Property

CIVIL LAW 2011 ©
Growling Notes
DISCLAIMER
This Personal Review Notes taken from various sources is an INTELECTUAL PROPERTY of 1BB (AY 2009-2010). These notes
are meant to be shared to those who will benefit from it. The user is discourage to delete, diminish, in any manner, and/or
otherwise refuse to give credit to the persons who made this.
GENERAL PRINCIPLES
I. Property
■ Definition of Property
■ Attributes of Property
■ Classifications
■ Property distinguished from a Thing
■ Kinds of Thing
II. Immovable Property
III. Movable Property
IV. Property in Relation to Person to whom it Belongs
■ Public Dominion
■ Patrimonial Property
V. Possessor in Good Faith ≠ Bad Faith
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Growling Notes
VI. Real ≠ Personal Right
PROPERTY1
Any physical and real, or juridical and legal, entity capable of becoming the subject matter of a juridical relation
Attributes of a Property
*Memory aide: USA
a. Utility
b. Substantivity or has a separate or autonomous existence
c. Susceptible to Appropriation
Classification of Property
1. As to Nature of the Thing Itself
a. Movable / Personal Property
a.1. Consummable
a.2. Non-consummable
b. Immovable / Real Property
2. As to Ownership
a. Public Dominion
b. Private Ownership
Importance of Classification
1. For applying the rules of acquisitive prescription2
2. To determine the propriety of the object of contracts
1
Article 414, New Civil Code
2
Rule on Aquisitive Prescription:
Movables
Good faith – uninterrupted possession of 4years
Bad faith – uninterrupted possession for 8years
Immovables
Good faith – 10years
Bad faith – 30years
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3. To determine the formalities of a donation3
4. In extrajudicial Deposit
5. Determining Crimes of Theft, Robbery and Usurpation
6. Determining the venue4 in remedial law
7. Taxation Purposes
Note: All properties are things but not all things are property.
We must first determine whether or not it can be sold. Remember the elements of a valid contract.5
*If it is a property – there would be no problem because it can be appropriated

*If it is a thing – validity of sale can be attacked because the object of the sale may be outside the commerce of man or illegal.
THING - any object that exist and capable of satisfying some human needs. It includes both objects already possessed or
owned and those that are susceptible of appropriation.
Kinds of Thing
1. res nullius6
2. res communes7
3. res derelicta8
4. res alicujus9
Q&A
3
Rule Formalities of Donation:
Personal Property – donation and acceptance must be in writing if donation exceeds Php5,000
Real Property – Donation and acceptance must be in a public document
4
Venue – proper place or court to file the action in order to vest jurisdiction upon the court
5
Elements of a Valid Contract (OBLICON)
○ Consent
○ Object
○ Cause or consideration
6
any property that is not yet appropriated but susceptible of appropriation
7
objects which are beyond human control and can be enjoyed by everybody
8
refers to abandoned property
9
property that is already owned
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Growling Notes
Q. Is human kidney a property?

A. No. It is not susceptible to appropriation. Kidneys are outside the commerce of man. It can only be donated but cannot be a
subject of a contract of sale.
Q. How about marijuana, will the sale be valid?

A. No. Insofar as the Philippine laws are concerned, it is outside the commerce of men.
Q. Corpse of human being?

A. No. Although upon death of a person, corpse is considered to be a thing, it is not susceptible of appropriation and
commerce by reason of public morals. The personality of man demands respect even after death.
Hence human body, whether alive or dead, is neither real nor personal property, for it is not even a property at all, in
that it generally cannot be appropriated. Under certain conditions, body of a person or parts thereof may be the subject matter
of a transaction (See RA No. 349, RA no. 7170 and RA No. 7719)
* In reality, there are illegal transactions commonly found in Medicine Schools. But LEGALLY speaking, it is not and can never
be subject to sale.
IMMOVABLE PROPERTY
● Properties which cannot be transferred from one place to another without causing injury.
Categories
*Memory aide: NIDA
1. by Nature10
2. by Incorporation11
3. by Destination12
a. Equipment and machineries necessary

b. Ornaments – as long as intended to be permanent
Note: It must be placed by the owner
4. by Analogy13
10
It cannot be carried from place to place (Art. 415, par. 1&8).
11
Attached to an immovable in a fixed manner to be made an integral part thereof and removal will cause injury (Art. 415, pars. 1-3)
12
Placed in an immovable for the utility it gives to the activity carried thereon (Art. 415, pars. 4-7 & 9)
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Q&A
Q. In immovable by incorporation, is the person who introduced such property important?

A. No. Person who placed the property (whether real or personal) is immaterial. What is material is the moment it is
incorporated or detached.
Q. How about in the contract of lease?

A. G.R.: Properties placed by a tenant (as lessee) are personal properties
XPN: The tenant is the agent of the owner
Note: In cases of informal settlers, who do not have the authority, it will not be a personal but will remain as real property.
Types of Immovable Properties14 (Art. 415)
1. Land, buildings, roads and constructions of all kinds adhered to the soil
● A dismantled house and/or of materials of such house shall cease to be immovable and shall legally be considered
personal property. (Bicerra v. Teneza, G.R. No. L-16218, 1962)
● Buildings are immovable by incorporation. Hence their adherence to the soil must be permanent and substantial.
● A building is an immovable even if not erected by the owner of the land. The only criterion is the union or incorporation
with the soil [reason: a building cannot be divested of its character of a realty by the fact that the land on which it is
constructed belongs to another. Otherwise, it would cloak the building in an uncertain status (real or personal) made
dependent on the ownership of the land]; 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 (Ladera v. Hodges, CA-GR No. 8027-R, 1952)
● A building which is merely superimposed on the soil is not a real property (Bautista v. Supnad (CA), 59 O.G. 1575,
1962)
● A building is real property thus its sale as annotated in the Chattel Mortgage Registry cannot be given the legal effect of
registration in the Registry of Real Property. (Leung Lee v. Strong Machinery Co. GR No. L-11658, 1918)
● While it is true that a mortgage of a 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 (Prudential Bank v. Panis,
G.R. No. L-50008, 1987)
13
It so classified by express provision of law (Art.415 par.10)
14
Article 415, New Civil Code
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Growling Notes
● Steel towers constructed by the Manila Electric Company 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. Hence, not
being adhered to the soil, they are not to be considered real properties. (Board of Assessment Appeals v. Manila
Electric Company, G.R. No. L-15334, 1964)
Doctrine of Estoppel – parties to a contract may, by agreement, treat as personal property that which by nature would be a
real property; party is prohibited from assuming inconsistent positions and repudiating an obligation voluntarily assumed after
having accepted benefits therefrom
Note: This is not to say that a chattel mortgage over a real property is valid. The contracting parties are merely stopped from repudiating the
contract.
● 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 said contract. (Piansay v. David, G.R. No. L-19468, 1964)
2. Trees plants and growing fruits
GR: When trees are uncut or uprooted, incorporation ceases and become movables
XPN: timber remains integral part of a real property when it constitutes its natural products
Note: For purposes of attachment, execution and the Chattel Mortgage Law, growing crops have the nature of a personal property. (Sibal v.
Valdez GR No. L-27352, 1927)
Growing Fruits
GR: Growing Fruits are real property if attached to the soil
XPN:
a. For purposes of sale
b. For attachment and execution
c. For applying Chattel Mortgage Law
3. Everything attached to an immovable in a fixed manner
● Attachment need not be made by the owner.
● The breakage or injury, in case of separation, must be substantial.
● The fact that the machineries were bolted or cemented on real property mortgage does not make them ipso facto
immovable under Art. 415 par. 3&5, as the parties’ intent has to be looked into. Even if the properties appear to be
immovable by nature, nothing prohibits the parties from treating them as chattels to secure an obligation under the
principle of estoppel. (Tsai v. CA, GR No. 120098, 2001)
4. Statues, reliefs, paintings or other objects for use or ornamentation

Requisites
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Growling Notes
a. Place by the owner or by the tenant as agent of the owner

b. With the intention of attaching them permanently, even if adherence will not involve breakage or injury.
5. Machinery, receptacles, instruments, or implements for an industry or works

Requisites
a. The machinery, etc. must be placed by the owner of the tenement or his agent
b. The industry or work must be carried on in a building or on a piece of land
c. The machinery, etc. must tend directly to meet the needs of the said industry or works
● Cash registers and typewriters usually found in hotels and restaurants are merely incidentals are not and should not
be considered immobilized by destination, for these business can continue or carry on their functions even without
these equipments. (Mindanao Bus Co. v. City Assessor, G.R. No. L-17870, 1962)
● Steel towers are not intended for industry or works on the land since Manila Electric Company is not engaged in an
industry or works on the land in which the steel supports or towers are constructed. (Board Assessment Appeals v.
Manila Electric Company, G.R. No. L-15334, 1964)
● Machinery15, movable in nature, becomes immobilized when placed on a plant by the owner of the property but not so
when placed by a tenant, usufractuary or a person having only a temporary right unless such person acted as agent
of the owner. (Davao Sawmill Co. v. Castillo, GR. No. 40411, 1935)
Note: Machinery must be essential and principal – if no longer used in the industry or works, it becomes a personal property; if temporarily
separated only but still needed, it is an immovable property
● Equipment and living quarters of the crew permanently attached to an immovable is an immovable especially if it is
intended to meet the needs of an industry of the corporation (Fels Energy, Inc. v. Province of Batangas, G.R. No.
168557, 2007)
GR: If not placed by the owner, property does not become immovable
XPN: Stipulation on the contract of lease that machinery, receptacles, instruments or implements placed by the lessee will,
upon termination of the lease, become the property of the lessor (lessee is considered as the agent of the lessor)
6. Animal houses, pigeon houses, beehives, fishponds etc.

Requisites
a. Place by the owner or by the tenant as agent of the owner, with the intention of permanent attachment
b. Forms permanent part of the immovable
15
Machinery (under the Tax Code) – 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 – must be necessary or essential to the operation of
the business or industry
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● May be considered as real property under Art415(1) if it is a construction adhered to the soil in a permanent manner
even if not placed by the owner of the immovable
● Animals in pigeon-houses, beehives, etc. are considered real property
7. Fertilizer
● “Actually used” means that has been spread over the land.
8. Mines, quarries and slag dumps

● They are considered as reality only if the matter remains unsevered from the soil. Once severed they become
personalty
● “Waters” refer to those which are found in their natural beds such as flowing streams, rivers or canals
9. Docks and structures

● Considered as immovables though floating, as long as they are intended by their nature and object, to remain at a fixed
place on a river, lake or coast
● Vessels are considered personal property under the civil law and common law and occasionally referred to as a
peculiar kind of personal property. It is essential that a record of documents affecting the title to a vessel be entered in
the record of the Collector of Customs at the port of entry. (Phil. Refining Co. Inc., v. Jarque, 61 Phil. 229)
10. Contracts for public works, real rights on immovable
GR.: A personal right is always regarded as personal property
XPN: In the cases of public works which are considered as real property.
● A person’s one-half interest in business is a personal property. (Involuntary Solvency of Strochker v. Ramirez, 44
Phil. 933)
MOVABLE PROPERTY
Types of Movable Properties (Art. 416)
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 personalty
Example: growing crops under the Chattel Mortgage Law
3. Forces of nature which are brought under control by science.
4. In general, all things which can be transported from place to place without impairment of the real property to which they
are fixed (Art. 416)
5. Obligations and actions which have for their object movables or demandable sums.
6. Shares of agricultural, commercial and industrial entities, although they may have real estate. (Art. 417)
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Growling Notes
● Business interest is a personal property by reason of its appropriability. Moreover, it is not included in the
enumeration under Art414 (Involuntary Insolvency of Strochker v. Ramirez, G.R. No. 18520, 1922)
Tests:
a. By exclusion: those which are not included in Art. 415
b. By description: an object is movable if:
● It can be transferred from place to place
● Without causing substantial injury to the immovable when removed
c. Real property considered as personal property by special provision of law
Article 418 - Movable property is either consumable or nonconsumable. To the first class belong those movables which cannot be used in a manner appropriate to their
nature without their being consumed; to the second class belong all the others.
CLASSIFICATION
1. By Nature
a. Consumable – property when used in accordance to its nature has to be consumed
b. Non-consumable – any other kind of movable property
2. By Intention
a. Fungible – property that can be replaced by another property of same kind quality either by nature or by
agreement
Example: money – fungible but non-consumable
b. Non-fungible – has own individuality; irreplaceable
**Importance of Classification: Special Contracts
GR: Commodatum is only for fungible things
Q&A
Q. In credit transactions (mutuum), is there a transfer of ownership once you deliver the object of mutuum?
A. Yes.
Reason: Mutuum is a contract of simple loan of personal property for consumption. It is the obligation of the debtor to return
the object, not of the same thing but of the same value or kind. (Bank does not return the same money deposited to them)
In case of Commodatum:
Example: Borrowing books from the library
● Without valuable consideration
● Obligation to take good care of it and return it
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Q. Will it destroy the book by using it according to its purpose?

A. No. Books are non-consumable property.
Q. Assuming that the book was lost, what is the remedy?

A. Either to replace it of same kind or pay for its equivalent.
Note: Distinction between fungible and consumable has already disappeared but strictly speaking there is really difference
between the two.
PUBLIC DOMINION ≠ PATRIMONIAL PROPERTY
Classifications:
1. In relation to the State
a. Public dominion
b. Patrimonial Properties (Arts420 and 421, NCC)
2. In relation to political Subdivision
a. Public Dominion (for public use)
b. Patrimonial Properties (Arts423 and 424, NCC)
3. In relation to persons and other entities – private
Note: Only patrimonial properties may be acquired through prescription
Public Dominion16 – held in trust for the interest of the community. It is inalienable, cannot be acquired by possession and not
subject to attachment or execution.
Classifications:
1. Agricultural lands – may be alienated
2. Forest / Timber
3. Mineral Lands
4. National Parks
Characteristics of Property of Public Dominion

1. Outside the Commerce of Man
2. Cannot be acquired through prescription
3. Cannot be levied upon execution
4. In general, may be used by everybody
5. May be real or personal property
6. Cannot be burdened by voluntary easement
16
Article 419 - Property is either of public dominion or of private ownership.
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Jura Regalia17 – All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential
energy, fisheries, forests or timber, wildlife, flora 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 co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such agreements may be for a
period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions
as may provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the
development of waterpower, beneficial use may be the measure and limit of the grant.
Properties of Public Dominion under Article420, NCC:
1. Roads – national highways and roads constructed and maintained by DPWH

2. Canals – artificial waterways, drainage, irrigation or navigation
3. Rivers – includes the running waters, bed and the bank
Accretion on riverbanks
a. Natural – belongs to the owner of land adjacent to bank
b. Artificial – belongs to the State
4. Torrents
5. Ports and Bridges Constructed by the State
Ports includes airports and seaports
● Charging of fees to the public does not determine the character of the property – still for public use (Manila
International Airport Authority v. CA, G.R. No. 164299, 2003)
6. Banks
7. Shores – space which is alternately covered and uncovered by the water with movements of the tides
8. Roadsteads
9. Others of Similar Character - Creeks
10. Those Belonging to State which are Intended for Some Public Service or for the Development of the National Wealth
a. For Public Service – can be used by a certain group of authorized persons
Example: Roponggi Property for the use of the Philippine Embassy
- different from -
Public Use - property of public dominion that can be used by the community, by anybody, regardless of age, sex
etc. ; no discrimination
a. For Development of National Wealth – economic or commercial activity
Natural Expropriation / de facto Eminent Domain – private property converted into property for public use through natural
action of the sea and abandonment of the owner
17
Article XII, Section 2 of 1987 Constitution
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Foreshore Lands – land immediately in front of the shore, part of which is between the high and low marks and alternately
covered by water and left dry by the flex and reflex of the tides
● Foreshore lands are outside the commerce of men, hence, not subject to appropriation (Manese v. Velasco, G.R.
No. 164024, 2009)
Natural Lakes or Lagoons, even if found on private lands are still properties of public dominion
Patrimonial Property – serves as means for the State’s subsistence; owned by the State and its political subdivisions in their
private capacity
1. Owned by the State in a private / proprietary capacity
2. Properties of Public Dominion no longer intended for public use or public service
*Executive or Legislative act is necessary to reclassify property into patrimonial – conversion cannot be inferred from non-use
Examples:
1. Friar Lands (Act 1120) – lands acquired by the government from religious corporations or orders
2. Alienable and Disposable Lands of Public Domain
3. Lands Covered by RA7227 – military reservations no longer needed for defense or military purposes are reclassified as patrimonial
properties
4. Reclaimed lands along Pasay City including that of MOA
Q&A
Q. Is it a property of public dominion or patrimonial property?

A. It is a patrimonial property. Citing Chavez v. PEA, these reclaimed lands are declared by the State no longer for public use.
In re: Reclaimed lands (Chavez v. PEA)
Under the Regalian Doctrine, submerged land are owned by the State but once reclaimed they can now be considered as
part of Patrimonial Property, with proper declarations from the authorities by Act of Congress or Senate. Hence they can now
be alienable and disposable lands; reclassification of which is given first to the executive before congress.
Q. How about those land titles given by the President to the poor people?
A. Definitely they are not personal property of the president. Basically the title distributed involves the property of the State.
Q. Can the validity of distribution be attacked?

A. It depends. Determine whether it is public dominion or patrimonial property, first.
Note:
*If land of Public Dominion and title given are not covered by LR Act, cannot be acquired by acquisitive prescription because it is inalienable.
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*If Patrimonial Property, it is owned by the State, the latter has the right to dispose and alienate it. Acquisitive prescription may apply.
Disposition of Patrimonial Properties may only be done through the enactment of Congress
Book 1, Administrative Code of 1987 (EO292)
Sec. 48. Official 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 therefor is expressly vested by law in another
officer.
(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.
New Civil Code
Article 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.
Article 423 - The property of provinces, cities, and municipalities is divided into property for public use and patrimonial property.
Article 424 - Property for public use, in the provinces, cities, and municipalities, consist 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.
Classification of Properties of Political Subdivisions

1. For Public use / service
a. Provincial Roads
b. City Streets
c. Municipal Streets
d. Squares
e. Fountains
f. Public Water
g. Promenades
h. Public works for public service
2. Patrimonial Property
Even if a public plaza is built on a private land, it shall be considered as property for public use and the owner of the
land is deemed to have waived waived his right over the land due to the continuous enjoyment and use of such as public plaza
(Harty v. Victoria, G.R. No. 5019, 1909)
Classification of municipal property devoted for distinctly governmental purposes as public, under the Law of
Municipal Corporations (Special Law) should prevail over the Civil Code (General Law) (Province of Zamboanga del Norte
v. City of Zamboanga, G.R. No. L-2440, 1968)
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LGUs have no authority to control or regulate the use of public properties unless specific authority is vested upon
them by Congress (Macasiano v. Diokno, G.R. No. 97764, 1992)
Article 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.
All lands are presumed to be of public ownership until the contrary is proved
Article 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,
scientific or artistic collections, books, medals, arms, 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.
POSSESSOR in GOOD FAITH ≠ POSSESSOR in BAD FAITH

Q&A
Q. Can a lessee be considered a person in good faith18?
Note: Before answering the question, we must first distinguish good faith under Persons and Family Relations from its definition under
Property.
A. No. From the very start the lessee knows that he cannot be the owner of the real property.
Purchaser in good faith, under Land Registration Act, is that even if there is a defect in title, the moment that a person has
transferred property to another person, it is already perfected. In the case at bar, title of the property was simply a
reconstitituted title. It was held that a property covered by a reconstituted title (once destroyed or lost) the possessor of which
is a possessor not in good faith. (Premiere Bank v. CA, 453 SCRA 630)
18
In Persons: When parties acted in good faith, believing that the solemnizing officer has the authority, then the contract of marriage is valid.
(“Mistake in fact, not in law.” According to Sen.Tolentino)
In Property: The title is one of the determining factor whether the possessor is in good or bad faith.
**HOW?
a. If the possessor believes that there is no defect in the title as far as the subject property is concern
b. If the possessor believes that the person who delivered the property has the authority to dispose or transfer ownership over the
property
c. If the possessor believes that he owns said property
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REAL RIGHT ≠ PERSONAL RIGHT
Real Right – one that confers upon its holder an autonomous power to derive directly from an appropriate thing certain
economic advantages, independently of whoever should be the possessor of the thing; attached to the property
*Action in Rem – quieting of title, lease, usufruct
*Can be transferred through succession
Example: right of way over a property (easement)
Note: Right of easement is a real right regardless of who will be the owner is immaterial because such right is attached to the said property.
Classifications
1. Of full control:
a. ownership
b. possession
2. Of enjoyment:
a. Usufruct
G.R.: It is a real right
XPN: There is a stipulation that upon the death of the usufructuary the usufruct is deemed terminated
b. Servitude
c. Lease
3. Of guaranty:
a. Mortgage
b. Pledge
c. Antichresis
d. Retention
4. Of acquisition:
a. Preemption
b. Redemption
Personal Right – power belonging to one person, to demand of another as a definite passive subject the fulfillment of a
prestation to give, to do or not to do; not transferrable
*Action in Personam – for enforcement of obligations
Example: right to support
Q&A
Q. Is right to lease real or personal right?
A. It depends. It s real if right to lease is not attached to the lessee but to his real right and there is no explicit prohibition
regarding its transfer on the contract. However, it is a personal right when there is a stipulation prohibiting the transfer.
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Growling Notes
Consolidated Personal Review/ lecture notes of:

Shery Paige A. Lim (2AA)
Romeo M. Teope Jr. (2A)
Ryan Armand L. Casabar & Dennis C. Bagaporo(2AA)

(Name & Logo)
Culled from the books of Atty. Rabuya, Usec. Pineda, Sen. Tolentino and lectures of Atty. Liza Lopez-Rosario.
OWNERSHIP
I. Dominium ≠ Ownership
■ Rights of an Owner
■ Attributes of an Owner
II. Doctrine of Self-Help
III. Doctrine of Incomplete Privilege
IV. Remedies to Recover Possession
■ Personal Property
■ Real Property
V. Hidden Treasure
Dominium ≠ Ownership
Dominium – absolute control over a property except as may be restrained by law
Ownership – bundle of rights that may be exercised over a property; 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 right)
and the promotion of the general welfare but subject to the restrictions imposed by law and the right of owner; real right to
enjoy, dispose, exclude and recover [EDER] a thing without limit other than those required by law or imposed by the owner
himself
Rights of an Owner:
1. Right to enjoy the property (Art428 par1, NCC)

2. Right to dispose the property (Art428 par1, NCC)
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3. Right to recover property from any holder or possessor (Art428 par2, NCC)
4. Right to exclude any person from enjoyment and disposal of the property (Art429, NCC)
5. Right to enclose or fence the land or tenement (Art430, NCC)
6. Right to demand indemnity for damages suffered due to lawful interference by a third person to avert an imminent
danger (Art432, NCC)
7. Right to just compensation in case of eminent domain (Art435, NCC)
8. Right to construct any works or make any plantations and excavations on the surface or subsurface of the land
(Art437, NCC)
9. Right to hidden treasure found in the owner’s property (Art438, NCC)
10. Right to accession (Art440, NCC)
Attributes of Ownership: [UFDAP-V]

1. Jus Utendi19
2. Jus Fruendi20
3. Jus Disponendi21
4. Jus Abutendi22
5. Jus Possidendi23
6. Jus Vindicandi24
Note:
Art428 mentions only three rights (Reason: Right to enjoy is included in jus utendi, jus fruendi, jus possidendi and jus abutendi)
Jus Possidendi (right to possess) is different from jus possessionis (right of possession)
**Rights of the Owner is important since the transfer of a thing includes the transfer of certain rights
1. Contract of Lease (Onerous)

GR: Lessee has the right to use and possess
XPN: When Lessee subleases, he is entitled to the fruits (rent)
Object of Lease: may be real, personal property or services
Rent Control Law – in the absence of express stipulation / written consent of the lessor, the lessee cannot sublease
2. Usufruct – temporary use of property (NCC is silent as to whether it is gratuitous or onerous)

Usufructuary is entitled to use and fruits
*Fruits is in the very nature of the usufruct
19
Right to use the property without destroying the substance
20
Right to the fruits
21
Right to dispose or alienate
22
Right to abuse or to consume the thing by its use
23
Right to Possess
24
Right to recover
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Growling Notes
3. Commodatum – personal property which is non-consummable
a. Bailor (lender) and Bailee (Lendee); Bailee is entitled to possess and use
b. Deposit – example, baggage counters – right to possess only EXCEPT where right to use is necessary for the
preservation of the thing
4. Simple Loan / Mutuum – ownership is transferred upon deposit of money in the bank (bank will return another
property to the depositor)
Note: If owner is deprived of his right to possession, he may not use force or violence to eject alleged usurpers - he may resort to judicial
process for the recovery of the property.25
Doctrine of Self-help26
Requisites
*Memory Aide: RONA
a. Reasonable force
b. Owner or lawful possessor is the person who will exercise the right
c. No delay in the exercise of one’s right
d. Actual or threatened physical invasion or usurpation
Note: Defense of Property27 included - Article 11 par1, RPC (must be coupled with attack on the person of the owner or lawful possessor)
When possession has already been lost, owner must resort to judicial recovery of property – Doctrine of Self-Help is inapplicable (German
Management & Services, Inc. vs. CA)
Article 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.
Article 431 – The owner of a thing cannot make use thereof in such manner as to injure the rights of a third person.
Doctrine of Incomplete Privilege28
25
Art 536, NCC
26
Article 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.
27
(1) Anyone who acts in defense of his person or rights, provided that the following circumstances concur:
First. unlawful aggression
Second. reasonable necessity of the means employed to prevent or repel it
Third. lack of sufficient provocation on the part of the person defending himself
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Growling Notes
GR.: A person cannot interfere with the right of ownership with another
XPN: Doctrine of incomplete privilege or state of necessity
Requisites: GITI
1. Grave peril, actual or imminent, upon the person of the actor or third person or their property
2. Interference is necessary to avert such danger
3. Threatened damage, compared to damage arising to owner from interference is greater
4. Without intentional provocation on the part of the party invoking the same
Note: No Criminal Liability or Civil Liability Except: (civil liability) borne by persons for whose benefit the harm has been prevented
Doctrine of Self-Help State of Necessity

Invoked by the owner or Availed by another person
lawful possessor in protection against someone else’s
of his right to prevent other property for the purpose of
persons from interfering with averting an imminent danger
the property to himself or to another
person or their property
Remedies to Recover Possession
Person in Possession – presumed owner

*Rebuttable presumption of ownership arising from actual possession (Art433, NCC)
Note: In an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of
the defendant’s claim. (Art. 343)
1. Personal Property
Replevin – a remedy for recovery of possession of personal property which is governed by Rule 60 of the Rules of Court
2. Real Property
A. Accion Interdictal: A summary action to recover physical or material possession of the property
Note: It must be brought in proper municipal trial court or metropolitan trial court within one (1) year from the time of the cause of action arises.
28
Article 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 benefited indemnity for
the damage to him.
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Growling Notes
a. Forcible Entry or Detentacion29 – 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
b. Unlawful Detainer or Desahuico – may be filed when possession by a lessor, vendor, vendee or other person against
whom 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.
Forcible Entry Unlawful Detainer

Possession is unlawful ab initio Possession is originally
lawful but became illegal
due to termination of his
right of possession under a
contract
Plaintiff must allege and prove Need not have prior
prior possession of the possession
premises until he was deprived
thereof
1 year from occurrence 1year counted from last
Except: Stealth – from time of demand (jurisdictional in
discovery nature)
B. Accion Publiciana or Plenaria de Posesion: An ordinary civil proceeding to recover the better right of possession of
property and is resorted to when the dispossession has lasted for more than one (1) year.
● The issue involved is not possession de facto but possession de jure of realty independent of the title.
● Must be brought to proper regional trial court within a period of ten (10) years from the time cause of action arises.
- different from –
Accion Pauliana or action to rescind – action to assail or impugn the contract entered into by the debtor with intent to
defraud the creditor (direct action which can be brought in the creditor’s own name)
*Action to rescind is available only to valid contracts, if contract is fictitious or inexistent, remedy is action for declaration
of nullity
*Action to rescind may be brought by 3rd persons as long as such person suffered injury
C. Accion Reivindicatoria: An action to recover real property based on ownership. The object is the recovery of dominion
over the property as owner.
● Must be brought to proper regional trial court within a period of ten (10) years from the time cause of action
arises.
Requisites [CIT]
i. Thing must be corporeal, concrete and determinate
29
A possessor deprived of his possession through forcible entry may within ten days from the filing 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 the
filing thereof. (Art. 539, Par.2)
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Growling Notes
ii. Proof of identity – description of the area, location and boundaries of the land
*Boundaries may be natural (permanent landmarks by nature, example, river, lake, stream, etc.) or artificial
*Conflict between the area and boundaries – boundaries prevails
iii. Proof of title
Limitations of Ownership (Imposed by the State):
1. Police Power – exercised for the purpose of promoting general welfare, comfort and convenience of the people by
restraining and regulating liberty and property.
Article 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 unjustified.
*for noxious or intended for noxious purpose, if for public use = eminent domain
2. Eminent Domain – 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
*Only where the owner is unwilling to sell or cannot accept the purchase price can there be an expropriation
*Subject to just compensation and due process of law
*Natural Expropriation included
Article 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 first complied with, the courts shall protect and in a proper case, restore the owner of his possession. (349a)
3. Taxation – power of the government to raise revenue in order to support its existence and carry out its legitimate
objectives
Limitations on Ownership imposed by Law:

1. Legal Easement
2. Art25, NCC – during a period of public want or emergency, thoughtless extravagance in expense for pleasure or
display may be stopped by order of the courts at the instance of any government or private charitable institution
3. Sec118, CA141 – Lands acquired under free patent or homestead cannot be subject to encumbrance or alienation
within five years from the issuance of the patent
4. Legitime
5. Conflict of Private Rights (example, accession continua)
Limitations Imposed by the Owner Himself:

1. Voluntary Easement
2. When owner transmits his property to another person (examples, lease, commodatum, donation or will)
3. Owner imposes restrictions or limitations on the right of ownership at the time he continues to be the owner of the
property (ex. Donor or testator may prohibit partition of property for a period not exceeding 20years)
*Perpetual prohibition to alienate – void
*Deed of restriction requiring a purchaser to pay association fees – valid
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Growling Notes
Surface Rights (Art. 437)
Article 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)
The owner of a parcel of land is the owner of its surface and of everything under it.
LIMITS
Horizontally: extends up to the boundaries
Vertically: extends below the surface and above it to the extent required by the economic utility to the owner, in relation to the
exploitation that may be made of the property.
Airspace: the owner cannot complain of the reasonable requirements of aerial navigation.
Ad coelum - Owner of land has rights not only to its surface but also to everything underneath and the airspace above it up to
a reasonable height
Limitations:
1. Cannot detriment servitudes
2. Subject to special laws and ordinances
3. Subject to reasonable requirements of aerial navigation
Lands cannot be classified as mineral underneath and agricultural on the surface; rights over a land are indivisible – land
must either be completely mineral or completely agricultural (Republic of the Philippines vs. Court of Appeals)
Construction of underground tunnels by NAPOCOR without the consent of the owners of the lands affected deprived the
owners in the construction of motorized deep wells – underground tunnel imposed limitations on Ibrahim’s use of property
(esp. the sub-terrain portion), hence, owners are entitled to just compensation (NAPOCOR vs. Ibrahim)
*Caves are part of national wealth – apply regalian doctrine whether the entrance is located in a private or public land and
whether entrance is naturally formed or manmade (RA 9072 – National Caves and Cave Resources Management and
Protection Act)
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 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. 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
beneficial use thereof, would be trespass for which he would have a remedy. (Hinman vs. Pacific Air Transport United
States Court of Appeals)
Recall Consti Case: United States vs. Causby (chickens and airplanes) – deprivation of full use of property = entitled to just compensation
Article 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
finder. If the finder 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)
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Growling Notes
Article 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)
HIDDEN TREASURE
Requisites:
1.Deposit of money, jewelry or other precious objects must be hidden or unknown

2.Lawful ownership of which must not appear
3.Discovered by chance
*Does not include natural wealth – minerals and petroleum
Article 117 (Family Code) - The following are conjugal partnership properties:
(4) The share of either spouse in the hidden treasure which the law awards to the finder or owner of the property where the treasure is found;
Rules on “Treasure Hunting”
1. RA 8492 (National Museum Act of 1998) – permits are required for the discovery / recovery of hidden treasures,
shipwrecks / sunken vessels recovery exclusively for materials of cultural and historical values such as:
a. Arts
b. Archeological artifacts
c. Ecofacts
d. Relics
e. Other materials embodying the cultural and natural heritage of the Filipino nation as well as those of foreign
origin
2. DENR AO 2002-04 as amended by DENR AO 2004-2003, in relation to EO 35 – permits for treasures which are not
of cultural and historical value whether or not hunting is to be conducted on private or governmental land and upon
discovery is turned over to National Museum for determination of whether it has cultural or historical value – if
affirmative, items will be given to National Museum; if negative, turned over to an oversight committee of DENR
Sharing of the net proceeds:

1. Within public lands – 75% to government; 25% to permit holder
2. Within private lands – 30% to the government; 70% shared by permit holder and landowner
3. Shipwreck / sunken vessel recovery – 50% to government; 50% to permit holder
*Items shall be allowed for exports only upon the approval of the National Heritage Commission
Q&A
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Growling Notes
Q. What if the treasure cannot be divided?
A. Co-ownership between the finder and owner of the land will be created
Q. What if the owner of the land hired services of a group of man for the purpose of finding a hidden treasure, if there is indeed
a hidden treasure, who owns the hidden treasure?
A. It depends.
If there is an agreement between the owner and the hired men then the latter will be entitled for a portion of the
treasure. Absent such agreement, the treasure belongs to the owner of the property.
Q. A scavenger found a bag filled with bank notes and cash in a dumpsite will it be considered a hidden treasure?
A. No. Bills and notes from the banks have serial numbers. The note’s identity can be traced easily, one of the requisites of
hidden treasure is lacking that is that the owner appears to be unknown.
Q. How about the Yamashita treasure?
A. Under PD 172, 25% is granted to the finder and 75% will belong to the State.

Ryan Armand L. Casabar & Dennis C. Bagaporo(2AA)

(Name & Logo)
KINDS OF EXPENSES
1. Necessary Expenses
● Refer to those without which the thing would physically deteriorate
2. Useful Expenses
● Refer to those which increase the productivity or raise the value for ever subsequent possessors
3. Ornamental Expenses
● Refer to those which add value of the thing only for certain determinate persons
ACCESSION
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Growling Notes
Accession – right of the owner of the thing to the products of said thing as well as to whatever is inseparably attached thereto
as an accessory (API); separation will cause injury
A – attached
P – produced
I – incorporated
*Ownership of the principal and accession is the incident or attribute of ownership
*Not a mode of acquiring ownership – mere incident of ownership
[Art712, NCC] Modes of acquiring ownership (OIL-DSTP):

1. Occupation
2. Intellectual Creation
3. Law
4. Donation
5. Succession
6. Tradition
7. Prescription
*Exclusive List
Accesion ≠ Acessory
Accessions are fruits of a thing or addition to or improvements upon things. While Accessories, on the other hand, are
things joined to or included with the principal for embellishment, better use or completion.
2 Kinds of Accession
1. Accession Discreta – right of the owner to anything produced by his property

a. Natural fruits – spontaneous products, whether through science or not
b. Industrial fruits
c. Civil fruits
2. Accession Continua – right of the owner to anything that is incorporated or attached to his property, whether such
attachment is through natural or artificial causes; may refer to either movable or immovable property
a. Immovable Property
1. Industrial Accession –artificial incorporation of accession (ex. Building, planting, sowing)
2. Natural Accession – accession through natural means
1. Alluvion / Accretion
2. Avulsion – delayed accession because ownership may be claimed only after 2years
3. Change of course of river
4. Formation of islands
b. Movable Property
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Growling Notes
1. Adjunction or Conjunction
2. Commixtion or Confusion
3. Specification
Q&A
Q: In the case of Adjunction / Conjunction, what happens if there is a dispute between the 2 properties – that each belongs to
different owners?
A:
1. Rule of Greater Value will apply, if not applicable -equal value or unknown value,
2. Determination of which is the principal – person owning the principal will get the property (reason: accessory follows
the principal)
Article 441 - To the owner belongs:

(1) The natural fruits;
(2) The industrial fruits;
(3) The civil fruits.
Article 442 - Natural fruits are the spontaneous products of the soil, and the young and other products of animals.
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.
Accession Discreta – right of owner to the products of his property or to the fruits of same – natural, civil or industrial fruits
Exception [ULAPP-F]:
1. Usufructuary – person in whose favor usufruct was constituted is entitled to the enjoyment of the property and also its
fruits30
2. Lease of Rural Lands – lessee is entitled to natural and industrial fruits while lessor is entitled to civil fruits in the form
of rent paid by the lessee31
3. Antichresis – creditor acquires the right to receive the fruits of the immovable of his debtor, with obligation to apply
them to the payment of the interest, if owing, and thereafter to the principal of his credit 32
4. Possession in Good Faith – person is entitled to fruits received by him before his possession is legally interrupted33
30
Art566, NCC
31
Arts 1654, 1676 (2), NCC
32
Art2123, NCC
33
Art544, NCC
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Growling Notes
5. Pledge
6. Fruits Naturally Falling – falling on adjacent lands belong to the owner of the said land and not the owner of the tree 34
2 Kinds of Natural Fruits
Spontaneous products of the soil – those which appear without intervention of human labor
1.
2.
Young and other products of animals
*If human intervention / labor is present, it becomes industrial fruit
Article 443 - He who receives the fruits has the obligation to pay the expenses made by a third person in their production, gathering, and preservation.
Purpose: so that no one may unjustly enrich himself at the expense of another
Applies To:
1. Fruits already harvested or gathered (does not apply to pending fruits by virtue of Art449, NCC)
2. Recipients did not incur expenses for the production, gathering and preservation of fruits
3. Possessor is in bad faith
Refundable Expenses:
1. Dedicated to annual production and not merely for purposes of improvement
2. Not superfluous, excessive or for luxury – expenses is commensurate with that required by products
*Must be refunded irrespective of whether the amount of expenses far exceed the value of the fruits
Article 444 - Only such as are manifest or born are considered as natural or industrial fruits.
With respect to animals, it is sufficient that they are in the womb of the mother, although unborn.
Existence of fruits is recognized (natural and industrial) only when they are manifest or born
*Offspring or young of animals are deemed existing at the beginning of the maximum period of gestation (existence in the
mother’s womb) – if pregnancy is manifest or evident
Q&A
Q. What kind of fruits are cloned animals?

A. It depends on two options.
First, applying the literal definition of the law that even if the animal is made through the intervention o man, it is
considered as a natural fruit, on the other hand, applying statutory construction (history of the provision); definitely the
definition of natural fruit that time was the young produced by a mother animal. Nobody had foreseen during 1950’s that
cloning would be possible hence considering human intervention, it can now be considered as industrial fruit.
34
Art681, NCC
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Growling Notes
** Same case applies to the use of artificial insemination
Article 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.
Article 446 - All works, sowing, and planting are presumed made by the owner and at his expense, unless the contrary is proved.
Accession 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 without causing substantial injury to the things involved – applies only where there is
controversy as to who shall be entitled to the resulting union of 2 or more things belonging to different owners
*Presupposes the absence of any agreement, express or implied, between or among the owners of different things involved
*If there is an agreement, parties shall be governed by their agreement and secondarily by law but not the law on accession
continua
Basic Principles Governing Accession Continua

*Memory Aide: GONE BAD
1. He who is in good faith may be held responsible but will not be penalized.
2. To the owner of the thing belongs the extension or increase of such thing.
3. Bad faith of one party neutralizes the bad faith of the other – in pari delicto
4. There should be no unjust enrichment at the expense of the others.
5. Bad faith involves liability for damages.
6. Accessory follows principal.
7. Accession exists only if the incorporation is such that the separation would either seriously damage the thing or
diminish its value.
Industrial Accession (Arts 445-456) – applies only to those involving lands and material belonging to different owners
1. Building – generic term for all architectural work with roof, built for the purpose of being used as man’s dwelling or for
offices, clubs or theatres – does not include partitions, railings, counters and shelves
2. a. Planting –trees big or small
b. Sowing – crops and plants caused by scattering or strewing of seeds upon the soil
Importance of Classification (Art448) – option of compelling builder or planter to pay price of land is not available
against the sower
3 Persons involved in Industrial Accession

1. Landowner [LO]
2. Builder, Planter or Sower [b/p/s]
3. Owner of Material [OM]
*There is controversy only when landowner is not the builder, planter or sower or owner of the materials
Article 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 indemnified for damages.
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Growling Notes
Good faith builder / planter / sower – where b/p/s believes he has the right to build, plant or sow because he thinks he owns
the land or believes himself to have a claim of title
Requisites:
1. Possessor of the land in the concept of an owner
2. Unaware that there exists in his title or mode of acquisition, any flaw which invalidates it
*Presupposes ownership in another
Good faith Landowner – 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
LO, whether he is the b/p/s or not

a. Good faith - Pay the value of materials
*LO may choose to return the materials if removal is possible without causing injury to the work constructed or
without the plantings, constructions or works being destroyed – no accession continua, hence, owners of the things
attached or joined retain ownership over their respective properties
*LO not b/p/s subsidiarily liable to OM for value
b. Bad faith – liable for damages
Criminal liability of LO for unlawful taking and use of materials of another without the consent and knowledge of OM
OM may demand indemnity or exercise his right of remotion [remove accession] (even if it will cause injury)
Article 448 - The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or
planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and
in case of disagreement, the court shall fix the terms thereof.
B/P/S in good faith

a. LO may appropriate after indemnifying
B/P/S with right of retention
-or-
b. Oblige b/p to pay price of land and sower to pay rent (value of the land must not be greater than value of accession)
c. B/P/S will be reimbursed for necessary and useful expenses
If value of the land is greater than value of accession and owner does not appropriate, parties shall agree on the terms of
lease; If there is disagreement, court shall fix the terms
Right of Retention – granted as a security for the possessor’s (b/p/s) right to indemnity for the improvements made by him; not
bound to pay rent (purpose: guarantee full and prompt reimbursement)
*There can be no offsetting of reimbursement for necessary and useful expenses with fruits received by the b/p/s (reason: right
to fruits and right to necessary and useful expenses are rights which are granted to b/p/s)
Q: What if landowner refuses to exercise either option?

A: Remedy is to compel the landowner to make a choice
GR: Art 448 cannot apply to a co-owner who is a b/p/s on the land owned in common – governed by rules of co-ownership
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Growling Notes
XPN: co-ownership is terminated

*When 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 Art448 should apply to
determine the respective rights of the parties
Art448 can be invoked by Successor-in-interest (Technogas vs. CA)
*Bad faith cannot be imputed to a registered owner of land when a part of his building enroaches upon a neighbor’s land
simply because he is supposedly presumed to know the boundaries of his land as prescribed in his certificate 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
Option # 1 – Appropriate the improvement

Article 546 - Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Article 548 - Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has
embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.
Basis of Indemnity – present value / market value (reason: prevent unjust enrichment)
*Ownerhsip of the building does not pass to the landowner until after the payment has been given to the builder (Bataclan v.
CFI)
Option # 2 – Sell the Land to b/p

*Basis: Market Value
Q: What if b/p refuses to pay?

A: Remedy – Forced lease is created
Q: What if b/p fails to pay the price of the land?

A: Remedy – Right of remotion is given to the landowner and b/p’s right of retention is lost (Ballatan v. CA)
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.
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.
Article 451 - In the cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower.
Article 452 - The builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.
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B/P/S in bad faith

a. LO has right of remotion -or-
b. Oblige b/p to buy the land and sower to pay rent (even if value of the land is greater than the value of the accession)
c. B/P/S may ask for reimbursement for necessary expenses only
Article 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.
Article 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.
Article 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 right 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.
Article 456 - In the cases regulated in the preceding articles, good faith does not necessarily exclude negligence, which gives right to damages under article 2176.
Both in bad faith

Effect: In pari delicto – each shall bear their own losses
OM in Bad Faith
Effects:
1. OM - Lose his materials without indemnity and liable for damages
2. b/p/s –
a. Good faith – entitled to compensation for his labor (reason: prevent unjust enrichment)
b. Bad Faith - considered agent of OM; loses what he has built, planted or sown without indemnity, liable for
damages (exception: all parties acted in bad faith = good faith)
3. Landowner – claim what has been built, planted or sown without obligation to indemnify
OM in Good Faith
Effects:
1. OM – entitled to recover the value of his materials
2. b/p/s
a. Good faith - primarily liable to OM for payment of materials without damages
b. Bad faith – primarily liable to OM for payment of materials with damages
3. Landowner
a. Appropriation - subsidiarily liable for payment of value of materials
Requisites:
● Insolvency of b/p/s
● Landowner appropriates the building, planting or sowing
a. b/p/s in bad faith (landowner entitled to damages) / good faith (landowner must pay reasonable compensation)
b. b/p/s in bad faith – landowner not subsidiarily liable if he chooses to exercise his right to remotion
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Application:
Only when the builder, planter, sower believes that he has the right to so build, plant or sow because he thinks he owns the
land or believes himself to have a claim of title. (Morales v. CA, GR No. 123672, 2005)
When the co-ownership is terminated by partition and it appears that the house of an erstwhile co-owner has encroached upon
a portion pertaining to another co-owner which was whoever made in good faith, then the provision of Art. 448 should apply to
determine the respective rights of the parties. (Ignao v. IAC, GR. No. 7287, 1991)
Does not apply where one’s interest in the land is merely that of a holder such as a mere lessee under a rental control
(Balucanag v. Francisco GR No. L-33422, 1983), an agent, or a usufractuary (Macasaet v. Macasaet, GR No. 154391)
Lessee is not a builder in good faith – lessee knows that he is not the owner of the leased premises and he cannot deny the
ownership of the lessor (Art448, NCC is not applicable to lessee)
Applicable Article is Art1678, NCC
Article 1678 - If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of
the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to
reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more
impairment upon the property leased than is necessary.
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. (n)
Requisites:
1. Lessee in good faith
2. Useful
Suitable to the use for which the lease is intended without altering the substance and form of the premises
The provision on indemnity in Art. 448 may be applied by analogy considering that the primary intent of the law is to avoid a
state of forced co-ownership especially where the parties agree that Arts. 448 and 546 are applicable and indemnity for the
improvements may be paid although they differ as to the basis of indemnity. It is the current market value of the improvements
which should be made the basis of reimbursement to the builder in good faith. (Pecson v. CA, GR No. 94033, 1995)
Q. What if the building is sold to pay for the value of the land?
A. The builder becomes part-owner of the land.
Notes:
G.R.: LO has no right of removal or demolition
XPN: option exercised was compulsory selling and the builder failed to pay.
Remedies?
1. demolish what has been built, sown or planted
2. consider price of land as an ordinary money debt of the builder (levy and execution)
The landowner may not seek to compel the owner of the building to remove the building from the land after refusing to pay
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for the building or to sell the land. He is entitled to such removal only when, after having chosen to sell the land, the other
party fails to pay for the said land. (Ignacio v. Hilario GR. No. L-175, 1946)
Q. What is the Rule when the land’s value is higher than the improvement?
A. LO cannot compel the builder to buy the land. In such event “forced lease” is created and the court shall fix the terms
thereof in case the parties disagree hereon.(Depra v. Dumalo, GR. No. L-57348, 1985)
RIGHT OF ACCESSION with Respect to REAL PROPERTY
Article 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.
Article 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 floods.
Alluvion or Alluvium (Arts. 457-458)

Increment which lands abutting rivers gradually receive as a result of the current of the waters.
Accretion – the process by which a riparian land gradually and imperceptibly receives addition made by the water to which
the land is contiguous.
Requisites [GAR]
a. the deposit of sediment must be gradual and imperceptible
b. accretion must result from the action of current of water
c. the land where accretion takes place is adjacent to the river banks
Note: Accretions belong to the riparian owner upon whose lands the alluvial deposits were made. (Agustin v. IAC, GR. Nos.
66075-76, 1990)
Reasons for the Rule

a. to compensate owner for loses which they may suffer by erosion
b. to compensate them for the burdens of legal easements imposed upon them
c. it is the owner of the contiguous land who can utilize the increment to best advantage
d. this is the best solution, since the previous owners can no longer be identified
GR.: An alluvion is automatically owned by the riparian owner from the moment the soil deposit can be seen but the additional
area does not automatically become registered land. The riparian owner must register the additional area. (Heirs of Navarro
v. IAC, GR No. 68188, 1997) Failure to register the acquired alluvial deposit by accretion subjects such accretion to
acquisition thru prescription by third persons. (Reynante v. CA, GR No. 95907, 1992)
XPN: Addition to land caused by special works (e.g. dikes) expressly intended by him to bring about accretion (e.g. for
reclamation purposes) and not to protect his property from destructive force of the water of the river. (Republic v. CA, GR No.
L-43105, 1984)
Article 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.
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*Delayed Accession
Avulsion
Transfer of known portion of land from one tenement to another by the force of the current. The portion of land must be such
that it can be identified as coming from definite tenement.
Article 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.
Note: This does not include trees which remain planted on a known portion of land carried by the forces. These trees are
regarded as accessions of the land through gradual changes in the course of adjoining stream. (Payatas-Estate
Improvements Co. v. Tuason, GR No. L-30067, 1929)
Change of Course of River (Arts.461-462)
Article 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.
Article 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.
Requisites
*Memory Aide: NAPA
a. there must be a natural change in the course of the waters of the rivers
b. change must be abrupt or sudden
c. change must be permanent
d. there must be abandonment by the owner of the bed
Notes:
Once the river bed has been abandoned, the owner of the invaded land becomes the owner of the abandoned bed to
the extent as provided in Art. 462. No positive act is needed on the part, as it is subject thereto ipso jure from the moment of
the moment the mode of acquisition is evident.
It does not apply to cases where the river simply dries up because there are no persons whose lands are occupied by
the waters of the river. (reason: jure regalia)
Article 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.
Article 464 - Islands which may be formed on the seas within the jurisdiction of the Philippines, on lakes, and on navigable or floatable rivers belong to the State.
Article 465 - Islands which through successive accumulation of alluvial deposits are formed in non-navigable and non-floatable 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.
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Formation of Islands (Art. 463-465)

Rules on ownership:
a. If formed by the sea:
i. Within territorial waters – State
ii. Outside territorial water – to the first occupant
b. If formed in lakes, or navigable or floatable rivers - State
c. If formed in non-navigable or non-floatable rivers:
i. If nearer to one margin or bank – to the nearer riparian owner
ii. If equidistant from both banks – to the riparian owners by halves
Note: There is no accession when islands are formed by the branching of river; the owner retains ownership of the isolated
piece of land.
RIGHT OF ACCESSION with Respect to PERSONAL PROPERTY
Basic Principle: Accession exists only if separation is not feasible. Otherwise, separation may be demanded.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
Article 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.
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Adjunction (Arts. 466-471)

Requisites
a. Two things must belong to different owners
b. That they form a single object, or that their separation would impair their nature
Kinds
a. Inclusion or engraftment
b. Soldadura or soldering
i. Ferruminacion – if both the accessory and principal objects are of the same metal
ii. Plumbatura – if the accessory and the principal objects are of different materials
c. Escritura or writing
d. Pintura or painting
e. Tejido or weaving
Test to determine principal in adjunction:

a. Rule of importance and purpose
b. That of greater value
c. That of greater volume
d. That of greater merits – take into consideration all pertinent provisions applicable as well as the comparative merits,
utility and volume
Rules on Who is Entitled

a. Adjunction in Good faith by either owner
GR.: Accessory follows the principal
XPN: If accessory is much precious than the principal, the owner of the accessory may demand the separation even
if the principal may suffer injury
b. Adjunction in bad faith by the owner of the principal
Option of owner of accessory
i. To recover the value plus damages
ii. To demand separation plus damages
c. Adjunction in bad faith by the owner of the accessory
i. He loses the accessory
ii. He is liable for damages
Q. When is separation of things allowed?

A. Article 469 (WAB)
1. separation without injury
2. accessory is more precious than the principal
3. owner of the principal acted in bad faith
Q. How is indemnity made?

A. 1. Delivery of a thing equal in kind and value; or
2. payment of its price including the sentimental value.
Article 472 - If by the will of their 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
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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.
Article 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.
Mixtures (Arts. 472-473)

Union of materials where the components lose their identity
Kinds
a. Commixtion – mixture of solids
b. Confusion – mixture of liquids
Rules
a. By will of both owners or by accident: each owner acquires an interest in portion to the value of his material
b. By one owner in good faith: apply rule (a)
c. By one owner in bad faith:
i. He loses his rights to his materials
ii. He is liable for damages
Article 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 first 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 scientific reasons, is considerably more than that of the material.
Article 475 - In the preceding articles, sentimental value shall be duly appreciated.
Specification (Arts. 474-475)

The transformation of another’s material by the application of labor. The material becomes a different kind. Labor is the
principal
Rules
a. Owner of principal (worker) in good faith
i. Maker acquires the new thing
ii. He must indemnify the owner of material
XPN: material is more valuable than the resulting thing the owner of material has the option:
i. Acquire the work and indemnify the laborer except where the value of work is greater due to artistic or
scientific reasons; or
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ii. To demand indemnity for the material

b. Owner of principal (worker) in bad faith, owner of the material has the option:
i. To acquire result without indemnity
ii. To demand indemnity for materials plus damages
c. Owner of material in bad faith
QUIETING OF TITLE
Article 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.
Article 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.
Article 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.
Article 479 - The plaintiff must return to the defendant all benefits he may have received from the latter, or reimburse him for expenses that may have redounded to the
plaintiff's benefit.
Article 480 - The principles of the general law on the quieting of title are hereby adopted insofar as they are not in conflict with this Code.
Article 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 promulgated.
Action to Quiet Title – remedy for removal of cloud or doubt or uncertainty with respect to title to real property
Basis: Equity
*Quasi in rem - legal action which mainly involves property rights, but partly involves personal rights as well; determines the
rights of a person in a thing
Classes of Quieting of Title

1. Remedial (action to quiet title) – action may be brought to remove a cloud or quiet title to real property or an interest
therein
2. Preventive (action quia timet) – prevent a future cloud or doubt from being cast upon the title to real property or an
interest therein
GR: Quieting of title applies only to real property

Exception: Applies to personal property (ex. Vessel not intended to remain at a fixed place)
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Requisites:
1. Legal or equitable title to or interest in the real property subject of the action
2. Cloud on title to real property or any interest therein
3. 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 efficacy
Legal Title – full or naked ownership registered

- different from -
Equitable Title – beneficial interest in the property legal title of which belongs to another
*Cloud on Title – semblance of title which appears in some legal form but which is in fact unfounded
*Ground for filing complaint – instrument, record, claim, encumbrance or proceeding (exclusive grounds)
*In an action for quieting of title, plaintiff need not be in possession of the property – if plaintiff is in possession of the property,
action is imprescriptible (reason: Possession is a continuing right as is the right to defend such possession; 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)
*If not in possession: (1) ordinary prescriptive period of 10years, (2) extraordinary prescriptive period of 30years
Where the TCT is null and void, there can be no cloud over the title
*Quieting of title may not be brought for the purpose of settling a boundary dispute
*Even if pleading filed is for “Annulment of Title and/or Reconveyance” but plaintiff is in actual possession, claiming lawful
ownership and seeking to remove a cloud = it will be considered as an action for quieting of title (reason: allegations, not the
caption of the pleading, determines the nature of the action)
Action to Quiet Title does not apply:

1. To questions involving interpretation of documents
2. To mere written or oral assertions of claims, EXCEPT:
a. If made in a legal proceeding
b. If it is being asserted that the instrument or entry in plaintiff’s favor is not what it purports to be
3. To boundary disputes
4. To deed by strangers to the title UNLESS purporting to convey the property of the plaintiff
5. To instruments invalid on their face
6. Where the validity of the instrument involves pure question of law
Recall: Obligations and Contracts – “invalid, ineffective, voidable and unenforceable”
Rescissible Contracts
Rescissible Contracts – valid contracts but defective due to injury or damage to either of the contracting parties or third parties
Characteristics:
1. Damage to contracting parties or third persons
2. Valid and legally effective before rescission
3. Can be attacked directly only
4. Can be assailed by contracting party or third person injured or defrauded
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5. Convalidation by prescription (not ratification)
Rescission (Art1380) Resolution (Art1191)

Contracting person or third Only the contracting party
person may institute an may institute an action
action
Based on lesion, fraud, Based on failure of one
etc. party to comply with his
obligation
Courts cannot grant Courts have the discretion
extension of time to extend period for
compliance
Any contract may be Applies only to contracts
rescinded with reciprocal obligations
Article 1380 - Contracts validly agreed upon may be rescinded in the cases established by law.
Article 1381 - The following contracts are rescissible:

(1) Those which are entered into by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object
thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number;
(3) Those undertaken in fraud of creditors when the latter cannot in any other manner collect the claims due them;
(4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial
authority;
(5) All other contracts specially declared by law to be subject to rescission.
**6th ground for rescission - Payments made in the state of insolvency for obligations whose fulfillment the debtor could not be
compelled at the time they were effected (Art1382, NCC)
*Art1381 – Accion Pauliana
Requisites:
1. Plaintiff seeking rescission has a credit prior to alienation
2. Debtor entered into a contract conveying patrimonial credit to the creditor
3. Creditor has no other legal remedy to collect
4. Act is fraudulent
5. Third person is an accomplice in the commission of fraud
*Complements Art1177 (accion subrogatoria)
Article 1177 - The creditors, after having pursued the property in possession of the debtor to satisfy their claims, may exercise all the rights and bring all the actions of the
latter for the same purpose, save those which are inherent in his person; they may also impugn the acts which the debtor may have done to defraud them.
Successive Rights (other remedies)

1. Levy upon the property of the creditor
2. Accion subrogatoria (subrogatory action) – indirect action; creditor acts in the name of the debtor after exhausting all
of the assets of the debtor
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Requisites:
a. Debtor to whom the right or action properly pertains must be indebted to the creditor
b. Creditor must be prejudiced by the inaction or failure of the debtor to proceed against the third person
c. Creditor must have pursued or exhausted all the properties of the debtor save those which are exempted
from execution
Those exempted from execution
● Rights arising from personal or family relations
● Rights which are public or honorary in character
GR: cannot be brought in the name of the creditor (reason: essence of this action is the creditor’s exercising of a right
not belonging to him but the right of the debtor against his own debtor)
Exception: Sublease
3. Action to rescind – action to assail or impugn the contract entered into by the debtor with intent to defraud the creditor
(Accion Pauliana) – direct action which can be brought in the creditor’s own name
*Action to rescind is available only to valid contracts, if contract is fictitious or inexistent, remedy is action for declaration of
nullity
*Action to rescind may be brought by 3rd persons as long as such person suffered injury
*Before there can be levy there must be judgment creditor (action for specific performance must have been brought first) –
after judgment, creditor becomes judgment creditor if judgment is favorable to the creditor
*Creditor must exhaust first the remedy of levying before the remedy of subrogation or rescission may be availed of
Guardianship
1. Rules 95-96 of New Rules of Court – approval of court required for contract regarding ward’s property
2. Art326, NCC – approval of court required for natural guardian regarding child’s property where value is more than
2,000pesos
3. Sec1, Rule 95 – judicial approval is indispensable for sale or encumbrance of real property
*Unenforceable if without judicial approval
Absentees – not rescissible if approved by courts
Requisites for Nos. 1 & 2 (guardians and absentees):

1. Contract is entered into by the guardian of the ward or legal representative of the absentee
2. Ward or absentee suffers lesion of more than ¼ of the value of the property which is the object of the contract
3. Contract is entered into without judicial approval
4. No other legal means for obtaining reparation for the lesion
5. Person bringing the action must be able to return whatever he may be obliged to restore
6. Object is not legally in the possession of a third person in good faith (reason: remedy will be indemnification, not
rescission)
Requisites for No. 3 (In fraud of creditors)

1. Credit is existing prior to the celebration of the contract
2. Fraud / intent to commit fraud in order to prejudice creditor who is seeking rescission
3. Creditor cannot, in any other legal manner, collect his credit
4. Object of the contract must not be in the possession of a third person in good faith
No. 4 – Thing under litigation – only strangers to the contract can assail the validity
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No.5 – Rescissible Contracts under the law
Article 1189 - When the conditions have been imposed with the intention of suspending the efficacy of an obligation to give,
the following rules shall be observed in case of the improvement, loss or deterioration of the thing during the pendency of the
condition:
(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;
(2) If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is understood that the thing is
lost when it perishes, or goes out of commerce, or disappears in such a way that its existence is unknown or it cannot be
recovered;
(3) When the thing deteriorates without the fault of the debtor, the impairment is to be borne by the creditor;
(4) If it deteriorates through the fault of the debtor, the creditor may choose between the rescission of the obligation and
its fulfillment, with indemnity for damages in either case;
(5) If the thing is improved by its nature, or by time, the improvement shall inure to the benefit of the creditor;
(6) If it is improved at the expense of the debtor, he shall have no other right than that granted to the usufructuary.
Article 1198 - The debtor shall lose every right to make use of the period:
(1) When after the obligation has been contracted, he becomes insolvent, unless he gives a guaranty or security for the
debt;
(2) When he does not furnish to the creditor the guaranties or securities which he has promised;
(3) When by his own acts he has impaired said guaranties or securities after their establishment, and when through a
fortuitous event they disappear, unless he immediately gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor agreed to the period;
(5) When the debtor attempts to abscond.
Article 1526 - Subject to the provisions of this Title, notwithstanding that the ownership in the goods may have passed to the
buyer, the unpaid seller of goods, as such, has:
(1) A lien on the goods or right to retain them for the price while he is in possession of them;
(2) In case of the insolvency of the buyer, a right of stopping the goods in transitu after he has parted with the possession
of them;
(3) A right of resale as limited by this Title;
(4) A right to rescind the sale as likewise limited by this Title.
Where the ownership in the goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies a
right of withholding delivery similar to and coextensive with his rights of lien and stoppage in transitu where the ownership has
passed to the buyer.
Article 1534 - An unpaid seller having the right of lien or having stopped the goods in transitu, may rescind the transfer of
title and resume the ownership in the goods, where he expressly reserved the right to do so in case the buyer should make
default, or where the buyer has been in default in the payment of the price for an unreasonable time. The seller shall not
thereafter be liable to the buyer upon the contract of sale, but may recover from the buyer damages for any loss occasioned by
the breach of the contract.
The transfer of title shall not be held to have been rescinded by an unpaid seller until he has manifested by notice to the
buyer or by some other overt act an intention to rescind. It is not necessary that such overt act should be communicated to the
buyer, but the giving or failure to give notice to the buyer of the intention to rescind shall be relevant in any issue involving the
question whether the buyer had been in default for an unreasonable time before the right of rescission was asserted.
Article 1539 - The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned
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in the contract, in conformity with the following rules:

If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or
number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in
the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the
rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the
contract.
The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold
exceeds one-tenth of the price agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area of inferior quality, he may
rescind the sale.
Article 1542 - In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or
number, there shall be no increase or decrease of the price, although there be a greater or less area or number than that
stated in the contract.
The same rule shall be applied when two or more immovables as sold for a single price; but if, besides mentioning the
boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or
number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to
what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to
deliver what has been stipulated.
Article 1556 - Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance, in relation to the
whole, that he would not have bought it without said part, he may demand the rescission of the contract; but with the obligation
to return the thing without other encumbrances that those which it had when he acquired it.
He may exercise this right of action, instead of enforcing the vendor's liability for eviction.
The same rule shall be observed when two or more things have been jointly sold for a lump sum, or for a separate price
for each of them, if it should clearly appear that the vendee would not have purchased one without the other.
Article 1560 - If the immovable sold should be encumbered with any non-apparent burden or servitude, not mentioned in the
agreement, of such a nature that it must be presumed that the vendee would not have acquired it had he been aware thereof,
he may ask for the rescission of the contract, unless he should prefer the appropriate indemnity. Neither right can be exercised
if the non-apparent burden or servitude is recorded in the Registry of Property, unless there is an express warranty that the
thing is free from all burdens and encumbrances.
Within one year, to be computed from the execution of the deed, the vendee may bring the action for rescission, or sue for
damages.
One year having elapsed, he may only bring an action for damages within an equal period, to be counted from the date on
which he discovered the burden or servitude.
Article 1567 - In the cases of articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from the
contract and demanding a proportionate reduction of the price, with damages in either case.
Article 1659 - If the lessor or the lessee should not comply with the obligations set forth in articles 1654 and 1657, the
aggrieved party may ask for the rescission of the contract and indemnification for damages, or only the latter, allowing the
contract to remain in force.
No.6 – Insolvency
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Article 1382 - Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also
rescissible.
Requisites:
1. Payment is made at the time of insolvency
2. Obligation is one which the debtor cannot be compelled to pay at the time of the payment
Basis for rescission: fraud under Arts.1381 Nos. 3 and 4
*Judicial declaration of insolvency is not necessary
*Insolvency does not mean that debtor is without properties – simply means that he cannot meet the obligations as they fall
due (liabilities exceeds his assets) = insolvency in fact
Article 1382 - Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also
rescissible.
Article 1383 - The action for rescission is subsidiary; it cannot be instituted except when the party suffering damage has no other legal means to obtain reparation for the
same.
Action for rescission may be instituted by:

1. Persons prejudiced
2. Representatives of persons prejudiced
3. Heirs of persons prejudiced
4. Creditors by virtue of subrogatory action
Article 1384 - Rescission shall be only to the extent necessary to cover the damages caused.
Article 1385 - Rescission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest;
consequently, it can be carried out only when he who demands rescission can return whatever he may be obliged to restore.
Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did not act in bad faith.
In this case, indemnity for damages may be demanded from the person causing the loss.
*Includes the return of accessions
Article 1386 - Rescission referred to in Nos. 1 and 2 of article 1381 shall not take place with respect to contracts approved by the courts.
Article 1387 - All contracts by virtue of which the debtor alienates property by gratuitous title are presumed to have been entered into in fraud of creditors, when the donor did
not reserve sufficient property to pay all debts contracted before the donation.
Alienations by onerous title are also presumed fraudulent when made by persons against whom some judgment has been rendered in any instance or some writ of
attachment has been issued. The decision or attachment need not refer to the property alienated, and need not have been obtained by the party seeking the rescission.
In addition to these presumptions, the design to defraud creditors may be proved in any other manner recognized by the law of evidence.
Article 1388 - Whoever acquires in bad faith the things alienated in fraud of creditors, shall indemnify the latter for damages suffered by them on account of the alienation,
whenever, due to any cause, it should be impossible for him to return them.
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If there are two or more alienations, the first acquirer shall be liable first, and so on successively.
*Presumption of fraud – need not be a final judgment
Badges of Fraud:
1. Inadequate cause or consideration
2. Transfer is made by a debtor after suit has begun while it is pending against him
3. Sale on credit by an insolvent debtor
4. Large indebtedness or complete insolvency
5. Transfer of all or nearly all of his property by a debtor, esp. when he is insolvent or greatly embarrassed financially
6. Transfer made between father and son when there are present, others of the above circumstances
7. Failure of vendee to take exclusive possession of all properties
Article 1389 - The action to claim rescission must be commenced within four years.
For persons under guardianship and for absentees, the period of four years shall not begin until the termination of the former's incapacity, or until the domicile of the latter is
known.
GR: Action prescribes within 4years

Exceptions:
1. Action based on lesion – from the time of termination of incapacity of the ward or from the time the domicile of the
absentee is known
2. Action based on fraud – counted from the time of discovery of fraud
3. Declared by law to be rescissible – six months or even 40 days, counted from day of delivery (Arts. 1543, 1571,
1577)
Article 1543 - The actions arising from articles 1539 and 1542 shall prescribe in six months, counted from the day of delivery.
Article 1539. The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is
mentioned in the contract, in conformity with the following rules:
If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of
measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may
have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional
reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not
less than one-tenth of that stated.
The same shall be done, even when the area is the same, if any part of the immovable is not of the quality
specified in the contract.
The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing
sold exceeds one-tenth of the price agreed upon.
Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area of inferior
quality, he may rescind the sale.
Article 1542 - In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of
measure or number, there shall be no increase or decrease of the price, although there be a greater or less area or
number than that stated in the contract.
The same rule shall be applied when two or more immovables as sold for a single price; but if, besides
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mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be
designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when
it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a
reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because
the vendee does not accede to the failure to deliver what has been stipulated.
Article 1571 - Actions arising from the provisions of the preceding ten articles shall be barred after six months, from the
delivery of the thing sold.
Article 1577 - The redhibitory action, based on the faults or defects of animals, must be brought within forty days from the date
of their delivery to the vendee.
This action can only be exercised with respect to faults and defects which are determined by law or by local customs.
Voidable Contracts
Voidable Contracts – all essential elements for the validity of the contract are present although consent is vitiated either by
lack of legal capacity of one of the contracting parties, or by mistake, violence, intimidation, undue influence or fraud
Characteristics:
1. Defect consists in the vitiation of consent of contracting parties
2. Binding until annulled by competent court
3. Suceptible to ratification – may be assailed only by the contracting parties, directly or collaterally
Article 1390 - The following contracts are voidable or annullable, even though there may have been no damage to the contracting parties:
(1) Those where one of the parties is incapable of giving consent to a contract;
(2) Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are annulled by a proper action in court. They are susceptible of ratification.
*If consent is absolutely lacking or simulated – contract is void

*Even when the contract (voidable) is merely executory or has already been consummated, it can be annulled by proper court
action
Article 1330 - A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.
Mistake – wrong conception of a thing and lack of knowledge

1. Mistake of Fact – fact does not exist but exists in reality / belief that such fact exists but does not exist in reality (ex.
Mistake of fact in Family Code - authority of the solemnizing officer)
a. Mistake as to object (error in re)
1. Identity of the thing (error in corpora) – confusion of things
2. Substance of the thing (error in substantia)
3. Conditions of thing
4. Quantity of the thing (error in quantitate)
5. Mistake in quality (error in qualitate) – material and nature of the thing
b. Mistake as to Person (error in persona)
Requisites:
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1. Mistake as to the identity or qualifications

2. Identity / qualifications of the person is the principal cause for entering into the contract
2. Mistake in Law – erroneous interpretation of a question of law or legal effects of a certain act or transaction
Article 1331 - In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have
principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent only when such identity or qualifications have been the principal cause of the contract.
A simple mistake of account shall give rise to its correction.
Article 1332 - When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show that the terms thereof have been fully explained to the former.
Article 1333 - There is no mistake if the party alleging it knew the doubt, contingency or risk affecting the object of the contract.
Article 1334 - Mutual error as to the legal effect of an agreement when the real purpose of the parties is frustrated, may vitiate consent.
GR: Only mistake of fact vitiates consent

Exception: Art1334
Requisites for the exception:
1. Mistake as to legal effect
2. Mistake is mutual
3. Real purpose of the parties is frustrated
Violence, Intimidation & Undue Influence
Article 1335 - There is violence when in order to wrest consent, serious or irresistible force is employed.
There is intimidation when one of the contracting parties is compelled by a reasonable and well-grounded fear of an imminent and grave evil upon his person or
property, or upon the person or property of his spouse, descendants or ascendants, to give his consent.
To determine the degree of intimidation, the age, sex and condition of the person shall be borne in mind.
A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent.
Article 1336 - Violence or intimidation shall annul the obligation, although it may have been employed by a third person who did not take part in the contract.
Requisites of Violence (Physical Compulsion - external)

1. Serious / Irresistible Force
2. It is the determining cause for entering into a contract
Requisites for Intimidation (Moral Compulsion - internal):

1. Fear of an evil
2. Evil feared is imminent, grave and unjust
3. It is the determining cause for entering into a contract
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Article 1337. There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice.
The following circumstances shall be considered: the confidential, family, spiritual and other relations between the parties, or the fact that the person alleged to have been
unduly influenced was suffering from mental weakness, or was ignorant or in financial distress.
Fraud (Causal)
Article 1338 - There is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them,
he would not have agreed to.
Article 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud.
*If there is no duty to reveal / innocent nondisclosure – not fraud

Requisites:
1. Employed by one of the contraction parties
2. Serious fraud
3. Fraud is used to induce a person to enter into a contract
4. Not employed by both parties (in pari delicto) or third person
Dolo causante (to induce person into entering into the contract) – Art1338; not a source of damages; ground for annulment of
contract – it is the fraud employed before or during the perfection of the contract = vitiated consent
- different from -
Dolo incidente (fraud in the performance of an obligation) – deliberate or intentional evasion of the normal fulfillment of the
obligation; malice, dishonesty, bad faith
Dolo Incidente Dolo Causante

Present during the Present at the time of the
performance of the birth of the obligation
obligation
Employed for the purpose Employed for the purpose
of evading the normal of securing the consent of
fulfillment of the obligation the other party to enter
into the contract
Results in the non- Results to the vitiation of
fulfillment or breach of the consent of the other
obligation party
Gives rise to a right to Gives rise to a right to
recover damages annul or rescind the
contract
Article 1340 - The usual exaggerations in trade, when the other party had an opportunity to know the facts, are not in themselves fraudulent.
Article 1341 - A mere expression of an opinion does not signify fraud, unless made by an expert and the other party has relied on the former's special knowledge.
Article 1342 - Misrepresentation by a third person does not vitiate consent, unless such misrepresentation has created substantial mistake and the same is mutual.
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Exception to Art1342 – one of the contracting party knew of the misrepresentation and misrepresentation is favorable to him
Article 1343 - Misrepresentation made in good faith is not fraudulent but may constitute error.
Article 1344 - In order that fraud may make a contract voidable, it should be serious and should not have been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages.
Article 1391 - The action for annulment shall be brought within four years.
This period shall begin:
In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.
Article 1392 - Ratification extinguishes the action to annul a voidable contract.
Article 1393 - Ratification may be effected expressly or tacitly. It is understood that there is a tacit ratification if, with knowledge of the reason which renders the contract
voidable and such reason having ceased, the person who has a right to invoke it should execute an act which necessarily implies an intention to waive his right.
Article 1394 - Ratification may be effected by the guardian of the incapacitated person.
Article 1395 - Ratification does not require the conformity of the contracting party who has no right to bring the action for annulment.
Article 1396 - Ratification cleanses the contract from all its defects from the moment it was constituted.
Ratification / Confirmation – act or means by virtue of which efficacy is given to a contract which suffers from a vice of curable
nullity
Requisites:
1. Tainted with vice which is susceptible of being cured
2. Effected by person who is entitled to do so under the law
3. Effected with knowledge of vice or defect (freedom, knowledge and clarity)
4. Nullity or defect should have already disappeared
Modes of convalidating voidable contracts:
1. Prescription of the action for annulment
2. Ratification or confirmation
3. Loss of thing which is the object of the contract through the fraud or fault of the person who is entitled to institute the
action
Article 1397 - The action for the annulment of contracts may be instituted by all who are thereby obliged principally or subsidiarily. However, persons who are capable cannot
allege the incapacity of those with whom they contracted; nor can those who exerted intimidation, violence, or undue influence, or employed fraud, or caused mistake base
their action upon these flaws of the contract.
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Requisites to institute action:

1. Person has interest in the contract
2. Victim is not the party who caused the vice or defect
Article 1398 - An obligation having been annulled, the contracting parties shall restore to each other the things which have been the subject matter of the contract, with their
fruits, and the price with its interest, except in cases provided by law.
In obligations to render service, the value thereof shall be the basis for damages.
Article 1399 - When the defect of the contract consists in the incapacity of one of the parties, the incapacitated person is not obliged to make any restitution except insofar as
he has been benefited by the thing or price received by him.
Effects of Annulment:
1. Obligation to do – apportionment of damages based on value of prestation with interest
2. Obligation to give – restore things, fruits and price, with interest
Article 1400 - Whenever the person obliged by the decree of annulment to return the thing can not do so because it has been lost through his fault, he shall return the fruits
received and the value of the thing at the time of the loss, with interest from the same date.
Article 1401 - The action for annulment of contracts shall be extinguished when the thing which is the object thereof is lost through the fraud or fault of the person who has a
right to institute the proceedings.
If the right of action is based upon the incapacity of any one of the contracting parties, the loss of the thing shall not be an obstacle to the success of the action, unless
said loss took place through the fraud or fault of the plaintiff.
Article 1402 - As long as one of the contracting parties does not restore what in virtue of the decree of annulment he is bound to return, the other cannot be compelled to
comply with what is incumbent upon him.
Article 1403 - The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statute of Frauds as set forth in this number. In the following cases an agreement hereafter made shall be unenforceable by action,
unless the same, or some note or memorandum, thereof, be in writing, and subscribed by the party charged, or by his agent; evidence, therefore, of the agreement cannot
be received without the writing, or a secondary evidence of its contents:
(a) An agreement that by its terms is not to be performed within a year from the making thereof;
(b) A special promise to answer for the debt, default, or miscarriage of another;
(c) An agreement made in consideration of marriage, other than a mutual promise to marry;
(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such
goods and chattels, or the evidences, or some of them, of such things in action or pay at the time some part of the purchase money; but when a sale is made by
auction and entry is made by the auctioneer in his sales book, at the time of the sale, of the amount and kind of property sold, terms of sale, price, names of the
purchasers and person on whose account the sale is made, it is a sufficient memorandum;
(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;
(f) A representation as to the credit of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
Unenforceable Contract
Unenforceable – cannot be enforced by proper action in court unless ratified
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Characteristics:
1. Cannot be enforced by proper action in court unless ratified
2. Suceptible to ratification
3. Cannot be assailed by third persons
Confirmation – cure a vice or defect (for voidable contracts)

- different from -
Ratification – validation of any kind of defective contract
- different from -
Recognition – defect of proof is cured
Statute of Fraud – requires contracts to be in writing and subscribed (valid but unenforceable)
*Not applicable to total / partially consummated contracts (reason: already ratified by performance)
Modes of Ratification:
1. Failure to object presentation of oral evidence
2. Acceptance of benefits
*Incapacity of one party (voidable); incapacity of both parties (unenforceable)
*Ratification by guardian/parents – voidable
*Ratification by incapacitated person after gaining capacity – valid at inception
Article 1404 - Unauthorized contracts are governed by article 1317 and the principles of agency in Title X of this Book.
*Agency
Article 1405 - Contracts infringing the Statute of Frauds, referred to in No. 2 of article 1403, are ratified by the failure to object to the presentation of oral evidence to prove the
same, or by the acceptance of benefit under them.
Article 1406 - When a contract is enforceable under the Statute of Frauds, and a public document is necessary for its registration in the Registry of Deeds, the parties may
avail themselves of the right under Article 1357.
Article 1407 - In a contract where both parties are incapable of giving consent, express or implied ratification by the parent, or guardian, as the case may be, of one of the
contracting parties shall give the contract the same effect as if only one of them were incapacitated.
If ratification is made by the parents or guardians, as the case may be, of both contracting parties, the contract shall be validated from the inception.
Article 1408 - Unenforceable contracts cannot be assailed by third persons.
Void or Inexistent Contracts

Void – all requisites are present but is contrary to law, moral, good customs, public order, public policy – pari delicto included
- different from -
Inexistent – lacks all of the essential elements
Characteristics:
1. No legal effect – quod nullum est nullum producit effectum
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Exception: motive is the cause when it predetermines the purpose of the contract
2. Not susceptible to ratification
3. Right to set up the defense of inexistence or absolute nullity cannot be waived or renounced
4. Imprescriptibility of action
5. Cannot be invoked by person whose interests are not directly affected
Article 1409 - The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
Void
1. Cause, object, purpose of the contracts is contrary to law, moral, good customs, public order, public policy
2. Object/s are outside the commerce of men
3. Impossible service
4. Intention of the parties as to the principal object of the contract cannot be ascertained
5. Expressly prohibited or declared void by law
a. Direct results of previous void contracts
b. No concurrence between offer and acceptance
c. Do not comply with the required form where form is essential for validity
*Sale of property without consent by one spouse – Void
Inexistent
1. Absolutely simulated or fictitious
2. Cause or object not existing at the time of the transaction
Article 1410 - The action or defense for the declaration of the inexistence of a contract does not prescribe.
Article 1411 - When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari delicto,
they shall have no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to the disposal of effects or instruments of a
crime shall be applicable to the things or the price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim what he has given, and shall not be bound to comply with his
promise.
Article 1412 - If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:
(1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's
undertaking;
(2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been
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promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply his promise.
Principle of in pari delicto – defect of a void contract consists in the illegality of the cause or object of the contract, and both of
the parties are at fault (law refuses them every remedy and leaved them where they are)
Exceptions:
1. Payment of usurious interest – debtor may recover interest paid in excess of that allowed, with interest from date of
payment
2. Payment of money or delivery of property for an illegal purpose where the party who paid or delivered repudiates the
contract before the purpose has been accomplished or before any damage has been caused to a third person
3. Payment of money or delivery of property by an incapacitated person
4. Agreement is not illegal per se but is merely prohibited by law for the protection of the plaintiff
5. Payment of any amount in excess of the maximum price of any article or commodity fixed by law
6. Laborer undertakes to work longer than the maximum hours fixed by law (may demand OT pay)
7. Laborer accepts wage lower than the minimum wage prescribed by law (may demand for the deficiency)
Article 1413 - Interest paid in excess of the interest allowed by the usury laws may be recovered by the debtor, with interest thereon from the date of the payment.
Article 1414 - When money is paid or property delivered for an illegal purpose, the contract may be repudiated by one of the parties before the purpose has been
accomplished, or before any damage has been caused to a third person. In such case, the courts may, if the public interest will thus be subserved, allow the party repudiating
the contract to recover the money or property.
Article 1415 - Where one of the parties to an illegal contract is incapable of giving consent, the courts may, if the interest of justice so demands allow recovery of money or
property delivered by the incapacitated person.
Article 1416 - When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for the protection of the plaintiff, he may, if public
policy is thereby enhanced, recover what he has paid or delivered.
Article 1417 - When the price of any article or commodity is determined by statute, or by authority of law, any person paying any amount in excess of the maximum price
allowed may recover such excess.
Article 1418 - When the law fixes, or authorizes the fixing of the maximum number of hours of labor, and a contract is entered into whereby a laborer undertakes to work
longer than the maximum thus fixed, he may demand additional compensation for service rendered beyond the time limit.
Article 1419 - When the law sets, or authorizes the setting of a minimum wage for laborers, and a contract is agreed upon by which a laborer accepts a lower wage, he shall
be entitled to recover the deficiency.
Article 1420 - In case of a divisible contract, if the illegal terms can be separated from the legal ones, the latter may be enforced.
Article 1421 - The defense of illegality of contract is not available to third persons whose interests are not directly affected.
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Article 1422 - A contract which is the direct result of a previous illegal contract, is also void and inexistent.
Article 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.
Article 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 travelers 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.
*Limitation on ownership – police power of the State

*Arts 482 and 483 are obligations arising from law – Art1157
Building or structure causing damage for lack of necessary repairs = owner is responsible
*If due to defect in construction – engineer, architect or contractor is liable
*Lack of knowledge of the falling condition of the structure will not excuse the owner from liability – quasi delict
Article 2191 - Proprietors shall also be responsible for damages caused:

(1) By the explosion of machinery which has not been taken care of with due diligence, and the inflammation of explosive substances which have not been kept in a
safe and adequate place;
(2) By excessive smoke, which may be harmful to persons or property;
(3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure;
(4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed without precautions suitable to the place.
Exception to Art2191 – due to fortuitous event = no liability

*Art483 – owner is liable even if due to fortuitous event (reason: owner is already negligent for failing to take necessary
measures to insure public safety; present danger of falling / collapse of building, structure or trees in Art483)
CO-OWNERSHIP
Article 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.
Co-ownership – right of common dominion which two or more persons have in a spiritual part of a thing, not materially or
physically divided
Requisites:
1. Plurality of subjects – different owners
2. Unity of the objects – material indivision
3. Recognition of ideal share – proportionate share of the owners
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Dual Nature of Co-ownership

1. Ownership over the ideal share – full ownership over the ideal share although portion is unidentified
2. Co-owners exercise joint ownership over the whole – observance of mutual respect between co-owners
*Exercise of the right of legal redemption presupposes the existence of co-ownership at the time the conveyance is made by
the co-owner and when it is demanded by the other co-owner or co-owners; Property already partitioned judicially or
extrajudicially where portion belonging to co-owners has been identified and localized, right of redemption cannot be invoked
GR: Co-owners cannot claim a definite portion

XPN: transferees of an undivided portion of the land allowed a co-owner to occupy a definite portion and has not disturbed the
same for a period too long to be ignored – possessor is in a better condition or right (potior est conditio possidentis)
Co-Ownership Partnership
Can exist without a Requires the existence of
contract contracts
No juridical personality Has separate juridical
distinct from the co- personality
owners
Purpose of common Agreement to divide the
enjoyment of the thing profits among themselves
owned in common
Agreement not to divide No limit as to the time of
the property for more than its existence
ten years is not valid with Reason: it will eventually
respect to the excess be extinguished – by
years death of one of the
partners or by agreement
of the partners
Death of co-owner does Death of a partner brings
not co-ownership about the dissolution of
(transferred to the heirs of the partnership
the deceased)
Co-owner may freely Partner has no power of
dispose of his share disposal so as to make
the buyer a partner
UNLESS agreed upon by
all the other partners
Co-owner does not Partner usually represents
represent the co- the partnership and binds
ownership the partnership
Sources of Co-ownership:
1. Law – ex. Commixtion, confusion, Art147, FC (common law spouses)
2. Contract – ex. Art494 par2, NCC (agreement not to divide a thing for a period not exceeding 10years) and Art658,
NCC (easement of party wall)
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3. Succession – Art1078, NCC (whole estate of the deceased, before partition, is owned by 2 or more heirs), Art1083
(testator my prohibit the partition of the estate among the heirs for a period not exceeding 20years)
4. Fortuitous event or chance – commixtion, confusion
5. Occupancy – Art438par2 (hidden treasure), hunting, fishing
Rules governing co-ownership

1. Contract
2. Arts 484 to 501, NCC
3. Special Provisions of Law – ex. Art75, FC (absolute community of property); not conjugal partnership of gains
Article 485 - The share of the co-owners, in the benefits 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.
Share of co-owners is governed by:

1. Contract – in the absence of agreement, shares are presumed to be equal
2. Law
*Share in the co-ownership shall be in proportion to their respective contributions, then all benefits and charges shall likewise
be divided among them in proportion to their share in capital – any stipulation to the contrary is void (reason: to prevent unjust
enrichment)
Article 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 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.
Exception to Art486: 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
*Co-owners can either exercise an equal right to live in the house or agree or lease it – if they fail to exercise any of these
options, they must bear the consequences (it is unjust to require a co-owner to pay rent after the co-owners by their silence
have allowed him to use the property)
*Co-owners agreed to lease the property – co-owner cannot retain it for his use without paying the proper rent
*Property retained by some of the co-owners for the exploitation of an industry – other co-owners become co-participants in
the accessions of the property and shares in the net profit
To Determine the Purpose:
1. Agreement, express or implied
2. Presumption that the thing is intended for that use for which it is ordinarily adapted according to its nature
Q. Is there such thing as perpetual co-ownership?

A. No. Any of the co-owners can demand partition at any given time.
No co-owner ought to be compelled to stay in a co-ownership indefinitely. He may insist the partition of the property
anytime. Such action to demand for partition does not prescribe. (Patricio v. Dario III, GR. No. 170829, 2006)
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A co-owner has a right to freely sell or dispose his undivided share of interest but has no right to sell a divided or definite
part of a real estate owned in common. (Lopez v. Illustre, 5 Phil. 568)
Co-ownership is terminated if there is judicial or extrajudicial partition of the property. (Cruz v. CA, 456 SCRA 165)
In a property co-owned by the compulsory heirs, any act tantamount to partition (identifying their share and constructed
their respective houses) automatically terminates the co-ownership. (Avila v. Sps. Arabat, 2006)
Article 487 - Any one of the co-owners may bring an action in ejectment.
GR: Any co-owner may institute action (in Ejectment) - includes suit of forcible entry (detentacion) or unlawful detainer
(desahuico) and all kinds of actions for the recovery of possession (including accion publiciana and reinvidicatory actions)
XPN: If action is for the benefit of the plaintiff alone, who claims to be the sole owner and entitled to the possession thereof,
other co-owners (indispensable parties) must be impleaded
*Any court judgment in favor of the co-owner will benefit the others but if such judgment is adverse, it cannot prejudice the
rights of the unimpleaded co-owners
Reason: law prohibits a co-owner from being prejudiced as to his interest; adverse judgment cannot be binding upon a co-
owner who was not given a day in court
*Action is available even against a co-owner who takes exclusive possession and asserts exclusive ownership of the property
- the court cannot, in the action filed by a co-owner against another co-owner proceed with the actual partitioning of the co-
owned property (extra-judicial partition is still necessary to effect physical division)
Article 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 co-ownership.
Article 489 - Repairs for preservation may be made at the will of one of the co-owners, but he must, if practicable, first 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.
Each co-owner has the right to demand contribution from other co-owners for any and all expenses he incurred for the
purpose of preserving the thing or right owned in common
*Opposition of other co-owners for making necessary repairs does not deprive the co-owner who made the advances from
demanding contributions from the other co-owners (reason: Art488 – repairs for preservation may be made at the will of only
one of the co-owners)
Q: What if the co-owner failed to comply with the notice requirement?

A: Failure does not deprive the co-owner of his right to recover the proportionate shares of the other co-owners in the
expenses; however, the co-owner has the burden of proving the necessity of the repairs and the reasonableness of the
expenses
Q: Why is useful expenses not subject to reimbursement?

A: It is an act of alteration
Renunciation – option that belongs to a co-owner who may be compelled to contribute to the expenses incurred for the
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purpose of preserving the property owned in common (Special form of payment – dation in payment)
*Co-owner cannot be compelled to renounce – if co-owner refuses to pay his share of expenses, the remedy is to file an action
for collection of sum of money
*Consent of co-owner who made advances is not required when a co-owner opts to renounce
Limitation on the exercise of the option of renunciation: Art488 prohibits the exercise of the option of renunciation if it is
prejudicial to the interest of the co-ownership
Taxes
GR: Not a necessary expense
XPN: Necessary expense under Art488, NCC

Ryan Armand L. Casabar & Dennis C. Bagaporo

(Name & Logo)
Article 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 floor of his story; the floor 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 first story shall be maintained at the expense of all the owners pro rata, with the exception of the owner of the ground floor; the
stairs from the first to the second story shall be preserved at the expense of all, except the owner of the ground floor and the owner of the first story; and so on
successively.
*Art490 applies to a house consisting of several stories and different stories belong to different owners
N/A to condominium project – governed RA4276 (Condominium Act)
Rules governing necessary expenses:

1. Manner of contribution specified in the title of ownership
2. Agreement of parties
3. In the absence of agreement – Art490
a. Main and party walls, roof and 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
b. Floor of entrance, front door, common yard and sanitary works common to all, shall be maintained at the
expense of all owners pro rata
c. Each owner shall bear the cost of maintaining the floor of his story
d. Stairs from the entrance to the first story – all owners pro rata (except owner of ground floor; reason: no need for
him to use the stairs)
Stairs from the first to second story – expense of all except the owner of ground floor and first floor
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Condominium Act
(Co-ownership provisions are suppletory)
Condominium – 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
Common Areas – condominium project refer to the entire project excepting all units separately granted or held or reserved
Unit – part of condominium project intended for any type of independent use or ownership, including one or more rooms or
spaces located in one or more floors in a building or buildings and such accessories as may be appended thereto
Nature of ownership in condominium projects

1. Condominium unit is owned separately and individually by the unit owner
2. Land and common areas – co-owned
Reason: Unit owner will become part of the association (pays association dues)
a. Land and common areas are held by owners of the separate units as co-owners – co-owners with respect to the
undivided interest in the land and common areas
b. Land and other common areas are held by the condominium corporation – owners of the individual units are
automatically considered members or shareholders of the corporation (reason: 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)
Rules on expenses on common areas

*Owner of project is required by law, prior to conveyance of any condominium to register a declaration of restrictions relating to
such project (restrictions is considered a lien upon each condominium in the project and shall inure to and bind all
condominium owners in the project)
Restrictions may be:
1. For maintenance of insurance policies insuring condominium owners against loss by fire, casualty, liability,
workmen’s compensation and other insurable risks and for bonding of the members of any management body
2. Provisions for maintenance, utility, gardening and other services benefitting the common areas, for the employment
of personnel necessary for the operation of the building and legal, accounting and other professional and technical
services
3. For purchase of materials, supplies and the like needed by the common areas
4. 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
5. For reconstruction of any portion or portions of any damage to or destruction of the project
*Notice of assessment of condominium is to be registered with the Registry of Deeds of the city or province where such
condominium is located
*Lien is superior to all other liens registered subsequent to the registration of notice of assessment EXCEPT real property tax
lien
Article 491 - None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common, even though benefits 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.
Article 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.
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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.
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 co-owners, and the remainder is owned in common, the preceding provision shall apply only to the part
owned in common.
Acts requiring Unanimous Consent

1. Encumbrance
Reason: co-owners will be prejudiced (example, mortgage foreclosure)
2. Disposition
Reason: No one may dispose a thing which he does not own
3. Acts of Alteration
Acts of Alteration Acts of Administration

Act by virtue of which a Improvement or
co-owner, in opposition to embellishment of the thing
the express agreement, if owned in common for the
there is any, or in default purpose of better
thereof, to the tacit enjoyment (IME)
agreement of all the co- ● Improvement
owners and violating their ● Management
will, changes the thing ● Enjoyment
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
Consent, express or tacit, Majority consent of the co-
previous to the act or after owners who represents the
its commission, of all co- controlling interest in the
owner required even object of the co-ownership
though alteration will required
benefit all co-owner
*Acts made without the Reason for majority
consent of all co-owners is consent: No alienation
illegal and invalid
Remedy:
● Undo what has
been done at the
expense of the
erring co-owner
(Art1168, NCC)
● Erring co-owner is
liable for any loss or
damage which the
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co-ownership may
have suffered
More permanent result –
refers to the substance or
form of the thing
Test: Whether the nature of the thing requires modifications for enjoyment – if there is no need for modification, it is an act of
alteration; where the nature of the thing requires changes in its exploitation, it is an act of administration
Acts of Majority Prejudicial to the Co-ownership:

1. Resolution calls for 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. Resolution goes beyond the limit of mere administration
3. Majority authorizes lease, loans, or other contracts without security, exposing the things to serious danger to the
prejudice of the other co-owners
4. 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 position
Article 493 - Each co-owner shall have the full ownership of his part and of the fruits and benefits 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.
*Co-owner has absolute ownership over his undivided share in the common property – he can alienate his share to third
persons even without the consent of other co-owners; may validly lease his undivided interest to a third party independently of
other co-owners
Effect of alienation or mortgage of undivided share: transferee steps into the shoes of the transferor as co-owner
GR: Alienation of entire co-owned property – sale will affect the portion owned by the co-owner only (reason: nemo dat quod
non habet – no one can give what he does not have) – remedy is an action for the partition of the property under Rule 69 of
the Revised Rules of Court
XPNs:
1. Buyer in good faith – a person dealing registered land is not required to go behind the register to determine the
condition of the property
2. Art147, FC – common law spouses are prohibited from encumbering or disposing of their share in the co-owned
property without the consent of the other prior to the termination of cohabitation
Sale of Conjugal Property without the consent of the other Spouse –VOID (reason: Conjugal Partnership of Gains under the
FC is governed suppletorily only by the rules on partnership)
Sale of Community Property without the consent of the other Spouse – VOID (reason: absolute community is a form of co-
ownership but Art493 does not apply; prior to the liquidation of the absolute community, the interest of each spouse is
inchoate, a mere expectancy which constitute neither legal nor 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)
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Legal Redemption – may be exercised by two or more co-owners in proportion to the share they respectively have
*Reason for allowing redemption: minimize co-ownership by reducing the number of participants until the community is done
away with
Requisites for Legal Redemption:

1. There is co-ownership
2. One of the co-owners sold his right to a stranger (not a co-owner)
3. Sale is before the partition of the co-owned property
4. Right of redemption must be exercised within 30days from knowledge
5. Vendee must be reimbursed for the price of the sale
*Right is granted not only to the co-owner but also to all those who subsequently acquires their respective shares while the
community subsists
*Co-owner has the right of redemption not a right of pre-emption to purchase the shares of his co-owners
*Written notice is not required when there is actual notice
Redemption under Art1088 – refers to hereditary rights without specifying the object
- different from -
Redemption under Art1620 – sale consists of property or properties of the inheritance
Article 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.
Extinguishment of Co-ownership
1. Merger in one person, of all the interest of the co-ownership (ex. Co-owner acquires another co-owner’s share though
purchase or legal redemption)
2. Prescription of the thing or right in favor of third persons or a co-owner
3. Destruction of the thing or loss of the right which is owned in common – co-ownership is a state of fact which exist so
long as the property remains physically undivided (no state of fact = co-ownership ceases)
4. Partition of the property owned in common
*Redemption is not a mode of terminating co-ownership – co-heir or co-owner who redeems the whole property benefits the
co-owners does not become the owner therof (he is considered as a trustee of the property and will be entitled to collect
reimbursement; redemption is a necessary expense under Art488)
*Heirs (co-owners) allowing the one year redemption period to expire without redeeming the property and even permitted the
consolidation of ownership and the issuance of new title in favor of the bank, through their omission, the heirs allowed the
extinction of their co-ownership (Tan vs. CA)
*Construction of a house on a co-owned property = implied partition by an act that would identify the share of ownership
GR: prescription does not lie (reason: co-ownership is a form of trust and every co-owner is a trustee for the others –
relationship of co-owners is fiduciary in character and attribute; no prescription so long as co-owner expressly or impliedly
recognized co-ownership)
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XPN: When co-ownership repudiated
Requisites for Repudiation:

1. Co-owner has performed unequivocal acts of repudiation amounting to an ouster of the other co-owners (ex. [1] Co-
owner executed a deed of partition and subsequently obtained the cancellation of the title and issuance of a new one
in his name [2] action to quiet title to property [3] action for recovery of ownership)
2. Positive acts of repudiation have been made known to the other co-owners – prescription runs only against co-
owners when such unequivocal notice has been given
3. Evidence is clear and convincing
Article 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.
Article 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.
Article 498 - 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.
Article 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.
Article 500 - Upon partition, there shall be a mutual accounting for benefits received and reimbursements for expenses made. Likewise, each co-owner shall pay for damages
caused by reason of his negligence or fraud.
Article 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.
Partition – separation, division and assignment of the thing held in common among those to whom it may belong; thing itself
may be divided or its value
*Partition cannot be invoked when one of the co-owners claim absolute and exclusive ownership of the property and denies
the others of any share therein
*Also considered as an action for declaration of co-ownership and for segregation and conveyance of a determinate portion of
the property involved
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Partition is not available:

1. Agreement between the owners to keep the thing undivided for a period not exceeding 10years – may be renewed by
a new agreement
2. Donor or testator prohibits partition for a period not exceeding 20years
3. Law prohibits partition
a. Spouses under the regime of absolute community
b. Family home UNLESS court finds compelling reason to do so
4. Partition renders the thing unserviceable for the use for which it is intended – thing is essentially indivisible
a. Subdivision will prejudice the interests of the co-owners
b. Co-owners are not in agreement as to whim among them shall be allotted or assigned the entire property upon
proper reimbursement
Legal Effects of Partition

1. Co-ownership is terminated; Co-owners are the absolute and exclusive owners of the share allotted to him – deemed
in exclusive possession of the portion allotted even during the entire period that the co-ownership lasted
2. Cannot 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
3. Personal rights pertaining to third persons against ownership shall also remain in force
4. Mutual accounting shall be rendered by the co-owners with regard to:
a. Benefits and expenses and each co-owner shall pay for damages cause by reason of his negligence or fraud
b. Reimburse each other as to the income and fruits received and for useful and necessary expenses made
c. Co-owner liable for the defects of title and quality of the portion assigned to each of the co-owners
2 principal issues in an action for partition:

1. Whether plaintiff is a co-owner of the property sought to be partitioned
2. How property is to be divided between the plaintiff and defendant
GR: Right of co-owner to demand partition is imprescriptible and cannot be barred by laches
Reason: 6 tights of owner – partition is one of them
XPN: One of the co-owners has possessed the property as exclusive owner and for a period sufficient to acquire it by
prescription
When co-owner has effectively repudiated co-ownership:

1. Co-owner acquires the property by acquisitive prescription if his possession meets all the requirements of the law and
after the expiration of the prescriptive period
- or -
2. Co-owners were deprived of their share loses their right to seek the declaration of the co-ownership and of their rights
thereunder (barred by the statute of limitations / extinctive prescription)
Requisites of Repudiation:
1. Co-owner repudiates co-ownership
2. Act of repudiation is clearly made known to other co-owners
3. Evidence is clear and conclusive
4. He has been in possession through open, continuous, exclusive and notorious possession for the property for the
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period prescribed by law
Waters
Article 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.
*Art503 & 504 Repealed by PD1067
Article 505. Every concession for the use of waters is understood to be without prejudice to third persons.
Article 506. The right to make use of public waters is extinguished by the lapse of the concession and by non-user for five years.
Governing Laws on Waters

1. PD1067 – Water Code of the Philippines [1976]
2. New Civil Code provisions not repealed by PD1067
3. Spanish Law on Waters of 1866 provisions not repealed by PD1067
Sec2, ArtXII, 1987 Constitution – “All lands of the public domain, waters, xxxx are owned by the State”
Article 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.
Article 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 floods, may cause such damage.
Article 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.
Article 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.
Article 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.
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Article 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.
Article 513. Waters artificially brought forth in accordance with the Special Law of Waters of August 3, 1866, belong to the person who brought them up.
Article 514. When the owner of waters artificially brought to the surface abandons them to their natural course, they shall become of public dominion.
Article 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.
Article 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.
Article 517. All the owners who participate in the benefits 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.
Article 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.
PRESIDENTIAL DECREE No. 1067

“The WATER CODE of the Philippines”
Underlying Principles:
● All waters belong to the State.

● All waters that belong to the State cannot be the subject to acquisitive prescription.
● The State may allow the use or development of waters by administrative concession.
● 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.
● Preference in the use and development of waters shall consider current usages and be responsive to the changing
needs of the country.
Waters - refers to water above and under the grounds, in the atmosphere, and of the sea within the territorial jurisdiction of the
Philippines
Pertinent Provisions:
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DECLARATION OF OBJECTIVES AND PRINCIPLES
The objectives of this Code are:

● To establish the basic framework relating to the appropriation, control and conservation of water resources to achieve
the optimum development and rational utilization of these resources;
● To define the extent of the rights and obligations of water users and owners including the protection and regulation of
such rights;
● 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
● To identify the administrative agencies which will enforce the Water Code
OWNERSHIP OF WATERS
The following belong to the State:

● Rivers and their natural beds;
● Continuous or intermittent waters of springs and brooks running in their natural beds and the beds themselves;
● Natural lakes and lagoons;
● All other categories of surface waters such as water flowing over lands, water from rainfall whether natural, or
artificial, and water from agriculture runoff, seepage and drainage;
● Atmospheric water;
● Subterranean or ground waters; and,
● Seawater.
The following waters found on private lands belong to the State:

● Continuous or intermittent waters rising on such lands;
● Lakes and lagoons naturally occuring on such lands;
● Rain water falling on such lands;
● Subterranean or ground waters; and,
● Water in swamps and marshes.
Note:
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. 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.
Water legally appropriated shall be subject to the control of the appropriator from the moment it reaches the appropriator's canal or
aqueduct leading to the place where the water will be used or stored and, thereafter, so long as it is being beneficially used for the purposes
for which it was appropriated.
APPROPRIATION OF WATERS
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APPROPRIATION - 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.
Water may be appropriated for the following purposes:

● Domestic
● Municipal
● Irrigation
● Power generation
● Fisheries
● Livestock raising
● Industrial
● Recreational, and
● Other purposes
GR: 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.
● 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.
XPN: 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.
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 handcarried 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 flotation.
Note: Only citizens of the Philippines, of legal age, as well as juridical persons, who are duly qualified by law to exploit and develop water
resources, may apply for water permits.
Article 16. Any person who desires to obtain a water permit shall file an application with the Council who shall make known said application to
the public for any protests.
Article 17. The right to the use of water is deemed acquired as of the date of filing 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.
Article 19. Water rights may be leaded or transferred in whole or in part to another person with prior approval of the Council, after due notice
and hearing.
Note: The measure and limit of appropriation of water shall be beneficial use. Beneficial use of water is the utilization of water in the right
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amount during the period that the water is needed for producing the benefits for which the water is appropriated.
GR: Standards of beneficial 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.
XPN: domestic use, every appropriator of water shall maintain water control and measuring devices, and keep records of
water withdrawal. When required by the Council, all appropriators of water shall furnish information on water use.
Article 22. Between two or more appropriators 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, the 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 find an alternative source of supply in accordance with conditions prescribed by the Council.
Note: A water right shall be exercised in such a manner that the rights of third persons or of other appropriators are not
prejudiced thereby.
Article 25. A holder of water permit may demand the establishment of easements necessary for the construction and maintenance of the
works and facilities needed for the beneficial 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, mortgagee 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.
Easements relating to the appropriation and use of waters may be modified by agreement of the contracting parties provided the same is
not contrary to law or prejudicial to third persons.
Article 28. Water permits shall continue to be valid as long as water is beneficially used; however, it maybe suspended on the
grounds of non-compliance with approved plans and specifications 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 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.
CHAPTER IV
UTILIZATION OF WATERS
Article 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 not adversely affected by an inferior right in the other.
For this purpose the Council shall promulgate rules and regulations and declare the existence of control areas for the coordinated
development, protection, and utilization of subterranean or ground water and surface waters.
Control area is an area of land where subterranean or ground water and surface water are so interrelated that withdrawal and use in one
similarly affects the other. The boundary of a control area may be altered from time to time, as circumstances warrant.
Article 33. Water contained in open canals, aqueducts or reservoirs of private persons may be used by any person for domestic purpose or
for watering plants as long as the water is withdrawn by manual methods without checking the stream or damaging the canal, aqueduct or
reservoir; Provided, That this right may be restricted by the owner should it result in loss or injury to him.
Article 34. A water permittee or appropriator may use any watercourse to convey water to another point in the watercourse for the purpose
stated in a permit and such water may be diverted or recaptured at that point by said permittee in the same amount less allowance for normal
losses in transit.
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Article 35. Works for the storage, diversion, distribution and utilization of water resources shall contain adequate provision for the prevention
and control of diseases that may be induced or spread by such works when required by the Council.
Note: When the reuse of waste water is feasible, it shall be limited as much as possible, to such uses other than direct human consumption.
No person or agency shall distribute such water for public consumption until it is demonstrated that such consumption will not adversely affect
the health and safety of the public.
Article 37. In the construction and operation of hydraulic works, due consideration shall be given to the preservation of scenic places and
historical relics and, in addition to the provisions of existing laws, no works that would required the destruction or removal of such places or
relics shall be undertaken without showing that the distribution or removal is necessary and unaviodable.
GR: Authority for the construction of dams, bridges and other structures across of which may interfere with the flow of navigable or floatable
waterways shall first be secured from the Department of Public Works, Transportation and Communications.
XPN: in cases of emergency to save life or property, the construction or repair of the following works shall be undertaken only after the plans
and specifications therefor, as may be required by the Council, are approved by the proper government agency; dams for the diversion or
storage of water; structures for the use of water power, installations for the utilization of subterranean or ground water and other structures for
utilization of water resources.
Note: When artificial means are employed to drain water from higher to lower land, the owner of the higher land shall select the routes and
methods of drainage that will cause the minimum damage to the lower lands, subject to the requirements of just compensation.
Article 47. When the use, conveyance or storage of waters results in damage to another, the person responsible for the damage shall pay
compensation.
Article 48. When a water resources project interferes with the access of landowner to a portion of his property or with the conveyance of
irrigation or drainage water, the person or agency constructing the project shall bear the cost of construction and maintenance of the bridges,
flumes and other structures necessary for maintaining access, irrigation, or drainage, in addition to paying compensation for land and
incidental damages.
CHAPTER V
CONTROL OF WATERS
Article 53. To promote the best interest and the coordinated protection of flood plain lands, the Secretary of Public Works, Transportation and
Communications may declare flood control areas and promulgate guidelines for governing flood plain management plans in these areas.
Article 54. In declared flood control areas, rules and regulations may be promulgated to prohibit or control activities that may damage or
cause deterioration or lakes and dikes, obstruct the flow of water, change the natural flow of the river, increase flood losses or aggravate flood
problems.
Article 55. The government may construct necessary flood control structures in declared flood control areas, and for this purpose it shall have
a legal easement as wide as may be needed along and adjacent to the river bank and outside of the bed or channel of the river.
Article 56. River beds, sand bars and tidal flats may not be cultivated except upon prior permission from the Secretary of the Department of
Public Works, Transportation and Communication and such permission shall not be granted where such cultivation obstructs the flow of water
or increase flood levels so as to cause damage to other areas.
Article 57. Any person may erect levees or revetments to protect his property from flood, encroachment by the river or change in the course of
the river, provided that such constructions does not cause damage to the property of another.
Article 58. When a river or stream suddenly changes its course to traverse private lands, the owners of the affected lands may not compel the
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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 land 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.
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
therefor is secured from the Secretary 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.
Article 59. Rivers, lakes and lagoons may, upon the recommendation of the Philippines Coast Guard, be declared navigable either in whole or
in part.
Article 60. The rafting of logs and other objects on rivers and lakes which are flotable may be controlled or prohibited during designated
season of the year with due regard to the needs of irrigation and domestic water supply and other uses of water.
Article 61. The impounding of water in ponds or reservoirs may be prohibited by the Council upon consultation with the Department of Health
if it is dangerous to public health, or it may order that such pond or reservoir be drained if such is necessary for the protection of public health.
Article 62. Waters of a stream may be stored in a reservoir by a permittee in such amount as will not prejudice the right of any permittee
downstream. Whoever operates the reservoir shall, when required, release water for minimum stream flow.
All reservoir operations shall be subject to rules and regulations issued by the Council or any proper government agency.
Article 63. The operator of a dam for the storage of water may be required to employ an engineer possessing qualifications prescribed for the
proper operations, maintenance and administration of the dam.
Article 64. The Council shall approve the manner, location, depth, and spacing in which borings for subterranean or ground water may be
made, determine the requirements for the registration of every boring or alteration to existing borings as well as other control measures for the
exploitation of subterranean or ground water resources, and in coordination with the Professional Regulation Commission prescribe the
qualifications of those who would drill such borings.
No person shall drill a well without prior permission from the Council.
Article 65. Water from one river basin may be transferred to another river basin only with approval of the Council. In considering any request
for such transfer, the Council shall take into account the full costs of the transfer, the benefits that would accrue to the basin of origin without
the transfer, the benefits would accrue to the receiving basin on account of the transfer, alternative schemes for supplying water to the
receiving basin, and other relevant factors.
CHAPTER VI
CONSERVATION AND PROTECTION OF WATERS AND WATERSHEDS AND RELATED LAND RESOURCES
Article 66. After due notice and hearing when warranted by circumstances, minimum stream flows for rivers and streams, and minimum water
levels for lakes may be established by the Council under such conditions as may be necessary for the protection of the environment, control of
pollution, navigation, prevention of salt damage, and general public use.
Article 67. Any watershed or any area of land adjacent to any surface water or overlying any ground water may declared by the Department of
Natural Resources as protected area Rules and regulations may be promulgated by such Department to prohibit or control such activities by
the owners or occupants thereof within the protected area which may damage or cause the deterioration of the surface water or ground water
or interfere with the investigation, use, control, protection, management or administration of such waters.
Article 68. It shall be the duty of any person in control of a well to prevent the water from flowing on the surface of the land, or into any surface
water, or any porous stratum under neath the surface without being beneficially used.
Article 69. It shall be the duty of any person in control of a well containing water with minerals or other substances injurious to man, animals,
agriculture, and vegetation to prevent such waters from flowing on the surface of the land or into any surface water or into any other aquifer or
porous stratum.
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Article 70. No person shall utilize an existing well or pond or spread waters for recharging substerranean or ground water supplies without
prior permission of the Council.
Article 71. To promote better water conservation and usage for irrigation purposes, the merger of irrigation associations and the appropriation
of waters by associations instead of by individuals shall be encouraged.
No water permit shall be granted to an individual when his water requirement can be supplied through an irrigation association.
Article 72. In the consideration of a proposed water resource project, due regard shall be given to ecological changes resulting from the
construction of the project in order to balance the needs of development and the protection of the environment.
Article 73. The conservation of fish and wildlife shall receive proper consideration and shall be coordinated with other features of water
resources development programs to insure that fish and wildlife values receive equal attention with other project purposes.
Article 74. Swamps and marshes which are owned by the State and which primary value for waterfowl propagation or other wildlife purposes
may be reserved and protected from drainage operation and development.
Article 75. No person shall, without prior permission from the National Pollution Control Commission, build any works that may produce
dangerous or noxious substances or perform any act which may result in the introduction of sewage, industrial waste, or any pollutant into any
source of water supply.
Water pollution is the impairment of the quality of water beyond a certain standard. This standard may vary according to the use of the
water and shall be set by the National Pollution Control Commission.
Article 76. The establishment of cemeteries and waste disposal areas that may affect the source of a water supply or a reservoir for domestic
or municipal use shall be subject to the rules and regulations promulgated by the Department of Health.
Article 77. Tailings from mining operations and sediments from placer mining shall not be dumped into rivers and waterways without prior
permission from the Council upon recommendation by the National Pollution Control Commission.
Article 78. The application of agricultural fertilizers and pesticides may be prohibited or regulated by the National Pollution Control
Commission in the areas where such application may cause pollution of a source of water supply.
CHAPTER VII
ADMINISTRATION OF WATERS AND ENFORCEMENT OF THE PROVISIONS OF THIS CODE
Article 79. The Administration and enforcement of the provisions of this Code, including the granting of permits and the imposition of penalties
for administrative violations hereof, are hereby vested in the Council, and except in regard to those functions which under this Code are
specifically conferred upon other agencies of the government, the Council is hereby empowered to make all decisions and determinations
provided for in this Code.
Article 80. The Council may deputize any official or agency of the government to perform any of its specific functions or activities.
Article 81. The Council shall provide a continuing program for data collection, research and manpower development needed for the
appropriation, utilization, exploitation, conservation, and protection of the water resources of the country.
Article 82. In the implementation of the provisions of this code, the Council shall promulgate the necessary rules and regulations which may
provide for penalties consisting of a fine not exceeding One Thousand Pesos (P1,000.00) and/or suspension or revocation of the water permit
or other right to the use of water. Violations of such rules and regulations may be administratively dealt with by the Council.
Such rules and regulations prescribed by any government agency that pertain to the utilization, exploitation, development, control,
conservation, or protection of water resources shall, if the Council so requires, be subject to its approval.
Article 83. The Council is hereby authorized to impose and collect reasonable fees or charges for water resources development from water
appropriators, except when it is for purely domestic purposes.
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Article 84. The Council and other agencies authorized to enforce this Code are empowered to enter upon private lands, with previous notice
to the owner, for the purpose of conducting surveys and hydrologic investigations, and to perform such other acts as are necessary in carrying
out their functions including the power to exercise the right of eminent domain.
Article 85. No program or project involving the appropriation, utilization, exploitation, development, control, conservation, or protection of
water resources may be undertaken without prior approval of the Council, except those which the Council may, in its discretion, exempt.
The Council may require consultation with the public prior to the implementation of certain water resources development projects.
Article 86. When plans and specifications of a hydraulic structure are submitted for approval, the government agency whose functions
embrace the type of project for which the structure is intended, shall review the plans and specifications and recommended to the Council
proper action thereon and the latter shall approve the same only when they are inconformity with the requirements of this Code and the rules
and regulations promulgated by the Council. Notwithstanding such approval, neither the engineer who drew up the plans and specifications of
the hydraulic structure, nor the constructor who built it, shall be relieved of his liability for damages in case of failure thereof by reason of
defect in plans and specifications, or failure due to defect in construction, within ten (10) years from the completion of the structure.
Any action recover such damages must be brought within five (5) years following such failure.
Article 87. The Council or its duly authorized representatives, in the exercise of its power to investigate and decide cases brought to its
cognizance, shall have the power to administer oaths, compel the attendance of witnesses by subpoena and the production of relevant
documents by subpoena duces tecum.
Non-compliance of violation of such orders or subpoena and subpoena duces tecum shall be punished in the same manner as indirect
contempt of an inferior court upon application by the aggrieved party with the proper Court of First Instance in accordance with the provisions
of Rules 71 of the Rules of the Court.
Article 88. The Council shall have original jurisdiction over all disputes to relating to appropriation, utilization, exploitation, development,
control, conservation and protection of waters within the meaning and context of the provisions of this Code.
The decisions of the Council on water rights controversies shall be immediately executory and the enforcement thereof may be
suspended only when a bond, in a amount fixed by the Council to answer for damages occasioned by the suspension or stay of execution,
shall have been filed by the appealing party, unless the suspension is virtue of an order of a competent court.
All dispute shall be decided within sixty (60) days after the parties submit the same for decision or resolution.
The Council shall have the power to issue writs of execution and enforce its decisions with the assistance of local or national police
agencies.
Article 89. The decisions of the Council on water rights controversies may be appealed to the Court of First Instance of the province where
the subject matter of the controversy is situated within fifteen (15) days from the date the party appealing receives a copy of the decision, on
any of the following grounds; (1) grave abuse of discretion; (2) question of law; and (3) questions of fact and law.
MINERALS
Article 519. Mining claims and rights and other matters concerning minerals and mineral lands are governed by special laws.
Governing Laws:
1. RA7942 – Philippine Mining Act of 1995
Section 2 – “All mineral resources in public and private lands within the territory and exclusive economic zone of the
Republic of Philippines are owned by the State”
2. RA7076 – People’s Small-Scale Mining Act of 1991
TRADEMARKS and TRADENAMES
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Article 520. A trade-mark or trade-name duly registered in the proper government bureau or office is owned by and pertains to the person, corporation, or firm registering the
same, subject to the provisions of special laws.
Article 521. The goodwill of a business is property, and may be transferred together with the right to use the name under which the business is conducted.
Article 522. Trade-marks and trade-names are governed by special laws.
Governing Law:
Sections 121-170 of RA8293 – Intellectual Property Code of the Philippines
Definitions:
MARK – visible sign capable of distinguishing the goods (trade mark) and service (service mark) of an enterprise and shall
include a stamped or marked containers of goods35
COLLECTIVE MARK - any visible sign designated as such in application for registration and capable of distinguishing the
origin of any other common characteristics, including the qualities of goods and services of different enterprise which use the
sign under the control o the registered owner36
TRADE NAME – the name or designation identifying or distinguishing an enterprise37
POSSESSION
Article 523. Possession is the holding of a thing or the enjoyment of a right.
*Possession referred to is independent from ownership and not based thereon = Jus Possessionis (real right by itself)
Concept of Possession:
1. Implies relation between a person and things
2. Relation is one of power or control
3. Control is one of fact which is effective but without resolving whether it carries with it or not a title of ownership
Elements of Possession:
1. Occupancy, apprehension or taking
2. Intent to possess (animus possidendi) – state of mind, question of fact
Example:
Crime of possession of regulated drugs is mala prohibita and intent to possess drugs must be proved by prosecution.
35
Sec. 121, RA 8293
36
Sec. 121.2, Ibid.
37
Sec. 121.3,Ibid.
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There is constructive possession when drug is under the dominion and control of the accused or when he has the right to
exercise dominion and control of the accused or when he has the right to exercise dominion and control over the place where
it is found, hence, accused must prove that there is no intent to possess.
Degrees of Possession:
1. Without any title or right – thief
2. With juridical title or right but not in the concept of an owner – lessee or depositary
3. With just title or a title sufficient to transfer ownership but not from the true owner – buyer in good faith
4. Derived from right of ownership or possession with a just title from the true owner – possession based on ownership
Classification of Possession:
1. In one’s own name and in name of another
2. In the concept of an owner and possession in the concept of a holder
3. Good faith and bad faith
Article 524. Possession may be exercised in one's own name or in that of another.
Possession in one’s own name depends on the meaning of the possession in the name of another
Possession in the name of another:

1. As an agent of the one entitled to possession there being no right whatsoever in the one exercising it – merely an
instrument for exercise of possession
2. Right belonging to the person exercising the possession in the name of another of which right that person is in
possession thereby implying a juridical relation between them, e.g. possession by lessee or a mere usufructuary
● Owner of a real estate has possession, either when he himself is physically in occupation of the property, or when
another person who recognizes his rights as owner is in such occupancy. An example of actual possession of real
property by an owner through another is a lease agreement whereby the lessor transfers merely the temporary use
and enjoyment of the thing leased. (Reyes v. CA, G.R. No. 237608, September 30, 1999)
● If both the fact of possession and right of possession are found in the same person, such possession is said to be
exercised in one’s own name. If, on the other hand, the right to the possession is in one person while the fact of
possession is in another person and the latter merely acts in representation of the former, the latter’s possession is
said to be exercised in another’s name. In this case, the actual possessor (the agent) is not considered in law as legal
possessor because the possession is not by virtue of his own right. (Heirs of Jose Olviga v. CA)
Article 525. The possession of things or rights may be had in one of two concepts: either in the concept of owner, or in that of the holder of the thing or right to keep or enjoy
it, the ownership pertaining to another person.
Possession in the concept of an owner – person is the owner himself or one who claims to be so; refers to the opinion or belief
of the neighbors and the rest of the world and not that of the possessor
● So long as a person claims ownership of the property and does not acknowledge in another a superior right, he is a
possessor in the concept of an owner, even a possessor in bad faith is entitled to acquire ownership of a property by
virtue of extraordinary prescription
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Possession of a holder – one who possess as a mere holder acknowledges in another a superior right which he believes to be
ownership, whether his belief be right or wrong
*Lessee, usufructuary, etc. are considered as possessor in the concept of a holder with respect to the thing itself but
considered in the concept of the owner with respect to their right
● Where a lease agreement, whether express or implied, is subsequently entered into by the mortgagor and the
mortgagee after the expiration of the redemption period and the consolidation of title in the name of the latter, a case
for ejectment or unlawful detainer, not a motion for a writ of possession, is the proper remedy in order to evict from
the questioned premises a mortgagor turned lessee. A lessee is a legitimate possessor of the subject properties and
could not be deprived of its lawful possession by a writ of possession. (Bukidnon Doctors’ Hospital, Inc. v. MBTC,
G.R. No. 161882, July 8, 2005)
Article 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
Article 527. Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof.
Article 528. Possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware
that he possesses the thing improperly or wrongfully.
Article 529. It is presumed that possession continues to be enjoyed in the same character in which it was acquired, until the contrary is proved.
Possessor in good faith – possessor is not aware that there exists in his title or mode of acquisition any flaw which invalidates
it
Requisites:
1. Possessor has a title or mode of acquisition
2. Flaw or defect in title or mode which invalidates it
3. Possessor is unaware of the flaw or defect, or believes that the thing belongs to him
A person who has no title or mode of acquisition but whose occupation of the land of another is by reason of the latter’s
tolerance or permission cannot be considered a possessor or builder in good faith.
Possessors in the concept of a holder are not possessors in good faith

*Possessor in good faith presupposes ownership in another
Possessor is in bad faith:

1. Possessor acquired the land from a person other than the registered owner and he was charged with a notice of the
existence of the owner’s certificate of title
2. Possessor of the land knows that he has no title because the house erected thereon was bought from one whom the
possessor knew was merely a tenant on the land
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GR: Art3, NCC – Ignorance of the law excuses no one from compliance therewith
Exception: Possessor’s mistake upon a doubtful or difficult question of law may serve as the basis of his good faith
● Petitioner is not conversant with the laws because he is not a lawyer. He proceeded on the well-grounded belief that
he was not violating the prohibition regarding the alienation of the land. (Kasilag v. Roque, 69 Phil 217)
Good faith is always presumed

*Possession in good faith ceases from the moment defects in the title are made known to the possessors by extraneous
evidence or by suit for recovery by the true owner
Article 530. Only things and rights which are susceptible of being appropriated may be the object of possession.
*All things which are outside the commerce of man and those which, by reason of physical impossibility cannot be subjected to
human control, may not be the object of possession
Servitudes such as discontinuous easements or non-apparent easements are not susceptible of possession since they are not
susceptible of continuous exercise.
Examples of things and rights which may not be the object of appropriation:
1. Res Communes due to depth, distance or immensity – sun, stars, moon, ocean
2. Forces of nature in diffused state unless brought under human control through science
3. Property of public dominion
4. Discontinuous servitudes
5. Non-apparent servitudes
Acquisition of Possession
Article 531. Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts
and legal formalities established for acquiring such right.
Article 532. Possession may be acquired by the same person who is to enjoy it, by his legal representative, by his agent, or by any person without any power whatever: but
in the last case, the possession shall not be considered as acquired until the person in whose name the act of possession was executed has ratified the same, without
prejudice to the juridical consequences of negotiorum gestio in a proper case.
Modes of Acquiring Possession:

1. Material occupation of a thing or the exercise of a right
2. By subjecting the thing or right to the action of our will
3. By proper acts and legal formalities established for the acquisition of such right
#1 – original mode of acquisition
#2&3 – derivative modes
Requisites:
1. Corpus – material holding of the thing or exercise of right which may be acquired through any modes mentioned
2. Animus possidendi – intent to possess the thing or right
Example: Stolen goods placed in the bag of another person without the former’s knowledge and consent – not a possessor
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because of lack of intent to possess the goods
Material Occupation – actual physical possession or material apprehension

*Applies only to corporeal objects
Occupation under Art531 Occupation under Art712

Mode of acquiring Mode of acquiring
possession ownership
Applies whether or not the Applies only where the
property is with an owner property is without an
or not owner
There must be intent to There must be intent to
possess own or appropriate
A parcel of land may be A parcel of land cannot be
the object of possession the object of occupation
2 Forms of Delivery involved in Material Occupation

1. Tradicion brevi manu
2. Tradicion constitutum possessorium
Doctrine of Constructive Possession – possession is under title calling for the whole
Example: Possession and cultivation of a portion of a tract under a claim of ownership of all is constructive possession if the
remainder is not in the adverse possession of another (reason: the law does not mean that a man has to have his feet on
every square meter of ground before it can be said that he is in possession)
Requisites:
1. Possessor was in actual possession of a portion or part of the property
2. Claiming ownership of the whole area
3. Remainder of the area must not be in the adverse possession of another person
4. Area claimed must be reasonable
● Mere planting of a sign or symbol of possession cannot justify a Magellan-like claim of dominion over an immense
tract of territory. Application of the doctrine of constructive possession shall depend, among others, to the size of the
tract in controversy with reference to the portion actually in the possession of the claimant (Lasam v. Director of
Lands, 1938, 65 Phil 367)
● Mere fact of declaring uncultivated land for taxation purposes and visiting it every once in a while, as was done by the
alleged possessor does not constitute acts of possession (Ramirez v. Director of Lands, 1934, 60 Phil 114)
● Mere casual cultivation of portions of the land by the claimant and the raising thereon of cattle do not constitute
possession under claim of ownership (Director of Lands v. Reyes, 1975, 68 SCRA 177)
Subjection to Action of Will – a degree of control over the thing sufficient to subject the same to the action of one’s will
1. Tradicio symbolica – delivery of symbols or some object which represent those to be delivered thus placing the thing
under the control of the transferee
Example, delivery of a key to the house
2. Tradicion longa manu – effected by the transferor pointing out to the transferee the things which are being transferred
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Juridical Acts and Legal Formalities

Examples: Donations, intestate and testate succession, writs of possession, judicial or administrative possession and
execution of public instruments
Who may Acquire Possession

1. Person who is to enjoy it
2. Agent or legal representative – someone authorized to acquire possession by the person who is to enjoy it
If person acquires possession over the property without prior consent of the principal, the principal may or may not ratify the
act of possession
*If Ratified,
● Possession shall be considered acquired only upon ratification
● Negotiorium gestio – ratification by the person for whom the thing was acquired will retroact to the time of
apprehension by the gestor and the possession of the former must be deemed to have been acquired from that
moment
Article 22 – Every person who through an act of performance by another, or any other means, acquires or comes into the possession of something at the expense of the
latter without just or legal ground, shall return the same to him.
(Reason: no person shall unjustly enrich himself at the expense of another [Nemo Cum Alterius Detrimento Locupletari
Potest])
*Enrichment with a just or legal ground is not prohibited
Coverage:
1. Someone acquires or comes into possession of “something” which means delivery or acquisition of “things”
2. Undue acquisition at the expense of another, without just or legal ground
*Rendition of services not included EXCEPT if services rendered benefitted another (based on quasi-contracts [no person
shall be unjustly enriched at the expense of another)
Limitation: Accion In Rem Verso – recovery for what has been paid without just cause; applicable only after exhausting all
other means of recovering (contract, quasi-contract, crime or quasi-delict)
Requisites of Accion in Rem Verso
1.Enrichment
2.Another suffered a loss
3.Without just or legal ground
4.No other actions based on contract, quasi-contracts, crime or quasi-delict
*Government not exempted from the principle of unjust enrichment
Rem Verso – payment could be made voluntarily but there will still be recovery (subsidiary to solution indebiti)
-different from-
Solutio Indebiti – payment made by mistake (UST vs. City of Manila)
GR: Capacity to act is necessary for the acquisition of possession

Exception:
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Art. 535. Minors and incapacitated persons may acquire the possession of things; but they need the assistance of their legal representatives in order to exercise the rights
which from the possession arise in their favor.
*Refers only to the acquisition of possession by minors and incapacitated persons over things but not over rights
Article 37 – Juridical capacity, which is the fitness to be the subject of legal relations, is inherent in every natural person and is lost only through death. capacity to act, which
is the power to do acts with legal effect, is acquired and may be lost.
Juridical Capacity Capacity to Act

Merely acquired upon
Inherent in Natural fulfillment of certain
Persons conditions or requisites
fixed by law
Capacity to be the subject Capacity to do acts with
of legal relations binding or legal effect
Can exist without capacity Cannot exist without
to act juridical capacity
May be lost through
Lost only through death
grounds other than death
Examples:
1. Unborn Child – has juridical capacity provided it be born later to become a person but has no capacity to act (not of
legal age)
2. Minor – has juridical capacity but has not capacity to act until he reaches the age of majority
*Presumption of Capacity to Act until the contrary is proven
Plena Capacidad Civil / Full Civil Capacity – a person who has both juridical and civil capacity
Article 533. The possession of hereditary property is deemed transmitted to the heir without interruption and from the moment of the death of the decedent, in case the
inheritance is accepted.
One who validly renounces an inheritance is deemed never to have possessed the same.
Article 534. On who succeeds by hereditary title shall not suffer the consequences of the wrongful possession of the decedent, if it is not shown that he was aware of the
flaws affecting it; but the effects of possession in good faith shall not benefit him except from the date of the death of the decedent.
If possession of property is effected by way of succession, whether testate or intestate, such possession is deemed
transmitted to the heir without interruption from the moment of the death of the decedent but only if the heir accepts the
inheritance
Existence of bad faith on the part of the possessor does not prejudice his successors-in-interest – bad faith is not transmissible
from one person to another, not even to an heir
Reason: Only personal knowledge of the flaw in one’s title or mode of acquisition can make him a possessor in bad faith
*Effects of possession in good faith shall not benefit the heir except from the date of the death of the decedent
Article 535. Minors and incapacitated persons may acquire the possession of things; but they need the assistance of their legal representatives in order to exercise the rights
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which from the possession arise in their favor.
Article 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.
Article 537. Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not affect possession.
Instances where Possession is not Acquired:

1. Use of force or intimidation
● That petitioners illegally entered into and occupied the property in question, respondents had no right to take
the law into their own hands and summarily or forcibly eject the occupants therefrom. The rule of law does
not allow the mighty and privileged to take the law into their own hands to enforce their alleged rights. They
should go to court and seek judicial vindication. (Heirs of Pedro Laurora v. Sterling Technopark III, et al.,
G.R. No. 146815, April 9, 2003)
2. Acts merely tolerated – mere permissive use. Constituting acts which are merely tolerated by the possessor or due to
his license cannot be the basis of acquisitive prescription
Toleration – act or practice of permitting or enduring something not wholly approved of
● Acts merely tolerated are those which by reason of neighborliness or familiarity, the owner of the property
allows his neighbor or another person to do on the property. (Sarona v. Villegas, 131 Phil 365, March 27,
1968)
3. Clandestine (secret, hidden or concealed) and unknown acts – no acquisitive prescription
Article 538. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise
regarding the fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are the
same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership
through proper proceedings.
Rules in case of Conflict over Possession de Facto:

1. Present possessor shall be preferred
2. If there are 2 possessors, one longer in possession is preferred
3. If the dates of possession are the same, the one who presents a title
*Art538 settles only question of possession and such possession is different from ownership
Effects of Possession
Article 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 filing 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 the
filing thereof.
Recall: Actions to recover possession, interdictal, publiciana, reivindicatoria

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Auxillary remedy: writ of preliminary mandatory injunction
Writ of Preliminary Mandatory Injunction – provisional remedy granted at any stage of an action prior to judgment or final
order, commanding or requiring the performance of a particular act
Purpose: prevent further dispossession
* Applies to actions for forcible entry and unlawful detainer
Section 15. Preliminary injunction. — The court may grant preliminary injunction, in accordance with the provisions of Rule 58 hereof, to prevent the defendant from
committing further acts of dispossession against the plaintiff.
A possessor deprived of his possession through forcible from the filing of the complaint, present a motion in the action for forcible entry or unlawful detainer for the
issuance of a writ of preliminary mandatory injunction to restore him in his possession. The court shall decide the motion within thirty (30) days from the filing thereof.
Section 20. Preliminary mandatory injunction in case of appeal. — Upon motion of the plaintiff, within ten (10) days from the perfection of the appeal to the Regional Trial
Court, the latter may issue a writ of preliminary mandatory injunction to restore the plaintiff in possession if the court is satisfied that the defendant's appeal is frivolous or
dilatory or that the appeal of the plaintiff is prima facie meritorious.
Article 540. Only the possession acquired and enjoyed in the concept of owner can serve as a title for acquiring dominion.
Article 541. A possessor in the concept of owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it.
Article 542. The possession of real property presumes that of the movables therein, so long as it is not shown or proved that they should be excluded.
Effects of Possession in the Concept of Owner:

1. Raises a disputable presumption of ownership
2. Disputable presumption that the possessor has just title and he cannot be obliged to show it
3. Can ripen into ownership through acquisitive prescription subject to additional requirements under Art1118, NCC
4.
Article 1118. Possession has to be in the concept of an owner, public, peaceful and uninterrupted.
Just Title – that which is legally sufficient to transfer ownership of the thing or the real right to which it relates and may be
proved orally by witnesses as well as through written documents or evidences
Article 1131. For the purposes of prescription, just title must be proved; it is never presumed.
Acquisitive Prescription – OCENCo
Article 543. Each one of the participants of a thing possessed in common shall be deemed to have exclusively possessed the part which may be allotted to him upon the
division thereof, for the entire period during which the co-possession lasted. Interruption in the possession of the whole or a part of a thing possessed in common shall be to
the prejudice of all the possessors. However, in case of civil interruption, the Rules of Court shall apply.
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Co-possessor – subject matter is undivided and there are two or more possessors
*In case of partition, each co-possessor shall be deemed to have exclusively possessed the part which may be allotted to him
for the entire period that the state of co-possession lasted
*Any interruption in the possession of the whole or part of the thing possessed in common shall be to the prejudice of all the
co-possessors
Article 544. A possessor in good faith is entitled to the fruits received before the possession is legally interrupted.
Natural and industrial fruits are considered received from the time they are gathered or severed.
Civil fruits are deemed to accrue daily and belong to the possessor in good faith in that proportion.
Article 545. If at the time the good faith ceases, there should be any natural or industrial fruits, the possessor shall have a right to a part of the expenses of cultivation, and to
a part of the net harvest, both in proportion to the time of the possession.
The charges shall be divided on the same basis by the two possessors.
The owner of the thing may, should he so desire, give the possessor in good faith the right to finish the cultivation and gathering of the growing fruits, as an indemnity
for his part of the expenses of cultivation and the net proceeds; the possessor in good faith who for any reason whatever should refuse to accept this concession, shall lose
the right to be indemnified in any other manner.
GR: Fruits belong to the owner

Exception: Possessors have a right over the fruits (good faith or bad faith)
Possessor in Good Faith

Fruits already received
● Possessor is entitled to fruits received by him before his possession is legally interrupted
● GR: Interruption of possession must be through legal means
Exception: Possessor in good faith becomes a possessor in bad faith from knowledge that he possesses the thing
improperly or wrongly
Fruits are considered received:
a. Natural and Industrial Fruits – from the time they are gathered / severed
b. Civil Fruits – deemed to accrue daily
Example, 30,000 rent per month, possession was interrupted on the 11 th day, possessor is entitled to 10,000 rent
Pending Fruits (only for natural and industrial fruits; not applicable to civil fruits)
● Owner and possessor shall have a right to a part of the net harvest and each shall divide the expenses of cultivation
in proportion to the time of their respective possession
● If owner chooses not to pay for the expenses, he may allow the possessor to finish the cultivation and gathering of
growing fruits and he will not have any share in the harvest – if possessor refuses the concession, possessor loses
the right to be indemnified in any other manner
● Charges shall also be divided by the possessor and the owner in proportion to the time of their respective
possessions (example, tax)
GR: Rules are not applicable to trees (reason, accesion industrial applies taking into consideration, good faith and bad faith)
Exception: Trees are being exploited for an industry = industrial fruits
Possessor in Bad Faith

Fruits already Received
● Not entitled to fruits
Article 549. The possessor in bad faith shall reimburse the fruits received and those which the legitimate possessor could have received, and shall have a right only to the
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expenses mentioned in paragraph 1 of article 546 and in article 443. The expenses incurred in improvements for pure luxury or mere pleasure shall not be refunded to the
possessor in bad faith, but he may remove the objects for which such expenses have been incurred, provided that the thing suffers no injury thereby, and that the lawful
possessor does not prefer to retain them by paying the value they may have at the time he enters into possession.
● Reimburse owner for fruits actually received

● Right to recover expenses for the production, gathering and preservation of the fruits (necessary expenses for
preservation of the land or thing) upon the owner’s receipt of reimbursement
Pending Fruits
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.
● Not entitled to reimbursement of expenses incurred

● Entitled to recover necessary expenses
● With respect to trees, rules on accesion industrial applies
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.
Article 451. In the cases of the two preceding articles, the landowner is entitled to damages from the builder, planter or sower.
Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the
option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Article 547. If the useful improvements can be removed without damage to the principal thing, the possessor in good faith may remove them, unless the person who
recovers the possession exercises the option under paragraph 2 of the preceding article.
Article 548. Expenses for pure luxury or mere pleasure shall not be refunded to the possessor in good faith; but he may remove the ornaments with which he has
embellished the principal thing if it suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended.
Article 549. The possessor in bad faith shall reimburse the fruits received and those which the legitimate possessor could have received, and shall have a right only to the
expenses mentioned in paragraph 1 of article 546 and in article 443. The expenses incurred in improvements for pure luxury or mere pleasure shall not be refunded to the
possessor in bad faith, but he may remove the objects for which such expenses have been incurred, provided that the thing suffers no injury thereby, and that the lawful
possessor does not prefer to retain them by paying the value they may have at the time he enters into possession.
Recall: Necessary expenses, useful expenses, ornamental expenses
Right of Possessor to Necessary Expenses – whether in good faith or bad faith

● Right of retention is available to possessor in good faith
Right of Possessor to Useful Expenses

● Only for possessor in good faith – has right of retention also
● Owner has the option to:
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a. Refund the amount of the expenses

b. Pay the increase in value which the thing may have acquired by reason of useful expenses
● Possessor in good faith may choose to remove the useful improvement instead if removal will not damage the
principal thing – does not reduce the value of principal thing (if ordinary repairs will be needed by separation,
separation is permissible)
● Current market value should be made the basis of reimbursement. (Pecson v. CA, 244 SCRA 407, 1995)
Right of Possessor to Expenses for Pure Luxury

● Whether in good faith or not, possessors are not entitled to reimbursement but they have a right to remove the
ornaments provided that the principal will suffer no injury
● If owner chooses to retain the thing by paying the value, right of remotion cannot be exercised by the possessor
Article 550. The costs of litigation over the property shall be borne by every possessor.
Article 551. Improvements caused by nature or time shall always inure to the benefit of the person who has succeeded in recovering possession.
Article 552. A possessor in good faith shall not be liable for the deterioration or loss of the thing possessed, except in cases in which it is proved that he has acted with
fraudulent intent or negligence, after the judicial summons.
A possessor in bad faith shall be liable for deterioration or loss in every case, even if caused by a fortuitous event.
Article 553. One who recovers possession shall not be obliged to pay for improvements which have ceased to exist at the time he takes possession of the thing.
Liability of Possessors for Loss or Deterioration

1. Good faith – not liable
2. Bad faith – liable, even if such is due to fortuitous events
3. Originally in good faith but became a possessor in bad faith due to interruption – liable only if loss or deterioration is
due to negligence or fraudulent acts
Article 554. A present possessor who shows his possession at some previous time, is presumed to have held possession also during the intermediate period, in the absence
of proof to the contrary.
If present possessor succeeds the previous possessor by hereditary title, possession is deemed continuous and without
interruption from the moment of the death of the decedent – conclusive presumption
Article 555. A possessor may lose his possession:

(1) By the abandonment of the thing;
(2) By an assignment made to another either by onerous or gratuitous title;
(3) By the destruction or total loss of the thing, or because it goes out of commerce;
(4) By the possession of another, subject to the provisions of article 537, if the new possession has lasted longer than one year. But the real right of possession is not
lost till after the lapse of ten years.
Abandonment
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● Spes recuperandi (hope of recovery or recapture) is gone and the animus revertendi (intent to recover) is finally given
up
● Must be made by a possessor in the concept of an owner
● There is no real intention to abandon a property when, as in the case of a shipwreck or a fire, things are thrown into
the sea upon the highway. Owner of the property cannot be held to have abandoned the same until at least he has
some knowledge of the loss of its possession or of the loss of the thing. (US v. Laurente Rey, 8 Phil 500, 1907)
Assignment
● Relinquishment of possession in favor of a definite or specified transferee
● Assignor must be in the concept of owner and has capacity to alienate
Destruction or Loss
● Physical loss - existence is unknown or cannot be recovered
● Juridical loss - goes out of commerce or expropriated by the government
Possession by Another
● Possession as a fact (de facto) – possession of another lasts for more than a year, possession de facto is lost
Remedy: forcible entry or unlawful detainer
● Right of possession (de jure) – can be lost only after the lapse of 10years
Remedy: Accion Publiciana
Article 556. The possession of movables is not deemed lost so long as they remain under the control of the possessor, even though for the time being he may not know their
whereabouts.
Article 557. The possession of immovables and of real rights is not deemed lost, or transferred for purposes of prescription to the prejudice of third persons, except in
accordance with the provisions of the Mortgage Law and the Land Registration laws.
Article 558. Acts relating to possession, executed or agreed to by one who possesses a thing belonging to another as a mere holder to enjoy or keep it, in any character, do
not bind or prejudice the owner, unless he gave said holder express authority to do such acts, or ratifies them subsequently.
Article 559. The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof, may recover it from the person in possession of the same.
If the possessor of a movable lost or which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return
without reimbursing the price paid therefor.
Possession of movables in good faith is equivalent to title

Requisites:
1. Movable property is acquired in good faith
2. Possession must be in the concept of an owner
Exceptions to Irrevindicability (Owner has right to recover property)

1. Owner lost the thing
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Duties of the Finder:

a. If owner known – return
b. If unknown – deposit the movable with the mayor of the city or municipality where the thing was found mayor
to make a public announcement for 2 consecutive weeks where no owner appears after 6months, the thing
will be given to the finder (if owner claims, reward of 1/10 of the sum or price of thing found must be given to the
finder)
*If finder or third person who acquired the thing subsequent to finder does not deposit the thing = theft (owner may
recover without paying indemnity)
2. Owner was unlawfully deprived of the property
● Not limited to unlawful taking but includes cases where there has been abuse of confidence
GR: Owner may recover the thing without paying indemnity
Exception: Possessor acquired the property through public sale (owner must reimburse the price paid)
*Public sale – there is public notice of the sale and anybody has a right to bid and offer to buy
Owner who lost the thing or was unlawfully deprived cannot recover:
1. Possessor acquired the thing at the merchant’s store or fairs or markets
2. Possessor acquired the thing by sale under statutory power of sale or under the order of a court of competent
jurisdiction
3. Possessor is a holder in due course of a negotiable document of title to goods or owner is barred by the principle of
negotiable instruments
4. Owner is barred by his own acts or neglect from denying the seller’s title
5. Prescription
Article 560. Wild animals are possessed only while they are under one's control; domesticated or tamed animals are considered domestic or tame if they retain the habit of
returning to the premises of the possessor.
Article 561. One who recovers, according to law, possession unjustly lost, shall be deemed for all purposes which may redound to his benefit, to have enjoyed it without
interruption.
Kinds of Animals:
1. Wild – natural freedom
● Possessed only while they are under one’s control
● Once natural freedom is regained, they immediately regain their status of res nullius and may be acquired
through occupation
2. Domesticated or tamed – formerly wild but which have been subdued and retained the habit of returning to the
premises of the possessor or owner
● Once they lose the habit of returning to the premises of the possessor = res nullius
● Possessor has 20 days counted from occupation by another to reclaim the animal/s
3. Domestic or tame – born or reared under the control and care of man
● Owner can recover them from present possessors without need of indemnity
Not subject to occupation unless there has been abandonment but may be acquired through acquisitive prescription (4years if
good faith)
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EASEMENTS
● A real right constituted on another’s property, corporeal and immovable whereby the owner of the latter must refrain from
doing or allowing somebody else to do something on his property, for the benefit of another person or tenement.
Kinds of Estate in an Easement
1. Dominant Estate38
2. Servient Estate39
Note: The terms “easement” and “servitude” are used interchangeably, however the first refers to the “right”, while the second
refers to the “encumbrance.”
Easements vs. Lease
Easements involve rightful use WITHOUT possession and without ownership. Lease involves rightful possession and use
WITHOUT ownership.
Q&A
Q. What are the Characteristics of Easements?
A.
1. it is a REAL RIGHT
2. It is impossible to ANOTHER’s property
3. It is a LIMITATION upon the servient owner’s right of ownership
4. A right constituted over IMMOVABLES
5. It is INSEPARABLE from the estate to which it actively or passively belongs
6. It is INDIVISIBLE
Q. What are the Classifications of Easements?
A.
1. According to the manner they are exercised:
a. Continuous – the use of which is or may be incessant, without the intervention of any act of man;
38
Dominant – immovable in favour of which the easement is established ;
39
Servient – provides the service or benefit (Art. 613, NCC)
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CIVIL LAW 2011 ©
Growling Notes
b. Discontinuous – used at intervals and depends upon the act of man
2. According to the presence of signs indicative of their existence:
a. Apparent – known and are continually kept in view by external signs that reveal the use and enjoyment of the same;
b. Non-apparent – show no external indication of their existence
3. According to whether there is an obligation to do or not to do:
a. Positive – duty on the owner of the servient estate to do or to allow something to be done by the dominant estate;
b. Negative – prohibits the servient owner from doing something
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Property

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Property

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CIVIL LAW 2011 ©

■ Property distinguished from a Thing

II. Immovable Property

III. Movable Property

IV. Property in Relation to Person to whom it Belongs

V. Possessor in Good Faith ≠ Bad Faith

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VI. Real ≠ Personal Right

1. As to Nature of the Thing Itself

a. Movable / Personal Property

b. Immovable / Real Property

1. For applying the rules of acquisitive prescription2

2. To determine the propriety of the object of contracts

3. To determine the formalities of a donation3

5. Determining Crimes of Theft, Robbery and Usurpation

6. Determining the venue4 in remedial law

*If it is a property – there would be no problem because it can be appropriated

Q. Is human kidney a property?

Q. How about marijuana, will the sale be valid?

Q. Corpse of human being?

a. Equipment and machineries necessary

Note: It must be placed by the owner

Q. In immovable by incorporation, is the person who introduced such property important?

Q. How about in the contract of lease?

Types of Immovable Properties14 (Art. 415)

2. Trees plants and growing fruits

GR: Growing Fruits are real property if attached to the soil

3. Everything attached to an immovable in a fixed manner

● Attachment need not be made by the owner.

● The breakage or injury, in case of separation, must be substantial.

4. Statues, reliefs, paintings or other objects for use or ornamentation

a. Place by the owner or by the tenant as agent of the owner

5. Machinery, receptacles, instruments, or implements for an industry or works

6. Animal houses, pigeon houses, beehives, fishponds etc.

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8. Mines, quarries and slag dumps

9. Docks and structures

10. Contracts for public works, real rights on immovable

GR.: A personal right is always regarded as personal property

Types of Movable Properties (Art. 416)

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Example: money – fungible but non-consumable

b. Non-fungible – has own individuality; irreplaceable

**Importance of Classification: Special Contracts

GR: Commodatum is only for fungible things

Q. Will it destroy the book by using it according to its purpose?

Q. Assuming that the book was lost, what is the remedy?

PUBLIC DOMINION ≠ PATRIMONIAL PROPERTY

Characteristics of Property of Public Dominion

Properties of Public Dominion under Article420, NCC:

1. Roads – national highways and roads constructed and maintained by DPWH

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Q. Is it a property of public dominion or patrimonial property?

In re: Reclaimed lands (Chavez v. PEA)

Q. Can the validity of distribution be attacked?

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Book 1, Administrative Code of 1987 (EO292)

New Civil Code

Classification of Properties of Political Subdivisions

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POSSESSOR in GOOD FAITH ≠ POSSESSOR in BAD FAITH

Q. Can a lessee be considered a person in good faith18?

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