property abandoned by his co-heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court itself afrms, the result would be the same whether it is one or the other. The petitioner would remain liable to the Private respondents, his co-heirs.216

216

At pp. 459-461.

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The Adille case must be distinguished from the case of Tan v. Court of Appeals.217 In Tan, the heirs (i.e., the co-owners) allowed the one year redemption period to expire without redeeming their parents former property and permitted the consolidation of ownership and the issuance of a new title in favor of the bank. By their knowing acts of omission, the heirs in the Tan case allowed the extinction of their coownership. In Tan, the disputed property was mortgaged by spouses Tan Tiong Tick and Tan Ong Hun to China Bank in 1963. In 1969, Tan Tiong Tick died without having paid the mortgage obligation. He was survived by his widow and six children, including D. Annie Tan. Meanwhile, China Bank foreclosed the mortgage in 1972. It was the highest bidder at the public auction. Thereafter, the heirs of Tan Tiong Tick sought to nullify the real estate mortgage and the foreclosure sale before the defunct CFI of Manila. The widow, Tan Ong Hun, also died, thus the children were left to redeem the foreclosed property. The one-year redemption period lapsed on July 6, 1973, but the heirs of the spouses Tan failed to redeem the property. China Bank then consolidated its ownership over the disputed property and a new title was issued in its name. In the meantime, a compromise agreement was forged between China Bank and the Tan heirs. The Bank allowed the heirs to repurchase the property on or before August 31, 1974, otherwise, it would dispose of the property to another party. Within the agreed period, or on August 30, 1974, only D. Annie Tan repurchased the entire property using her own funds. The bank, however, insisted that the repurchase be made for or in behalf of the other heirs as well. Left without any choice, D. Annie Tan led an action in court, asserting her exclusive ownership over the property on the ground that the co-ownership between her and her brothers and sisters had already been extinguished. In sustaining her contention, the Supreme Court ruled The rst question which arises is the correctness of the assumption that there was a co-ownership among the children of Tan Tiong Tick and Tan Ong Hun when the petitioner purchased the property.

217

172 SCRA 660, April 24, 1989.

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Since the lot and its improvement were mortgaged by the deceased parents, there can be no question that a coownership existed among the heirs during the period given by law to redeem the foreclosed property. Redemption by one during this period would have inured to the benet of all (Adille v. Court of Appeals, G.R. No. 44546, 157 SCRA 455 [1988]; and De Guzman v. Court of Appeals, G.R. No. 47378, 148 SCRA 75 [1987]). The records show, however, that when the petitioner purchased the disputed property on August 30, 1974, any coownership among the brothers and sisters no longer existed. The period to redeem had expired more than one year earlier, on July 6, 1973. The respondent China Bank consolidated its ownership and a new title was issued in the banks name. When the heirs allowed the one year redemption period to expire without redeeming their parents former property and permitted the consolidation of ownership and the issuance of a new title, the co-ownership was extinguished. The challenged ruling of the respondent court is, therefore, based on erroneous premises. Under Section 63-B of Presidential Decree No. 1529, the Property Registration Decree, in case of non-redemption, the purchaser at the foreclosure sale, meaning the respondent Bank in this case, is entitled to a new certicate of title in its name after ling the necessary papers with the Register of Deeds (Spouses Teosto and Eulalia Verceles v. Court of First Instance of Rizal, et al., G.R. No. 62219, February 28, 1989). It becomes a ministerial duty to place the buyer in possession of the property he now owns (Banco Filipino v. Intermediate Appellate Court, G.R. No. 68878,142 SCRA 44 [1986]). Ownership, therefore, passed to China Bank and there was no more co-ownership among the heirs.218

218

At pp. 668-669.

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73. Prescription
[73.1] General Rule: Prescription Does Not Lie

Co-ownership is a form of trust and every co-owner is a trustee for the others,219 hence, the relationship of such co-owner to the other co-owners is duciary in character and attribute.220 Whether established by law or agreement of the co-owners, the property or thing held pro indiviso is impressed with a ducial nature so that each co-owner becomes a trustee for the benet of his co-owners and he may not do any act prejudicial to the interest of his co-owners.221 Thus, the Supreme Court has held that the possession by a co-owner is like that of a trustee222 and shall not be regarded as adverse to the other co-owners but in fact benecial to all of them.223 Following this principle, it is the rule in this jurisdiction that no prescription shall lie in favor of a coowner or co-heirs as long as he expressly or impliedly recognizes the co-ownership.224
[73.2] Exception: When Co-Ownership Is Repudiated

In a co-ownership, the act of one benets all the other co-owners, unless the former repudiates the co-ownership.225 If the co-owner actually holding the property asserts exclusive dominion over it against the other co-owners, the corollary of the rule is that he can acquire sole title to it after the lapse of the prescribed prescriptive period.226 Thus, prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation of the co-ownership227 and absent a clear repudiation of the co-ownership a co-owner cannot acquire by prescription the share of the other co-owners.228

Sanchez v. Court of Appeals, 404 SCRA 541, 548, June 20, 2003. Id. 221 Id. 222 Delima v. CA, 201 SCRA 641, 646, Sept. 24, 1991; Salvador v. CA, 243 SCRA 239, 251, April 5, 1995. 223 Salvador v. CA, 243 SCRA 239, 251, April 5, 1995. 224 Art. 494, last par., NCC. 225 Trinidad v. Court of Appeals, 289 SCRA 188, 211, April 20, 1988. 226 Pangan v. Court of Appeals, 166 SCRA 375, 382, Oct. 17, 1988. 227 Adille v. Court of Appeals, supra, 461. 228 Heirs of Segunda Maningding v. Court of Appeals, supra, 608.
219 220

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[73.3] Requisites

In order that the title may prescribe in favor of a co-owner229 or in order that a co-owners possession may be deemed adverse to the other co-owners,230 the following elements must concur:
[73.3.1] The co-owner has performed unequivocal acts of repudiation amounting to an ouster of the other coowners.231

Since the relationship of a co-owner to the other co-owners is duciary in character and attribute,232 acts which are adverse to strangers may not be sufciently adverse to the co-owners.233 Consequently, a mere silent possession by a co-owner, his receipt of rents, fruits or prots from the property, the erection of buildings and fences and the planting of trees thereon, and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear, complete and conclusive evidence that he exercised acts of possession which unequivocally constituted an ouster or deprivation of the rights of the other co-owners.234 Thus, the mere fact that the tax declaration is in the name of one of the co-owners alone does not constitute sufcient repudiation of the co-ownership as the same is not an act adverse to the interests of the other co-owners,235 especially if the payment of land taxes in the name of such co-owner has been agreed upon by all the co-owners.236 While prescription among co-owners cannot take place when the acts of ownership exercised are vague and uncertain, such prescription arises and produces all its effects when the acts of ownership do not evince any doubt as to the ouster of the rights of the other co-owners.237 For example, when a co-owner of the property executed a deed of partition and on the strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one wherein
Robles v. Court of Appeals, 328 SCRA 97, 110, March 14, 2000. Salvador v. Court of Appeals, 243 SCRA 239, 251, April 5, 1995. 231 Robles v. CA, supra; see also Salvador v. CA, supra, 251. 232 Sanchez v. Court of Appeals, supra, 548. 233 Salvador v. CA, supra, 251. 234 Id., citing Bicarme v. Court of Appeals, 186 SCRA 294, 301, June 6, 1990. 235 See Bicarme v. Court of Appeals, supra. 236 See Robles v. Court of Appeals, supra. 237 Heirs of Segunda Maningding v. Court of Appeals, 276 SCRA 601, 609, July 31, 1997.
229 230

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he appears as the new owner of the property, he thereby in effect denies or repudiates the ownership of the other co-owners over their shares.238 Also the ling by a trustee of an action in court against the trustor to quiet title to the property, or for recovery of ownership thereof, held in possession by the former, may constitute an act of repudiation of the trust reposed on him by the latter.239
[73.3.2] Such positive acts of repudiation have been made known to the other co-owners.240

For title to prescribe in favor of the co-owner, there must be a clear showing that he has repudiated the claims of the other co-owners and that they have been categorically advised of the exclusive claim he is making to the property in question. It is only when such unequivocal notice has been given that the period of prescription will begin to run against the other co-owners and ultimately divest them of their own title if they do not seasonably defend it.241
[73.3.3] The evidence thereof is clear and convincing.242

Mere refusal to accede to a partition, without specifying the grounds for such refusal, cannot be considered as notice to the other coowners of the occupants claim of title in himself in repudiation of the co-ownership. The evidence relative to the possession, as a fact upon which the alleged prescription is based, must be clear, complete and conclusive in order to establish said prescription without any shadow of doubt; and when upon trial it is not shown that the possession of the claimant has been adverse and exclusive and opposed to the rights of the others, the case is not one of ownership, and partition will lie.243 Therefore, while prescription among co-owners cannot take place when the acts of ownership exercised are vague and uncertain, such prescription arises and produces all its effects when the acts of ownership do not evince any doubt as to the ouster of the rights of the other co-owners.244
Delima v. Court of Appeals, supra, citing Castillo v. Court of Appeals, 10 SCRA 549. Alzona v. Capunitan, February 28,1962, G.R. No. L-10220, cited in Pangan v. Court of Appeals, supra. 240 Id. 241 Pangan v. CA, 166 SCRA 375, 382, Oct. 17, 1988. 242 Id. 243 Heirs of Segunda Maningding v. CA, 276 SCRA 601, 608-609, July 31, 1997. 244 Id., at p. 609.
238 239

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Art. 495. Notwithstanding the provisions of the preceding article, the co-owners cannot demand a physical division of the thing owned in common, when to do so would render it unserviceable for the use for which it is intended. But the co-ownership may be terminated in accordance with Article 498. (401a) Art. 496. Partition may be made by agreement between the parties or by judicial proceedings. Partition shall be governed by the Rules of Court insofar as they are consistent with this Code. (402) Art. 497. The creditors or assignees of the co-owners may take part in the division of the thing owned in common and object to its being effected without their concurrence. But they cannot impugn any partition already executed, unless there has been fraud, or in case it was made notwithstanding a formal opposition presented to prevent it, without prejudice to the right of the debtor or assignor to maintain its validity. (403) Art. 498. Whenever the thing is essentially indivisible and the coowners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds distributed. (404) Art. 499. The partition of a thing owned in common shall not prejudice third persons, who shall retain the rights of mortgage, servitude, or any other real rights belonging to them before the division was made. Personal rights pertaining to third persons against the co-ownership shall also remain in force, notwithstanding the partition. (405) Art. 500. Upon partition, there shall be a mutual accounting for benets received and reimbursements for expenses made. Likewise, each co-owner shall pay for damages caused by reason of his negligence or fraud. (n) Art. 501. Every co-owner shall, after partition, be liable for defects of title and quality of the portion assigned to each of the other co-owners. (n)

74. Partition
[74.1] Denition

Partition, in general, is the separation, division and assignment of a thing held in common among those to whom it may belong. The thing itself may be divided, or its value.245
[74.2] Right of Co-Owner to Demand Partition

Article 494 of the New Civil Code states that no co-owner shall be obliged to remain in the co-ownership and, thus, each co-owner may
245

Art. 1079, NCC.

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demand at any time the partition of the thing owned in common, insofar as his share is concerned. In Budlong v. Bondoc,246 Article 494 has been interpreted to mean that the action for partition is imprescriptible247 or cannot be barred by laches.248 Note, however, that an action for partition implies that the thing is still owned in common.249 Hence, as long as the co-ownership is recognized, an action to compel partition will not prescribe and may be led at any time against the actual possessor by any of the other co-owners.250 If a co-owner or co-heir, however, holds the property in exclusive adverse possession as owner, asserting sole and exclusive dominion for the required period, he can acquire sole title to it as against the co-heirs or co-owners.251 The imprescriptibility of the action cannot thus be invoked when one of the co-owners has possessed the property as exclusive owner and for a period sufcient to acquire it by prescription.252 From the moment one of the co-owners claims that he is the absolute and exclusive owner of the properties and denies the others any share therein, the question involved is no longer one of partition, but of ownership.253 In such case, the imprescriptibility of the action for partition can no longer be invoked or applied when one of the coowners has adversely possessed the property as exclusive owner for a period sufcient to vest ownership by prescription.254
[74.3] Period of Prescription

When a co-owner has effectively repudiated the co-ownership, two possibilities may arise: (1) such co-owner may acquire the entire property by virtue of acquisitive prescription if his possession meets all the requirements of the law, and after the expiration of the prescriptive period; or (2) the other co-owners who were deprived of their share may lose their right to seek a declaration of the existence of the co-ownership

79 SCRA 24. Cited in Tomas Claudio Memorial College, Inc. v. Court of Appeals, 316 SCRA 502. 248 Salvador v. Court of Appeals, 243 SCRA 239, 250-251. 249 Bicarme v. Court of Appeals, supra. 250 Pangan v. Court of Appeals, supra. 251 Id. 252 Id. 253 Id. 254 Delima v. Court of Appeals, supra.
246 247

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and of their rights thereunder because the same may already be barred under the statute of limitations (or extinctive prescription).
[74.3.1] Acquisitive Prescription

While the action to demand partition of a co-owned property does not prescribe, a co-owner may acquire ownership thereof by prescription where there exists a clear repudiation of the co-ownership, and the coowners are apprised of the claim of adverse and exclusive ownership.255 Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.256 Ordinary acquisitive prescription requires possession of things in good faith and with just title for a period of ten years.257 Without good faith and just title, acquisitive prescription can only be extraordinary in character which requires uninterrupted adverse possession for thirty years.258 The case of Heirs of Flores Restar v. Heirs of Dolores R. Cichon259 is an example of a case where a co-owner has acquired the co-owned property by acquisitive prescription.
Heirs of Flores Restar v. Heirs of Dolores R. Cichon 475 SCRA 731, Nov. 22, 2005 In 1935, Emilio Restar (Restar) died intestate, leaving eight (8) childrencompulsory heirs, namely: Flores Restar, Dolores Restar-Cichon, Perpetua Restar-Sta. Maria, Paciencia Restar-Manares, Dominica Restar-Relojero, Policarpio Restar, Maria Restar-Rose and Adolfo Restar. In 1960, Restars eldest child, Flores, on the basis of a July 12, 1959 Joint Afdavit he executed with one Helen Restar, caused the cancellation of Tax Declaration No. 6696 in Restars name covering a 5,918 square meter parcel of land, Lot 3177 (the lot), located at Barangay Carugdog, Lezo, Aklan which was among the properties left by Restar, and the issuance of Tax Declaration No. 11134 in his name. Flores died on June 10, 1989. On November 5, 1998, the co-heirs of Flores discovered the cancellation of Restars Tax Declaration No. 6696 and the issuance in lieu thereof of Tax Declaration No. 11134 in the name of Flores. On January 21, 1999, the heirs of Flores sisters Dolores R. Cichon, Perpetua Sta. Maria, and Maria Rose who had in the meantime died, together with Flores surviving sisters Dominica Restar-Relojero and Paciencia Restar-Manares, led a Complaint against Flores heirs for partition of the lot, declaration of nullity
Heirs of Flores Restar v. Heirs of Dolores R. Cichon, 475 SCRA 731, Nov. 22, 2005. Id. 257 Id. 258 Id. 259 Supra.
255 256

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of documents, ownership with damages and preliminary injunction before the Regional Trial Court (RTC) of Aklan. Flores brothers Policarpio and Adolfo were impleaded also as defendants, they being unwilling co-plaintiffs. It has been shown during the trial that the complainants (respondents) never possessed the lot since the death of Restar and asserted their claim thereto only on January 21, 1999 when they led the complaint for partition. In contrast, Flores took possession of the lot after Restars death and exercised acts of dominion thereon tilling and cultivating the land, introducing improvements, and enjoying the produce thereof and in 1960 was able to secure a tax declaration in his name. In addition, the heirs of Restar had a verbal partition of one parcel of land in Carugdog, Lezo, Aklan in 1945 and an amicable partition of the lands of Restar in Banga, Aklan in 1973 without demanding for the partition of the subject lot. In holding that Flores possession ripened into ownership through acquisitive prescription, the Supreme Court explained Contrary to the ndings of the appellate court, the records of the case amply support petitioners claim that the requirements for extraordinary prescription had been duly met. When Restar died in 1935, his eight children became pro indiviso co-owners of the lot by intestate succession. Respondents never possessed the lot, however, much less asserted their claim thereto until January 21, 1999 when they led the complaint for partition subject of the present petition. In contrast, Flores took possession of the lot after Restars death and exercised acts of dominion thereon tilling and cultivating the land, introducing improvements, and enjoying the produce thereof. The statutory period of prescription, however, commenced not in 1935 but in 1960 when Flores, who had neither title nor good faith, secured a tax declaration in his name and may, therefore, be said to have adversely claimed ownership of the lot. And respondents were also deemed to have been on said date become aware of the adverse claim. Flores possession thus ripened into ownership through acquisitive prescription after the lapse of thirty years in accordance with the earlier quoted Article 1137 of the New Civil Code. The following observations of the trial court thus merit this Courts approval. The evidence proved that as far back as 1959, Flores Restar adjudicated unto himself the whole land in question as his share

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from his father by means of a joint afdavit which he executed with one Helen Restar, and he requested the Provincial Treasurer/ Assessor to have the land declared in his name. It was admitted by the parties during the pre-trial that this afdavit was the basis of the transfer of Tax Declaration No. 6686 from Emilio Restar to Flores Restar. So that from 1960 the land was declared in the name of Flores Restar (Exhibit 10). This was the rst concrete act of repudiation made by Flores of the co-ownership over the land in question. x x x Plaintiffs did not deny that aside from the verbal partition of one parcel of land in Carugdog, Lezo, Aklan way back in 1945, they also had an amicable partition of the lands of Emilio Restar in Cerrudo and Palale, Banga Aklan on September 28, 1973 (Exhibit 20). If they were able to demand the partition, why then did they not demand the inclusion of the land in question in order to settle once and for all the inheritance from their father Emilio Restar, considering that at that time all of the brothers and sisters, the eight heirs of Emilio Restar, were still alive and participated in the signing of the extra-judicial partition? Also it was admitted that Flores died only in 1989. Plaintiffs had all the chances (sic) to le a case against him from 1960, or a period of 29 years when he was still alive, yet they failed to do so. They led the instant case only on January 22, 1999, almost ten (10) years after Flores death. From the foregoing evidence, it can be seen that the adverse possession of Flores started in 1960, the time when the tax declaration was transferred in his name. The period of acquisitive prescription started to run from this date. Hence, the adverse possession of Flores Restar from 1960 vested in him exclusive ownership of the land considering the lapse of more than 38 years. Acquisitive prescription of ownership, laches and prescription of the action for partition should be considered in favor of Flores Restar and his heirs. While tax declarations and receipts are not conclusive evidence of ownership and do not prove title to the land, nevertheless, when coupled with actual possession, they constitute evidence of great weight and can be the basis of a claim of ownership through prescription. As for respondents claim that they have been receiving shares from the produce of the land, it was correctly discredited by the trial court. [P]laintiffs claim that Flores Restar gave them ve to eight gantas each as their shares in the produce cannot be sustained. A few gantas cannot be considered one-eight share of sixty (60)

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cavans of palay produced per cropping. One eight of sixty cavans would be at least six cavans, not merely gantas after excluding expenses for cultivation and production. If plaintiffs were to be believed, their whole 7/8 share of the produce would total two cavans, six gantas only at the usual rate of 25 gantas per cavan. Unless there are strong and impelling reasons to disturb the trial courts ndings of facts which must, as a matter of judicial policy, be accorded with the highest respect, they must remain. Respondents have not, however, proffered any reason warranting the disturbance of the trial courts ndings of facts. Indeed, the following acts of Flores show possession adverse to his coheirs: the cancellation of the tax declaration certicate in the name of Restar and securing another in his name; the execution of a Joint Afdavit stating that he is the owner and possessor thereof to the exclusion of respondents; payment of real estate tax and irrigation fees without respondents having ever contributed any share therein; and continued enjoyment of the property and its produce to the exclusion of respondents. And Flores adverse possession was continued by his heirs. [74.3.2] Extinctive Prescription

While the action for the partition of the thing owned in common (actio communi dividendo or actio familiae erciscundae) does not prescribe, the co-ownership does not last forever since it may be repudiated by a co-owner.260 In such a case, the action for partition does not lie.261 Hence, if the defendants show that they had previously asserted title in themselves adversely to the plaintiff and for the requisite period of time, the plaintiffs right to require recognition of his status as a co-owner will have been lost by prescription and the court cannot issue an order granting partition.262 Hence, from the moment one of the co-owners claims that he is the absolute and exclusive owner of the properties and denies the others any share therein, the question involved is no longer one of partition but of ownership263 and the prescriptive period will begin to run and may eventually operate to divest the real owners of their right to the property after the lapse of the applicable statutory period.264
Jardin v. Hallasgo, 117 SCRA 532, 536, Sept. 30, 1982. Id. 262 Roque v. Intermediate Appellate Court, 165 SCRA 118, 126, Aug. 30, 1988. 263 Delima v. Court of Appeals, 201 SCRA 641, Sept. 24, 1991. 264 165 SCRA 368, 376, Sept. 19, 1988.
260 261

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As discussed in supra 73.1, a co-ownership is a form of trust and every co-owner is a trustee for the others. In Article 1451, when land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is established by implication of law for the benet of the true owner. Likewise, under Article 1456 of the same Code, if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benet of the person from whom the property comes. Thus, in a situation where there is a repudiation of the co-ownership over a real property, it has been held that the action for reconveyance by a coowner of his share prescribes in ten (10) years, the action being based on an implied or constructive trust.265 When does the ten-year period commence to run? In a registered property, the point of reference is ordinarily the date of registration of the deed or the date of the issuance of the certicate of title over the property.266 The Supreme Court has held that when a co-owner of the property in question executed a deed of partition and on the strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one wherein he appears as the new owner of the property, thereby in effect denying or repudiating the ownership of the other co-owners over their shares, the statute of limitations started to run for the purposes of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their rights thereunder.267 In Delima v. Court of Appeals,268 it was held that the issuance of the new title in the name of one of the coowners constituted an open and clear repudiation of the trust or coownership and as the certicate of title was notice to the whole world of his exclusive title to the land, such rejection was binding on the other co-owners and started as against them the period of prescription. In Delima, three brothers and a sister inherited a parcel of land from their father, Lino Delima, in 1921. In 1953, the inherited property was transferred in the name of the Legal Heirs of Lino Delima, represented by Galileo Delima under TCT No. 2744. In the same year, Galileo Delima executed an afdavit of Extra-judicial Declaration of Heirs
Delima v. CA, supra; Segura v. Segura, 165 SCRA 368; Heirs of Jose Olviga v. Court of Appeals, 227 SCRA 330. 266 Vda. de Cabrera v. CA, 267 SCRA 339. 267 Delima v. CA, supra; Castillo v. Court of Appeals, 10 SCRA 549. 268 Supra.
265

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and based on this afdavit, TCT No. 2744 was cancelled and TCT No. 3009 was issued on February 4, 1954 in the name of Galileo Delima alone to the exclusion of the other heirs. Thereafter, Galileo Delima declared the lot in his name for taxation purposes and paid the taxes thereon from 1954 to 1965. On February 28, 1968, the surviving heirs of the siblings of Galileo led an action for reconveyance and/or partition of the property. In holding that the action led had already prescribed, the Court explained We have held that when a co-owner of the property in question executed a deed of partition and on the strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one wherein he appears as the new owner of the property, thereby in effect denying or repudiating the ownership of the other co-owners over their shares, the statute of limitations started to run for the purposes of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their rights thereunder (Castillo v. Court of Appeals, No. L-18046, March 31, 1964, 10 SCRA 549). Since an action for reconveyance of land based on implied or constructive trust prescribes after ten (10) years, it is from the date of the issuance of such title that the effective assertion of adverse title for purposes of the statute of limitations is counted (Jaramil v. Court of Appeals, No. L-31858, August 31, 1977, 78 SCRA 420). Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino Delima, represented by Galileo Delima, was cancelled by virtue of an afdavit executed by Galileo Delima and that on February 4, 1954, Galileo Delima obtained the issuance of a new title in his name numbered TCT No. 3009 to the exclusion of his co-heirs. The issuance of this new title constituted an open and clear repudiation of the trust or co-ownership, and the lapse of ten (10) years of adverse possession by Galileo Delima from February 4, 1954 was sufcient to vest title in him by prescription. As the certicate of title was notice to the whole world of his exclusive title to the land, such rejection was binding on the other heirs and started as against them the period of prescription. Hence,

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when petitioners led their action for reconveyance and/or to compel partition on February 29, 1968, such action was already barred by prescription. Whatever claims the other co-heirs could have validly asserted before can no longer be invoked by them at this time. In Maritegui v. Court of Appeals,269 however, the Supreme Court held that when a co-owner or co-heir registered the properties in his name in fraud of other co-owners or co-heirs, prescription can only be deemed to have commenced from the time the latter discovered the formers act of defraudation. In Adille v. Court of Appeals,270 the Court held that while it is true that registration under the Torrens system is constructive notice of title, the Torrens title does not furnish a shield for fraud. In Adille, one of the co-owners redeemed a foreclosed property belonging to the co-ownership and was able to secure a title only in his name. In holding that the action led by the other co-owners has not yet prescribed, the Court explained This Court is not unaware of the well-established principle that prescription bars any demand on property (owned in common) held by another (co-owner) following the required number of years. In that event, the party in possession acquires title to the property and the state of co-ownership is ended. In the case at bar, the property was registered in 1955 by the petitioner, solely in his name, while the claim of the private respondents was presented in 1974. Has prescription then, set in? We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive; and (4) he has been in possession through open, continuous, exclusive; and notorious possession of the property for the period required by law.
269 270

205 SCRA 337, citing Adille v. Court of Appeals, 157 SCRA 455. Supra.

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The instant case shows that the petitioner had not complied with these requisites. We are not convinced that he had repudiated the co-ownership; on the contrary, he had deliberately kept the private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot therefore be said to have made known his efforts to deny the co-ownership. Moreover, one of the private respondents, Emeteria Asejo, is occupying a portion of the land up to the present, yet, the petitioner has not taken pains to eject her therefrom. As a matter of fact, he sought to recover possession of that portion Emeteria is occupying only as a counterclaim, and only after the private respondents had rst sought judicial relief. It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title. For the same reason, we cannot dismiss the private respondents claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from such a date in this case. We note the petitioners sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral afdavit of extrajudicial settlement that he is the only heir and child of his mother Feliza with the consequence that he was able to secure title in his name also. Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioners act of defraudation. According to the respondent Court of Appeals, they came to know [of it] apparently only during the progress of the litigation. Hence, prescription is not a bar.

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Between the two contrasting views in the Delima and Mariategui cases, the ruling in the latter case is more in keeping with justice and equity and should thus be followed after all, our courts are not only courts of law but also, and more importantly, courts of justice. The foregoing discussions, however, apply only when the plaintiff or the person enforcing the trust is not in possession of the property, since if a person claiming to be the owner thereof is in actual possession of the property the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.271 The reason for this is that one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession.272
[74.4] Action For Partition, Explained

An action for partition which is typically brought by a person claiming to be co-owner of a specied property against a defendant or defendants whom the plaintiff recognizes to be co-owners may be seen to present simultaneously two principal issues. First, there is the issue of whether the plaintiff is indeed a co-owner of the property sought to be partitioned. Second, assuming that the plaintiff successfully hurdles the rst issue, there is the secondary issue of how the property is to be divided between plaintiff and defendant(s) i.e., what portion should go to which co-owner.273 Should the trial court nd that the defendants do not dispute the status of the plaintiff as co-owner, the court can forthwith proceed to the actual partitioning of the property involved. In case the defendants assert in their Answer exclusive title in themselves adversely to the plaintiff, the court should not dismiss the plaintiffs action for partition but, on the contrary and in the exercise of its general jurisdiction, resolve the question of whether the plaintiff is co-owner or not. Should the trial
Vda. de Cabrera v. CA, supra. Id. 273 Roque v. Intermediate Appellate Court, 165 SCRA 118, 125.
271 272

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court nd that the plaintiff was unable to sustain his claimed status as co-owner, or that the defendants are or have become the sole and exclusive owners of the property involved, the court will necessarily have to dismiss the action for partition. This result would be reached, not because the wrong action was commenced by the plaintiff, but rather because the plaintiff having been unable to show co-ownership rights in himself, no basis exists for requiring the defendants to submit to partition the property at stake. If, upon the other hand, the court after trial should nd the existence of co-ownership among the parties litigant, the court may and should order the partition of the property in the same action. Judgment for one or the other party being on the merits, the losing party (respondents in this case) may then appeal the same. In either case, however, it is quite unnecessary to require the plaintiff to le another action, separate and independent from that for partition originally instituted. Functionally, an action for partition may be seen to be at once an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of the property involved. This is the import of our jurisprudence on the matter and is sustained by the public policy which abhors multiplicity of actions.274
[74.5] When Partition Not Available

The action for partition will not be available in the following instances: (1) When there is an agreement among the owners to keep the thing undivided.275 However, such agreement must not exceed ten years.276 Where the parties stipulate a denite period of indivision which exceeds the maximum allowed by law, said stipulation shall be void only as to the period beyond such maximum.277 However, the period of ten years may be extended by a new agreement.278 (2) When the donor or testator prohibits partition for a period which shall not exceed twenty (20) years.279 Although the Civil Code is silent as to the effect of the indivision of a property for more than twenty years, it would be contrary to public policy to sanction coId. Art. 494, 2nd par., NCC. 276 Id. 277 Oliveras v. Lopez, 168 SCRA 431. 278 Art. 494, 2nd par., NCC; see also Art. 1083, NCC. 279 Art. 494, 3rd par., NCC.
274 275

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ownership beyond the period set by the law. Otherwise, the 20-year limitation expressly mandated by the Civil Code would be rendered meaningless.280 (3) When the law prohibits partition281 such as when the origin or juridical nature of co-ownership prevents partition: Examples: (a) The spouses, who are governed by a regime of absolute community, cannot agree to partition the community property without a judicial order.282 The heirs cannot partition the family home upon the death of the person or persons who constituted the same unless the court nds compelling reasons therefore.283 Upon the death of the person or persons who constituted the family home and there are two or more heirs, the whole estate of the decedent (including the family home) is, before its partition, owned in common by such heirs, subject to the payment of the debts of the deceased.284 As a rule, any one of the co-owners may demand partition at any time.285 However, so long as the family home continues as such pursuant to the provisions of Article 159 of the Family Code, the heirs are prohibited from partitioning the family home unless the court nds compelling reason therefore.286

(b)

(4) When partition would render the thing unserviceable for the use for which it is intended.287
[74.6] When thing is essentially indivisible

Whenever the thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds distributed.288 This is resorted to
Oliveras v. Lopez, supra. Art. 494, 3rd par., NCC. 282 Art. 134, FC. 283 Art. 159, FC. 284 Art. 1078, NCC. 285 Art. 494, NCC. 286 Art. 159, FC. 287 Art. 495, NCC. 288 Art. 498, NCC.
280 281

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when: (1) the right to partition the property is invoked by any of the coowners but because of the nature of the property it cannot be subdivided or its subdivision would prejudice the interests of the co-owners, and (2) the co-owners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement of the co-owners.289 In Reyes v. Concepcion,290 the Court upheld the order of the trial court directing the holding of a public sale of the properties owned in common pursuant to Article 498 of the Civil Code. The Court therein held Moreover, there is no legal inrmity tainting respondent trial judges order for the holding of a public sale of the subject properties pursuant to the provisions of Article 498 of the New Civil Code. After a careful examination of the proceedings before respondent trial judge, the Court nds that respondent trial judges order was issued in accordance with the laws pertaining to the legal or juridical dissolution of co-ownerships. It must be noted that private respondents, in their answer with counterclaim prayed for, inter alia, the partition of the subject properties in the event that the petitioners refused to purchase their pro-indiviso shares at the rate of P12.50 per square meter. Unlike petitioners claim of a pre-emptive right to purchase the other co-owners pro-indiviso shares, private respondents counterclaim for the partition of the subject properties is recognized by law, specically Article 494 of the New Civil Code which lays down the general rule that no co-owner is obliged to remain in the co-ownership. Article 494 reads as follows: No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any time partition of the thing owned in common, insofar as his share is concerned. Nevertheless, an agreement to keep the thing undivided for a certain period of time, not
289 290

Aguilar v. Court of Appeals, 227 SCRA 473. 190 SCRA 171.

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exceeding ten years, shall be valid. This term may be extended by a new agreement. A donor or testator may prohibit partition for a period which shall not exceed twenty years. Neither shall there be partition when it is prohibited by law. No prescription shall run in favor of a coowner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership. None of the legal exceptions under Article 494 applies to the case at bar. Private respondents counterclaim for the partition of the subject properties was therefore entirely proper. However, during the pre-trial proceedings, petitioners adopted the position that the subject properties were incapable of physical partition. Initially, private respondents disputed this position. But after petitioners inexplicably refused to abide by the pre-trial order issued by respondent trial judge, and stubbornly insisted on exercising an alleged pre-emptive right to purchase private respondents shares at a reasonable price, private respondents relented and adopted petitioners position that the partition of the subject properties was not economically feasible, and, consequently, invoked the provisions of Article 498 of the New Civil Code[Private respondents Motion To Allot Properties To Defendants Or To Sell the Same Pursuant To Article 498 Of The Civil Code, Annex D of the Petition; Rollo, pp. 46-49]. Inasmuch as the parties were in agreement as regards the fact that the subject properties should not be partitioned, and private respondents continued to manifest their desire to terminate the co-ownership arrangement between petitioners and themselves, respondent trial judge acted within his jurisdiction when he issued his order dated February 4, 1981 requiring the parties to answer certain questions for the purpose of determining whether or not the legal conditions for the applicability of Article 498 of the New Civil Code were present in the case.

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Art. 498 provides that: Whenever the thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds distributed. The sale of the property held in common referred to in the above article is resorted to when (1) the right to partition the property among the co-owners is invoked by any of them but because of the nature of the property, it cannot be subdivided or its subdivision [See Article 495 of the New Civil Code] would prejudice the interests of the co-owners (See Section 5 of Rule 69 of the Revised Rules of Court) and (2) the co-owners are not in agreement as to who among them shall be allotted or assigned the entire property upon reimbursement of the shares of the other coowners. Petitioners herein did not have justiable grounds to ignore the queries posed by respondent trial judge and to insist that hearings be conducted in order to ascertain the reasonable price at which they could purchase private respondents pro-indiviso shares [Petitioners Compliance and Motion dated February 27, 1981, Annex H of the Petition; Rollo, pp. 57-60]. Since at this point in the case it became reasonably evident to respondent trial judge that the parties could not agree on who among them would be allotted the subject properties, the Court nds that respondent trial judge committed no grave abuse of discretion in ordering the holding of a public sale for the subject properties (with the opening bid pegged at P12.50 per square meter), and the distribution of the proceeds thereof amongst the co-owners, as provided under Article 498 of the New Civil Code. In Aguilar v. Court of Appeals, cited in supra 64.3, the Court also sustained the sale of the community property under the provisions of Article 498 of the Civil Code.

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Article 498 of the Civil Code is complemented by Article 1086 of the Civil Code which provides, as follows: Art. 1086. Should a thing be indivisible, or would be much impaired by its being divided, it may be adjudicated to one of the heirs, provided he shall pay the others the excess in cash. Nevertheless, if any of the heirs should demand that the thing be sold at public auction and that strangers be allowed to bid, this must be done. (1062)
[74.7] Legal Effects of Partition

Once a partition has been made, whether by agreement among the co-owners or by judicial proceedings,291 the following are the legal effects thereof: (1) The co-ownership is terminated292 and each co-owner becomes the absolute and exclusive owner of the share allotted to him.293 And he shall be deemed to be in exclusive possession of that portion which has been allotted to him even during the entire period that the co-ownership lasted.294 (2) It shall not prejudice the rights of third persons, who shall retain the rights of mortgage, servitude, or any other real rights belonging to them before the division was made.295 (3) Personal rights pertaining to third persons against the ownership shall also remain in force.296 (4) Mutual accounting shall be rendered by the co-owners to each other with regard to benets and expenses and each co-owner shall pay for damages caused by reason of his negligence or fraud.297 In the partition among co-heirs, they shall reimburse one another for the

Art. 496, NCC. See discussion under supra 72.1. 293 Art. 1091, NCC. 294 Art. 543, NCC. 295 Art. 499, NCC. 296 Id. 297 Art. 500, NCC.
291 292

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income and fruits which each one of them may have received from any property of the estate, for any useful and necessary expenses made upon such property, and for any damage thereto through malice or neglect.298 (5) Every co-owner shall be liable for defects of title and quality of the portion assigned to each of the other co-owners.299 oOo

298 299

Art. 1087, NCC. Art. 501, NCC; see also Arts. 1092-1096, NCC.

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Title IV. SOME SPECIAL PROPERTIES


Chapter 1 WATERS Section 1. Ownership of Waters
Art. 502. The following are of public dominion: (1) Rivers and their natural beds; (2) Continuous or intermittent waters of springs and brooks running in their natural beds and the beds themselves; (3) Waters rising continuously or intermittently on lands of public dominion; (4) Lakes and lagoons formed by Nature on public lands, and their beds; (5) Rain waters running through ravines or sand beds, which are also of public dominion; (6) Subterranean waters on public lands; (7) Waters found within the zone of operation of public works, even if constructed by a contractor; (8) Waters rising continuously or intermittently on lands belonging to private persons, to the State, to a province, or to a city or a municipality from the moment they leave such lands; (9) The waste waters of fountains, sewers and public establishments. (407) Art. 503. The following are of private ownership: (1) Continuous or intermittent waters rising on lands of private ownership, while running through the same; (2) lands; (3) Lakes and lagoons, and their beds, formed by Nature on such Subterranean waters found on the same;

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(4) Rain waters falling on said lands, as long as they remain within the boundaries; (5) The beds of owing waters, continuous or intermittent, formed by rain water, and those of brooks, crossing lands which are not of public dominion. In every drain or aqueduct, the water, bed, banks and oodgates shall be considered as an integral part of the land or building for which the waters are intended. The owners of lands, through which or along the boundaries of which the aqueduct passes, cannot claim ownership over it, or any right to the use of its bed or banks, unless the claim is based on titles of ownership specifying the right or ownership claimed. (408)

Section 2. The Use of Public Waters


Art. 504. The use of public waters is acquired: (1) (2) By administrative concession; By prescription for ten years.

The extent of the rights and obligations of the use shall be that established, in the rst case, by the terms of the concession, and, in the second case, by the manner and form in which the waters have been used. (409a) Art. 505. Every concession for the use of waters is understood to be without prejudice to third persons. (410) Art. 506. The right to make use of public waters is extinguished by the lapse of the concession and by non-user for ve years. (411a)

75. Governing Laws on Waters Prior to the enactment of the New Civil Code, matters relating to waters or water resources were governed by the following laws: (1) the Civil Code of Spain of 1889 (the Old Civil Code), which was extended to the Philippines by Royal Decree of July 31, 1889; (2) the Spanish Law on Waters of 1866, which was extended to the Philippines by the Royal Decree of August 3, 1866; and (3) the Irrigation Act (Act No. 2152), which was passed by the Philippine Legislature in 1912. While the New Civil Code (R.A. No. 386, as amended), which took effect on August 30, 1950, repealed expressly those parts and provisions of the Civil Code of 1889 which were then in force at that time, there was no express repeal of the provisions of the Spanish Law on Waters of 1866 and the Irrigation Act of 1912.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION SOME SPECIAL PROPERTIES Waters

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In 1976, the Water Code of the Philippines (P.D. No. 1067) was promulgated expressly repealing the provisions of the Irrigation Act. However, the provisions of the Spanish Law on Waters of 1866 and the New Civil Code on ownership of waters, easements relating to waters, use of public waters and acquisitive prescription on the use of waters, were considered repealed only to the extent that they were inconsistent with the provisions of the Water Code of the Philippines. Hence, under present laws, matters relating to waters or water resources are governed primarily by the Water Code of the Philippines. The provisions of the New Civil Code on waters and that of the Spanish Law on Waters of 1866, which are not in conict with the Water Code of the Philippines, still apply. 76. Ownership of Waters The basic provision governing the ownership of waters within the territorial jurisdiction of the Philippines is Section 2, Article XII of the 1987 Philippine Constitution which provides, part, as follows Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, sheries, forests or timber, wildlife, ora and fauna, and other natural resources are owned by the State. x x x1 With the foregoing provision of the Constitution, it seems that all waters in their natural beds must be considered of public dominion.2 Indeed, the basic State principles underlying the enactment of the Water Code of the Philippines are stated, as follows: 1. All waters belong to the State. 2. All waters that belong to the state can not be the subject of acquisitive prescription.

1 This is a substantial reproduction of Section 8, Article XIV of the 1973 Constitution which provides, as follows: Sec. 8. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, sheries, wildlife, and other natural resources of the Philippines belong to the State. x x x 2 See II Tolentino, Civil Code of the Philippines, 1992 ed., 219.

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3. The State may allow the use or development of waters by administration concession. 4. The utilization, exploitation, development, conservation and protection of water resources shall be subject to the control and regulation of the government through the National Water Resources Council, hereinafter referred to as the Council. 5. Preference in the use and development of waters shall consider current usages and be responsive to the changing needs of the country.3
[76.1] State Ownership of Waters

The Water Code of the Philippines, in implementing the mandate of Section 8, Article XIV of the 1973 Constitution4 which declared waters as belonging to the State, appears to have nationalized the ownership of waters found in their natural beds by declaring all of them as State-owned, whether the waters are found on public property or on private lands. Articles 5 and 6 of the Water Code of the Philippines provide, as follows Art. 5. The following belong to the state: a. Rivers and their natural beds; b. Continuous or intermittent waters of springs and brooks running in their natural beds and the beds themselves; c. Natural lakes and lagoons; d. All other categories of surface waters such as water owing over lands, water form rainfall whether natural or articial, and water from agriculture run-off, seepage and drainage; e. f. g. Atmospheric water; Subterranean or ground water; and Seawater.

3 4

See Art. 3, Water Code of the Philippines. The precursor of Sec. 2, Article XII of the 1987 Phil. Constitution.

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Art. 6. The following waters found on private lands also belong to the States: a. lands; b. c. d. e. Continuous or intermittent waters rising on such Lakes and lagoons naturally occurring on such lands; Rain water and falling on such lands; Subterranean or ground waters; and Waters in swamps and marshes.

The owner of the land where the water is found may use the same for domestic purposes without securing a permit, provided that such use shall be registered, when required by the Council. The Council, however, may regulate such use when there is wastage, or in times of emergency. In declaring the waters enumerated in Article 6 of the Water Code of the Philippines as belonging to the State, the said law has the effect of repealing the provisions of Article 503 of the New Civil Code because the provisions of the latter law are totally inconsistent with the former. Under existing laws, therefore, there are no more waters of private ownership to speak of. However, for those waters found on private lands mentioned in Article 6 of the Water Code of the Philippines, the owner of the land may use the waters for domestic without securing a permit from the National Water Resources Council, although the Council may regulate such use in two occasions: (1) when there is wastage; or (2) in times of emergency.
[76.2] Subterranean or Ground Waters

While it is the rule in Article 437 of the New Civil Code that the ownership of lands extends to the surface as well as to the subsoil under it, such rule does not extend to the waters under the ground, known as subterranean or ground waters. Pursuant to paragraph (d) of Article 6 of the Water Code of the Philippines, subterranean or ground waters belong to the State even if they are found on private lands. As such, any construction of installations for the utilization of subterranean or

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ground waters may not be undertaken unless the plans and specications thereof are approved by the proper government agency.5 Section 3. The Use of Waters of Private Ownership
Art. 507. The owner of a piece of land on which a spring or brook rises, be it continuous or intermittent, may use its waters while they run through the same, but after the waters leave the land they shall become public, and their use shall be governed by the Special Law of Waters of August 3, 1866, and by the Irrigation Law. (412a) Art. 508. The private ownership of the beds of rain waters does not give a right to make works or constructions which may change their course to the damage of third persons, or whose destruction, by the force of oods, may cause such damage. (413) Art. 509. No one may enter private property to search waters or make use of them without permission from the owners, except as provided by the Mining Law. (414a) Art. 510. The ownership which the proprietor of a piece of land has over the waters rising thereon does not prejudice the rights which the owners of lower estates may have legally acquired to the use thereof. (415) Art. 511. Every owner of a piece of land has the right to construct within his property, reservoirs for rain waters, provided he causes no damage to the public or to third persons. (416)

Section 4. Subterranean Waters


Art. 512. Only the owner of a piece of land, or another person with his permission, may make explorations thereon for subterranean waters, except as provided by the Mining Law. Explorations for subterranean waters on lands of public dominion may be made only with the permission of the administrative authorities. (417a) Art. 513. Waters articially brought forth in accordance with the Special Law of Waters of August 3, 1866, belong to the person who brought them up. (418) Art. 514. When the owner of waters articially brought to the surface abandons them to their natural course, they shall become of public dominion. (419)

See Art. 39, Water Code of the Philippines.

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Section 5. General Provisions


Art. 515. The owner of a piece of land on which there are defensive works to check waters, or on which, due to a change of their course, it may be necessary to reconstruct such works, shall be obliged, at his election, either to make the necessary repairs or construction himself, or to permit them to be done, without damage to him, by the owners of the lands which suffer or are clearly exposed to suffer injury. (420) Art. 516. The provisions of the preceding article are applicable to the case in which it may be necessary to clear a piece of land of matter, whose accumulation or fall may obstruct the course of the waters, to the damage or peril of third persons. (421) Art. 517. All the owners who participate in the benets arising from the works referred to in the two preceding articles, shall be obliged to contribute to the expenses of construction in proportion to their respective interests. Those who by their fault may have caused the damage shall be liable for the expenses. (422) Art. 518. All matters not expressly determined by the provisions of this Chapter shall be governed by the special Law of Waters of August 3, 1866, and by the Irrigation Law. (425a)

77. Appropriation of Waters All waters that belong to the State, according to Article 3 of the Water Code of the Philippines, cannot be the subject of acquisitive prescription. Hence, to this extent, paragraph 2 of Article 504 of the New Civil Code, which authorizes acquisition of use of public waters by prescription, is deemed to have been repealed. Ordinarily, appropriation of water is not authorized without a water permit, which is the privilege granted by the government to appropriate and use water and evidenced by a document known as water permit.6 A water permit, however, need not be secured in the following instances: 1. For use of waters found on private lands by the owner thereof but only for domestic purposes.7 Use of water for domestic purpose is the utilization of water for drinking, washing, bathing, cooking or other

6 7

See Art. 13, Water Code of the Philippines. See Art. 6, Water Code of the Philippines.

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household needs, home gardens, and watering of lawns or domestic animals.8 2. For appropriation or use of natural bodies of water for any of the following: (a) Appropriation of water by means of hand-carried receptacles; and (b) Bathing or washing, watering or dipping of domestic or farm animals, and navigation of watercrafts or transportation of logs and other objects by oatation.9 Water which are legally appropriated pursuant to the provisions of the Water Code of the Philippines shall be subject to the control of the appropriator from the moment it reaches the appropriators canal or aqueduct leading to the place where the waters will be used or stored and, thereafter, so long as it is being benecially used for the purposes for which it was appropriated.10
PRESIDENTIAL DECREE NO. 1067 December 31, 1976 THE WATER CODE OF THE PHILIPPINES (A DECREE INSTITUTING A WATER CODE, THEREBY REVISING AND CONSOLIDATING THE LAWS GOVERNING THE OWNERSHIP, APPROPRIATION, UTILIZATION, EXPLOITATION, DEVELOPMENT, CONSERVATION AND PROTECTION OF WATER RESOURCES) WHEREAS, Article XIV, Section 8 of the New Constitution of the Philippines provides, inter alia, that all waters of the Philippines belong to the State; WHEREAS, existing water legislations are piece-meal inadequate to cope with increasing scarcity of water and changing patterns of water use; WHEREAS, there is a need for a Water Code based on rational concepts of integrated and multi-purpose management of water resources and sufciently exible to adequately meet future developments:
See Art. 10, Water Code of the Philippines. See Art. 14, Water Code of the Philippines. 10 See Art. 8, Water Code of the Philippines.
8 9

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WHEREAS, water is vital national development and it has become increasingly necessary for government to intervene actively in improving the management of water resources; NOW, THEREFORE, I, FERDINAND, E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, do hereby orders and decree the enactment of the Water Code of the Philippines of 1976, as follows: CHAPTER I DECLARATION OF OBJECTIVES AND PRINCIPLES Article 1. This Code shall be known as The Water Code of the Philippines. Article 2. The objectives of this Code are: a. To establish the basic principles and framework relating to the appropriation, control and conservation of water resources to achieve the optimum development and rational utilization of these resources; b. To dene the extent of the rights and obligation of water users and owners including the protection and regulation of such rights; c. To adopt a basic law governing the ownership, appropriation, utilization, exploitation, development, conservation and protection of water resources and rights to land related thereto; and d. Code. Art. 3. The underlying principles of this code are: a. All waters belong to the State. b. All waters that belong to the state can not be the subject of acquisitive prescription. c. The State may allow the use or development of waters by administration concession. d. The utilization, exploitation, development, conservation and protection of water resources shall be subject to the control and regulation of the government through the National Water Resources Council, hereinafter referred to as the Council. e. Preference in the use and development of waters shall consider current usages and be responsive to the changing needs of the country. To identify the administrative agencies which will enforce this

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Art. 4. Waters, as used in this Code, refers to water under the grounds, water above the ground, water in the atmosphere and the waters of the sea within the territorial jurisdiction of the Philippines. CHAPTER II OWNERSHIP OF WATERS Art. 5. The following belong to the state: a. Rivers and their natural beds; b. Continuous or intermittent waters of springs and brooks running in their natural beds and the beds themselves; c. Natural lakes and lagoons; d. All other categories of surface waters such as water owing over lands, water form rainfall whether natural or articial, and water from agriculture run-off, seepage and drainage; e. f. g. Atmospheric water; Subterranean or ground water; and Seawater.

Art. 6. The following waters found on private lands also belong to the States: a. b. c. d. e. Continuous or intermittent waters rising on such lands; Lakes and lagoons naturally occurring on such lands; Rain water and falling on such lands; Subterranean or ground waters; and Waters in swamps and marshes.

The owner of the land where the water is found may use the same for domestic purposes without securing a permit, provided that such use shall be registered, when required by the Council. The Council, however, may regulate such use when there is wastage, or in times of emergency. Art. 7. Subject to the provisions of this Code, any person who captures or collects water by means of cisterns, tanks, or pools shall have exclusive control over such water and the right to dispose of the same. Art. 8. Water legally appropriated shall be subject to the control of the appropriator from the moment it reaches the appropriators canal or aqueduct

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leading to the place where the water will be used or stored and, thereafter, so long as it is being benecially used for the purposes for which it was appropriated. CHAPTER III APPROPRIATION OF WATERS Art. 9. Waters may be appropriated and used in accordance with the provisions of this Code. Appropriation of water, as used in this Code, is the acquisition of rights over the use of waters or the taking or diverting of waters from a natural source in the manner and for any purpose allowed by law. Art. 10. Water may be appropriated for the following purposes: a. b. c. d. e. f. g. h. i. Domestic; Municipal; Irrigation; Power generation; Fisheries; Livestock raising; Industrial; Recreational; and Other purposes;

Use of water for domestic purposes is the utilization of water for drinking, washing, bathing, cooking or other household needs, home gardens, and watering of lawns or domestic animals. Use of water for municipal purposes is the utilization of water for supplying the water requirements of the community. Use of water for irrigation is the utilization of water for producing agricultural crops. Use of water for power generation is the utilization of water for producing electrical or mechanical power. Use of water for power sheries is the utilization of water for the propagation and culture of sh as a commercial enterprise. Use of water for livestock raising is the utilization of water for large herds or ocks of animals raised as a commercial enterprise.

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Use of water for industrial purposes is the utilization of water in factories, industrial plants and mines, including the use of water as an ingredient of a nished product. Use of water for recreational purposes is the utilization of water for swimming pools, bath houses, boating, water skiing, golf courses and other similar facilities in resorts and other places of recreation. Art. 11. The state, for reasons of public policy, may declare waters not previously appropriated, in whole or in part, exempt from appropriation for any or all purposes and, thereupon, such waters may not be appropriated for those purposes. Art. 12. Waters appropriated for a particular purpose may be applied for another purpose only upon prior approval of the Council and on condition that the new use does not unduly prejudice the rights of other permittees, or require an increase in the volume of water. Art. 13. Except as otherwise herein provided, no person, including government instrumentalities or government-owned or controlled corporations, shall appropriate water without a water right, which shall be evidenced by a document known as a water permit. Water right is the privilege granted by the government to appropriate and use water. Art. 14. Subject to the provisions of this Code concerning the control, protection, conservation, and regulation of the appropriation and use of waters, any person may appropriate or use natural bodies of water without securing a water permit for any of the following. a. Appropriation of water by means of hand carried receptacles; and b. Bathing or washing, watering or dipping of domestic or farm animals, and navigation of watercrafts or transportation of logs and other objects by otation. Art. 15. Only citizens of the Philippines, of legal age, as well as juridical persons, who are duly qualied by law to exploit and develop water resources, may apply for water permits. Art. 16. Any person who desires to obtain a water permit shall le an application with the Council who shall make known said application to the public for any protests. In determining whether to grant or deny an application, the Council shall consider the following: protests led, if any; prior permits granted; the availability of water; the water supply need for benecial use; possible adverse effects; land-use economics; and other relevant factors.

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Upon approval of an application, a water permit shall be issued and recorded. Art. 17. The right to the use of water is deemed acquired as of the date of ling of the application for a water permit in case of approved permits, or as of the date of actual use in a case where no permit is required. Art. 18. All water permits granted shall be subject to conditions of benecial use, adequate standards of design and construction, and such other terms and conditions as may be imposed by the Council. Such permits shall specify the maximum amount of water which may be diverted or withdrawn, the maximum rate diversion or withdrawal, the time or times during the year when water may be diverted or withdrawn, the points or points of diversion or location of wells, the place of use, the purpose for which water may be used and such other requirements the Council deems desirable. Art. 19. Water rights may be lent or transferred in whole or in part to another person with prior approval of the Council, after due notice and hearing. Art. 20. The measure and limit of appropriation of water shall be benecial use. Benecial use of water is the utilization of water in the right amount during the period that the water is needed for producing the benets for which the water is appropriated. Art. 21. Standards of benecial use shall be prescribed by the Council for the appropriator of water for different purposes and conditions, and the use of waters which are appropriated shall be measured and controlled in accordance therewith. Excepting those for domestic use, every appropriator of water shall maintain water control and measuring devices, and keep records or water withdrawal. When required by the Council, all appropriators of water shall furnish information on water use. Art. 22. Between two or more appropriation of water from the same sources of supply, priority in time of appropriation shall give the better right, except that in times of emergency, the use of water for domestic and municipal purposes shall have a better right over all other uses; Provided, That where water shortage is recurrent and the appropriator for municipal use has a lower priority in time of appropriation, then it shall be his duty to nd an alternative source of supply in accordance with conditions prescribed by the Council. Art. 23. Priorities may be altered on grounds of greater benecial use, multi-purpose use, and other similar grounds after due notice and hearing, subject to payment of compensation in proper cases.

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Art. 24. A water right shall be exercised in such a manner that rights of third persons or of other appropriators are not prejudiced thereby. Art. 25. A holder of a water permit may demand the establishment of easements necessary for the construction and maintenance of the works and facilities needed for the benecial use of the waters to be appropriated subject to the requirements of just compensation and to the following conditions: a. That he is the owner, lessee, mortgage or one having real right over the land upon which he proposes to use water; and b. That the proposed easement is the most convenient and the least onerous to the servient estate. Easement relating to the appropriation and use of waters may be modied by agreement of the contracting parties provided the same is not contrary to law or prejudicial to third persons. Art. 26. Where water shortage is recurrent, the use of the water pursuant to a permit may, in the interest of equitable distribution of benets among legal appropriators, be reduced after due notice and hearing. Art. 27. Water users shall bear the diminution of any water supply due to natural causes or force majeure. Art. 28. Water permits shall continue to be valid as long as water is benecially used; however, it maybe suspended on the grounds of noncompliance with approved plans and specications or schedules of water distribution; use of water for a purpose other than that for which it was granted; non-payment of water charges, wastage; failure to keep records of water diversion, when required; and violation of any term or condition of any permit or of rules and regulations promulgated by the Council. Temporary permits may be issued for the appropriation and use of water for short periods under special circumstances. Art. 29. Water permits may be revoked after due notice and hearing on grounds of non-use; gross violation of the conditions imposed in the permit; unauthorized sale of water; willful failure or refusal to comply with rules and regulations or any lawful order; pollution, public nuisance or acts detrimental to public health and safety; when the appropriator is found to be disqualied under the law to exploit and develop natural resources of the Philippines; when, in the case of irrigation, the land is converted to non-agricultural purposes; and other similar grounds. Art. 30. All water permits are subject to modication or cancellation by the Council, after due notice and hearing, in favor of a project of greater benecial use or for multi-purpose development, and a water permittee who

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suffers thereby shall be duly compensated by the entity or person in whose favor the cancellation was made. CHAPTER IV UTILIZATION OF WATERS Art. 31. Preference in the development of water resources shall consider security of the State, multiple use, benecial effects, adverse effects and cost of development. Art. 32. The utilization of subterranean or ground water shall be coordinated with that of surface waters such as rivers, streams, springs and lakes, so that a superior right in one is not adversely affected by an inferior right in the other. For this purpose, the Council shall promulgate rules and regulations