Anda di halaman 1dari 185

1 2 PROPERTY

[1.2] Concept of “Things”


The concept of “property” (bienes) is intimately related with the
concept of “things” (cosa). It must be noticed that the Civil Code does
not define the term property but simply implies that the concept refers
BOOK II to things which are susceptible of appropriation.4 With the foregoing
PROPERTY, OWNERSHIP, AND ITS in mind, it is but proper to begin the discussion of property with the
MODIFICATION concept of “things.”
There was a time in history when certain persons, called “slaves,”
were considered merely as chattels or things that could be the subject
Title I. CLASSIFICATION OF PROPERTY of appropriation. But as human civilization progressed, the practice of
slavery has been condemned and eventually eradicated. In the modern
PRELIMINARY PROVISIONS world, therefore, distinction is made between persons and things. The
former is regarded as the subject or the holder of rights while the latter
ARTICLE 414. All things which are or may be the object of appro- is its object, although the actions of the former may likewise be the
priation are considered either: object of rights. Thus, while the human person may not be considered
(1) Immovable or real property; or as property, his conduct or acts, to a certain extent, may give rise to
(2) Movable or personal property. (333) enforceable rights in favor of other persons if such act or conduct is
considered by law as a source of obligation.
§ 1. Introductory Concepts Things, therefore, are objects external to man. But the concept
[1.1] Origin of the Word “Property”
of things under the Civil Code is not limited to corporeal objects —
or to objects that can be perceived by the senses. The concept also
The word “property” is derived from the Latin word proprius, extends to those which have only an intellectual or juridical existence
meaning belonging to one or one’s own.1 Traditionally, therefore, the (incorporeal objects). Otherwise stated, the concept of things in our
concept of property extends only to those things which are already Civil Code embraces both material objects and rights. This is clear from
possessed and found in the possession of man.2 Hence, in the traditional the provisions of Articles 414, 415 and 416 of the New Civil Code.
notion, the concept of property is inseparable from the relation which To illustrate, in Article 414, the law considers all things susceptible
the object has with the person exercising dominion or right over it. It is of appropriation as property, which may either be real or personal. In
in this sense that the concept of property is said to be limited compared Articles 415 and 416, on the other hand, rights are likewise considered as
to the concept of things, which extends to all objects that exist,3 whether property. This is exemplified in the provision of paragraph 10 of Article
it is already in the possession of man or not. 415 which classifies as real property those “real rights over immovable
property” and in the provision of paragraph 1 of Article 417 of the
New Civil Code which classifies as personal property “obligations and
actions which have for their object movables or demandable sums.”
1
Miss. — Thompson v. Kreutzer, 72 So. 891, 112 Miss. 165.
2
2 Falcon 6, 3 Manresa 10, cited in II Tolentino, Civil Code of the Philippines, 1992 ed.,
2.
3
II Tolentino, Civil Code of the Philippines, 1992 ed., 2.

1 4
See Art. 414, NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 3 4 PROPERTY


CLASSIFICATION OF PROPERTY
Preliminary Provisions

[1.3] Concept of “Property” under the Civil Code a contract,7 they are not necessarily disqualified from being considered
As discussed in supra § 1.1, the traditional notion is that property as property pursuant to the criterion mentioned in Article 414 of the
are those things which are already possessed and found in the possession Code. For example, properties of public dominion pertaining to the
of man. However, in our Civil Code, the concept of property is not State, being outside the commerce of man, cannot be the object of
confined to things which are already appropriated or possessed by man contracts. However, they are considered property under the Code.8
but also extends to those susceptible of such appropriation, although [1.5] Additional Requisites
not yet appropriated. This is clear from the provisions of Article 414
which classifies as property “all things which are or may be the object Aside from the criterion of susceptibility to appropriation
of appropriation.” From the viewpoint of the Code, therefore, the terms mentioned in Article 414, most authors in the subject provide for two
“property” and “things” are identical to each other and may be used additional requisites before considering a thing as property: (1) utility, or
interchangeably.5 that it can serve as a means to satisfy human needs; and (2) substantivity
or individuality, or that the thing must have an autonomous and separate
[1.4] Susceptibility to Appropriation existence.
As mentioned in supra § 1.2, the term “property” under the Civil With respect to the requisite of utility, it is inconceivable at this
Code refers to things which are susceptible of appropriation. Hence, age to think of a thing which is incapable of satisfying any human need
even in the juridical sense, not all things may be considered as property. or want. As such, this requirement is of little use in law because almost
This much is clear from the very provision of Article 414 of the New all things are capable of giving utility to man.
Civil Code. Pursuant to said article, it is essential that a thing must be
The requisite of individuality, on the other hand, need not be
susceptible of appropriation before it can be considered as property.
spelled out separately for the same is implicitly required in Article 414
Things which cannot, therefore, be subjected to human control by
of the Code. Thus, to be considered a separate property, a thing must
reason of sheer physical impossibility are not considered as property.
have an autonomous and separate existence and not simply a part of a
Examples are the following: whole. But if a part is separated from the whole and, while in that state, is
(1) Things which, because of their distance, their depth or their capable of satisfying any human need or want, it can then be considered
immensity are not capable of human control such as the sun, the stars as a separate property. This is the basis, for example, of the rule stated
and the ocean, are not properties; in Article 466 of the New Civil Code which states that “whenever two
movable things belonging to different owners are, without bad faith,
(2) Ordinarily, forces of nature such as lightning and rain are not united in such a way that they form a single object, the owner of the
properties because of impossibility of appropriation in their diffused principal thing acquires the accessory, indemnifying the former owner
state. However, when they are brought under human control through the thereof for its value.” Hence, when a diamond stone is attached to a
help of science, i.e., electricity, they may now be regarded as property.6 ring, the ring and the stone constitute a single property since they now
For the purpose of classifying things as property, the criterion of form a single object. However, when the stone is removed from the ring
susceptibility to appropriation should be distinguished from the concept it will be regarded as a separate property from the ring to which it has
of things or objects which are “outside the commerce of man.” While once been attached.
things which are outside the commerce of man may not be the object of

5 7
See II Caguioa, Civil Code of the Philippines, 1966 ed., 3. See Art. 1347, NCC.
6 8
See Art. 416(3), NCC. See Arts. 419 to 425, NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 5 6 PROPERTY
CLASSIFICATION OF PROPERTY
Preliminary Provisions

The same can be said of the different parts of the living human real rights over immovable property, on the other hand,
body. While these parts remain attached to the person, they are not are acquired by ordinary prescription through possession
considered as property because they are integral parts of the person and of ten years10 or thirty years, without need of title or of
the latter is not, in law, considered as thing. However, when a part of good faith.11
the human body, such as hair and teeth, is separated from the person, it
[2.2.2] In determining the propriety of the object of the
may now be considered as property for it now has an autonomous and
contracts of pledge, chattel mortgage and real estate
independent existence.
mortgage: Only movables can be the object of the
§ 2. Classification of Property contracts of pledge and chattel mortgage.12 On the other
hand, only immovables can be the object of a real estate
[2.1] Classification under Book II of the Civil Code mortgage contract.13 As a consequence, should the parties
Although there are many classifications of property, Book II of execute a chattel mortgage over a real property, the same
the New Civil Code enumerates the more important classifications, as is null and void and registration of the instrument in the
follows: Registry of Property does not validate it insofar as third
parties are concerned.14
(1) Immovable or movable (Arts. 415 to 417);
[2.2.3] For purposes of determining the formalities of a
(2) Movables, in turn, are classified into consumable or non- donation: If the value of the personal property donated
consumable (Art. 418); exceeds P5,000.00, the donation and the acceptance are
(3) From the viewpoint of ownership, property is classified required to be in writing; otherwise, the donation is void.15
either as property of public dominion or of private ownership (Arts. 419 In order that the donation of an immovable property may
to 425). be valid, it must be made in a public document, as well as
the acceptance thereof.16
It is obvious from Article 414 that the term “immovable” is used
synonymously with the term “real” property and the term “movable” is [2.2.4] In extrajudicial deposit: Only movable things may be
used synonymously with the term “personal” property. the object of extrajudicial deposit.17

[2.2] Importance of Classification


[2.2.5] In crimes of theft, robbery and usurpation: Only
personal property can be the object of the crimes of theft
The classification of property in Article 414 into immovable and robbery.18 However, the crime of usurpation defined in
(real) and movable (personal) is based on the nature of the thing itself Article 312 of the Revised Penal Code can be committed
and is the most important in point of law because of the various legal only with respect to a real property.
consequences flowing therefrom, as follows:
[2.2.1] For purposes of applying the rules of acquisitive
prescription: The ownership of movables prescribes 10
Art. 1134, NCC.
11
through uninterrupted possession for four years in good 12
Art. 1137, NCC.
Arts. 2094 and 2140, NCC.
faith or through uninterrupted possession for eight years, 13
Art. 2124, NCC.
without need of any other condition.9 Ownership and other 14
Associated Insurance & Surety Co., Inc. v. Iya, 103 Phil. 972 (1958).
15
Art. 748, NCC.
16
Art. 749, NCC.
17
Art. 1966, NCC.
9 18
Art. 1132, NCC. Art. 308, RPC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 7 8 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

[2.2.6] For purposes of determining the venue in remedial (7) Fertilizer actually used on a piece of land;
law: In the law of procedure, it is important to know the (8) Mines, quarries and slug dumps, while the matter thereof
classification of property for purposes of venue. If the forms part of the bed, and waters either running or stagnant;
action affects title to or possession of real property, or (9) Docks and structures which, though floating, are intended
interest therein, the action (referred to as “real action”) by their nature and object to remain at a fixed place on a river, lake, or
must be filed in the proper court wherein the real property coast;
involved, or a portion thereof, is situated.19 All other actions (10) Contracts for public works, and servitudes and other real
(referred to as “personal action”) may be commenced and rights over immovable property. (334a)
tried where the plaintiff or the defendant resides, at the
election of the plaintiff.20 § 3. Immovable Property
[3.1] No Definition under the Code
***** Article 415 of the New Civil Code does not define immovable or
real property but enumerates what are considered as such.21 This is so
Chapter 1 because of the difficulty of drawing precisely a definition of this term
IMMOVABLE PROPERTY simply because the word is not used in its etymological or grammatical
meaning but in its juridical meaning, i.e., the term is applied to many
Art. 415. The following are immovable property: things which, although by nature are personal, are considered by law as
(1) Land, buildings, roads and constructions of all kinds adhered real. Consequently, to avoid difficulty the law simply goes by way of
to the soil; enumeration.22
(2) Trees, plants, and growing fruits, while they are attached to
the land or form an integral part of an immovable; [3.2] Kinds of Immovable (Real) Property
(3) Everything attached to an immovable in a fixed manner, in Immovable or real property may be reduced to four general classes
such a way that it cannot be separated therefrom without breaking the
or kinds, notwithstanding the enumerations in Article 415, to wit:
material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or ornamen- [3.2.1] Immovable by nature — those which by their
tation, placed in buildings or on lands by the owner of the immovable in essence and nature are immovable or cannot be
such a manner that it reveals the intention to attach them permanently to moved from one place to another, such as lands
the tenements; and roads in paragraph 1 of Article 415 and mines,
(5) Machinery, receptacles, instruments or implements intended quarries and slug dumps in paragraph 8 of Article
by the owner of the tenement for an industry or works which may be car- 415;
ried on in a building or on a piece of land, and which tend directly to meet
the needs of the said industry or works; [3.2.2] Immovable by incorporation — those which are
(6) Animal houses, pigeon-houses, beehives, fish ponds or breed- treated as immovable by reason of their attachment
ing places of similar nature, in case their owner has placed them or pre- or incorporation to an immovable in such manner
serves them with the intention to have them permanently attached to the as to be an integral part thereof, such as buildings
land, and forming a permanent part of it; the animals in these places are
included; and constructions of all kinds adhered to the soil

19 21
Rule 4, Section 1, 1997 Rules of Civil Procedure. People’s Bank and Trust Co. v. Dahican Lumber Company, 20 SCRA 84, 93 (1967).
20 22
Rule 4, Section 2, 1997 Rules of Civil Procedure. 3 Manresa, 6th Ed., 16, cited in II Caguioa, Civil Code, 1966 ed., 11.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 9 10 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

mentioned in paragraph 1 of Article 415; trees, to is that which substantially adheres to the land and not one which
plants and growing fruits mentioned in paragraph is merely superimposed on the soil. In the language of Justice J.B.L.
2 of Article 415 while they are still attached to the Reyes in Ladera v. CN Hodges,26 the building referred to under the law
land or form an integral part of an immovable; is a “true building” or not one merely superimposed on the soil. Since a
and those that are attached to an immovable in house or a building is classified as immovable property by reason of its
the manner provided for in paragraph 3 of Article adherence to the soil on which it is built, once the house is demolished it
415; ceases to exist as such and hence its character as an immovable likewise
ceases.27
[3.2.3] Immovable by destination — those which are
essentially movable, but by the purpose for which Bicerra v. Teneza
they have been placed in an immovable, partake 6 SCRA 649 (1962)
of the nature of the latter because of the added
utility derived therefrom, such as those mentioned In this case, the plaintiff filed an action before the Court of First Instance
(now RTC) of Abra alleging that the defendant forcibly demolished his house
in paragraphs 4, 5, 6, 7 and 9 of Article 415; and
and that the materials of the house, after it was dismantled, were placed in
[3.2.4] Immovable by analogy or by law — those that the custody of the barrio lieutenant. Plaintiff prayed that he be declared the
are mentioned in paragraph 10 of Article 415. owner of the house and/or materials and that defendant be ordered to pay him
damages in the total sum of P800. The CFI dismissed the action on the ground
§ 4. Real Property under Article 415(1) that the same was within the exclusive original jurisdiction of the Justice of the
Peace of Court (now MTC), the action not being a real action. In sustaining the
“Lands, buildings, roads and constructions of all kinds adhered dismissal of the complaint, the Supreme Court explained: “A house is classified
to the soil …” as immovable property by reason of its adherence to the soil on which it is built
(Art. 415, par. 1, Civil Code). This classification holds true regardless of the
(A) Lands and Roads
fact that the house may be situated on land belonging to a different owner. But
[4.1] Lands and roads once the house is demolished, as in this case, it ceases to exist as such and
hence its character as an immovable likewise ceases. It should be noted that the
There is no question that lands and roads are always immovable. complaint here is for recovery of damages.”
By their nature, they are considered as immovable or real property.
[4.3] Buildings Are Always Immovable
(B) Buildings
Buildings are always immovable under the Code.28 While there
[4.2] Building Is Immovable By Incorporation is a holding to the effect that a building which is merely superimposed
A house (or a building) is immovable by incorporation.23 As on the soil or is sold for immediate demolition may be considered as
explained in Bicerra v. Teneza,24 a house (or a building) is classified as a movable or personal property,29 Justice J.B.L. Reyes clarified that the
immovable property by reason of its adherence to the soil on which it rule that a building is immovable or real property has reference only to a
is built. Thus, a building which is merely superimposed on the soil is “true building” or one which is not merely superimposed on the soil.30
not a real property.25 When paragraph No. (1) of Article 415 of the New
Civil Code classifies buildings as immovables, the building referred 26
Supra, 5380.
27
Bicerra v. Teneza, supra, 651.
28
Punzalan, Jr. v. Vda. de Lacsamana, 121 SCRA 331, 335 (1983).
23 29
Ladera v. CN Hodges, (CA), 48 O.G. 5374, 5379 (1952). Bautista, et al. v. Supnad, (CA), 59 O.G. 1575, 1578 (1962).
24 30
6 SCRA 649, 651 (1962). Ladera v. C.N. Hodges, et al., (CA), 48 Off. Gaz., 5374, 5380 (1952); cited in Evangelista
25
Bautista v. Supnad, (CA), 59 O.G. 1575 (1962). v. Alto Surety & Ins. Co., Inc., 103 Phil. 401, 404 (1958).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 11 12 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

Punzalan, Jr. v. Vda. De Lacsamana building would still be considered immovable property even if dealt
121 SCRA 331 (1983) with separately and apart from the land.34
In this case, Punzalan mortgaged with PNB a parcel of land situated in
Tarlac which was eventually foreclosed by PNB in 1970. However, the bank Prudential Bank v. Panis
secured title thereto only in 1977. In the meantime, while the property was still 153 SCRA 390 (1987)
in the possession of Punzalan, he constructed thereon in 1974 a warehouse In this case, the pivotal issue is whether or not a valid real estate mortgage
allegedly with the permission of PNB. In 1978, PNB sold the land, including can be constituted on the building erected on the land belonging to another.
the building thereon, to Vda. de Lacsamana. Thus, Punzalan filed an action Answering in the affirmative, the Supreme Court explained —
to annul the sale with respect to the building. He filed the action in Quezon
City. The court dismissed the action on the ground of improper venue because “In the enumeration of properties under Article 415 of the
the action is for recovery of a real property. The court ruled that the venue Civil Code of the Philippines, this Court ruled that, ‘it is obvious
should have been Tarlac. In sustaining the decision of the lower court, the that the inclusion of building separate and distinct from the land,
Supreme Court ruled that “the warehouse claimed to be owned by (Punzalan) in said provision of law can only mean that a building is by itself
is an immovable or real property as provided in Article 415(1) of the Civil an immovable property.’ (Lopez v. Orosa, Jr., et al., L-10817-18,
Code” and that “buildings are always immovable under the Code.” The Court Feb. 28, 1958; Associated Ins. and Surety Co., Inc. v. Iya, et al.,
further ruled that “the prevalent doctrine is that an action for the annulment or L-10837-38, May 30, 1958)
rescission of a sale of real property does not operate to efface the fundamental Thus, while it is true that a mortgage of land necessarily
and prime objective and nature of the case, which is to recover said real includes, in the absence of stipulation of the improvements thereon,
property. It is a real action.” buildings, still a building by itself may be mortgaged apart from
the land on which it has been built. Such a mortgage would still
[4.3.1] Rule is not affected by the fact that the building is treated
be a real estate mortgage for the building would still be considered
separately from the land
immovable property even if dealt with separately and apart from
A building treated separately from the land on which it stood is the land (Leung Yee v. Strong Machinery Co., 37 Phil. 644). In
immovable property and the mere fact that the parties to a contract seem the same manner, this Court has also established that possessory
to have dealt with it separate and apart from the land on which it stood rights over said property before title is vested on the grantee, may
be validly transmitted or conveyed as in a deed of mortgage (Vda.
in no wise changed its character as immovable property.31 It is obvious
de Bautista v. Marcos, 3 SCRA 438 [1961]).”
that the inclusion of the building, separate and distinct from the land, in
the enumeration of what may constitute real properties (in Article 415 [4.3.2] Rule is not affected by the fact that the building is erected on
of the New Civil Code) could only mean one thing — that a building is a land owned by another person
by itself an immovable property, a doctrine already pronounced by the
Supreme Court as early as the case of Leung Yee v. Strong Machinery The law makes no distinction as to whether or not the owner of
Co.32 Thus, while it is true that a mortgage of land necessarily includes, the land is or is not the owner of the building.35 Hence, a building is an
in the absence of stipulation, the improvements thereon, still a building immovable property regardless of whether or not said structure and the
by itself may be mortgaged apart from the land on which it has been land on which it is adhered to belong to the same owner36 or whether
built.33 Such a mortgage would still be a real estate mortgage for the it is erected by the owner of the land or by a usufructuary or lessee.37

31 34
Punzalan, Jr. v. Vda. de Lacsamana, supra, 335-336; citing Leung Yee v. Strong Machin- Id.
35
ery Co., 37 Phil. 644 (1918). Ladera v. CN Hodges, 48 Off. Gaz., 5374, 5379; Makati Leasing and Finance Corp. v.
32
Lopez v. Orosa, Jr. and Plaza Theatre, Inc., 103 Phil. 98, 105 (1958); cited in Prudential Wearever Textile Mills, 122 SCRA 296, 301 (1983).
36
Bank v. Panis, 153 SCRA 390, 396 (1987). Lopez v. Orosa, Jr. and Plaza Theater, Inc., supra, 105.
33 37
Prudential Bank v. Panis, supra, 396, citing Leung Yee v. Strong Machinery Co., supra. Ladera v. CN Hodges (CA), supra, 5380.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 13 14 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

A building certainly cannot be divested of its character of a realty by The levy was made pursuant to the rules governing the levy of real properties.
the fact that the land on which it is constructed belongs to another.38 To In due course, judgment was rendered in favor of Evangelista, who, on October
hold it the other way, the possibility is not remote that it would result 8, 1951, bought the house at the public auction made to satisfy the judgment.
in confusion, for to cloak the building with an uncertain status made The corresponding deed of sale was issued to him on October 22, 1952. When
Evangelista sought to take possession of the house, he was told that Alto Surety
dependent on the ownership of the land, would create a situation where
was now the owner of the house because the latter allegedly bought the house at
a permanent fixture changes its nature or character as the ownership of an auction sale on September 29, 1950. It turned out that Alto Surety likewise
the land changes hands.39 filed an action against Rivera and likewise obtained a favorable judgment. The
corresponding deed was issued to Alto Surety on May 10, 1952. Subsequently,
Ladera v. C.N. Hodges, et al. (CA) Evangelista instituted an action against Alto Surety and Rivera for the purpose
48 Off. Gaz. 5374 (1952) of establishing his title over said house. The trial court ruled in favor of
In this case, Ladera purchased from CN Hodges a parcel of land payable Evangelista. On appeal, however, the Court of Appeals reversed the decision of
in installments. After the execution of the contract, Ladera built on the lot a the trial court on the ground that Evangelista did not acquire a preferential lien
house of mixed materials. When Ladera failed to pay the agreed instalments, through the preliminary writ of attachment because the house was levied as if
CN Hodges rescinded the contract and filed an action for ejectment. The court it were an immovable property. The Court of Appeals was of the opinion that
thereupon rendered a decision upon agreement of the parties requiring Ladera the house should have been levied pursuant to the rules governing the levy of
to vacate and surrender possession of the lot and to pay P10 a month until personal property (apparently for the reason that the house was constructed on
delivery of the premises. Thereafter, the court issued an alias writ of execution a land belonging to another). In reversing the decision of the CA, the Supreme
and the sheriff levied upon the house. The sheriff subsequently posted notices Court reiterated the ruling in Ladera v. Hodges (48 Off. Gaz., 5374) that “a
of sale at auction but did not publish the same in a newspaper of general true building (not one merely superimposed on the soil) is immovable or real
circulation. The sale pushed through. Thereupon, Ladera filed an action to property, whether it is erected by the owner of the land or by a usufructuary
set aside the sale. The trial court set aside the sale for non-compliance with or lessee.”
the requirement of publication (of the notice of sale) in judicial sales of real
property under the Rules of Court. CN Hodges appealed from the said decision [4.4] Instances Where Building Is Treated As Personal Property
contending that the house, being built on land owned by another person, should By the Parties
be regarded in law as movable or personal property. The Court of Appeals,
speaking thru Justice J.B.L. Reyes held that “a true building (not one merely Although the dicta in some decisions of the Supreme Court to
superimposed on the soil) is immovable or real property, whether it is erected the effect that “the parties to a contract may by agreement treat as
by the owner of the land or by a usufructuary or lessee.” Thus, the Court of personal property that which by nature would be a real property”40 may
Appeals ruled that the lower court was right in concluding that, as the object of have tended to erode the doctrine pronounced in Leung Yee v. Strong
the levy and sale was real property, the publication in a newspaper of general Machinery41 — that a building is by itself an immovable property —
circulation was indispensable and it being admitted that no such publication the fact remains that the nature of a building does not depend on the
was ever made, the execution sale was void. way the parties deal with it. The classification of property into real or
personal is provided for by law and may not, therefore, be changed
Evangelista v. Alto Surety & Ins. Co., Inc.
103 Phil. 401 (1958) by the agreement of the parties. As such, even if the parties may treat
as personal property that which under the law is a real property, that
In this case, Evangelista sued Rivera for collection of sum of money on agreement does not in any way alter the character of the property as an
June 4, 1949. On the same date, he obtained a writ of preliminary attachment,
immovable or real property.
which was levied upon a house built by Rivera on a land owned by Alto Surety.

40
Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, 632-633 (1923); see also De
38
Associated Ins. & Surety Co., Inc. v. Iya, et al., 103 Phil. 972, 979 (1958). Jesus v. Guan Bee Co., 72 Phil. 446 and Luna v. Encarnacion, 91 Phil. 531 (1952).
39 41
Id. Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 15 16 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

[4.5] Doctrine of Estoppel; Navarro and Tumalad Cases house (or building) subject matter of the cases was a personal property.
In Ladera v. CN Hodges,42 Justice J.B.L. Reyes explained that Rather, the Court simply applied the doctrine of estoppel, in that, since
the ruling in Standard Oil,43 De Jesus v. Guan Bee Co.,44 Evangelista the parties so agreed that the building (or house) is a personal property
v. Abad,45 and Tomines v. San Juan,46 to the effect that “the parties to and a proper subject of the contract of chattel mortgage, they are
a contract may by agreement treat as personal property that which by estopped from denying the existence of the chattel mortgage which, as
nature would be a real property” is predicated on statements by the between them, must be upheld.
owner declaring his house to be a chattel, a conduct that may conceivably
estop him from subsequently claiming otherwise. Navarro v. Pineda
9 SCRA 631 (1963)
This doctrine of estoppel was eventually applied by the Court in
Navarro47 and Tumalad48 cases. In these two cases, a chattel mortgage In this case, Rufino Pineda and his mother, Juana Gonzales, executed
contract was executed by the parties involving a house. Thereafter, the a deed of real estate and chattel mortgages in favor of Conrado Navarro,
whereby Gonzales, by way of real estate mortgage hypothecated a parcel of
mortgagors questioned the validity of the chattel mortgage so executed
land belonging to her, and Pineda, by way of chattel mortgage, mortgaged
on the ground that the subject matter thereof was not chattel but real his house erected on a lot belonging to another person and one motor truck.
property. While it is true that only personal properties can be the subject Both mortgages were contained in one instrument, which was registered both
of a chattel mortgage49 and that the execution of a chattel mortgage in the Office of the Register of Deeds and the Motor Vehicle Office. When
covering a real property (a building, for example) is invalid and a Navarro filed a complaint for foreclosure of the mortgage, Pineda questioned
nullity,50 the court need not resolve the issue of the validity of the chattel the validity of the chattel mortgage over his house on the ground that the house,
mortgage in the cases of Navarro and Tumalad. As a consequence, there being an immovable property, could not be the subject of a chattel mortgage,
is no need on the part of the court to rule on the character of the house citing the cases of Lopez v. Orosa, Jr., 103 Phil. 98; Associated Ins. & Surety
Co., Inc. v. Iya, 103 Phil. 972; and Leung Yee v. Strong Machinery Co., 37 Phil.
(or building) in these cases. Note that the cases of Navarro and Tumalad
644. The trial court upheld the validity of the chattel mortgage. The decision
can be resolved by simply applying the doctrine of estoppel which, in of the trial court was directly appealed to the Supreme Court. In sustaining the
fact, was what the Court did. decision of the trial court, the Supreme Court applied the principle of estoppel
As applied in the above cases, the doctrine of estoppel not because the house in question was treated as personal or movable property by
only prohibits a party from assuming inconsistent positions but also the parties to the contract themselves. In the deed of chattel mortgage, Pineda
conveyed by way of chattel mortgage “(his) personal properties,” a residential
precludes him from repudiating an obligation voluntarily assumed after
house and a truck. The mortgagor himself grouped the house with the truck,
having accepted benefits therefrom. To countenance such repudiation which is, inherently a movable property. The Court explained further that the
would be contrary to equity and would put a premium on fraud or cases cited by Pineda were not applicable because in these cases, third persons
misrepresentation. In other words, the Court did not rule in Navarro assailed the validity of the deed of chattel mortgages; whereas in this case, it
and Tumalad that the subject chattel mortgage was valid and that the was one of the parties to the contract of mortgage who assailed its validity.

Tumalad v. Vicencio
42
Supra. 41 SCRA 143 (1971)
43
Supra.
44
Supra. In this case, Vicencio and Simeon executed a chattel mortgage in favor
45
(CA) 36 O.G. 2913. of Tumalad over their house of strong materials built on a lot rented from
46
(CA) 45 O.G. 2935. Madrigal & Company, Inc. When Vicencio and Simeon defaulted in the
47
Navarro v. Pineda, 9 SCRA 631 (1963). payment of their obligation, the mortgage was extrajudicially foreclosed and
48
Tumalad v. Vicencio, 41 SCRA 143 (1971).
49
See Sec. 1, Act No. 3952.
the house was sold at public auction. Tumalad emerged as the highest bidder
50
Associated Ins. & Surety Co. v. Iya, 103 Phil. 972, 979 (1958). during the auction. Subsequently, Tumalad filed an action for ejectment against
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 17 18 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

Vicencio and Simeon. In their answer, the defendants impugned the legality In Associated Ins. & Surety Co. Inc. v. Iya,52 the principal question
of the chattel mortgage and its subsequent foreclosure on the ground that the was this: May Associated Insurance rightfully demand for the exclusion
house, being an immovable, could only be the subject of a real estate mortgage of the house from the foreclosure of the real estate mortgage by Iya?
and not a chattel mortgage. When the case finally reached the Supreme Court, In this case, if the chattel mortgage over the house is to be preferred
the said Court again applied the principle of estoppel since the parties treated
over the real estate mortgage over the same house, then Associated
the subject house as personalty. The Court explained that “although there is no
specific statement referring to the subject house as personal property, yet by
Insurance may rightfully demand for the exclusion of the house in the
ceding, selling or transferring a property by way of chattel mortgage (Vicencio foreclosure of the real estate mortgage since it was executed prior to the
and Simeon) could only have meant to convey the house as chattel, or at least, latter mortgage.
intended to treat the same as such, so that they should not now be allowed to In the said case, the debtor-mortgagor executed two mortgages
make an inconsistent stand by claiming otherwise.” This case was likewise
in favor of different mortgagees. The first was a chattel mortgage in
compared with Associated Ins. & Surety Co., Inc. v. Iya, Lopez v. Orosa, Jr.
and Plaza Theatre, Inc. and Leung Yee v. Strong Machinery Co. Unlike in
favor of Associated Insurance covering the house. The second was a
these three cases, wherein third persons assailed the validity of the chattel real estate mortgage over the same house and the lot on which the house
mortgage, it is the debtors-mortgagors who are attacking the validity of the was situated in favor of Iya. Both mortgage obligations were not paid.
chattel mortgage in this case. Hence, the doctrine of estoppel applies. Hence, Associated Insurance foreclosed the chattel mortgage over the
house and eventually purchased the house during the auction. When the
[4.6] Compared with the cases of Associated Ins. & Surety Co. v. real estate mortgage was about to be foreclosed, Associated Insurance
Iya, Evangelista v. Alto Surety & Ins. Co., Inc., Manarang v. sought for the exclusion of the house claiming a preferential right over
Ofilada and Piansay v. David it by virtue of the chattel mortgage and its subsequent foreclosure.
In the cases of Associated Ins. & Surety Co. v. Iya, Evangelista v. Iya, in turn, questioned the validity of the chattel mortgage contract
Alto Surety & Ins. Co., Inc., Manarang v. Ofilada and Piansay v. David, contending that since the subject matter thereof was real property, the
the question on the character of the house or building concerned was same was not valid.
of primordial consideration. In other words, there was no other way of In this case, the court is required to meet squarely the issue of the
resolving these cases except with a precise ruling on the character of the validity of the chattel mortgage contract. And in resolving said issue,
house (or building) subject thereof. the court must pass upon the character of the house — whether it is real
In Evangelista v. Alto Surety & Ins. Co., Inc.,51 for example, the main property or personal property. If the house is a real property, then the
question was — who between the contending parties had a preferential chattel mortgage is not valid and Associated Insurance does not acquire
right over the house? If the levy made on the house pursuant to a writ a preferential right over the house subject matter of the mortgage. But
of preliminary attachment in 1949 was valid, then Evangelista had a if the house is a personal property, then the chattel mortgage is valid
preferential right over the same, otherwise, it would be Alto Surety. and Associated Insurance has a preferential right over the house. Since
The validity of the levy, in turn, would depend upon the character of the court is called upon to apply the law (Article 415[1], NCC), there is
the house. If the house was a real property, then the levy would be no other conclusion except that the house is a real property — it is so
valid. If the house was a personal property, then the levy would not whether it is erected on a land belonging to another.
be valid. Since the resolution of the case calls for the application of
In Manarang v. Ofilada,53 a house was made the subject matter
the law (Article 415[1], NCC), there is no other conclusion except that
of a chattel mortgage contract. When the mortgage obligation was
the house is a real property — it is so whether it is erected on a land
belonging to another.
52
Supra.
51 53
103 Phil. 401. 99 Phil. 108 (1956).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 19 20 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

not paid, the creditor opted to file an action for collection (instead of chattel mortgage is valid; otherwise, it is not. Since the court is again
foreclosing the mortgage) and after obtaining favorable judgment, the called upon to apply the law (Article 415[1], NCC), there is no other
creditor caused the levy upon execution of the same house subject conclusion except that the house is a real property.
matter of the chattel mortgage contract. Before the property could be
sold at the public auction, the debtor offered to pay her indebtedness. Manarang v. Ofilada
The sheriff, however, told her to likewise pay the expenses incurred in 99 Phil. 108 (1956)
the publication of the notice of sale. The debtor, however, refused to In this case, Manarang executed a chattel mortgage over a house of
pay the publication expenses contending that such publication was not mixed materials in favor of Esteban. Upon default, Esteban filed an action to
necessary since the house was not a real property. recover the loan. Judgment having been entered in plaintiff’s favor, execution
was issued against the same property mortgaged. Before the property could
Note that under the Rules of Court, if what is to be sold at a
be sold at the auction, Manarang offered to pay the sum of P277. The sheriff,
public auction is a real property, publication of the notice of sale is however, refused the tender unless the additional amount of P260 representing
indispensable. Without such publication, the sale is a nullity. On the the expenses incurred for the publication of the notice of sale be also paid.
other hand, if what is to be sold is a personal property, there is no need Manarang refused to pay the additional amount contending that the house in
for publication. question was considered as personal property by the parties, hence, publication
of its sale at public auction was not necessary. In upholding the action of the
Hence, the issue in this case is the character of the house, whether it sheriff, the Supreme Court explained that the rules on execution do not allow
is a real property or personal property for purposes of sale on execution. the parties to a contract to treat a real property as personal because “sale on
Since the character of the house is the precise issue in this case, the execution affect the public and third persons.” “The regulation governing
court is once again called upon to apply the law (Article 415[1], NCC). sales on execution are for public officials to follow” and “were never intended
Since the court is called upon to apply the law (Article 415[1], NCC), to suit the consideration that parties, may have privately given to the property
there is no other conclusion except that the house is a real property. levied upon.” Hence, “the mere fact that a house was the subject of a chattel
mortgage and was considered as personal property by the parties does not
In Piansay v. David,54 a house was again made the subject matter make said house personal property for purposes of the notice to be given for
of a chattel mortgage which was foreclosed. The mortgagee bought the its sale at public auction.” In fine, the Supreme Court declare that “the house
house during the auction and later sold the same to Piansay. Another of mixed materials levied upon on execution, although subject of a contract of
unsecured creditor of the debtor filed an action for collection against chattel mortgage between the owner and a third person, is real property within
him. After obtaining judgment, said creditor (Mangubat) caused the the purview of Rule 39, Section 16 of the Rules of Court as it has become a
permanent fixture on the land, which is real property.”
levy upon execution of the house earlier foreclosed and sold to Piansay.
Thus, Piansay questioned the validity of the levy upon execution. The Evangelista v. Alto Surety & Ins. Co., Inc.
main question in this case is this: who between Piansay and Mangubat 103 Phil. 401 (1958)
has a better right over the house? In order to answer this question, there
In this case, Evangelista sued Rivera for collection of sum of money on
is a need on the part of the court to pass upon the issue of the validity
June 4, 1949. On the same date, he obtained a writ of preliminary attachment,
of the chattel mortgage contract. If the same is valid, then Piansay which was levied upon a house built by Rivera on a land owned by Alto Surety.
acquires a preferential right over the house subject matter of the chattel The levy was made pursuant to the rules governing the levy of real properties.
mortgage; otherwise, Mangubat shall acquire a preferential right over In due course, judgment was rendered in favor of Evangelista, who, on October
it. The validity of the chattel mortgage, in turn, is dependent upon the 8, 1951, bought the house at the public auction made to satisfy the judgment.
character of the house. If the house is a personal property, then the The corresponding deed of sale was issued to him on October 22, 1952. When
Evangelista sought to take possession of the house, he was told that Alto Surety
was now the owner of the house because the latter allegedly bought the house at
54
12 SCRA 227. an auction sale on September 29, 1950. It turned out that Alto Surety likewise
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 21 22 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

filed an action against Rivera and likewise obtained a favorable judgment. The estate mortgage was reversed. In reversing the said portion of the decision, the
corresponding deed was issued to Alto Surety on May 10, 1952. Subsequently, Supreme Court explained that the house in question was a real property and
Evangelista instituted an action against Alto Surety and Rivera for the purpose the chattel mortgage in favor of Associated Insurance was not valid since its
of establishing his title over said house. The trial court ruled in favor of subject matter was not a personal property. The chattel mortgage being void,
Evangelista. On appeal, however, the Court of Appeals reversed the decision Associated Insurance did not acquire any right over the house.
of the trial court on the ground that Evangelista did not acquire a preferential
lien through the preliminary writ of attachment because the house was levied Piansay v. David
as if it were an immovable property. The CA was of the opinion that the house 12 SCRA 227 (1964)
should have been levied pursuant to the rules governing the levy of personal
In this case, Conrado David obtained a loan from Uy Kim upon the
property. In reversing the decision of the CA, the Supreme Court explained
security of a chattel mortgage on a house situated at Tondo, Manila. When
that a house is “immovable or real property, whether it is erected by the owner David defaulted, Uy Kim foreclosed the mortgage and the house was sold
of the land or by a usufructuary or lessee.” Hence, the levy that was made was to Uy Kim. Thereafter, Uy Kim sold the house to Salvador Piansay. In the
proper and Evangelista acquired a preferential right over the house by virtue of meantime, Marcos Mangubat filed an action for collection of loan against
the writ of preliminary attachment which was secured long before the sale of David. After obtaining a judgment against David, the house was levied upon
the house in favor of Alto Surety. at the instance of Mangubat. Piansay assailed the right of Mangubat to levy
upon execution the house in question alleging that the same belongs to him,
Associated Ins. & Surety Co., Inc. v. Iya, et al. he having bought it from Uy Kim, who, in turn, acquired it at the auction sale
103 Phil. 972 (1958) held in connection with the extrajudicial foreclosure of the chattel mortgage
In this case, the spouses Valino purchased a lot on installment basis constituted in her favor by David. In ruling in favor of Mangubat, the Court
from Philippine Realty Corporation. Prior to the full payment of the purchase held “regardless of the validity of a contract constituting a chattel mortgage
price, ownership remained with PRC. In the meantime, the spouses Valino on a house, as between the parties to said contract, the same cannot and does
constructed a house on the lot and subsequently mortgaged the same in favor not bind third persons, who are not privies to the aforementioned contract or
of Associated Insurance by way of a chattel mortgage. After completing their privies. As a consequence, the sale of the house in the proceedings for
payment of the purchase price on the lot and after the issuance of the title the extrajudicial foreclosure of said chattel mortgage, is null and void insofar
to the lot in their names, the spouses Valino subsequently mortgaged the lot as defendant Mangubat is concerned, and did not confer upon Mrs. Uy Kim,
and the house (earlier mortgaged to Associated Insurance) in favor of Iya as buyer in said sale, any dominical right in and to said house, so that she
by way of a real estate mortgage. Soon, the spouses Valino defaulted in the could not have transmitted to her assignee, plaintiff Piansay, any such right as
payment of their obligation secured by the chattel mortgage. Thus, Associated against defendant Mangubat.”
Insurance foreclosed the chattel mortgage over the house and subsequently
[4.7] Classification of property into real or personal property, a
caused the said house to be declared in its name for tax purposes. When the
question of law — the Standard Oil case
surety company learned of the existence of the real estate mortgage, it filed an
action for the purpose of excluding the house from the real estate mortgage. In the case of Standard Oil Co. of New York v. Jaramillo,55 the
In the meantime, the spouses likewise defaulted in the payment of their Supreme Court ruled that the Register of Deed may not refuse the
obligation secured by the real estate mortgage. Thus, Iya filed an action against registration of a chattel mortgage on the pretext that the subject matter
the spouses Valino and Associated Insurance for the payment of the mortgage thereof is not a personal property. The Court clarifies that the duties of
obligation with an alternative prayer for the foreclosure of the real estate
the register of deeds in respect to the registration of chattel mortgages are
mortgage. The two cases were jointly heard. After trial, the lower court ruled
that the chattel mortgage in favor of Associated Insurance was preferred and
of purely ministerial in character. As earlier discussed, the classification
superior over the real estate mortgage in favor of Iya, with respect to the house. of property into real or personal is provided for by law. In refusing the
The lower court thus ordered the exclusion of the house in the foreclosure of registration of a chattel mortgage on the ground that the subject matter
the real estate mortgage. On appeal to the Supreme Court, the portion of the
decision of the lower court excluding the house in the foreclosure of the real 55
Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 23 24 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

thereof is not a personal property, the register of deeds is engaging itself of chattel mortgages are of a purely ministerial character, and no provision of
in the interpretation of the law — which is the exclusive province of the law can be cited which confers upon him any judicial or quasi-judicial power
courts. For that reason, the Supreme Court clarified that the duty of the to determine the nature of any document of which registration is sought as a
register of deeds in respect to the registration of chattel mortgages is of chattel mortgage.”
a purely ministerial character.
(C) Construction Adhered To the Soil
The Standard Oil case is telling us that the registration of a
[4.8] Constructions of All Kinds Adhered To the Soil
chattel mortgage covering a real property before the chattel mortgage
registry may not be prevented by the register of deeds. What then is To be immovable, the construction must be attached permanently
the effect of such registration? In Associated Ins. & Surety Co., Inc. v. to the land.58 It becomes immovable by incorporation. The adherence
Iya,56 the Supreme Court held that the registration of a chattel mortgage to the soil must not be of provisional or temporary character but fixed
covering a building in the Chattel Mortgage Registry produces no effect or integral. Thus, in a case,59 the steel towers constructed by the Manila
whatsoever, for where the interest conveyed is in the nature of a real Electric Company were not considered as real properties because they
property, the registration of the document in the registry of chattels is were “removable and merely attached to a square metal frame by means
merely a futile act. Thus, the registration of the chattel mortgage of a of bolts, which when unscrewed could easily be dismantled and moved
building of strong materials produces no effect as far as the building from place to place.” In Meralco Securities Industrial Corporation v.
is concerned.57 But then again, as between the parties to said chattel CBAA,60 however, the Court held that the pipeline system in question is
mortgage, they are not allowed to assail the validity of said agreement indubitably a construction adhering to the soil. It is attached to the land
under the principle of estoppel. in such a way that it cannot be separated therefrom without dismantling
the steel pipes which were welded to form the pipeline.
Standard Oil Co. of New York v. Jaramillo
44 Phil. 630 (1923) Board of Assessment Appeals v. Manila Electric Co.
In this case, Gervasia de la Rosa, a lessee of a parcel of land situated in 10 SCRA 68 (1964)
the City of Manila and owner of the house of strong materials built thereon, In this case, the City Assessor of Quezon City classified the 40 steel towers
executed a deed of chattel mortgage, conveying to plaintiff by way of mortgage constructed by Meralco within Quezon City as real properties for purposes
both the leasehold interest in said lot and the building which stands thereon. of taxation. Thus, the Board of Assessment Appeals of Quezon City required
After said document was duly acknowledged and delivered, the petitioner Meralco to pay the amount of P11,651.86 as real property tax on the said steel
caused the same to be presented to defendant, as register of deeds of the City towers for the years 1952 to 1956. Meralco paid the amount under protest and
of Manila, for the purpose of having the same recorded in the book of record questioned the imposition of the tax before the Court of Tax Appeals. The CTA
of chattel mortgages. Upon examination of the instrument, defendant was of ordered the cancellation of the tax declarations on the aforesaid steel towers
the opinion that it was not a chattel mortgage, for the reason that the interest and directed the City Treasurer of Quezon City to refund the payments made
therein mortgaged did not appear to be personal property, within the meaning by Meralco. The CTA ruled that the steel towers were personal properties and
of the Chattel Mortgage Law, and registration was refused on this ground. A were not, therefore, subject to real property tax. On appeal, the Supreme Court
petition for mandamus was filed against the register of deeds. The Supreme sustained the decision of the CTA holding that —
Court ruled that the position taken by the register of deeds is untenable. It is
his duty to accept the proper fee and place the instrument on record. The Court Granting for the purpose of argument that the steel supports
explained that “the duties of a register of deeds in respect to the registration or towers in question are not embraced within the term poles, the

56 58
Supra. 3 Manresa 18-19, cited in II Tolentino, Civil Code, p. 17.
57 59
Associated Ins. & Surety Co., Inc. v. Iya, 103 Phil. 972, 979, citing Leung Yee v. Strong Board of Assessment Appeals v. Manila Electric Company, 10 SCRA 68 (1964).
60
Machinery Co., 37 Phil. 644. 114 SCRA 261 (1982).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 25 26 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

logical question posited is whether they constitute real properties, § 5. Real Property under Article 415(2)
so that they can be subject to a real property tax. The tax law
does not provide for a definition of real property; but Article 415 “Trees, plants and growing fruits …”
of the Civil Code does, by stating the following are immovable (A) Trees and Plants
property:
[5.1] Trees and Plants
“(1) Land, building, roads and constructions of all kinds
adhered to the soil; Trees, plants and growing fruits, while they are attached to the
land, are immovable property.61 They are immovable by reason of their
xxx xxx xxx
incorporation to the soil or because they form an integral part of the
(3) Everything attached to an immovable in a fixed immovable. If, therefore, the trees or plants are cut or uprooted for
manner, in such a way that it cannot be separated therefrom purposes of making them firewood or timber they become movable
without breaking the material or deterioration of the object; property except when the timber constitutes the natural product of the
xxx xxx xxx tenement and, therefore, forms an integral part of the immovable.62
(5) Machinery, receptacles, instruments or implements
intended by the owner of the tenement for an industry or works
(B) Growing Fruits
which may be carried on in a building or on a piece of land, and [5.2] Growing Fruits
which tend directly to meet the needs of the said industry or
works; With regard to growing fruits, they are considered as real property
so long as they are still attached to the soil. But for certain purposes
xxx xxx xxx.”
and while still attached to the soil, growing fruits may exceptionally
The steel towers or supports in question, do not come be treated as personal property pursuant to the provisions of Article
within the objects mentioned in paragraph 1, because they do not 416(2) of the New Civil Code. By way of example, ungathered fruits are
constitute buildings or constructions adhered to the soil. They are considered personal property for the purpose of sale of the whole or part
not constructions analogous to buildings nor adhering to the soil. of the crops.63 In addition, ungathered fruits have the nature of personal
As per description, given by the lower court, they are removable
property for purposes of attachment and execution and in applying the
and merely attached to a square metal frame by means of bolts,
provisions of the Chattel Mortgage Law.64
which when unscrewed could easily be dismantled and moved
from place to place. They cannot be included under paragraph 3, Sibal v. Valdez
as they are not attached to an immovable in a fixed manner, and 50 SCRA 512 (1927)
they can be separated without breaking the material or causing
deterioration upon the object to which they are attached. Each of In this case, the deputy sheriff of the Province of Tarlac attached several
these steel towers or supports consists of steel bars or metal strips, properties of Leon Sibal, among which was included the sugar cane in seven
joined together by means of bolts, which can be disassembled by parcels of land. Thereafter, the said deputy sheriff sold at public auction said
unscrewing the bolts and reassembled by screwing the same. These properties, including the sugar cane, to Valdez. Sibal offered to redeem said
steel towers or supports do not also fall under paragraph 5, for they sugar came and tendered to Valdez the amount sufficient to cover the price
are not machineries, receptacles, instruments or implements, and paid by the latter. Valdez, however refused to accept the money and to return
even if they were, they are not intended for industry or works on the sugar cane on the ground that the sugar cane in question had the nature of
the land. Petitioner is not engaged in an industry or works on the
land in which the steel supports or towers are constructed.” 61
Inter-Regional Development Corp. v. CA, 65 SCRA 265, 268 (1975).
62
3 Manresa, 6th ed., 20.
63
3 Manresa, 6th ed., 21.
64
Sibal v. Valdez, 50 Phil. 512, 524 (1927).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 27 28 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

personal property and was not, therefore, subject to redemption. On the issue 415(3), as between the parties since their intent has to be looked into.
of whether the sugar in question is personal or real property, the Supreme Court Thus, if the parties treat the machinery as chattels, they are bound by
held that “for purposes of attachment and execution, and for the purposes of their agreement under the principle of estoppel67 notwithstanding the
the Chattel Mortgage Law, ungathered products have the nature of personal fact that the machinery may have been attached to an immovable in a
property.”
fixed manner and may not be separated therefrom without breaking the
material or deterioration of the object to which it is attached.
§ 6. Real Property under Article 415(3)
“Everything attached to an immovable in a fixed manner …” Tsai v. Court of Appeals
[6.1] Attachment Must Be In A Fixed Manner 366 SCRA 324 (2001)

These properties are immovable by incorporation. Their attachment In this case, Ever Textile Mills, Inc. obtained in 1975 a three million loan
to an immovable must be in a fixed manner and in such a way that from PBCom. As security for the loan, Evertex executed in favor of PBCom a
they cannot be separated therefrom without breaking the material or deed of real and chattel mortgage over the lot where its factory stands, and the
chattels located therein as enumerated in a schedule attached to the mortgage
deterioration of the object.65 In the Board of Assessment Appeals case,66
contract. In 1979, PBCom granted a second loan of P3,356,000 to Evertex. The
for example, the Supreme Court ruled that the steel towers of Meralco loan was secured by a chattel mortgage over personal properties enumerated
could not be included under paragraph 3 because they are not attached in a list attached thereto. In 1982, PBCom foreclosed the real and chattel
to an immovable in a fixed manner since they could be separated mortgages. In 1982, Evertex was declared insolvent. In the meantime, PBCOm
without breaking the material or causing deterioration upon the object sold the factory, lock and stock and barrel to Ruby Tsai in 1984. In 1989,
to which they were attached. Each of the steel towers consists of steel Evertex filed an action for annulment of the sale, reconveyance and damages.
bars or metal strips, joined together by means of bolts, which could be Evertex alleges, inter alia, that PBCom appropriated some chattels not included
disassembled by unscrewing the bolts and reassembled by screwing the in the real and chattel mortgage in 1975 nor in the chattel mortgage of 1979.
same. Evertex further alleged that these properties were acquired only in 1981. Tsai
and PBCom contended, on the other hand, that the disputed 1981 machineries
[6.2] Need Not Be Attached By the Owner were real properties because they were heavy, bolted or cemented on the real
property. In finding the contention to be unmeritorious, the SC held —
The Civil Code nowhere requires that the attachment or
Petitioners contend that the nature of the disputed
incorporation be made by the owner of the land or immovable himself.
machineries, i.e., that they were heavy, bolted or cemented on the
For the property to be immobilized under paragraph 3, the only criterion real property mortgaged by EVERTEX to PBCom, make them ipso
is its union or incorporation with the immovable in the manner required facto immovable under Article 415(3) and (5) of the New Civil
by law. Code. This assertion, however, does not settle the issue. Mere nuts
and bolts do not foreclose the controversy. We have to look at the
[6.3] However, Intent of the Parties May Govern parties’ intent.
The principle of estoppel may likewise apply with respect to While it is true that the controverted properties appear to be
properties mentioned in paragraph 3 of Article 415. The fact that the immobile, a perusal of the contract of Real and Chattel Mortgage
machineries are heavy, bolted or cemented on the real property, for executed by the parties herein give us a contrary indication. In
example, does not make them ipso facto immovable under Article the case at bar, both the trial and the appellate courts reached the
same finding that the true intention of PBCom and the owner,
EVERTEX, is to treat machinery and equipment as chattels. The
65
Art. 415, par. 3.
66 67
Board of Assessment Appeals v. Manila Electric Company, supra. Tsai v. CA, 366 SCRA 324 (2001).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 29 30 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

pertinent portion of respondent appellate court’s ruling is quoted must be made by the owner of the immovable either personally or through
below: an agent; while it is immaterial as to who makes the incorporation in
xxx xxx xxx paragraph 3; (2) the incorporation in paragraph 3 must be such that
separation is impossible; whereas, in paragraph 4 separation is possible
In the absence of any showing that this conclusion is baseless,
without deterioration of the immovable or destruction of the material.
erroneous or uncorroborated by the evidence on record, we find no
compelling reason to depart therefrom.
§ 8. Real Property under Article 415(5)
Too, assuming arguendo that the properties in question are
immovable by nature, nothing detracts the parties from treating it as “Machineries, receptacles, instruments or implements …”
chattels to secure an obligation under the principle of estoppel. As [8.1] Immovable By Destination in Par. (5); Requisites
far back as Navarro v. Pineda, 9 SCRA 631 (1963), an immovable
may be considered a personal property if there is a stipulation as The properties mentioned in paragraph 5 are essentially movables
when it is used as a security in the payment of an obligation where but by reason of their purpose — they being destined for use in the
a chattel mortgage is executed over it, as in the case at bar. industry or work in the tenement — they are converted into real
properties. In order to be immobilized under paragraph 5, however, the
In the instant case, the parties herein: (1) executed a contract
styled as “Real Estate and Chattel Mortgage,” instead of just “Real
following requisites must be satisfied:
Estate Mortgage” if indeed their intention is to treat all properties (1) They must be machinery, receptacles, instruments or im-
included therein as immovable, and (2) attached to the said plements;
contract a separate “LIST OF MACHINERIES & EQUIPMENT.”
These facts, taken together, evince the conclusion that the parties’ (2) They must be placed by the owner of the tenement or by his
intention is to treat these units of machinery as chattels. A agent;
fortiori, the contested after-acquired properties, which are of the
(3) There must be an industry or work carried in such building
same description as the units enumerated under the title “LIST
OF MACHINERIES & EQUIPMENT,” must also be treated as
or on the piece of land; and
chattels. (4) They must tend directly to meet the needs of said industry
or work.
§ 7. Real property under Article 415(4)
[8.2] Properties Contemplated Under Paragraph 5
“Statues, reliefs, paintings or other objects for use or orna-
mentation …” The properties contemplated in this paragraph are machineries,
receptacles, instruments or implements. Thus, in the Board of Assessment
[7.1] Requisites Appeals case,68 the Supreme Court did not consider the steel towers
These are real properties by destination. In order that the properties constructed by Meralco as falling under paragraph 5 for they are not
mentioned in this paragraph may be considered as real property, the machineries, receptacles, instruments or implements.
following requisites must concur: (1) they must be placed in buildings [8.3] They Must Be Placed By the Owner or By His Agent
or on lands by the owner of the immovable or by his agent; and (2) the
attachment must be intended to be permanent. In Davao Sawmill Co. v. Castillo,69 the Supreme Court held that
machinery which is movable by nature becomes immobilized when
[7.2] Distinguish From Paragraph 3
The real properties in this paragraph are to be distinguished from 68
Supra.
those mentioned in paragraph 3, as follows: (1) here the incorporation 69
61 Phil. 709 (1935).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 31 32 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

placed by the owner of the tenement, property or plant, but not so Davao Sawmill Co. v. Castillo
when placed by tenant, usufructuary, or any other person having only 61 Phil. 709
a temporary right, unless such person acted as the agent of the owner.70 Plaintiff operated a sawmill. The land upon which the business was con-
Hence, if the machinery, receptacles, instrument or implements are not ducted was leased from another person. On the land, the sawmill company
placed by the owner of the tenement or by his agent, these properties erected a building which housed the machinery used by it. Some of the ma-
remain as movables and are not converted into real properties. As further chines were mounted and placed on foundations of cement. In the contract of
explained by Justice J.B.L. Reyes in Ladera v. CN Hodges,71 in the case lease, plaintiff agreed to turn over free of charge all improvements and build-
of immovables by destination (such as statutes, paintings and reliefs, ings erected by it on the premises with the exception of machineries, which
shall remain with the plaintiff. In an action brought by the defendant herein,
machinery and implements, and animal houses), the Code requires that
judgment was rendered against plaintiff. A writ of execution was issued and the
they be placed by the owner of the tenement, in order to acquire the machineries placed on the sawmill were levied upon as personalty by the sher-
same nature or consideration of real property. iff. The question raised in this case involves the determination of the nature of
the machineries, for plaintiff claimed that they were immobilized and they be-
[8.3.1] Exception to the Rule in supra § 8.3 longed to the owner of the land. In holding that the machinery is not immobi-
Should the machinery, receptacles, instruments or implements be lized, the Court explained that “machinery which is movable in its nature only
placed in the land or tenement by the lessee thereof, the same remains becomes immobilized when placed in a plant by the owner of the property or
personal because they are not placed by the owner of the tenement. An plant, but not when so placed by a tenant, usufructuary, or any person having
only a temporary right, unless such person acted as the agent of the owner.”
exception will arise, however, if in the contract of lease it is stipulated that
such machinery, receptacles, instruments or implements placed there by Burgos, Sr. v. Chief of Staff, AFP
the lessee will become, at the termination of the lease, the property of 133 SCRA 800 (1984)
the lessor for in that case they will be considered as immovable property
In this case, the search warrants issued were questioned on grounds, inter
since in placing them the lessee will just be merely acting as an agent alia, that real properties were seized under the disputed warrants. In debunking
of the lessor.72 In the Davao Sawmill case, the Supreme Court quoted this particular argument, the Supreme Court declared —
with approval the case of Valdez v. Central Altagracia, Inc.,73 where it
was held that while under the general law of Puerto Rico machinery xxx Under Article 415(5) of the Civil Code of the Philippines,
“machinery, receptacles, instruments or implements intended by
placed on property by a tenant does not become immobilized, yet, when
the owner of the tenement for an industry or works which may be
the tenant places it there pursuant to a contract that it shall belong to carried on in a building or on a piece of land and which tend directly
the owner, it then becomes immobilized as to that tenant and even as to meet the needs of the said industry or works” are considered
against his assignees and creditors who had sufficient notice of such immovable property. In Davao Sawmill Co. v. Castillo where
stipulation.74 this legal provision was invoked, this Court ruled that machinery
which is movable by nature becomes immobilized when placed
by the owner of the tenement, property or plant, but not so when
placed by tenant, usufructuary, or any other person having only
a temporary right, unless such person acted as the agent of the
owner.
70
See also Burgos, Sr. v. Chief of Staff, AFP, 133 SCRA 800, 812 (1984). In the case at bar, petitioners do not claim to be the owners
71
Supra, 5379. of the land and/or building on which the machineries were placed.
72
See Davao Sawmill v. Castillo, supra. This being the case, the machineries in question, while in fact bolt-
73
225 U.S. 58.
74
Cited in People’s Bank and Trust Co. v. Dahican Lumber Company, 20 SCRA 84, 95
ed to the ground remain movable property susceptible to seizure
(1967). under a search warrant.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 33 34 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

People’s Bank and Trust Co. v. Dahican Lumber Company become immobilized, yet, when the tenant places it there pursuant to a contract
20 SCRA 84 (1967) that it shall belong to the owner, it then becomes immobilized as to that tenant
and even as against his assignees and creditors who had sufficient notice of
In this case, Atlantic Gulf & Pacific Company (AG & P) sold and assigned
such stipulation. In the case at bar it is not disputed that DALCO purchased
all its rights in a lumber concession to Dahican Lumber Company (DALCO)
the ‘after acquired properties’ to be placed on, and be used in the development
for a total sum of $500,000, of which only $50,000 was paid. To develop the
of its lumber concession, and agreed further that the same shall become
concession, DALCO obtained various loans from People’s Bank & Trust
immediately subject to the lien constituted by the questioned mortgages. There
Company. The loan was secured by a real estate mortgage over five parcels
is also abundant evidence in the record that DAMCO and CONNEL had full
of land, including the buildings and improvements thereon. The mortgage
notice of such stipulation and had never thought of disputed validity until the
was executed on July 13, 1950. On the same date, DALCO executed a second
present case was filed. Consequently, all of them must be deemed barred from
mortgage on the same properties in favor of AG & P to secure payment of the
denying that the properties in question had become immobilized.
unpaid balance of the purchase price. Both deeds contained an identical provision
extending the mortgage lien to properties to be subsequently acquired by
[8.4] They Must Tend Directly To Meet the Needs of Said Industry
DALCO including but not limited to machinery, fixtures, tools and equipments
or Work
which the mortgagor may install, use in connection with the premises. After
July 13, 1950, DALCO purchased various machineries, equipment, spare parts The properties mentioned in paragraph 5 are immovable by
and supplies (collectively referred to as “after-acquired properties”). Pursuant destination and they are converted into real properties by reason of
to the provisions of the mortgage deeds, the Bank requested DALCO to submit their purpose, not by reason of their attachment to an immovable. In
compete lists of said properties but the latter failed to do so. Thereafter, the Berkenkotter v. Cu Unjieng e Hijos,75 it was held that the installation of
board of directors of DALCO passed a resolution to rescind the alleged sales of
the machinery and equipment in the central of the Mabalacat Sugar Co.,
after-acquired properties by Connel Bros. Company Philippines (CONNEL).
After which, DALCO and CONNEL executed the corresponding agreements of
Inc. for use in connection with the industry carried by that company,
rescission of sale. The Bank demanded for the cancellation of such agreements. converted the said machinery and equipment into real property by
When DALCO refused to do so, the Bank and AG & P commenced foreclosure reason of their purpose. The Court explained in the said case that “it
proceedings of the mortgage deeds, including the after-acquired properties. cannot be said that their incorporation therewith was not permanent
DALCO and CONNEL contended that the mortgages were null and void as in character because, as essential and principal elements of a sugar
regards the “after acquired properties” because they were not registered in central, without them the sugar central would be unable to function or
accordance with the Chattel Mortgage Law. In upholding the validity of the carry on the industrial purpose for which it was established.” The Court
mortgage and the foreclosure, the Court held that the after-acquired properties adds, “inasmuch as the central is permanent in character, the necessary
came within the operation of Article 415, paragraph 5 and Article 2127 machinery and equipment installed for carrying on the sugar industry
of the New Civil Code. The Court explained that since the “after acquired for which it has been established must necessarily be permanent.”
properties” were purchased by DALCO in connection with, and for the use
in the development of its lumber concession and that they were purchased in The same ruling was made in the case of Ago v. Court of Appeals,76
addition to, or in replacement of those already existing in the premises on July where the Court held that “by the installation of the sawmill machineries
13, 1950 they must be deemed, in law, “to have been immobilized, with the in the building of the Golden Pacific Sawmill, Inc., for use in the sawing
result that the real estate mortgages involved herein — which were registered of logs carried on in said building, the same became a necessary and
as such — did not have to be registered a second time as chattel mortgages in permanent part of the building or real estate on which the same was
order to bind the after acquired properties and affect third persons.” The Court constructed, converting the said machineries and equipments into real
likewise held that CONNEL is also barred from denying that the properties in
estate within the meaning of Article 415(5) of the Civil Code of the
question had become immobilized. The Court explained:
Philippines.”
Moreover, quoted in the Davao Sawmill case was that of Valdez v.
Central Altagracia, Inc. (225 U.S. 58), where it was held that while under the 75
61 Phil. 663.
general law of Puerto Rico, machinery placed on property by a tenant does not 76
6 SCRA 530, 537.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 35 36 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

Berkenkotter v. Cu Unjieng GSIS v. Calsons, Inc.


61 Phil. 663 23 SCRA 891 (1968)
The Mabalacat Sugar Co., Inc., owner of a sugar central, obtained from In this case, Calsons, Inc. borrowed from GSIS upon the security of a
defendant a loan secured by a real estate mortgage constituted on two parcels real estate mortgage over five parcels of land “together with all the buildings
of land with all the buildings, improvements, sugarcane mill thereon, and and improvements now existing thereon or which may hereafter be constructed
whatever forms part or was a necessary complement of said sugar-cane mill. on the mortgaged properties.” GSIS thereafter applied for foreclosure of the
Shortly thereafter, the company decided to increase the capacity of its sugar mortgage on grounds, inter alia, that Calsons without prior consent of GSIS
central by buying additional machinery and equipment, which it installed in removed and disposed of the complete band sawmill and filling machine which
the central, so that instead of milling 150 tons daily it could produce 250. The formed part of the properties mortgaged. Calsons did not deny this allegation
company obtained a loan from plaintiff to pay for the machinery. The issue but contended that said machines were not included in the mortgage. The
in the present action is whether the additional machinery was subject to the Supreme Court ruled that the machineries were part of the immovable since
mortgage deed executed in favor of defendant. In holding the machinery to they were permanently attached to the property and installed there by the
be real property, the Court explained that the installation of the machinery former owner to meet the needs of certain works or industry therein. Hence,
and equipment in question in the central converted them into real property by the machineries need not be the subject of a separate chattel mortgage in order
reason of their purpose and constitutes a permanent improvement on said sugar to be deemed duly encumbered in favor of GSIS.
central and subjects said machinery and equipment to the real estate mortgage
constituted on the sugar central. [8.5] They Must Be “Essential” and “Principal” Elements of the
Industry or Works
Ago v. Court of Appeals
6 SCRA 360 (1962) Before movables may be deemed immobilized in contemplation of
paragraph 5 of Article 415, it is necessary that they must be “essential”
In this case, Ago bought sawmill machineries and equipments from Grace and “principal” elements of the industry or works without which
Park Engineering, Inc., executing a chattel mortgage over said machineries and
such industry or works would be unable to function or carry on the
equipments to secure the balance of the purchase price, which Ago agreed to
pay on installments. When Ago defaulted, Grace Park instituted foreclosure
industrial purpose for which it was established.77 We must distinguish,
proceedings of the mortgage. To enjoin the foreclosure, Ago instituted a special therefore, those movables which become immobilized by destination
civil action. The parties, however, arrived at a compromise agreement. Ago sold because they are essential and principal elements in the industry from
the machineries to Golden Pacific Sawmill, Inc., which installed the same in those which may not be so considered immobilized because they are
a building and permanently attached the same to the ground. In the meantime, merely incidental, not essential and principal.78 Thus, cash registers,
as Ago continued to default in his payments as provided in the judgment by typewriters, etc., usually found and used in hotels, restaurants, theaters,
compromise, Grace Park filed with the trial court a motion for execution, etc. are merely incidentals and are not and should not be considered
which was granted. Thereafter, the sheriff levied upon and sold the sawmill immobilized by destination, for these businesses can continue or carry
machineries and equipments in question without prior publication of the notice on their functions without these equipments.79 Airline companies use
of sale. Ago questioned the legality of the sale contending that the machineries
forklifts, jeep-wagons, pressure pumps, IBM machines, etc., which are
were real properties. When the case eventually reached the Supreme Court, the
Court declared the sale to be void for lack of the necessary advertisement of
incidentals, not essentials, and thus retain their movable nature.80 On the
sale by publication in a newspaper as required by the rules on the execution other hand, machineries of breweries used in the manufacture of liquor
sale of a real property. The Court explained that “the installation of the sawmill and soft drinks, though movable in nature, are immobilized because
machineries in the building of the Golden Pacific Sawmill, Inc., for use in
the sawing of logs carried on in said building, the same became a necessary 77
Mindanao Bus Co. v. City Assessor and Treasurer, 6 SCRA 197, 200 (1962).
and permanent part of the building or real estate on which the same was 78
Id.
constructed, converting the said machineries and equipments into real estate 79
Id.
within the meaning of Article 415(5) of the Civil Code of the Philippines.” 80
Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 37 38 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

they are essential to said industries; but the delivery trucks and adding business, according to the Court, “is not carried on in a building or
machines which they usually own and use and are found within their permanently on a piece of land,” as demanded by law. Likewise, in
industrial compounds are merely incidentals and retain their movable the Board of Assessment Appeals case,83 the Court held that the steel
nature.81 towers do not fall under paragraph 5 of Article 415 for they are not
machineries, receptacles, instruments or implements, and even if they
Mindanao Bus Co. v. City Assessor and Treasurer were, the Court declared that “they are not intended for industry or
6 SCRA 197 (1962) works on the land” since the Manila Electric Company “is not engaged
In this case, the City Assessor of Cagayan de Oro City assessed a realty in an industry or works on the land in which the steel supports or towers
tax on several equipment and machineries of Mindanao Bus Co., a company are constructed.”
engaged in the transportation business. These equipment were placed on
wooden or cement platforms and can be moved around in the bus company’s [8.7] Application of the Doctrine of Estoppel in Article 415(5)
repair shop. The bus company appealed the assessment to the Board of Tax The doctrine of estoppel was likewise applied by the Supreme
Appeals on the ground that the same are not realty. The Board of Tax Appeals of
Court with respect to properties which are considered immobilized by
the City, however, sustained the city assessor. Thus, the bus company appealed
to the Court of Tax Appeals, which likewise sustained the city assessor. In reason of its destination or purpose under paragraph 5 of Article 415.
reversing the decision of the Court of Tax Appeals, thereby holding that the In Serg’s Products, Inc. v. PCI Leasing and Finance, Inc.,84 the Court
equipment in question are not real property, the Supreme Court distinguished held that the machines therein are proper subjects of a writ of replevin,85
between principal and essential elements of the industry from those that are although they are essential and principal elements of the industry
merely incidental. According to the Court, in order that movable equipments because the parties have treated the same as personal property.
to be immobilized in contemplation of the law they must first be “essential
and principal elements of an industry or works without which such industry In the Serg’s Products case, Serg’s Products Inc. (SPI) and
or works would be unable to function or carry on the industrial purpose for PCI Leasing and Finance, Inc. (PCI) entered into a lease agreement
which it was established.” In this case, the tools and equipment in question are providing that the machines in question were to be considered as
by their nature, not essential and principal elements of Mindanao Bus Co.’s personal property, although the same were essential and principal
business of transporting passengers and cargoes by motor trucks. They are elements in the chocolate-making business of SPI. Subsequently, PCI
merely incidentals — acquired as movables and used only for expediency to filed a complaint against SPI for sum of money, with an application for
facilitate and/or improve its service. Even without such stools and equipments, a writ of replevin. The sheriff then proceeded to seize the machines in
its business may be carried on. As explained by the Court, “the transportation question. SPI contended that the subject machines used in their factory
business could be carried on without the repair or service shop if its rolling were not proper subjects of the writ of replevin because they were in
equipment is repaired or serviced in another shop belonging to another.”
fact real property having become immobilized by destination. SPI went
to the Court of Appeals via an original action for certiorari. The Court
[8.6] The Industry or Works Must Be Carried On In A Building or of Appeals, however, sustained the writ and held that the machines were
On A Piece of Land personal property. Thus, SPI appealed to the Supreme Court. In holding
Aside from the element of essentiality, paragraph 5 of Article 415 that the machines are proper subjects of the writ of replevin even if they
also requires that the industry or works be carried on in a building or on are considered immobilized under paragraph 5 of Article 415, the Court
a piece of land.82 In the Mindanao Bus case, for example, the equipments explained that the lease agreement, of which SPI is a party, clearly
in question were not deemed real property because the transportation
83
Supra, 74.
84
338 SCRA 499 (2000).
81 85
Id. Note: Under the Rules of Court, writs of replevin are issued for the recovery of personal
82
Id., 201. property only.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 39 40 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

provides that the machines in question are personal property, hence, SPI estoppel was not applied because the interest of a third party (Golden
is estopped from denying the characterization of the subject machines Pacific Sawmill, Inc.) would be prejudiced. And besides, the holding in
as personal property. The Court cautioned, however, that its holding the Serg’s Products case that the machines should be deemed personal
— that the machines should be deemed personal property pursuant to property is good only insofar as the contracting parties to the Lease
the Lease Agreement — is good only insofar as the contracting parties Agreement are concerned. In the Ago case, Golden Pacific was not a
are concerned. party to the chattel contract, hence, it was not bound by the agreement
The Serg’s Products case must be distinguished from Ago v. of the parties therein treating the machines as personal property.
Court of Appeals.86 In the latter case, Ago executed a chattel mortgage
contract in favor of Grace Park Engineering over certain machineries Makati Leasing and Finance Corp. v. Wearever Textile Mills, Inc.
and equipment which the former purchased from the latter to secure 122 SCRA 294 (1983)
the payment of the balance of the price remaining unpaid. When In this case, Wearever Textile Mills, Inc. executed a chattel mortgage
Ago defaulted in his payments, Grace Park instituted extrajudicial contract in favor of Makati Leasing and Finance Corporation covering certain
foreclosure proceedings of the mortgage. To enjoin said foreclosure, raw materials and machinery. Upon default, Makati Leasing filed a petition for
Ago instituted an action against Grace Park. In the said case, Ago and judicial foreclosure of the properties mortgaged. Acting on Makati Leasing’s
Grace Park arrived at a compromise agreement. When Ago violated application for replevin, the lower court issued a writ of seizure. Pursuant
the compromise agreement, Grace Park obtained from the court a writ thereto, the sheriff enforcing the seizure order seized the machinery subject
of execution. Pursuant to said writ, the sheriff levied upon and ordered matter of the mortgage. In a petition for certiorari and prohibition, the Court of
the sale of the sawmill machineries and equipments in question. The Appeals ordered the return of the machinery on the ground that the same can-
sheriff sold the machineries and equipments without prior publication not be the subject of replevin because it is a real property pursuant to Article
415 of the new Civil Code, the same being attached to the ground by means of
of the notice of sale. It turned out, however, that after purchasing the
bolts and the only way to remove it from Wearever textile’s plant would be to
machineries and equipments from Grace Park, the same had already
drill out or destroy the concrete floor. When the motion for reconsideration of
been assigned by Ago to Golden Pacific Sawmill Inc. in payment of its Makati Leasing was denied by the Court of Appeals, Makati Leasing elevated
subscription to the shares of stocks of said corporation. Thereafter, the the matter to the Supreme Court. In reversing the decision of the Court of Ap-
sawmill machineries and equipments were installed in a building and peals and reinstating the decision of the lower court, the Court explained —
permanently attached to the ground for use in the sawing of logs carried
Examining the records of the instant case, We find no
on in said building by Golden Pacific. In declaring the sale made by
logical justification to exclude the rule out, as the appellate court
the sheriff as null and void because of the absence of publication of the
did, the present case from the application of the above-quoted
notice of sale, the Supreme Court explained that “by the installation of pronouncement. If a house of strong materials, like what was
the sawmill machineries in the building of the Golden Pacific Sawmill, involved in the above Tumalad case, may be considered as personal
Inc., for use in the sawing of logs carried on in said building, the same property for purposes of executing a chattel mortgage thereon as
became a necessary and permanent part of the building or real estate long as the parties to the contract so agree and no innocent third
on which the same was constructed, converting the said machineries party will be prejudiced thereby, there is absolutely no reason
and equipments into real estate within the meaning of Article 415(5) of why a machinery, which is movable in its nature and becomes
the Civil Code of the Philippines.” immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is
Note that in the Ago case, even if the machineries in question were estopped from the denying the existence of the chattel mortgage.
made the subject matter of a chattel mortgage contract, the doctrine of
In rejecting petitioner’s assertion on the applicability of the
Tumalad doctrine, the Court lays stress on the fact that the house
86
Supra. involved therein was built on a land that did not belong to the owner
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 41 42 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

of such house. But the law makes no distinction with respect to the owner to use them on the tenement is beyond doubt.87 Hence, fertilizers
ownership of the land on which the house is built and We should kept in the farmhouse are not immovable.88
not lay down distinctions not contemplated by law.
It must be pointed out that the characterization by the private § 11. Real Property under Article 415(8)
respondent is indicative of the intention and impresses upon the “Mines, quarries, slag dumps, waters ...”
property the character determined by the parties. As stated in
Standard Oil Co. of New York v. Jaramillo, 44 Phil. 630, it is [11.1] Mines, Quarries and Slag Dumps
undeniable that the parties to a contract may by agreement treat as
personal property that which by nature would be a real property, as They are considered immovable property “while the matter thereof
long as no interest of third parties would be prejudiced thereby. forms part of the bed,” that is, the matter thereof remains unsevered
from the soil. Once separated they are no longer mines but minerals and
are considered as personal property.
§ 9. Real property under Article 415(6)
[11.2] Waters
“Animal houses, pigeon-houses, etc. …”
The waters, either running or stagnant, referred to here are those
[9.1] Animal Houses and Pigeon Houses, Etc. which are found in their natural beds such as flowing streams, rivers or
The structures mentioned in paragraph 6 are immovable by canals.
destination and the Code requires that they be placed by the owner of
§ 12. Real Property under Article 415(9): “Docks and Structures”
the land in order to acquire the same nature or consideration of real
property. Even if not placed by the owner, however, such structures may They are considered as immovables, though floating, as long as
still qualify as real property under paragraph 1 of Article 415, being a they are intended by their nature and object to remain at a fixed place
construction attached to the soil, provided that such attachment must be on a river, lake, or coast.
of a permanent character.
In one case,89 the Provincial Assessor of Batangas City assessed
[9.2] Animals Included a real estate tax on the power barges operated by FELS Energy, Inc.,
which power barges were moored at Balayan Bay in Calaca, Batangas.
It is worthy to note that animals in the pigeon-houses, beehives, On the question of whether the power barges are real property, the
fishponds and breeding places mentioned in paragraph 6 of Article 415 Court held that they are so and are categorized as immovable property
are likewise considered as real property. However, these animals will by destination pursuant to the provisions of Article 415(9) of the Civil
be considered as personal property under laws which so provide for Code.
them pursuant to the second paragraph of Article 416 — referring to
“real property which by any special provision of law is considered as § 13. Real Property under Article 415(10)
personal property.” Thus, the fish in fishponds will be considered as
[13.1] Rights as Property
personal property for purposes of theft under the Revised Penal Code.
As discussed in supra § 1.2, the concept of property extends to
§ 10. Real Property under Article 415(7): “Fertilizers” rights provided that the same is patrimonial in nature. Patrimonial
These are immovables by destination. The fertilizers must actually
be used on the land because it is only then that the intention of the 87
II Tolentino, Civil Code, 1982 ed., p. 20.
88
3 Manresa 32.
89
FELS Energy, Inc. v. The Province of Batangas, et al., G.R. No. 168557, Feb. 16, 2007.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 43 44 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

rights, in turn, are either (1) real — the power belonging to a person The various decisions of the Supreme Court on the above question
over a specific thing, without a passive subject individually determined are not source of enlightenment but even add to the confusion because
against whom such right may be personally exercised; it is enforceable there were cases decided solely on the basis of Article 415 of the New
against the whole world; or (2) personal — the power belonging to one Civil Code91 but there were also cases decided on the basis of the
person to demand of another, as a definite passive subject, the fulfillment provisions of the Assessment Law (Commonwealth Act No. 470) and
of a prestation to give, to do or not to do. the Real Property Tax Code (Presidential Decree No. 464).92

[13.2] How Rights Classified In Benguet Corporation v. Central Board of Assessment Appeals,93
the Supreme Court even recognized the fact that the Real Property Tax
Whether a right is personal or real property shall depend on: (1) Code does not define “real property” but simply says that the realty
whether it is a personal or real right, and (2) whether the subject matter tax is imposed on “real property, such as lands, buildings, machinery
thereof is a personal or real property. Except for rights arising from and other improvements affixed or attached to real property.” The same
contracts for public works which are classified as real property under observation was arrived at by the Court in the Board of Assessment
paragraph 10 of Article 415, all personal rights will fall under personal Appeals v. Manila Electric Co.,94 where it was held that the tax law did
property regardless of the subject matter thereof. With respect to real not provide for a definition of real property.
rights, however, the classification thereof will depend on its subject
matter. If the subject matter of the real right is a real property, then such In the Board of Assessment case, it was held that that the steel
real right is a real property. This is clear from paragraph 10 of Article 415 supports or towers in question were not subject to realty tax because
which classifies as real property “real rights over immovable property.” they were not real property under either paragraphs (1), (3) or (5) of
Thus, a real estate mortgage is a real right and a real property by itself.90 Article 415 of the New Civil Code. In the Mindanao Bus case, the Court
On the other hand, if the subject matter of the real right is a personal likewise held that the imposition of realty tax on the maintenance and
property, as in the case of chattel mortgage, such real right is classified repair equipment in question was not proper because the properties
as personal property. involved were not real property under paragraph (5) of Article 415.
In Meralco Securities Industrial Corp. v. CBAA,95 the Court, on the
§ 14. Definition of Real Property in Real Estate Taxation other hand, affirmed the propriety of the imposition of realty tax on
the pipeline system of Meralco Securities on the ground that the same
[14.1] Concept of Real Property in Realty Taxation
was considered a construction adhering to the soil, hence, real property
The area of real property taxation presents difficulty to the courts under paragraph (1) of Article 415.
on the matter of the classification of property for taxation purposes
In Manila Electric Co. v. CBAA,96 a case involving two storage
because there are highly controversial and borderline cases which do
tanks, the Court held that the imposition of real tax was proper even if
not fall squarely within the provisions of Article 415 of the New Civil
the storage tanks were not embedded in the land. The Court recognized
Code and yet, the property involved therein may rightfully be classified
as realty pursuant to existing tax laws. Hence, in the area of real property
taxation, there is a nagging question as to which law shall govern the 91
Mindanao Bus Co. v. City Assessor and Treasurer, 6 SCRA 197 (1962); Board of Assess-
classification of property for taxation purposes — is it the provisions of ment Appeals v. Manila Electric Co., 10 SCRA 68 (1964) and Manila Securities Industrial Corp.
the Civil Code or the provisions of tax laws? v. Central Board of Assessment Appeals, 114 SCRA 261 (1982).
92
Caltex (Phils.), Inc. v. CBAA, 114 SCRA 296 (1982) and Manila Electric Co. v. CBAA,
114 SCRA 273 (1982).
93
G.R. No. 106041, Jan. 29, 1993.
94
Supra.
90 95
MBTC v. Alejo, 364 SCRA 812, 819 (2001); see also Hongkong & Shanghai Bank v. Supra.
96
Aldecoa & Co., 30 Phil. 255, 273. Supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 45 46 PROPERTY
CLASSIFICATION OF PROPERTY
Immovable Property

that this was a borderline case which could not be decided solely on the manner which drastically departs from the provisions of Article 415 of
basis of Article 415 but by the pertinent provisions of the Assessment the Civil Code.
Law (Commonwealth Act No. 470) and the Real Property Tax Code
For example, Section 3 of the Real Property Tax Code defines
(Presidential Decree No. 464).97 In Caltex (Phils.), Inc. v. CBAA,
“machinery,” as follows:
involving equipment and machinery permanently affixed by Caltex to
its gas station rented from a certain lessor, the Court held that the issue m) “Machinery” shall embrace machines, mechanical
of whether the said equipment and machinery are subject to realty tax contrivances, instruments, appliances and apparatus attached
should be resolved primarily under the provisions of the Assessment to the real estate. It includes the physical facilities available
Law and the Real Property Tax Code. In these two cases, had the Court for production, as well as the installations and appurtenant
applied the provisions of Article 415, the properties therein involved service facilities, together with all other equipment designed
would not be classified as real property. In applying the provisions of for or essential to its manufacturing, industrial or agricultural
the tax laws in lieu of Article 415, the Court justified the same on the purposes.
basis of its dictum in Standard Oil Co. of New York v. Jaramillo98 — Under the Title on Real Property Taxation in the Local Government
“it is a familiar phenomenon to see things classed as real property for Code of 1991, the term “machinery” is defined, thus:
purposes of taxation which on general principle might be considered
personal property.” (o) “Machinery” embraces machines, equipment,
mechanical contrivances, instruments, appliances or appara-
In the light of the foregoing cases, it appears that in real property tus which may or may not be attached, permanently or tem-
taxation, the classification of property for taxation purposes is not the porarily, to the real property. It includes the physical facili-
exclusive domain of the Civil Code, especially in borderline cases such ties for production, the installations and appurtenant service,
as that of Manila Electric Co. v. CBAA and Caltex (Phils.), Inc. v. CBAA, facilities, those which are mobile, self-powered or self-pro-
where the provisions of existing tax laws were primarily applied. In pelled, and those not permanently attached to the real prop-
these borderline cases, the property involve is usually either machinery erty which are actually, directly and exclusively used to meet
or improvements. It is usually with respect to these two kinds of property the needs of the particular industry, business or activity and
that a problem may arise in the matter of their classification for taxation which by their very nature and purpose are designed for, or
purposes because existing tax laws may provide for specific definitions necessary to its manufacturing, mining, logging, commer-
of what may be considered as “machinery” or “improvement.” cial, industrial or agricultural purposes;
[14.2] Machinery and Improvements Subject to Realty Tax Note that both under the old Real Property Tax Code and the
[14.2.1] Machinery present law on Real Property Taxation, in order to classify “machinery”
as realty for taxation purposes, what is important is that the same
The old Real Property Tax Code and the present provisions on Real must be “essential” or “necessary” to the operation of the business or
Property Taxation under the Local Government Code of 1991 (R.A. No. industry. If so, it is classified as realty subject to real property tax, even
7160), both imposed realty tax on “land, building, machinery, and other if the other requirements of paragraph (5) of Article 415 of the New
improvements” which are not specifically exempted therein. However, Civil Code may not be present. Thus, in Caltex (Phils.), Inc. v. CBAA,
both tax laws define the terms “machinery” and “improvement” in a the equipment and machinery therein involved were held to be subject
to realty tax because they “are necessary to the operation of the gas
97
The precursor of the present Real Property Taxation under Title 2, Book II of the Local station, for without them the gas station would be useless.”
Government Code of 1991 (R.A. No. 7160).
98
44 Phil. 630, 633.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 47 48 PROPERTY


CLASSIFICATION OF PROPERTY
Immovable Property

[14.2.2] “Improvements” constructed, arguing that the dam cannot be subjected to realty tax as
The old Real Property Tax Code99 defined a taxable improvement, a separate and independent property because it does not constitute an
as follows: “assessable improvement” on the mine. In sustaining the imposition of a
realty tax over the tailings dam, the Court held that the dam falls within
“k) Improvement is a valuable addition made to the definition of an “improvement” because it is permanent in character
property or an amelioration in its condition, amounting to and it enhances both the value and utility of petitioner’s mine.
more than mere repairs or replacement of waste, costing
The same ruling was made by the Supreme Court in the case of
labor or capital and intended to enhance its value, beauty or
Manila Electric Co. v. CBAA,105 involving two storage tanks, which while
utility or to adapt it for new or further purposes.”
not embedded in the land were nonetheless considered as improvements
A similar definition is to be found in the present law on Real on the land because (1) they enhanced its utility and rendered it useful
Property Taxation:100 to the oil industry and (2) they have been installed with some degree of
permanence as receptacles for the considerable quantities of oil needed
“(m) Improvement is a valuable addition made to a
by MERALCO for its operations.
property or an amelioration in its condition, amounting to
more than a mere repair or replacement of parts involving
capital expenditures and labor, which is intended to enhance Chapter 2
its value, beauty or utility or to adapt it for new or further
purposes.” MOVABLE PROPERTY

As to whether a structure constitutes an improvement so as to Art. 416. The following things are deemed to be personal property:
partake of the status of realty, according to the Supreme Court, would (1) Those movables susceptible of appropriation which are not
depend upon the degree of permanence intended in its construction included in the preceding article;
and use.101 The expression “permanent” as applied to an improvement (2) Real property which by any special provision of law is consid-
does not imply that the improvement must be used perpetually but ered as personalty;
only until the purpose to which the principal realty is devoted has been (3) Forces of nature which are brought under control by science;
accomplished.102 It is sufficient that the improvement is intended to and
remain as long as the land to which it is annexed is still used for the (4) In general, all things which can be transported from place to
said purpose.103 place without impairment of the real property to which they are fixed.
(335a)
In addition, the tax laws require that the structure must be such that
Art. 417. The following are also considered as personal property:
it enhances the value and utility of the property to which it is annexed.
(1) Obligations and actions which have for their object movables
In the case of Benguet Corp. v. CBAA, et al.,104 the petitioner or demandable sums; and
questioned the imposition of real estate taxes on the tailings dam it (2) Shares of stock of agricultural, commercial and industrial enti-
ties, although they may have real estate. (336a)

99
See Sec. 3(k), Real Property Tax Code.
100
See Sec. 199(m), R.A. No. 7160.
101
Benguet Corp. v. CBAA, et al., G.R. No. 106041, Jan. 29, 1993.
102
Id.
103
Id.
104 105
Supra. Supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 49 50 PROPERTY
CLASSIFICATION OF PROPERTY
Movable Property

§ 15. Movable Property [15.3] Realty Considered as Personalty By Special Provisions of


Law
[15.1] No Precise Definition of the Term
As discussed in supra §§ 5.2 and 9.2, there are certain properties
The Civil Code does not likewise define the term “personal” or
classified under Article 415 of the Code as real property which may, by
“movable” property. As in the case of “real” or “immovable” property,
special provision of law, be considered as personal property for purposes
the Code simply enumerates in Articles 416 and 417 thereof what are
of the application of the said special provision of law. In applying the
to be considered as “personal” property. Note that under our law, the
provisions of the Revised Penal Code for the commission of the crime
meaning and application of the term “personal” property depends
of theft, for example, the animals in the animal houses referred to in
upon the meaning and application which our law gives to the term
paragraph 6 of Article 416 will be considered as personal property.
“real” property. Thus, under our law, all properties which are not real
Also, for purposes of attachment, execution and the Chattel Mortgage
are personal. Hence, while certain property may, by its nature, be
Law, ungathered fruits referred to in the second paragraph of Article
moved from one place to another, it will not be considered as movable
415 shall be treated as personal property. To a certain extent, therefore,
property if it is classified as immovable property under the provisions
the provision of the second paragraph of Article 416 is an attempt to
of Article 415 because of the purpose for which it has been placed in an
qualify the rules outlined in Article 415 of the Code.
immovable, in which case, it shall partake of the nature of the latter and
shall be classified as an immovable property by destination. [15.4] Forces of Nature
[15.2] What May Be Considered “Movable” Property, In General Paragraph (3) of Article 416 is an attempt to clarify the rule
outlined in Article 414 that only things susceptible of appropriation
In general, all things susceptible of appropriation which can be
are considered as property. The forces of nature in their original state
transported from place to place without impairment of the real property
are not, ordinarily, subject to appropriation because of the degree of
to which they are fixed106 and not included in the enumeration in Article
difficulty in appropriating them. However, paragraph (3) of Article 416
415107 are classified as “personal” or “movable” property. By way of
clarifies that if these forces of nature are brought under the control of
example: if certain machineries for use in an industry or works are
man through the help of science, thereby becoming appropriable, they
placed on the tenement not by the owner of the tenement and they are not
are now considered as property and classified as personal property.
attached to the tenement in a fixed manner but can, in fact, be separated
Hence, gas108 and electricity109 are considered personal property under
therefrom without causing substantial injury, they are considered as
this provision.
movable property. Note that by their nature, these machineries can be
transported from place to place and they do not become immobilized, [15.5] Chose in Action
either by reason of incorporation (under Article 415[3]) because they
can be separated from the tenement without causing substantial injury A chose in action is personal property110 and it is an intangible
or by reason of destination (under Article 415[5]) because they are not or incorporeal right.111 A “chose in action” means, literally, a thing in
placed on the tenement by its owner, which is a requirement under this action,112 and is the right of bringing an action,113 or a right to recover a
paragraph for the movable to be immobilized.

108
US v. Tambunting, 41 Phil. 364.
109
US v. Carlos, 21 Phil. 553.
110
Art. 417(1), NCC; Ark. – Gregory v. Colvin, 363 S.W. 2d 539, 540, 235 Ark. 1007.
111
Tex. – Browne v. King, Civ. App., 196 S.W. 884, affirmed 235 S.W. 522, 111 Tex. 330.
106 112
Art. 416(4), NCC. Gregory v. Colvin, supra.
107 113
Art. 416(1), NCC. Id.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 51 52 PROPERTY


CLASSIFICATION OF PROPERTY
Movable Property

debt or money,114 or a right or proceeding in a court of law to procure the [16.2] Distinguished From Fungible and Non-Fungible
payment of a sum of money,115 or a right to recover a personal chattel or Aside from the classification provided in Article 418 of the Civil
a sum of money by action.116 As discussed in supra § 13.2, since a chose Code, movables may likewise be classified into fungibles or non-
in action is merely a personal right, it is to be classified as a personal fungibles. In classifying movables into consumable or non-consumable,
property. the basis of the classification is the very nature of the corporeal object
[15.6] Obligations In General itself. On the other hand, the basis of the classification of movables
into fungible or non-fungible is simply the intention of the parties. The
Every obligation creates a personal right on the part of the credi- movable is classified as fungible if, by the intention of the parties, it
tor to demand for its fulfillment or performance. The right to demand can be replaced by another of the same kind; otherwise, it is a non-
for the performance of the obligation is, by itself, a property. Since the fungible.
right to demand the performance of the obligation is simply a personal
right on the part of the creditor, such right is classified as personal prop-
erty pursuant to the discussion in supra § 13.2. Chapter 3

Art. 418. Movable property is either consumable or non-consum-


PROPERTY IN RELATION TO THE PERSON
able. To the first class belong those movables which cannot be used in a TO WHOM IT BELONGS
manner appropriate to their without their being consumed; to the second
class belong all the others. (337)
Art. 419. Property is either of public dominion or of private owner-
ship. (338)
§ 16. Consumable and Non-consumable
[16.1] Consumable and Non-Consumable § 17. Public Dominion and Private Ownership
The classification of property into consumable or non-consumable [17.1] Public Dominion and Private Ownership
applies only to movable property and does not find application to From the point of view of ownership, property is classified either
immovable property. In addition, such classification does not find as that of public dominion or that of private ownership.117 However, this
application to all kinds of movable property but only to those which classification is not complete and accurate since the Civil Code fails to
are corporeal in nature. As defined, a consumable is a movable which consider the basic difference between patrimonial property and ordinary
cannot be used in a manner appropriate to its nature without itself private property. The Code seems to suggest that those properties of
being consumed. For example, a cigarette cannot be used in a manner the State which are called “patrimonial” are in equal footing with
appropriate to its nature, i.e., for smoking, without itself being consumed. properties of private ownership. But this should not be the case. As will
A non-consumable, on the other hand, is a movable which can be used be explained in infra § 23.3, patrimonial properties of the State are not
in a manner appropriate to its nature without itself being consumed. An exactly in the same category as ordinary private properties. The latter
example of a non-consumable is table which can be used in the manner can be acquired thru adverse possession while the adverse possession
appropriate to its nature and, yet, it will not be consumed. of the former cannot ipso facto ripen into ownership as it is an iron-clad
dictum that prescription can never lie against the State.118

114
Ill. –– People, for Use of Vancil Motor Co. v. Weaver, 40 N.E. 2d 83, 313 Ill. App. 317.
115
N.Y. –– Niles v. Mathusa, 47 N.Y.S. 38, 20 App. Div. 483, affirmed 57 N.Y. 184, 162
117
N.Y. 546. Art. 419, NCC.
116 118
Ala. –– Peavy Lumber Co. v. Murchison, 130 So. 2d. 338, 272 Ala. 251. Alonso v. Cebu Country Club, Inc., 417 SCRA 115, 127.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 53 54 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

[17.2] Classification of Property From the Point of View of Owner- needs, and resides in the social group.”124 Viewed in this light, the State
ship holds these properties not in the concept of an owner125 but only in
From the viewpoint of ownership, the Civil Code classifies prop- consequence of its territorial integrity.126 Hence, the relation of the State
erties, as follows: (1) in relation to the State, its properties are either of to these properties arises from the fact that the State is the juridical
public dominion or patrimonial properties;119 (2) in relation to the politi- representative of the social group, and as such it takes care of them,
cal subdivisions (provinces, cities and municipalities), their properties preserves them and regulates their use for the general welfare.127
are either of public dominion (for public use) or patrimonial proper- The term public dominion is to be viewed as referring to public
ties;120 (3) in relation to persons and entities other than the State and its ownership in relation to the properties of the State intended for public
political subdivisions (or private persons, either individually or collec- use or for some public service mentioned in paragraph numbers (1) and
tively), their properties are denominated as that of private ownership.121 (2) of Article 420. Since the ownership of these properties belong to the
public in general and not to the State, the latter may not make them the
Art. 420. The following things are property of public dominion: object of commerce unless they are properly converted into patrimonial
(1) Those intended for public use, such as roads, canals, rivers, properties pursuant to the provisions of Article 422 of the New Civil
torrents, ports and bridges constructed by the State, banks, shores, road- Code.
steads, and others of similar character;
[18.3] “Public Dominion,” as Referring To “State Ownership”
(2) Those which belongs to the State, without being for public
use, and are intended for some public service or for the development of In another sense, the term “public dominion” may also mean
the national wealth. (339a)
properties or things held by the State by regalian right.128 Under Section
2 of Article XII of the 1987 Philippine Constitution, which reaffirms the
§ 18. Property of State: Public Dominion
regalian doctrine or jura regalia earlier enshrined in the 1935 Philippine
[18.1] Kinds of Property of Public Dominion Pertaining to the Constitution, all lands of the public domain as well as all natural
State resources are owned by the State.129 While these properties are owned
In relation to the State, there are three kinds of property of public by the State, they remain to be part of the public dominion. Hence, in
dominion: (1) those that are intended for public use; (2) those that are Chavez v. Public Estates Authority,130 for example, the Supreme Court
intended for some public service; and (3) those that are intended for the held that submerged lands are part of the State’s inalienable natural
development of national wealth.122 resources and classified as property of public dominion.

[18.2] “Public Dominion,” as Referring To “Public Ownership”


In a sense, the term “public dominion” means ownership by the 124
Laurel v. Garcia, 187 SCRA 797, 808 (1990), citing 3 Manresa, 66-69; Tolentino, Com-
public in general123 or “public ownership.” As used in this sense, the mentaries on the Civil Code of the Philippines, 1963 Edition, Vol. II, p. 26.
125
ownership referred to is a “special collective ownership for the general See II Tolentino, Civil Code of the Philippines, 1992 ed., p. 30.
126
Caguioa, Civil Code of the Philippines, Vol. II, 1966 ed., p. 30. (Note: According to
use and enjoyment, an application to the satisfaction of collective Justice Fernando in Lee Hong Hok v. David, 48 SCRA 372, 377 [1972], the government authority
possessed by the state which is appropriately embraced in the concept of sovereignty comes under
the heading of imperium.)
119 127
See Arts. 420 and 421, NCC. See II Tolentino, Civil Code of the Philippines, 1992 ed., p. 30.
120 128
See Arts. 423 and 424, NCC. Republic v. Alagad, 169 SCRA 455, 461 (1989).
121 129
See Art. 425, NCC. The capacity of the State to own or acquire property is the state’s power of dominium.
122
Art. 420, NCC. (Separate Opinion of J. Puno in Cruz v. Secretary of Environment and Natural Resources, 347
123
Note that the old Civil Code used the term “public ownership” instead of public SCRA 128, 165).
130
dominion. 415 SCRA 403 (2003).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 55 56 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

[18.4] “Public Ownership” Distinguished From “State Ownership” Manila Lodge No. 761 v. Court of Appeals
73 SCRA 162 (1976)
Property of public dominion falling under the concept of State
ownership by virtue of regalian right must be distinguished from In 1905, the Philippine Commission enacted Act No. 1360 authorizing
property of public dominion in the concept of public ownership. In the the City of Manila to reclaim a portion of the Manila Bay and the reclaimed
latter, not even the State may make them the object of commerce. Hence, area was to form part of the Luneta extension. The Act likewise provided that
the reclaimed area “shall be the property of the City of Manila.” The City of
they cannot be leased, donated, sold or be the object of any contract.131
Manila was likewise authorized to lease the northern side of the reclaimed
With respect to natural resources, they are not, however, totally outside area for a hotel site. Subsequently, the Philippine Commission passed Act No.
the commerce of man as the Constitution allows the State to enter into 1657, amending Act No. 1360, to authorized the City of Manila to lease or sell
co-production, joint venture or production-sharing agreements with the portion set aside as a hotel site. After the reclamation, the City of Manila
private individuals or corporations for their exploration, development sold a portion of the reclaimed land (located on the southern end) to Manila
and utilization.132 With respect to fishponds, for example, which are Lodge which, in turn, sold the same to Tarlac Development Corp. After such
likewise owned by the State,133 they may be leased although they may purchase, the City of Manila filed a petition in court for the re-annotation of
not be alienated. Under Section 45 of R.A. No. 8550, otherwise known its right to repurchase the property sold to Manila Lodge, which petition was
granted by the court. Thereafter, the TDC filed an action to be declared the
as “The Philippine Fisheries Code of 1998,” public lands such as tidal
purchaser of the property in good faith. After trial, the trial court found the
swamps, mangroves, marshes, foreshore lands and ponds suitable for subject land to be part of the “public park or plaza” and, therefore, part of the
fishery operations shall not be disposed or alienated but they may be the public dominion. Consequently, the court declared the sale of the subject land
subject matter of a fishpond lease agreement. by the City of Manila to Manila Lodge void. Both Manila Lodge and TDC
appealed from the said decision. One of the issues raised by the appellants was
[18.5] Intent to Devote, Sufficient that in order that the character of property for public use may be so attached
For a property of the State to fall under public dominion, it is to a plaza, the latter must be actually constructed or at least laid out as such.
They contended that the subject property was not yet constructed as a plaza
not necessary that the same be actually used for some public use or
or at least laid out as a plaza when it was sold by the City of Manila. On
for some public service. In the case of Manila Lodge No. 761 v. Court this particular issue, the Supreme Court held that in order to be property of
of Appeals,134 the Supreme Court clarified that in order to be property public dominion an intention to devote it to public use is sufficient. The Court
of public dominion an intention to devote it to public use is sufficient explained: “It is not necessary, therefore, that a plaza be already constructed
and it is not necessary that it must actually be used as such. Hence, it or laid out as a plaza in order that it be considered property for public use. It
matters not that the property is not actually devoted for public use or for is sufficient that it be intended to be such. In the case at bar, it has been shown
some public service.135 If the property has been intended for such use or that the intention of the lawmaking body in giving to the City of Manila the
service, and it has not been devoted to other uses and no measures have extension to the Luneta was not a grant to it of patrimonial property but a
grant for public use as a plaza.”
been adopted which amount to a withdrawal thereof from public use or
service, the same remains property of public dominion, the fact that it is
[18.6] Public Use and Public Service, Distinguished
not actually devoted for public use or service notwithstanding.136
In Villarico v. Sarmiento,137 the Supreme Court defined the term
“public use” as that “use which is not confined to privileged individuals,
131
Municipality of Cavite v. Rojas, 30 Phil. 602. but is open to the indefinite public.” Hence, properties for public use
132
See Sec. 2, Article XII of the 1987 Constitution. may be distinguished from properties intended for public service
133
Menchavez v. Teves, Jr., 449 SCRA 380, 391 (2005).
134
73 SCRA 162, 182-183 (1976).
in that the former may be used indiscriminately by the public while
135
Agripino Capitulo, et al. v. Alejo Aquino, No. 15488-R, (CA) 53 O.G. 1477, November
19, 1956.
136 137
Ibid. 442 SCRA 110, 115 (2004), citing US v. Tan Piaco, 40 Phil. 853, 856 (1920).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 57 58 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

the latter, although used for the benefit of the public, cannot be used (A) Roads
indiscriminately by anyone but only by those that are authorized by [19.2] Roads
proper authority.138
The “roads” referred to under Article 420(1) of the New Civil
§19. Property of Public Dominion: For Public Use Code are the national highways and roads constructed and maintained
by the national government through the Department of Public Works
[19.1] Enumeration of Properties of the State for “Public Use”
and Highways. Provincial, city and municipal roads and streets, on the
The first paragraph of Article 420 enumerates the properties of other hand, are properties of public dominion of the local government
public dominion which are intended for public use, as follows: “roads, unit concerned and are governed by Article 424 of the Civil Code and
canals, rivers, torrents, ports and bridges constructed by the State; the provisions of the Local Government Code.
banks, shores, roadsteads, and others of similar character.” Articles 5
and 6 of P.D. No. 1067, as amended, otherwise known as “The Water (B) Canals
Code of the Philippines,” add to the above enumeration, the following: [19.3] Canals
“Art. 5. The following belong to the State: A “canal” is usually an artificial waterway, drainage, irrigation
a.G Rivers and their natural beds; or navigation.139 In the case of Santos v. Moreno,140 the Supreme Court,
quoting Article 339(1) of the Spanish Civil Code of 1889,141 held that
b.G Continuous or intermittent waters of springs and brooks
“canals constructed by the State and devoted to public use are of public
running in their natural beds and the bed themselves;
ownership” (or of public dominion). Conversely, said the Court, “canals
c.G Natural lakes and lagoons; constructed by private persons within their private lands and devoted
exclusively for private use must be of private ownership.” In the Santos
d.G All other categories of surface waters such as water flowing
case, the canals involved were declared to be of private ownership since
over lands, water from rainfall whether natural or artificial,
and water from agriculture runoff, seepage and drainage; they were constructed by the owners of hacienda San Esteban for their
exclusive use and prohibited the public from using them.
e.G Atmospheric water;
In the case, however, of Mercado v. Municipal President of
f.G Subterranean or ground waters; and Macabebe,142 while the canal involved (Batasan-Limasan) was originally
g.G Seawater.” dug by the estate’s owner, the Supreme Court held that he had lost any
right over it by prescription since he allowed said canal to be used by the
“Art. 6. The following waters found on private lands also belong public for navigation and fishing purposes for a period of twenty-two
to the State: (22) years. In this case, the canal could have been of private ownership
a. Continuous or intermittent waters rising on such lands. had not its builder lost it by prescription.
b. Lakes and lagoons naturally occurring on such lands; In Bautista v. Alarcon,143 the plaintiff therein sought the injunction
against the defendants who allegedly constructed a dam across a public
c. Rain water falling on such lands;
d. Subterranean or ground waters; and 139
Magno v. Vargas, 54331-R, August 27, 1979.
140
21 SCRA 1141, 1166 (1967).
e. Waters in swamps and marshes.’’ 141
Which provisions were substantially reproduced in Article 420(1) of the new Civil
Code.
142
59 Phil. 592 (1934).
138 143
II Caguioa, Civil Code of the Philippines, 1966 ed., p. 31. 23 Phil. 631.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 59 60 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

canal which conveyed water from the Obando River to fishponds purposes, and it being also a fact that such was the condition of the
belonging to several persons. The canal was situated within a public creek at least since 1906 until it was closed in 1928, if the appellant
land. In sustaining the injunction granted by the lower court, the and her predecessors-in-interest had acquired any right to the creek
Supreme Court said: in question by virtue of excavations which they had made thereon,
they had lost such right through prescription, inasmuch as they
“No private person has a right to usurp possession of a failed to obtain, and in fact they have not obtained, the necessary
watercourse, branch of a river, or lake of the public domain authorization to devote it to their own use to the exclusion of all
and use, unless it shall have been proved that he constructed others. The use and enjoyment of a creek, as any other property
the same within property of his exclusive ownership, and susceptible of appropriation, may be acquired or lost through
such usurpation constitutes a violation of the legal provisions prescription, and the appellant and her predecessors in interest
certainly lost such right through the said cause, and they cannot
which explicitly exclude such waterways from the exclusive
now claim it exclusively for themselves after the general public
use or possession of a private party.” (Italics supplied) had been openly using the same from 1906 to 1928. xxx”
In view of the foregoing cases, the rule appears to be that if a canal
is constructed by private person within his private land and devoted it (C) Rivers
exclusively for private use, the same is of private ownership. However, [19.4] “River” is a Composite Term
if the canal is situated within a public property or the same is constructed
by the State and devoted to public use, such canal is property of public Although Article 420 of the New Civil Code speaks only of rivers
dominion. and banks, “rivers” is a composite term which includes: (1) the running
waters, (2) the bed, and (3) the banks.144 All these constitute the river.145
Mercado v. Municipal President of Macabebe Since a river is but one compound concept, it should have only one
59 Phil. 592 (1934) nature, i.e., it should either be totally public or completely private.
And since rivers are of public ownership, it is implicit that all the three
The predecessor-in-interest of the plaintiff was the owner of an hacienda
component elements be of the same nature also.146 However, to dispel
in which flowed a river and a creek near each other. The owner of the hacienda
made an excavation connecting these two bodies of water, constructing a sort of
all possible doubts, Article 420, paragraph 1 of the New Civil Code and
canal known as Batasan-Limasan. This canal was then used not only by residents Article 5, paragraph (a) of the Water Code of the Philippines, expressly
of the hacienda, but also by people of nearby barrios and municipalities as make all three elements properties of public dominion.
a means of communication in attending to their needs. This continued from
1906 to 1928, when the owner of the hacienda closed the two openings of the [19.5] Natural Bed of a River
Batasan-Limasan and converted it into a fish pond. The government ordered The bed of the river is also classified as property of the public
the removal of the dikes closing both ends of the Batasan-Limasan, and this dominion.147 In the case of Binalay v. Manalo,148 it was held that the
case was brought as an appeal from that order. In holding that the builder of the
buyer did not acquire private ownership of the bed of the eastern branch
canal lost it by prescription, the Supreme Court explained —
of the Cagayan River even if it was included in the deeds of absolute
“And even granting that the Batasan-Limasan creek acquired
the proportions which it had, before it was closed, as a result of
excavations made by laborers of the appellant’s predecessor-in- 144
Binalay v. Manalo, 195 SCRA 374, 384 (1991), citing Hilario v. City of Manila, 19
interest, it being a fact that, since the time it was opened as a water SCRA 931 (1967).
145
route between the Nasi River and Limasan creek, the owners thereof Hilario v. City of Manila, supra, p. 939.
146
Id.
as well as strangers, that is, both the residents of the hacienda and 147
Art. 502(1), NCC; Art. 5(a), Water Code of the Philippines; see also Binalay v. Manalo,
those of other nearby barrios and municipalities, had been using supra, 384; Republic v. CA, 132 SCRA 514 (1984).
it not only for their bancas to pass through but also for fishing 148
Supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 61 62 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

sale executed by the sellers since the sellers “could not have validly point of where the Cagayan River forks is at its ordinary depth, river
sold land that constituted property of public dominion.” water does not flow into the eastern branch. And while this condition
persists, the eastern bed is dry and is susceptible to cultivation. During
In Republic v. Court of Appeals,149 the Court ruled that the lower
the rainy season (September to December), however, the water level in
court cannot validly order the registration of two lots in the names of
the Cagayan River increases. As the river becomes swollen due to heavy
private respondents since these lots “were portions of the bed of the
rains, the unsurveyed area of Manalo’s property would be inundated
Meycauayan river and are therefore classified as property of the public
with water, causing the eastern bed to be covered with flowing river
domain under Article 420, paragraph 1 and Article 502, paragraph 1
waters.
of the Civil Code of the Philippines.”
On the question of whether the unsurveyed area of Manalo’s
[19.6] Extent of River Bed alleged property is part of the natural bed of the eastern branch of the
What is the extent of the river bed? Article 70 of the Law of Waters Cagayan River, the Supreme Court applied the provisions of Article
of August 3, 1866 defines the “natural bed” or “channel” of a creek or 70 of the Law of Waters of August 3, 1866 which defines the natural
river as “the ground covered by its waters during the highest floods.”150 bed or channel of a creek or river as the ground covered by its waters
The Supreme Court had the occasion to apply this provision in the case during the highest floods. According to the Court, the highest floods in
of Binalay.151 the eastern branch of the Cagayan River occur with the annual coming
of the rains as the river waters in their onward course cover the entire
In the above-mentioned case, Manalo purchased two parcels of depressed portion in Manalo’s property. As a consequence, the Supreme
land: (1) the first parcel, consisting of 8.65 hectares, was purchased from Court declared the regularly submerged portion or the eastern bed of the
Faustina Taccad; and (2) the second parcel, consisting of 1.80 hectares, Cagayan River to be property of public dominion.
was purchased from Gregorio Taguba. During the cadastral survey
conducted in Balug, Tumauini, Isabela on October 21, 1969, the two [19.7] Banks of Rivers
parcels of land purchased by Manalo were surveyed and consolidated
Riverbanks are expressly declared to be property of public
into one lot, designated as Lot No. 307, which contains a total area of
dominion in paragraph 1 of Article 420 of the New Civil Code. The
4.6849 hectares, broken down as follows: (1) the whole of 1.80 hectares
phrase “banks of a river” is understood to be those “lateral strips or
acquired from Taguba; and (2) 2.8489 hectares acquired from Taccad.
zones of its beds which are washed by the stream only during such high
As the survey was taken during the rainy season, a portion of the land
floods as do not cause inundations.”152 In other words, the banks refer
bought from Taccad then under water was left unsurveyed and was not
to the lateral lines or strips reached by the waters when the river is at
included in Lot 307. In this case, it appears that the Cagayan River forks
high tide.153
at a certain point to form two branches — the western and the eastern
— and then unites at the other end to form a narrow strip of land. The Applying the foregoing definition, the Supreme Court absolved the
eastern branch of the river cuts through the land of Manalo and is defendants in the case of Hilario v. City of Manila,154 from any liability
inundated with water only during the rainy season. It likewise appear to Hilario since according to the Court they were extracting gravel and
that the submerged or the unsurveyed portion of the land of Manalo is sand only from the banks of the San Mateo River — which constitute
the bed of the eastern branch of Cagayan River. For about eight months part of the public domain — and not from the property of Hilario. In
of the year (from January to August) when the level of the water at the
152
Hilario v. City of Manila, supra, 938, citing Art. 73 of the Law of Waters of August 3,
149
Supra. 1866.
150 153
cited in Binalay v. Manalo, supra, 382. Ibid., at 946.
151 154
Supra. Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 63 64 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

this case, Hilario sued the City of Manila and other defendants for Buildings are properties of public dominion and thus owned
indemnity for the sand and gravel extracted from the San Mateo River by the State or the Republic of the Philippines.
banks of the Hilario Estate. The Supreme Court held, however, that the
The Airport Lands and Buildings are devoted to public
defendants were extracting materials not from the property of Hilario
use because they are used by the public for international and
but only from the river banks which is property of public dominion.
domestic travel and transportation. The fact that the MIAA
[19.8] Accretion on Riverbanks collects terminal fees and other charges from the public
does not remove the character of the Airport Lands and
Accretions on river banks, however, belong to the owner of lands Buildings as properties for public use. The operation by the
adjoining the banks,155 provided that the deposit is due to the effects of the government of a tollway does not change the character of
current of the river.156 Where the deposit of land was not formed solely the road as one for public use. Someone must pay for the
by the natural effect of the water current of the river bordering said land maintenance of the road, either the public indirectly through
but is also the consequence of the direct and deliberate intervention of the taxes they pay the government, or only those among the
man, it is deemed a man-made accretion and, as such, part of the public public who actually use the road through the toll fees they
domain.157 pay upon using the road. The tollway system is even a more
efficient and equitable manner of taxing the public for the
(D) Ports
maintenance of public roads.
[19.9] Ports
The charging of fees to the public does not determine
The term “ports” in Article 420(1) of the New Civil Code includes the character of the property whether it is of public dominion
seaports and airports.158 The MIAA Airport Lands and Buildings or not. Article 420 of the Civil Code defines property of
constitute a “port” constructed by the State.159 Hence, they are properties public dominion as one ‘intended for public use.’ Even if the
of public dominion and thus owned by the State or the Republic of government collects toll fees, the road is still ‘intended for
the Philippines.160 In Manila International Airport Authority v. CA,161 the public use’ if anyone can use the road under the same terms
Court explained: and conditions as the rest of the public. The charging of fees,
“No one can dispute that properties of public dominion the limitation on the kind of vehicles that can use the road,
mentioned in Article 420 of the Civil Code, like ‘roads, the speed restrictions and other conditions for the use of the
canals, rivers, torrents, ports and bridges constructed by the road do not affect the public character of the road.”
State,’ are owned by the State. The term ‘ports’ includes
(E) Shores
seaports and airports. The MIAA Airport Lands and
Buildings constitute a ‘port’ constructed by the State. Under [19.10] Shore, Defined
Article 420 of the Civil Code, the MIAA Airport Lands and “Shore” is understood to be that space which is alternately covered
and uncovered by water with the movements of the tides.162 Its interior
155
Art. 457, NCC.
or terrestrial limit is the line reached by the highest equinoctial tides.163
156
Republic v. CA, 132 SCRA 514 (1984). Where the tides are not appreciable, the shore begins on the land-side at
157
Tiongco v. Director of Lands, 16 C.A. Rep. 211, cited in Vda. de Nazareno v. CA, 257
SCRA 589 (1996).
158 162
Manila International Airport Authority v. CA, 495 SCRA 591, 622. Art. 1, The Law of Waters of August 3, 1866, cited in Francisco v. Government of the
159
Id. P.I., 28 Phil. 505, 507 (1914) and Government of the Philippine Islands v. Cabañgis, 53 Phil. 112,
160
Id. 115 (1929).
161 163
Supra. Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 65 66 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

the line reached by the sea during ordinary storms or tempests.164 Thus, accretion on which, by the mandate of Article 84 of the Spanish law of
in Cagampang v. Morano,165 the Supreme Court held that the subject Waters of 1866, belongs to the owner of the land contiguous thereto.174
property is part of the shore and public property as the same is covered
by the highest tides from May to July and there is no showing that these (F) Foreshore Lands
tides are due to abnormal conditions. [19.13] Part of Public Dominion
[19.11] Shore, Property of Public Dominion Foreshore lands are part of the public dominion.175 The term
Shores are properties of public dominion. Thus, when the sea166
“foreshore land” was defined by the Court of Appeals in the case of
advances and private properties are permanently invaded by the waves, Hacut v. Director of Lands176 which involved a parcel of land along
the properties so invaded become part of the shore or beach and they Basilan Island. The appellate court, quoting from Bouvier’s Law
then pass to the public domain.167 The owner thus dispossessed does not Dictionary, defined “foreshore lands” as:
retain any right to the natural products resulting from their new nature; “that part of the land immediately in front of the shore;
it is a de facto case of eminent domain, and not subject to indemnity.168 the part which is between high and low water marks, and
This process whereby private property is converted into property for alternately covered with water and left dry by the flux and
public use through the natural action of the sea and the abandonment by reflux of the tides. It is indicated by a middle line between
the owner has been called “natural expropriation.”169 the highest and lowest tides.”177
[19.12] Accretions on Seashore In the two resolutions issued by the Supreme Court in 1965
Accretions and alluvial deposits caused by the action of the sea involving the Ponce cases,178 the Supreme Court had the occasion
are governed by Article 4 of the Spanish Law of Waters of 1866, an to define the term “foreshore lands” in relation to Republic Act No.
old but still valid law.170 Under said law, “lands added to the shores by 1899. The said Act, which was passed by Congress on June 22, 1957,
accretions and alluvial deposits caused by the action of the sea, form authorizes municipalities and chartered cities to undertake and carry
part of the public domain.” Since alluvial formation along the seashore out at their own expense the reclamation by dredging, filling or other
is part of the public domain, it is not open to acquisition by adverse means, of any “foreshore lands” bordering their respective territories.
possession by private persons.171 It is outside the commerce of man, The law, however, did not define the term foreshore lands. In these
unless otherwise declared by either the executive or legislative branch cases, the Supreme Court upheld the dictionary meaning of the term
of the government.172 The accretion on the foreshore of the Manila Bay, “foreshore lands” that the Court of Appeals adopted in the Hacut case.
the latter being an inlet or an arm of the sea, for example, is part of the In these cases, the City of Cebu entered into a reclamation contract with
public domain.173 On the other hand, the Laguna de Bay is a lake the the Cebu Development Corporation to reclaim foreshore land along
the coast of Cebu City pursuant to R.A. No. 1899. The Supreme Court
164
Id. declared that the authority to reclaim granted to chartered cities and
165
22 SCRA 1040 (1968). municipalities under R.A. No. 1899 is limited to foreshore lands only
166
Art. 420(1), NCC.
167
Government of the Philippine Islands v. Cabangis, supra, 115-116, cited in Republic v.
174
Court of Appeals, 281 SCRA 639, 655-656 (1997). Heirs of Emiliano Navarro v. IAC, supra, 90; citing Government of the P.I. v. Colegio de
168
Id. San Jose, 53 Phil. 423 (1929); Republic v. Court of Appeals, 131 SCRA 532 (1984); Republic v.
169
Caguioa, Civil Code of the Philippines, Vol. II, 1966 ed., p. 33. Alagad, 169 SCRA 455 (1989); and Meneses v. CA, 246 SCRA 162 (1995).
170 175
Heirs of Emiliano Navarro v. Intermediate Appellate Court, 268 SCRA 74 (1997). Republic v. CA, 281 SCRA 639 (1997).
171 176
De Buyser v. Director of Lands, 121 SCRA 13, 16 (1983). 49 O.G. No. 5, p. 1863 (1953).
172 177
Id., citing Ignacio v. Director of Lands, 108 Phil. 335. At p. 1865.
173 178
Heirs of Emiliano Navarro v. IAC, supra., citing Ignacio v. Director of Lands and Vale- Ponce v. Gomez, L-21870, February 3, 1965, and Ponce v. City of Cebu, L-22669, June
riano, 108 Phil. 335 (1960). 24, 1966.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 67 68 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

which, quoting Corpus Juris, is “that part of the land adjacent to the (G) Lakes
sea which is alternately covered and left dry by the ordinary flow of the [19.14] Ownership of Lakes
tides.” Thus, in the Ponce cases, the Supreme Court upheld the Cebu
City ordinance but only with respect to the reclamation of the foreshore Natural lakes and lagoons and their beds belong to the State181 and
areas, and nullified the same with respect to the submerged areas. are part of public dominion.182 Lakes and lagoons naturally occurring
on private lands also belong to the State.183 Hence, lakes and lagoons
In Republic v. Court of Appeals,179 the Supreme Court declared as developed by a private person on private lands are of private ownership.
invalid the ordinances passed by the Pasay City and the reclamation The Water Code of the Philippines, however, prohibits any person from
agreements it entered into with Republic Real Estate Corporation on developing a lake, stream or spring for recreational purposes without
the ground that the subject matter thereof were submerged lands and not first obtaining a permit from the National Water Resources Council.184
foreshore lands. The Court held that the term foreshore lands cannot be
unduly stretched to include the submerged areas. The Court reiterated The Laguna de Bay has long been recognized as a lake.185 As such,
what was said in the Ponce cases that the term “foreshore” refers to the accretion occurring therein, by mandate of Article 84 of the Spanish
Law of Waters of 1866, belongs to the owner of the land contiguous
“that part of the land adjacent to the sea which is alternately covered
thereto.186
and left dry by the ordinary flow of the tides.”
In Chavez v. Public Estates Authority,180 the Court declared as [19.15] Natural Bed of Lakes, Defined
invalid the joint venture agreement between Public Estates Authority What is the natural bed or basin of lakes? In the case of Republic
(PEA) and Amari Coastal Bay Development Corporation (Amari). v. Court of Appeals,187 the Supreme Court defined the extent of a lake
In said case, PEA entered into a joint venture agreement with Amari bed, as follows:
obligating itself to convey title and possession over 750 hectares of
land, 592.15 hectares or 78% of the total area are still submerged and “The natural bed or basin of lakes, ponds, or pools,
permanently under the waters of Manila Bay. Under the said agreement, is the ground covered by their waters when at their highest
the PEA conveyed to Amari the submerged lands even before their ordinary depth.”188
actual reclamation, although the documentation of the deed of transfer In Republic v. Court of Appeals, the Republic, thru the Director
and issuance of the certificates of title would be made only after of Lands, opposed the registration of a parcel of land with an area of
actual reclamation. A question arose with respect to the validity of this 17,311 square meters and situated near the shore of Laguna de Bay,
transaction. In declaring the contract to be invalid the Supreme Court
held: “Submerged lands, like the waters (sea or bay) above them, are 181
Art. 5(c), Water Code of the Philippines.
part of the State’s inalienable natural resources. Submerged lands are 182
Art. 502(4), NCC.
183
property of public dominion, absolutely inalienable and outside the Art. 6(b), Water Code of the Philippines. (Note: To this extent, the provision of Art.
503[2] of the NCC is deemed repealed. The repealing clause of the Water Code provides, in part:
commerce of man. This is also true with respect to foreshore lands. “Art. 100. The following laws, parts and/or provisions of laws are hereby repealed: a. The provi-
Any sale of submerged or foreshore lands is void being contrary to the sions of the Spanish Law on Waters of August 3, 1886, the Civil Code of the Philippines [RA
386] on ownership of waters, easements relating to waters, use of public waters and acquisitive
Constitution.” prescription on the use of waters, which are inconsistent with the provisions of this Code. xxx”)
184
Art. 41, Water Code of the Philippines.
185
Government of P.I. v. Colegio de San Jose, 53 Phil. 423 (1929); Republic v. Court of
Appeals, 131 SCRA 532 (1984); Republic v. Alagad, 169 SCRA 455 (1989).
186
Heirs of Emiliano Navarro v. IAC, supra, 90, citing Government of the P.I. v. Colegio de
San Jose, 53 Phil. 423 (1929); Republic v. Court of Appeals, 131 SCRA 532 (1984); Republic v.
Alagad, 169 SCRA 455 (1989); and Meneses v. CA, 246 SCRA 162 (1995).
179 187
299 SCRA 199 (1998). 131 SCRA 532 (1984).
180 188
415 SCRA 403 (2003). Citing Art. 74 of the Law of Waters of 1866.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 69 70 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

about twenty (20) meters therefrom, on the ground that such is part of acquisitive prescription,193 and, as public water, it cannot be registered
the public domain and therefore not registrable. The Director of Lands under the Torrens System in the name of any individual.194 It is included
contends that since the land sought to be registered is covered with in the phrase “others of similar character” in paragraph 1 of Article 420
water four to five months a year, the same is part of the lake bed of of the New Civil Code.195
Laguna de Bay, or is at least, a foreshore land. The rise in the water level
of the Laguna de Bay, as observed four to five months a year during the § 20. Property of Public Dominion: For Public Service
rainy season, is caused by the rains. It is the rains which bring about the All properties of the State that are devoted or intended for some
inundation of a portion of the land in question. Applying the provisions public service are likewise part of the public dominion.196 As earlier
of Article 74 of the Law of Waters of 1866, the Supreme Court held explained, these properties cannot be used indiscriminately by anyone
that since the rise in the water level which causes the submersion of the but only by those that are authorized by proper authority. A good example
land occurs during a shorter period (four to five months a year) than of a property falling under this category is the Roppongi property.197 The
the level of the water at which the land is completely dry, the latter Roppongi property is one of the four (4) properties in Japan acquired
should be considered as the “highest ordinary depth” of Laguna de Bay. by the Philippine government under the Reparations Agreement entered
Therefore, the Court concludes, the land sought to be registered is not into with Japan in 1956. Under the said agreement, the Roppongi
part of the bed or basin of Laguna de Bay, and therefore capable of property was specifically designated to house the Philippine Embassy.
registration as private property. As such, the nature of the Roppongi lot as property for public service
In Republic v. Alagad,189 the Supreme Court defined the highest is expressly spelled out.198 It is dictated by the terms of the Reparations
ordinary depth of the waters of the Laguna de Bay as the highest depth Agreement and the corresponding contract of procurement which bind
of the waters during the dry season or such depth being the regular, the Philippine government and the Japanese government.199 As property
common, natural, which occurs always or most of the time during of public dominion, the Roppongi lot is outside the commerce of men
the year. Otherwise stated, where the rise in water level is due to the and cannot be alienated.200
“extraordinary” action of nature, rainfall for instance, the portions § 21. Property of Public Dominion: For the Development of National
inundated thereby are not considered part of the bed or basin of the body Wealth
of water in question.190 It cannot therefore be said to be foreshore land
but land outside of the public dominion, and land capable of registration Property of public dominion pertaining and/or belonging to the
as private property.191 State refers not only to property devoted to public use or to some public
service, but also to property devoted to the development of the national
(H) “Others of Similar Character” wealth. This class of property constituted property of public dominion
although employed for some economic or commercial activity to
[19.16] Creeks
increase the national wealth.201
A creek is defined as a recess or arm extending from a river and
participating in the ebb and flow of the sea.192 It is a property belonging to
the public domain which is not susceptible to private appropriation and 193
Id., 471; see also Celestial v. Cachopero, 413 SCRA 469 and Usero v. CA, supra, 359.
194
Id., 471; see also Usero v. CA, supra, 359.
195
Usero v. CA, supra, 359.
189 196
169 SCRA 455, 463-464, citing Republic v. CA, supra. Art. 420(2), NCC.
190 197
Id., at 464. Laurel v. Garcia, 187 SCRA 797, 808 (1990).
191 198
Id. Id., 807.
192 199
Maneclang v. Intermediate Appellate Court, 161 SCRA 469, 471 (1988), citing Mercado Id., 807.
200
v. Municipal President of Macabebe, 59 Phil. 592 (1934); see also Maneclang v. IAC, 144 SCRA Id., 808.
201
553, 556 (1986); Usero v. Court of Appeals, 449 SCRA 352, 359 (2005). See Chavez v. Public Estates Authority, 384 SCRA 152, 192 (2002).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 71 72 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

[21.1] The Regalian Doctrine and State Ownership of Natural was an overwhelming sentiment in the Convention in favor
Resources of the principle of state ownership of natural resources and
Under the Regalian Doctrine, all lands not otherwise appearing the adoption of the Regalian doctrine. State ownership of
to be clearly within private ownership are presumed to belong to the natural resources was seen as a necessary starting point
State.202 to secure recognition of the state’s power to control their
disposition, exploitation, development, or utilization. The
The Spaniards first introduced the doctrine to the Philippines delegates to the Constitutional Convention very well knew
through the Laws of the Indies and the Royal Cedulas, specifically, Law that the concept of State ownership of land and natural
14, Title 12, Book 4 of the Novisima Recopilacion de Leyes de las Indias resources was introduced by the Spaniards, however, they
which laid the foundation that “all lands that were not acquired from were not certain whether it was continued and applied by the
the Government, either by purchase or by grant, belong to the public Americans. To remove all doubts, the Convention approved
domain.”203 Upon the Spanish conquest of the Philippines, ownership of the provision in the Constitution affirming the Regalian
all “lands, territories and possessions” in the Philippines passed to the doctrine.”
Spanish Crown.204
The 1987 Constitution reaffirmed the Regalian doctrine in Section
The Laws of the Indies were followed by the Ley Hipotecaria 2 of Article XII on “National Economy and Patrimony,”208 to wit:
or the Mortgage Law of 1893. The Spanish Mortgage Law provided
for the systematic registration of titles and deeds as well as possessory “Sec. 2. All lands of the public domain, waters,
claims. The Royal Decree of 1894 or the “Maura Law” partly amended minerals, coal, petroleum, and other mineral oils, all forces
the Mortgage Law as well as the Law of the Indies. The Maura Law was of potential energy, fisheries, forests or timber, wildlife,
the last Spanish land law promulgated in the Philippines. It required flora and fauna, and other natural resources are owned by
the “adjustment” or registration of all agricultural lands, otherwise the the State. With the exception of agricultural lands, all other
lands would revert to the State.205 natural resources shall not be alienated. The exploration,
development and utilization of natural resources shall be
The 1935, 1973 and 1987 Constitutions adapted the Regalian under the full control and supervision of the State. The State
doctrine substituting, however, the State, in lieu of the King, as the may directly undertake such activities or it may enter into co-
owner of all lands and waters of the public domain.206 Justice Reynato S. production, joint venture, or production-sharing agreements
Puno, in his separate opinion in Cruz v. Secretary of Environment and with Filipino citizens, or corporations or associations at least
Natural Resources,207 explained thus: sixty per centum of whose capital is owned by such citizens.
“One of the fixed and dominating objectives of the Such agreements may be for a period not exceeding twenty-
1935 Constitutional Convention was the nationalization and five years, renewable for not more than twenty-five years,
conservation of the natural resources of the country. There and under such terms and conditions as may be provided
by law. In cases of water rights for irrigation, water supply,
202
Collado v. Court of Appeals, 390 SCRA 343, 354 (2002), citing Republic v. Sayo, 191
fisheries, or industrial uses other than the development of
SCRA 71 (1990). water power, beneficial use may be the measure and limit of
203
Id., 354-355, citing the Separate Opinion of J. Puno in Cruz v. Secretary of Environment the grant.
and Natural Resources, 347 SCRA 128 (2000).
204
Id., 355.
205
Id., 355.
206
Id., 357, citing the Separate Opinion of J. Puno in Cruz v. Secretary of Environment and
208
Natural Resources, supra. Separate Opinion of J. Puno in Cruz v. Secretary of Environment and Natural Resources,
207
Supra, at pp. 171-172. supra, 173.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 73 74 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

xxx.” [21.4] Submerged Lands

Under the Regalian Doctrine embodied in the present Constitution, Submerged lands, like the waters (sea or bay) above them, are
all lands of the public domain as well as all natural resources enumerated part of the State’s inalienable natural resources.218 Submerged lands are
in the above-quoted provision, whether on public or private land, belong property of public dominion, absolutely inalienable and outside the
to the State.209 commerce of man.219 This is also true with respect to foreshore lands.
Any sale of submerged or foreshore lands is void being contrary to the
(A) Natural Resources Constitution.220
[21.2] Fishponds
(B) Lands of the Public Domain
Fishponds are owned by the State.210 The 1987 Constitution spe- [21.5] Classification
cifically declares that all lands of the public domain, waters, fisheries,
and other natural resources belong to the State. Included here are the Under Section 3 of Article XII of the 1987 Philippine Constitution,
fishponds, which may not be alienated but only leased.211 Possession lands of the public domain are classified into agricultural, forest or
thereof, no matter how long, cannot ripen into ownership.212 Under Sec- timber, mineral lands and national parks. Only agricultural lands are
tion 45 of R.A. No. 8550, otherwise known as “The Philippine Fisheries allowed, however, to be alienated.221 On the other hand, mineral and
Code of 1998,” public lands such as tidal swamps, mangroves, marshes, timber or forest lands are not subject to private ownership unless they
foreshore lands and ponds suitable for fishery operations shall not be are first reclassified as agricultural lands and so released for alienation.222
disposed or alienated. They may, however, be the subject matter of a Hence, it is already a settled rule that forest lands or forest reserves are
fishpond lease agreement.213 not capable of private appropriation, and possession thereof, however
long, cannot convert them into private property, unless such lands are
[21.3] Watershed Reservation reclassified and considered disposable and alienable by the Director of
Forestry.223
A watershed reservation is also a natural resource214 and cannot
therefore be alienated.215 A positive act (e.g., an official proclamation) [21.6] Classification of Public Lands, Prerogative of the Executive
of the Executive Department is needed to declassify land which had
been earlier classified as a watershed reservation and to convert it into Agricultural public lands may be defined as those alienable
alienable or disposable land for agricultural or other purposes.216 Unless portions of the lands of the public domain which are not forest or
and until the land classified as such is released in an official proclamation timber, mineral,224 or national parks.225 Their disposition is provided
so that it may form part of the disposable agricultural lands of the public for under Commonwealth Act No. 141 (Sections 6-7), which states
domain, the rules on confirmation of imperfect title do not apply.217 that it is only the President, upon the recommendation of the proper
department head, who has the authority to classify the lands of the
public domain into alienable or disposable, timber and mineral lands.

209 218
Id., 173. Chavez v. Public Estates Authority, supra.
210 219
Menchavez v. Teves, Jr., 449 SCRA 380, 391 (2005). Id.
211 220
Id. Id.
212 221
Id. Sec. 3, Art. XII, 1987 Philippine Constitution.
213 222
Id. Director of Forestry v. Villareal, 170 SCRA 598, 601 (1989).
214 223
Collado v. CA, supra. Republic v. IAC, 186 SCRA 88, 93 (1990).
215 224
Id. See Republic v. De Porkan, 151 SCRA 88; Krivenko v. Register of Deeds, 79 SCRA 461;
216
Id., 369. Mapa v. Insular Government, 10 Phil. 175.
217 225
Id. See Sec. 3, Art. XII, 1987 Constitution.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 75 76 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

The classification of public lands, therefore, is an exclusive prerogative § 22. Characteristics of Properties of Public Dominion
of the Executive Department of the Government and not of the courts.226
The following are the characteristics of properties of public
In the absence of such classification, the land remains as unclassified
dominion:
land until it is released therefrom and rendered open to disposition.227
This is in consonance with the Regalian doctrine that all lands of the [22.1] They Are Outside the Commerce of Man
public domain belong to the State, and that the State is the source of any
asserted right to ownership in land and charged with the conservation of Properties of public dominion are outside the commerce of man.233
such patrimony.228 As such, all lands not appearing to be clearly within Being outside the commerce of man, it cannot be alienated or leased
private ownership are presumed to belong to the State. Unless public or otherwise be the subject matter of contracts.234 Hence, the right of
land is shown to have been reclassified or alienated to a private person by the public to use public property may not be bargained away through
the State, it remains part of the inalienable public domain. To overcome contract.235
this presumption, incontrovertible evidence must be established that the In Dacanay v. Asistio,236 for example, when certain public streets
land subject of the application is alienable or disposable.229 in Caloocan City were converted into flea markets and leased to
several vendors, the Supreme Court held that such leases were null and
[21.7] When Public Lands Classified As Patrimonial Property void since a public street is property for public use hence outside the
Since property of public dominion is outside the commerce of man commerce of man. Being outside the commerce of man, it may not be
and not susceptible to private appropriation and acquisitive prescription, the subject of lease or other contract. In this case, the Court directed
the adverse possession which may be the basis of a grant of title in the the City Mayor to demolish the market stalls occupying said city
confirmation of an imperfect title under the Public Land Act refers only streets. In Maneclang v. Intermediate Appellant Court,237 the Supreme
to alienable or disposable portions of the public domain.230 It is only after Court declared as null and void the compromise agreement between
the Government has declared the land to be alienable and disposable the parties since the stipulations contained therein partake of the nature
agricultural lands that the year of entry, cultivation and exclusive and of an adjudication of ownership in favor of one of the parties of the
adverse possession can be counted for purposes of an imperfect title.231 fishpond in dispute which was found to be originally a creek forming a
tributary of the Agno River.
From the foregoing, it appears that agricultural public lands are
classified as patrimonial property of the State as soon as they are made Being outside the commerce of man, these properties may not be
available for alienation or disposition. Prior to the reclassification alienated. In Laurel v. Garcia,238 for example, the Supreme Court held
of public lands into agricultural lands and prior to their being made that since the Roppongi Property is a property of public dominion it
available for alienation and disposition, they form part of the property of cannot be alienated. In Chavez v. Public Estates Authority,239 the Court
public dominion, under Article 420, paragraph 2, “for the development voided the joint venture agreement between PEA and Amari since the
of the national wealth” and under Section 2 of Article XII of the 1987 former conveyed to the latter submerged lands, which are declared to
Constitution.232
233
Dacanay v. Asistio, Jr., 208 SCRA 404, 411 (1992).
234
Id., citing Villanueva v. Castañeda and Macalino, 15 SCRA 142; Municipality of Cavite
226
Director of Lands v. Court of Appeals, 129 SCRA 689, 692. v. Rojas, 30 Phil. 602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; and Muyot v.
227
Id. De la Fuente, 48 O.G. 4860.
228 235
Id. Id.
229 236
Republic v. Lao, 405 SCRA 291, 298. Supra.
230 237
Celestial v. Cachopero, 413 SCRA 469, 485. 114 SCRA 553 (1986).
231 238
Id. 187 SCRA 797, 808 (1990).
232 239
II Tolentino, Civil Code of the Phil., 1992 ed., 38. Supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 77 78 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

be part of the State’s inalienable natural resources, hence, absolutely Since properties of public dominion are not subject to private
inalienable. In Binalay v. Manalo,240 it was held that the buyer did appropriation, they cannot be registered under the Land Registration
not acquire private ownership of the bed of the eastern branch of the Law and be the subject of a Torrens Title. In Republic v. Court of
Cagayan River even if it was included in the deeds of absolute sale Appeals,246 the Court ruled that the lower court cannot validly order the
executed by the sellers since the sellers “could not have validly sold registration of two lots in the names of private respondents since these
land that constituted property of public dominion.” lots “were portions of the bed of the Meycauayan river and are therefore
classified as property of the public domain under Article 420, paragraph
With respect to natural resources, however, the Constitution
1 and Article 502, paragraph 1 of the Civil Code of the Philippines.”
allows the State to enter into co-production, joint venture or production-
In Republic v. Intermediate Appellate Court,247 the Court likewise held
sharing agreements with private individuals or corporations for their
that the subject parcel of land, being part of a forest reserve, cannot be
exploration, development and utilization.241 With respect to fishponds registered.
which are likewise owned by the State,242 they may be leased although
they may not be alienated. Under Section 45 of R.A. No. 8550, otherwise [22.3] They Are Not Subject To Attachment and Execution
known as “The Philippine Fisheries Code of 1998,” public lands such as
Properties of public dominion, being for public use, are not subject
tidal swamps, mangroves, marshes, foreshore lands and ponds suitable
to levy, encumbrance or disposition through public or private sale.248
for fishery operations shall not be disposed or alienated but they may be
Any encumbrance, levy on execution or auction sale of any property of
the subject matter of a fishpond lease agreement.
public dominion is void for being contrary to public policy.249 Essential
[22.2] They Are Not Susceptible To Private Appropriation and public services will stop if properties of public dominion are subject to
Acquisitive Prescription encumbrances, foreclosures and auction sale.250 Hence, it was held in
one case251 that the City of Parañaque cannot foreclose and compel the
Properties of public dominion are not susceptible to private ap- auction sale of the 600-hectare runway of the MIAA for non-payment
propriation and acquisitive prescription.243 Thus, in Celestial v. Cacho- of real estate tax since the Airport Lands and Buildings of MIAA are
pero,244 the Court held that the petitioner’s claim of ownership over a properties of public dominion.252
parcel of land which is a dried-up bed of the Salunayan Creek based
on her alleged long term adverse possession must necessarily fail since In Vda. de Tan Toco v. Municipal Council of Iloilo,253 the Supreme
the same is a property of public dominion. In Palomo v. Court of Ap- Court held that the property of a municipality, whether real or personal,
peals,245 the Court held that the adverse possession which may be the necessary for governmental purposes cannot be attached and sold at
basis of a grant of title in confirmation of imperfect title cases applies public auction to satisfy a judgment against the municipality. According
only to alienable lands of the public domain. In this case, since the sub- to the Court, the necessity for government service justifies that the
ject property is part of the reservation for provincial park purposes and, property for public use of the municipality be exempt from execution.
thus, part of the forest zone, it is not registrable and its possession, no In this case, by virtue of a writ of execution obtained by the plaintiff
matter how lengthy, cannot convert it into private property. against the Municipality of Iloilo, the sheriff attached two auto trucks

246
132 SCRA 514 (1984).
247
186 SCRA 88 (1990).
240 248
Supra. Manila International Airport Authority v. CA, supra.
241 249
See Sec. 2, Article XII of the 1987 Constitution. Id.
242 250
Menchavez v. Teves, Jr., 449 SCRA 380, 391 (2005). Id.
243 251
Celestial v. Cachopero, supra, 485. Id.
244 252
Supra. See supra § 18.9.
245 253
266 SCRA 392, 401 (1997). 49 Phil. 52.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 79 80 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

used for street sprinkling, a police patrol automobile, police station and over the disputed lot where the stairways were built as it is a property of public
market together with the lots which they occupy. The Court declared the dominion, the Supreme Court explained that “the lot on which the stairways
attachment as invalid. were built is for the use of the people as passageway to the highway” belongs
to the State. Consequently, it is a property of public dominion. And considering
In Tufexis v. Olaguera,254 the Court likewise held that the usufruct that the said lot is a property of public dominion, it cannot be burdened by a
of the public market was not subject to attachment on account of its voluntary easement or right of way in favor of Villarico. In fact, its use by the
being of a public character. public is by mere tolerance of the government through the DPWH. Hence,
Villarico cannot appropriate it for himself and he cannot claim any right of
[22.4] They Cannot Be Burdened With Voluntary Easements possession over it.
In Villarico v. Sarmiento,255 for example, the petitioner claimed a
right of way on a lot owned by the DPWH and on which stairways were Art. 421. All other property of the State, which is not of the character
built for the use of the people as a passageway to the Ninoy Aquino stated in the preceding article, is patrimonial property. (340a)
Avenue. The Supreme Court held that since the lot is a property of public
§ 23. Patrimonial Property of the State
dominion devoted to public use, it cannot be burdened by a voluntary
easement or right of way in favor of Villarico. All other property of the State, which is not of the character stated
in Article 420 of the New Civil Code, is patrimonial property.256 It is
Villarico v. Sarmiento considered as a property of the State in what may be called the private
442 SCRA 110 (2004) sense.257 It is said that over this kind of property the State has the same
Villarico is the owner of a lot in La Huerta, Parañaque City. His lot
rights and has the same power of disposition as private individuals
is separated from the Ninoy Aquino Avenue (highway) by a strip of land subject, of course, to existing rules and regulations.258 Thus, in Chavez
belonging to the government. As this highway was elevated by four meters v. Public Estates Authority,259 the Court held that “government owned
and therefore higher than adjoining areas, the DPWH constructed stairways at lands, as long they are patrimonial property, can be sold to private
several portions of this strip of public land to enable the people to have access parties, whether Filipino citizens or qualified private corporations.”
to the highway. Sometime in 1991, Villarico had a building constructed on a
portion of said government land. In November of that same year, a part thereof [23.1] Examples of Patrimonial Property
was occupied by Andok’s Litson and Marites’ Carinderia. In 1993, by means of [23.1.1] Friar Lands
a Deed of Exchange of Real Property, Villarico acquired a portion of the area
owned by the government and registered in his name under TCT No. 74430. From the beginnings of Spanish colonization up to the establish-
In 1995, Villarico filed with the RTC of Parañaque City a complaint for accion ment of American sovereignty, religious corporations had acquired
publiciana against several respondents, including Sarmiento, alleging that large tracts of land in the Philippines, breeding feelings of unrest and
respondents’ structures on the government land closed his “right of way” to the agitation among Filipino tenants occupying those lands.260 In order to
Ninoy Aquino Avenue and encroached on a portion of his lot covered by TCT avert any outbreak of violence, the Philippine Bill of 1902 authorized
No. 74430. Respondents deny the allegations claiming that they have been
the Insular Government to exercise the power of eminent domain over
issued licenses and permits by Parañaque City to construct their buildings on
the area and that Villarico has no right over the subject property as it belongs
lands which, on August 13, 1898, were owned or held by religious
to the government.
256
Art. 421, NCC.
In holding that neither Villarico nor respondents have a right of possession 257
Hinunangan v. Director of Lands, 24 Phil. 124, 127 (1913).
258
II Caguioa, Civil Code of the Phil., 1966 ed., 36.
259
403 SCRA 1, 31, G.R. No. 133250, May 6, 2003.
254 260
32 Phil. 654. Dissenting Opinion of J. Tinga in Alonso v. Cebu Country Club, Inc., 417 SCRA 115,
255
442 SCRA 110 (2004). citing A. Mañalac and R. Mañalac, Land Registration, 3rd ed., 95.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 81 82 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

orders in such tracts or parcels or in such manner as in the opinion of be withdrawn by Congress from public use and declared patrimonial
the Philippine Commission injuriously affected the peace and welfare property to be sold to private parties.267 R.A. No. 7227 creating the
of the people. Hence, the Friar Lands Act (Act No. 1120) was passed to BCDA is a law that declares specific military reservations no longer
appease the restless Filipinos and to curtail and diminish the influence needed for defense or military purposes and reclassifies such lands as
of the Catholic Church. Thus, lands acquired by the government from patrimonial property for sale to private parties.268
religious corporations or orders (during the Taft administration in 1903)
are referred to as “friar lands.” [23.2] Disposition of Patrimonial Property

Friar lands over which the Government holds title are not public It was held in Laurel v. Garcia,269 that any conveyance of a real
lands but private or patrimonial property of the State.261 However, they property falling under the patrimonial property of the State must be
can be alienated only upon proper compliance with the requirements of authorized and approved by a law enacted by the Congress. The Court
Act No. 1120 or the Friar Lands Act.262 cited Section 48, Book I of the Administrative Code of 1987 (Executive
Order No. 292), which reads:
[23.1.2] Alienable and Disposable Lands of the Public Do-
main
“SEC. 48. Official Authorized to Convey Real Property.
— Whenever real property of the Government is authorized
Alienable lands of the public domain, or those available for alien- by law to be conveyed, the deed of conveyance shall be
ation or disposition, are part of the patrimonial properties of the State.263 executed in behalf of the government by the following:
They are State properties available for private ownership except that
(1) For property belonging to and titled in the name
their appropriation is qualified by Sections 2 and 3 of Article XII of the
of the Republic of the Philippines, by the President, unless
Constitution and the public land laws.264
the authority therefore is expressly vested by law in another
Before lands of the public domain are declared available for officer.
private acquisition, or while they remain intended for public use or for
(2) For property belonging to the Republic of the
public service or for the development of national wealth, they would
Philippines but titled in the name of any political subdivision
partake of properties of public dominion just like mines before their
or of any corporate agency or instrumentality by the executive
concessions are granted, in which case, they cannot be alienated or
head of the agency or instrumentality.”
leased or otherwise be the object of contracts.265 In contrast, patrimonial
properties may be bought or sold or in any manner utilized with the Hence, in the case of Laurel, the Court held that even if the
same effects as properties owned by private persons.266 Roppongi property is patrimonial property of the State, then President
Corazon Aquino could not sell it since there was no law authorizing her
[23.1.3] Lands Covered by Republic Act No. 7227 to do so.
Well-settled is the doctrine that public land granted to an end-
[23.3] Not Susceptible To Acquisitive Prescription
user government agency for a specific public use may subsequently
There is a view to the effect that patrimonial properties of the
261
State are subject to acquisitive prescription on the basis of Article 1113
Jacinto v. Director of Lands, 49 Phil. 853 (1926).
262
Alonso v. Cebu Country Club, Inc., supra. of the New Civil Code, which reads:
263
Separate Opinion of J. Bellosillo in Chavez v. PEA, 403 SCRA 1, 37, citing II Tolentino,
Civil Code of the Philippines 38 (1992).
264 267
Id. Chavez v. Public Estates Authority, 403 SCRA 1, 31 (2003).
265 268
Id., at p. 38, citing Montano v. Insular Government, 22 Phil. 572 (1909). Id.
266 269
Id.; citing Manila Lodge No. 761 v. CA, 73 SCRA 162. 187 SCRA 797, 812.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 83 84 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

“Art. 1113. All things which are within the commerce counted in its favor, as the subject property being a friar
of men are susceptible of prescription, unless otherwise pro- land, remained part of the patrimonial property of the Gov-
vided. Property of the State or any of its subdivisions not ernment. Possession of patrimonial property of the Govern-
patrimonial in character shall not be the object of prescrip- ment, whether spanning decades or centuries, can not ipso
tion.” facto ripen into ownership. Moreover, the rule that statutes
It has been argued that the afore-quoted provision impliedly of limitation do not run against the State, unless therein ex-
authorizes the acquisition of patrimonial properties of the State by way pressly provided, is founded on “the great principle of public
of acquisitive prescription. policy, applicable to all governments alike, which forbids
that the public interests should be prejudiced by the negli-
However, it is an ironclad dictum that prescription can never lie gence of the officers or agents to whose care they are con-
against the Government.270 Thus, it is expressly provided in paragraph fided.” (Italics supplied)
(4) of Article 1108 that prescription, both acquisitive and extinctive,
does not run against the State and its subdivisions. The provisions of Consequently, unless the law expressly provides, a patrimonial
Article 1113 quoted above are not even in conflict with paragraph (4) property of the State is not subject to acquisitive prescription. An ex-
of Article 1108. Far from being in conflict with the latter, the former in ample of a law that allows the acquisition of patrimonial properties of
fact reiterates the rule in the latter that property of the State or any of its the State by way of acquisitive prescription is Commonwealth Act No.
subdivision shall not be the object of prescription. 141 which authorizes confirmation of imperfect title. The adverse pos-
session which may be the basis of a grant of title in confirmation of im-
The rule that Statutes of Limitation do not run against the State,
perfect title cases, however, applies only to alienable lands of the public
unless therein expressly provided, is founded on “the great principle
domain273 — which fall under the patrimonial properties of the State.
of public policy, applicable to all governments alike, which forbids
that the public interests should be prejudiced by the negligence of the
officers or agents to whose care they are confided.”271 Hence, the rule Art. 422. Property of public dominion, when no longer intended for
public use or for public service, shall form part of the patrimonial property
stated in paragraph (4) of Article 1108 cannot be modified, altered or
of the State. (341a)
changed by mere implication. Had Congress really intended to subject
patrimonial properties of the State to acquisitive prescription it could
§ 24. Conversion: From Public Dominion to Patrimonial Property
have expressly provided the same in Article 1113.
Property of public dominion, when no longer intended for public
In Alonso v. Cebu Country Club, Inc.,272 the Supreme Court held in
use or for public service, shall form part of the patrimonial property of
unequivocal language:
the State.274 It should be noted that Article 422 of the New Civil Code
Neither may the rewards of prescription be success- does not address the question of who has the authority to effect such
fully invoked by respondent, as it is an iron-clad dictum that conversion and neither does it set out or refer to any procedure for
prescription can never lie against the Government. Since re- such conversion.275 In other words, no specific formula or procedure of
spondent failed to present the paper trail of the property’s conversion is provided in Article 422. Our case law, however, contains
conversion to private property, the lengthy possession and some fairly explicit pronouncements on this point.276
occupation of the disputed land by respondent cannot be
273
Palomo v. Court of Appeals, supra.
270 274
Alonso v. Cebu Country Club, Inc., supra, 127. Art. 422, NCC.
271 275
Id. See Dissenting Opinion of J. Feliciano in Laurel v. Garcia, supra, 821.
272 276
Id. Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 85 86 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

When land of the public domain ceases to be one, or when the government as indemnification to the Filipino people for their losses
change takes place, is a question our courts have debated early.277 In and suffering during World War II. As intended, it became the site of
Municipality of Oas v. Roa,278 it was held that property of the public the Philippine Embassy in Japan for sometime until the embassy was
dominion, a public plaza in this instance, becomes patrimonial property transferred to another site. Since then, the Philippine Government has
upon use thereof for purposes other than a plaza. In Municipality of failed to develop the Roponggi property. In 1985, the Executive Depart-
Hinunangan v. Director of Lands,279 it was held that when a fortress ment passed an administrative order creating a committee to study the
ceases to be used for the purpose for which it was constructed, it disposition or utilization of some properties, including the Roponggi
becomes a patrimonial property of the state. In these two cases, the property. In 1987, the President issued Executive Order No. 296 pro-
character of the property, and any change occurring therein, depends on viding that some properties, including the Roponggi property, be made
the actual use to which it is dedicated. available for sale or lease to non-Filipinos. Answering the question as
to whether the Roponggi property has been converted into patrimonial
In Ignacio v. Director of Lands280 case, however, the Supreme property, the Supreme Court held that abandonment of the intention to
Court ruled that a property continues to be part of the public domain, use the Roponggi property for public service and to make it a patrimo-
not available for private appropriation or ownership until there is a nial property “cannot be inferred from the non-use alone specially if the
formal declaration on the part of the government, either through the non-use was attributable not to the government’s own deliberate and
Executive department or the Legislative, to the effect that the property indubitable will but to a lack of financial support to repair and improve
is no longer needed for public service, for public use or for special the property.” The Court likewise ruled that E.O. No. 296 does not de-
industries. Thus, under Ignacio, either the Executive Department or clare that the property has lost its public character since the executive
the Legislative Department may convert property of the State of public order merely intends to make the properties available to foreigners and
dominion into patrimonial property of the State. not to Filipinos. It was based on the wrong premise or assumption that
In Cebu Oxygen Acetylene v. Bercilles,281 the City Council of the Roponggi was earlier converted into alienable real property.
Cebu by resolution declared a certain portion of an existing street as an The case of Laurel v. Garcia has cleared the uncertainties brought
abandoned road, “the same not being included in the city development about by earlier interpretations that the nature of property — whether
plan.” Subsequently, by another resolution, the City Council of Cebu public or patrimonial — is predicated on the manner it is actually used,
authorized the acting City Mayor to sell the land through public bidding. or not used. In fine, it is now clear that there must be an affirmative act,
Although there was no formal and explicit declaration of conversion of either on the part of executive or the legislative, to reclassify property of
property for public use into patrimonial property, the Supreme Court the public dominion into patrimonial. The intention to reclassify must
declared the withdrawal of the property in question from public use and be clear, definite and must be based on correct legal premises. Hence,
its subsequent sale as valid. the conversion can no longer be inferred from the non-use alone of the
Then came the case of Laurel v. Garcia.282 In this case, the prop- property for the purpose to which it is intended.
erty involved (“Roponggi property”) was acquired from the Japanese
Art. 423. The property of provinces, cities, and municipalities is
277
divided into property for public use and patrimonial property. (343)
See Concurring Opinion of J. Sarmiento in Laurel v. Garcia, supra, 818.
278
7 Phil. 20 (1906), cited in the Concurring Opinion of J. Sarmiento in Laurel v. Garcia,
supra, 818.
279
24 Phil. 124 (1913), cited in the Concurring Opinion of J. Sarmiento in Laurel v. Garcia,
supra, 818.
280
108 Phil. 335 (1960).
281
66 SCRA 481 (1975).
282
187 SCRA 797 (1990).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 87 88 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

§ 25. Property of Provinces, Cities and Municipalities public use of the City of Manila and not its patrimonial property, the Court of
Appeals held —
[25.1] Classification of Properties of Political Subdivisions
“xxx. The nature of properties owned by cities in this country
The property of provinces, cities and municipalities is divided into is determined by the character of the use or service for which they
property for public use and patrimonial property.283 The first consists of are intended or devoted. Properties which are intended for public
the provincial roads, city streets, municipal streets, squares, fountains, use or for some public service are properties for public use. All
public waters, promenades, and public works for public service paid for others are patrimonial properties. Art. 424, new Civil Code. It
by said provinces, cities or municipalities.284 All other property possessed matters not that the property is not actually devoted for public use
or for some public service. If it has been intended for such use or
by said provinces, cities or municipalities is patrimonial.285
service, and the city has not devoted it to other uses, or adopted
The nature of properties owned by cities (municipalities and any measure which amounted to a withdrawal of the property from
provinces) in this country is determined by the character of the use or public use and service, the same remains property for public use,
service for which they are intended or devoted.286 Properties which are the fact that it is not actually devoted for public use or service
notwithstanding.”
intended for public use or for some public service are properties for
public use.287 All others are patrimonial properties.288 It matters not that
Art. 424. Property for public use, in the provinces, cities, and munic-
the property is not actually devoted for public use or for some public
ipalities, consists of the provincial roads, city streets, municipal streets,
service.289 If it has been intended for such use or service, and the city the squares, fountains, public waters, promenades, and public works for
(municipality or province) has not devoted it to other uses, or adopted public service paid for by said provinces, cities, or municipalities.
any measure which amounted to a withdrawal of the property from public All other property possessed by any of them is patrimonial and shall
use and service, the same remains property for public use, the fact that it be governed by this Code, without prejudice to the provisions of special
is not actually devoted for public use or service notwithstanding.290 laws. (344a)

§ 26. Property for Public Use of Provinces, Cities and Municipali-


Agripino Capitulo, et al. v. Alejo Aquino ties
No. 15488-R, 53 O.G. 1477 (1956)
[26.1] Governed By Same Principles as Property of Public Domin-
This case involves a lot owned by the City of Manila and situated around ion
the intersections of Andalucia, Governor Forbes and Aragon Streets, City of
Manila. This lot was donated to the City of Manila by the Sulucan Development The property of provinces, cities and municipalities for public use
Company exclusively for street purposes. Since its acquisition, the City of is governed by the same principles as property of public dominion of
Manila formed the project to construct thereon a traffic circle. For reasons, the same character.291 Hence, the following jurisprudence or principles
however, not disclosed by the records, this project had not been carried out. are applicable to properties of the political subdivisions (provinces,
Hence, it remained vacant. In ruling that the lot in question is property for cities and municipalities) for public use:

283
a. They are outside the commerce of man.292 Being outside
Art. 423, Civil Code; Macasiano v. Diokno, 212 SCRA 464, 469 (1992); Pilapil v. CA,
216 SCRA 33, 46 (1992).
the commerce of man, it cannot be alienated or leased or
284
Art. 424, 1st par., Civil Code; cited in Pilapil v. CA, supra, at p. 46. otherwise be the subject matter of contracts.293
285
Art. 424, 2nd par., Civil Code.
286
Agripino Capitulo, et al. v. Alejo Aquino, No. 15488-R, 53 O.G. 1477, November 19,
291
1956. Pilapil v. CA, supra, at p. 46, citing Tolentino, Civil Code, Vol. II, 1983 ed., 38.
287 292
Ibid. Dacanay v. Asistio, Jr., 208 SCRA 404, 411 (1992).
288 293
Ibid. Ibid., citing Villanueva v. Castañeda and Macalino, 15 SCRA 142; Municipality of Cav-
289
Ibid. ite v. Rojas, 30 Phil. 602; Espiritu v. Municipal Council of Pozorrubio, 102 Phil. 869; and Muyot
290
Ibid. v. De la Fuente, 48 O.G. 4860.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 89 90 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

b. They cannot be acquired by prescription.294 In ruling in favor of the Municipality of Antipolo, the Supreme Court
explained that at the time the application for registration was filed, the disputed
c. They are not subject to attachment and execution. 295
property was already devoted to public use and public service. Therefore, it
d. They cannot be burdened by any voluntary easement.296 was outside the commerce of man and could no longer be subject to private
registration.

Harty v. Municipality of Victoria


13 Phil. 152 [26.2] Provincial Roads, City Streets and Municipal Streets

When the town of Victoria was formed, a large public plaza was left in A public street is property for public use and hence outside the
the center. This land formerly belonged to one Tañedo, who donated part of the commerce of man.297 Being outside the commerce of man, it may not be
land for religious purposes, which portion was later occupied by the church. the subject of lease or other contract.298
The remaining portion was kept an open space as a plaza. It is later claimed
that the entire plaza was later on donated by the municipality to the church. Local governments have no authority whatsoever to control or
regulate the use of public properties, like roads and streets, unless
The Supreme Court ruled that the property could not have been validly
specific authority is vested upon them by Congress.299 In the case of
donated by the town to the church because the same was property for public
use. Even assuming that the property was originally private property of Cebu Oxygen & Acetylene Co., Inc. v. Bercilles,300 the City Council of
Tañedo, it must be assumed that he waived his right thereto for the benefit of Cebu was expressly authorized under its Revised Charter to “close
the townspeople since they have continuously enjoyed the use of the land as any city road, street or alley, boulevard, avenue, park or square.” The
a public plaza. The property thus became property for public use. As such, it same Charter likewise expressly states that “property thus withdrawn
could not have been the validly donated by the town to the church. The same from public servitude may be used or conveyed for any purpose for
could not likewise be acquired by prescription. which other real property belonging to the City may be lawfully used or
conveyed.” Thus, in that case the Supreme Court held that the withdrawal
Municipality of Antipolo v. Zapanta
133 SCRA 820 (1984)
of an existing road from public use was valid thereby converting the
withdrawn property into patrimonial property which can be the object
In this case, the disputed property has been considered to be public land of an ordinary contract.
by the Municipality of Antipolo subject to its use and permission to use. It
has been the site of the public market as far back as 1908, or at the latest, In the case of Favis v. City of Baguio,301 the power of the City
since 1920. Gradually, additional public structures were built thereon, like Council of Baguio City to close city streets and withdraw them from
the Puericulture and Family Planning Center, the Integrated National Police public use was also assailed. The Supreme Court said:
Building, the Office of the Municipal Treasurer, and the public abattoir. Those
public structures occupy almost the entire area of the land. Sometime in 1977, “5. So it is, that appellant may not challenge the city
an application for the registration of the disputed property was filed by two council’s act of withdrawing a strip of Lapu-Lapu Street at
distinct applicants before the Court of First Instance of Rizal alleging that the its dead end from public use and converting the remainder
disputed property was declared for taxation purposes in their names or of their
thereof into an alley. These are acts well within the ambit of
predecessors-in-interest as early as 1918. The applicants claimed that they
merely tolerated occupants by the Municipality of Antipolo. The CFI of Rizal
the power to close a city street. The city council, it would
approved the application. Thus, the Municipality of Antipolo questioned the
approval made by the said court.
297
Dacanay v. Asistio, supra.
298
Ibid.
294 299
Insular Government v. Aldecoa, 19 Phil. 505. Macasiano v. Diokno, supra, at p. 469.
295 300
Tan Toco v. Municipal Council of Iloilo, 49 Phil. 52. 66 SCRA 481 (1975).
296 301
2-II Colin & Capitant 520, cited in Tolentino, Civil Code, Vol. II, 1983 ed., 29-30. 27 SCRA 1060.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 91 92 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

seem to us, is the authority competent to determine whether further held that the right of the public to use the city streets may not be
or not a certain property is still necessary for public use. bargained away through contract.
Such power to vacate a street or alley is discretionary.
Dacanay v. Asistio, Jr.
And the discretion will not ordinarily be controlled or
208 SCRA 404 (1992)
interfered with by the courts, absent a plain case of abuse
or fraud or collusion. Faithfulness to the public trust will May public streets or thoroughfares be leased or licensed to market
be presumed. So the fact that some private interests may stallholders by virtue of a city ordinance or resolution of the Metro Manila
be served incidentally will not invalidate the vacation Commission? This is the issue posed in this case. The Supreme Court ruled
that “a public street is property for public use and hence outside the commerce
ordinance.”
of man. Being outside the commerce of man, it may not be the subject of
In Macasiano v. Diokno,302 the Court clarified the authority of the lease or other contract.” The Court adds: “As the stallholders pay fees to the
local governments to close roads, streets and other similar public places. City Government for the right to occupy portions of the public street, the City
According to the Court, “the closure should be for the sole purpose of Government, contrary to law, has been leasing portions of the streets to them.
withdrawing the road or other public property from public use when Such leases or licenses are null and void for being contrary to law. The right of
the public to use the city streets may not be bargained away through contract.
circumstances show that such property is no longer intended or necessary
The interests of a few should not prevail over the good of the greater number
for public use or public service.”303 When it is already withdrawn from
in the community whose health, peace, safety, good order and general welfare,
public use, the property then becomes patrimonial property of the local the respondent city officials are under legal obligation to protect.”
government unit concerned.304 It is only then that the property can be
the object of an ordinary contract.305 In Macasiano, the Court nullified Macasiano v. Diokno
the ordinance closing several streets in Parañaque for the purpose of 212 SCRA 464 (1992)
establishing flea markets thereon. The Court reasoned that “those roads
In this case, the then municipality of Parañaque passed an ordinance
and streets which are available to the public in general and ordinarily
authorizing the closure of several municipal streets for purposes of converting
used for vehicular traffic are still considered public property devoted to them as sites for flea market and/or vending areas. The municipality then
public use. In such case, the local government has no power to use it for entered into an agreement with Palanyag for the operation of flea market in
another purpose or to dispose of or lease it to private persons.”306 the said streets. Subsequently, Brig. Gen. Macasiano of the PNP ordered the
destruction and confiscation of the stalls. Palanyag went to court. The trial court
In another case,307 the Metropolitan Manila Commission simply
upheld the validity of the ordinance passed by the Municipality of Parañaque.
designated certain streets as sites for flea markets and pursuant thereto
Macasiano questioned the ruling of the trial court before the Supreme Court.
the Caloocan City mayor opened several flea markets in some city In sustaining Macasiano, the Court explained —
streets without withdrawing the same from public use. When the matter
was elevated to the Supreme Court, it ruled that the subject streets were “We find the petition meritorious. In resolving the question
properties for public use hence outside of the commerce of man and of whether the disputed municipal ordinance authorizing the flea
may not therefore be subjected to lease or other contract. The Court market on the public streets is valid, it is necessary to examine
the laws in force during the time the said ordinance was enacted,
namely, Batas Pambansa Blg. 337, otherwise known as Local
Government Code, in connection with established principles
302
Supra. embodied in the Civil Code on property and settled jurisprudence
303
At p. 470.
304
Article 422, Civil Code; Cebu Oxygen, etc., et al. v. Bercilles, et al., supra. on the matter.
305
Macasiano v. Diokno, supra.
306
The property of provinces, cities and municipalities is di-
Ibid., p. 471.
307
Dacanay v. Asistio, supra. vided into property for public use and patrimonial property (Art.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 93 94 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

423, Civil Code). As to what consists of property for public use, public in general are outside the commerce of man and cannot be
Article 424 of Civil Code states: disposed of or leased by the local government unit to private per-
sons. Aside from the requirement of due process which should be
ART. 424. Property for public use, in the provinces, cities
complied with before closing a road, street or park, the closure
and municipalities, consists of the provincial roads, city streets, the
should be for the sole purpose of withdrawing the road or other
squares, fountains, public waters, promenades, and public works for
public property from public use when circumstances show that
public service paid for by said provinces, cities or municipalities.
such property is no longer intended or necessary for public use or
All other property possessed by any of them is patrimonial public service. When it is already withdrawn from public use, the
and shall be governed by this Code, without prejudice to the property then becomes patrimonial property of the local govern-
provisions of special laws. ment unit concerned (Article 422, Civil Code; Cebu Oxygen, etc.,
et al. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66
Based on the foregoing, J. Gabriel, G.G. Cruz, Bayanihan,
SCRA 481). It is only then that the respondent municipality can
Lt. Garcia Extension and Opena streets are local roads used for
use or convey them for any purpose for which other real prop-
public service and are therefore considered public properties of
erty belonging to the local unit concerned might be lawfully used
respondent municipality. Properties of the local government which
or conveyed in accordance with the last sentence of Section 10,
are devoted to public service are deemed public and are under the
Chapter II of Blg. 337, known as Local Government Code. In one
absolute control of Congress (Province of Zamboanga del Norte v.
case, the City Council of Cebu, through a resolution, declared the
City of Zamboanga, L-24440, March 28, 1968, 22 SCRA 1334). terminal road of M. Boreas Street, Mabolo, Cebu City as an aban-
Hence, local governments have no authority whatsoever to control doned road, the same not being included in the City Development
or regulate the use of public properties unless specific authority Plan. Thereafter, the City Council passed another resolution autho-
is vested upon them by Congress. One such example of this rizing the sale of the said abandoned road through public bidding.
authority given by Congress to the local governments is the power We held therein that the City of Cebu is empowered to close a city
to close roads as provided in Section 10, Chapter II of the Local street and to vacate or withdraw the same from public use. Such
Government Code, which states: withdrawn portion becomes patrimonial property which can be the
SEC. 10. Closure of roads. — A local government unit object of an ordinary contract (Cebu Oxygen and Acetylene Co.,
may likewise, through its head acting pursuant to a resolution Inc. v. Bercilles, et al., G.R. No. L-40474, August 29, 1975, 66
of its sangguniang and in accordance with existing law and the SCRA 481). However, those roads and streets which are available
provisions of this Code, close any barangay, municipal, city to the public in general and ordinarily used for vehicular traffic are
or provincial road, street, alley, park or square. No such way or still considered public property devoted to public use. In such case,
place or any part thereof shall be closed without indemnifying any the local government has no power to use it for another purpose or
person prejudiced thereby. A property thus withdrawn from public to dispose of or lease it to private persons. xxx”
use may be used or conveyed for any purpose for which other real
property belonging to the local unit concerned might be lawfully [26.3] Squares, Fountains, Public Waters, Promenades, Etc.
used or conveyed. (Emphasis ours).
Town or public plazas are properties of public dominion, to be
However, the aforestated legal provision which gives au-
thority to local government units to close roads and other similar
devoted to public use and to be made available to the public in general.308
public places should be read and interpreted in accordance with They are beyond the commerce of man and so cannot be the subject
basic principles already established by law. These basic principles of lease or any other contractual undertaking.309 Indeed, this point was
have the effect of limiting such authority of the province, city or
municipality to close a public street or thoroughfare. Article 424 308
Espiritu v. Municipal Council of Pozorrubio, 101 Phil. 869-870.
of the Civil Code lays down the basic principle that properties of 309
Villanueva v. Castañeda, 154 SCRA 142, 148 (1987), citing Municipality of Cavite v.
public dominion devoted to public use and made available to the Rojas, 30 Phil. 602 and Espiritu v. Municipal Council of Pozorrubio, 101 Phil. 869-870.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 95 96 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

settled as early as 1915 in the case of Municipality of Cavite v. Rojas,310 market stalls, specially of residences, and that such structures constitute
where the Supreme Court declared as null and void the lease of a public a nuisance subject to abatement according to law.
plaza of the said municipality in favor of a private person. Mr. Justice
In Muyot v. de la Fuente,312 it was held that the City of Manila could
Torres said in that case:
not lease a portion of a public sidewalk on Plaza Sta. Cruz, being likewise
According to Article 344 of the Civil Code: “Property beyond the commerce of man. Echoing Rojas, the decision said:
for public use in provinces and in towns comprises the Appellants claim that they had obtained permit from
provincial and town roads, the squares, streets, fountains, the government of the City of Manila, to construct booths
and public waters, the promenades, and public works of Nos. 1 and 2, along the premises in question, and for the use
general service supported by said towns or provinces.” of spaces where the booths were constructed, they had paid
The said Plaza Soledad being a promenade for public and continued paying the corresponding rentals. Granting
use, the municipal council of Cavite could not in 1907 this claim to be true, one should not entertain any doubt that
withdraw or exclude from public use a portion thereof in such permit was not legal, because the City of Manila does
order to lease it for the sole benefit of the defendant Hilaria not have any power or authority at all to lease a portion of a
Rojas. In leasing a portion of said plaza or public place to the public sidewalk. The sidewalk in question, forming part of
defendant for private use the plaintiff municipality exceeded the public plaza of Sta. Cruz, could not be a proper subject
matter of the contract, as it was not within the commerce of
its authority in the exercise of its powers by executing a
man (Article 1347, new Civil Code, and Article 1271, old
contract over a thing of which it could not dispose, nor is it
Civil Code). Any contract entered into by the City of Manila
empowered so to do.
in connection with the sidewalk, is ipso facto null and ultra
The Civil Code, Article 1271, prescribes that everything vires. (Municipality of Cavite v. Roxas, et al., 30 Phil. 603.)
which is not outside the commerce of man may be the object The sidewalk in question was intended for and was used by
of a contract, and plazas and streets are outside of this the public, in going from one place to another. “The streets
commerce, as was decided by the supreme court of Spain in and public places of the city shall be kept free and clear for
its decision of February 12, 1895, which says: “Communal the use of the public, and the sidewalks and crossings for the
things that cannot be sold because they are by their very pedestrians, and the same shall only be used or occupied for
nature outside of commerce are those for public use, such as other purposes as provided by ordinance or regulation; x x x.”
the plazas, streets, common lands, rivers, fountains, etc.” (Sec. 1119, Revised Ordinances of the City of Manila.) The
booths in question served as fruit stands for their owners and
Therefore, it must be concluded that the contract,
often, if not always, blocked the free passage of pedestrians
Exhibit C, whereby the municipality of Cavite leased to
who had to take the plaza itself which used to be clogged
Hilaria Rojas a portion of the Plaza Soledad is null and void
with vehicular traffic.
and of no force or effect, because it is contrary to the law and
the thing leased cannot be the object of a contract. § 27. Patrimonial Property of Political Subdivisions
In Espiritu v. Municipal Council of Pozorrubio,311 the Supreme All other property possessed by provinces, cities or municipalities,
Court held that town plaza cannot be used for the construction of which is not intended for public use, is patrimonial.313

310 312
Supra. G.R. No. L-6534, 48 O.G. 4860.
311 313
102 Phil. 869-870. Art. 424, 2nd par., Civil Code.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 97 98 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

Unlike in the classification regarding State properties, properties in 1957 that Congress granted to chartered cities and municipalities a
for public service in the provinces, cities and municipalities are not general authority to reclaim foreshore lands bordering their respective
classified as public.314 However, the Supreme Court expressed the view territories.323 R.A. No. 7160, otherwise known as the Local Government
that it is not inclined to hold that municipal property held and devoted Code of 1991, likewise empowers local government units to undertake
to public service is in the same category as ordinary private property reclamation projects by themselves or through contractors.
because of dire consequences detrimental to the local community, i.e.,
Whether reclaimed lands transferred to a public or municipal
ordinary properties can be levied and attached and they can even be
corporation are public in nature or patrimonial depends upon the
acquired thru adverse possession.315
legislative intent.
In Agripino Capitulo, et al. v. Alejo Aquino,316 it was held that
In Manila Lodge No. 761 v. Court of Appeals,324 for example, where
properties which are intended for public use or for some public service
in 1905, the Philippine Commission enacted Act No. 1360 authorizing
are properties for public use. All others are patrimonial properties.
the City of Manila to reclaim of a portion of the Luneta to form part of
[27.1] Reclaimed Lands Belonging To Political Subdivisions the Luneta extension. The Act provided that the reclaimed area “shall
be the property of the City of Manila.” In this case, the Supreme Court
The right to reclaim is a function of the sovereign who owns title to held that the legislative intent was to make the reclaimed land part of
all the lands and waters of the public domain.317 The authority to reclaim the property of public dominion of the City of Manila. The Court held
is not a right or privilege accorded any person and the land reclaimed that “if the reclaimed area is an extension of the Luneta, then it is of the
does not belong to whosoever undertakes its reclamation.318 Even same nature or character as the old Luneta.”
private owners of lands adjoining bodies of water, especially the sea and
navigable waters, cannot motu proprio undertake reclamation of shores Since the city or municipality may alienate the land it reclaimed
and submerged lands and claim title thereto.319 Unless the State, through pursuant to R.A. No. 1899325 or it may pay a portion of the reclaimed lands
Congress, grants this right, it is only the National Government that can pursuant to Section 302 of the Local Government Code, it appears that
undertake reclamation work and assert title to reclaimed land.320 the lands reclaimed by the local government pursuant to the aforesaid
laws are patrimonial in character unless said local government reserves
In several instances, however, the State delegated to specific certain portions of the reclaimed area for public use such as for plazas,
municipalities the right to reclaim land. For example, the Philippine schools or hospitals, in which case, the reclaimed land is characterized
Legislature passed laws granting municipalities the right to reclaim as land of the public domain.
foreshore or marshy lands within their respective territories.321 The rule
remained, nonetheless, that no person, public or private, could undertake In Chavez v. Public Estates Authority,326 the Supreme Court like-
reclamation work and own the land they reclaimed without a specific wise held that “reclaimed alienable lands of the public domain if sold
grant from Congress.322 It was only with the passage of R.A. No. 1899 or transferred to a public or municipal corporation for a monetary con-
sideration become patrimonial property in the hands of the public or
municipal corporation” and “once converted to patrimonial property,
314
Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334, 1342 (1968).
315
the land may be sold by the public or municipal corporation to private
Ibid., at p. 1346.
316
No. 15488-R, (CA) 53 O.G. 1477, November 19, 1956. parties, whether Filipino citizens or qualified private corporations.”
317
Concurring Opinion of J. Puno in Republic v. CA, 299 SCRA 199, 301 (1998).
318
Id.
319
Id.
320 323
Id. Id., 302.
321 324
Id., citing R.A. No. 161, Bacolod City; R.A. No. 287, Catbalogan, Samar; R.A. No. Supra.
325
1099, Romblon. See Ponce cases, supra.
322 326
Id., 301-302. Chavez v. PEA, 403 SCRA 1, 32.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 99 100 PROPERTY


CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

§ 28. Other Classification Zamboanga Province. Thereafter Congress approved R.A. No. 3039 amending
C.A. No. 39 by providing that “all buildings, properties and assets belonging to
The classification of properties other than those for public use in the former province of Zamboanga and located within the City of Zamboanga
the provinces, cities and municipalities as patrimonial under Article 424 are hereby transferred, free of charge, in favor of the said City of Zamboanga.”
of the New Civil Code is “without prejudice to the provisions of special The Province of Zamboanga del Norte questioned the constitutionality of R.A.
laws.” For purposes of this article, the principles obtaining under the Law No. 3039 on the ground that it deprived the province of its property without
of Municipal Corporation can be considered as “special laws.”327 Hence, due process and just compensation. In resolving the constitutionality of the
in the case of Province of Zamboanga del Norte v. City of Zamboanga,328 law, the Supreme Court laid down this test: If the property is owned by the
the Supreme Court held that the classification of municipal property municipality (meaning municipal corporation) in its public and governmental
devoted for distinctly governmental purposes as public should prevail capacity, the property is public and Congress has absolute control over it.
But if the property is owned in its private or proprietary capacity, then it is
over the Civil Code classification. The same principle was applied in
patrimonial and Congress has no absolute control over it. In applying the test,
the case of Vda. de Tantoco v. Municipal Council of Iloilo.329 In this case, the Court has to resolve another question: Which norm to use in classifying
the Court held that municipal properties necessary for governmental the properties in question — the Civil Code or that obtaining under the law of
purposes are public in nature. Thus, the auto trucks used by the Municipal Corporations. If the Civil Code is to be applied, all the properties
municipality for street sprinkling, the police patrol automobile, police in question, except the two lots used as High School playgrounds, would be
stations and concrete structures with the corresponding lots used as considered as patrimonial properties of the former Zamboanga province. On
markets were declared exempt from execution and attachment since the other hand, applying the norm obtaining under the principles constituting
they were not patrimonial properties. the law of Municipal Corporations, all of the 50 properties in question which
are devoted to public service are deemed public. In upholding the latter view,
Taking into consideration the cases of Province of Zamboanga del the Court explained —
Norte and Vda. de Tantoco, it appears that the properties of the political
We are more inclined to uphold the latter view. The
subdivisions (provinces, cities and municipalities) are classified in
controversy here is more along the domains of the Law of
accordance with the use to which they are intended or devoted. In effect, Municipal Corporations — the State v. Province — than along
what was said by the Court of Appeals in Capitulo v. Aquino330 had been that of Civil Law. Moreover, this Court is not inclined to hold that
reiterated and adopted by the Supreme Court. In Capitulo, the Court municipal property held and devoted to public service is in the
of Appeals held that “the nature of properties owned by cities in this same category as ordinary private property. The consequences
country is determined by the character of the use or service for which are dire. As ordinary private properties, they can be levied upon
they are intended or devoted” and that “properties which are intended and attached. They can even be acquired thru adverse possession
for public use or for some public service are properties for public use.” — all these to the detriment of the local community. Lastly, the
All other properties are patrimonial. classification of properties other than those for public use in the
municipalities as patrimonial under Art. 424 of the Civil Code is
Province of Zamboanga del Norte v. City of Zamboanga “x x x without prejudice to the provisions of special laws.” For
22 SCRA 1334 (1968) purposes of this article, the principles obtaining under the Law
of Municipal Corporations can be considered as “special laws.”
In this case, Congress passed Commonwealth Act 39 converting the Hence, the classification of municipal property devoted for
Municipality of Zamboanga into Zamboanga City. Prior to the conversion, distinctly governmental purposes as public should prevail over the
the Municipality of Zamboanga used to be the provincial capital of the then Civil Code classification in this particular case.

327
Province of Zamboanga del Norte v. City of Zamboanga, 22 SCRA 1334 (1968).
Art. 425. Property of private ownership, besides the patrimonial
328
Supra. property of the State, provinces, cities and municipalities, consists of all
329
Supra. property belonging to private persons, either individually or collectively.
330
Supra. (345a)
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 101 102 PROPERTY
CLASSIFICATION OF PROPERTY
Property in Relation to the Person to Whom it belongs

§ 29. Private Property clothing, horses or carriages and their accessories, grains, liquids and
merchandise, or other things which do not have as their principal object
Private properties may belong to the State, to provinces, cities the furnishing or ornamenting of a building, except where from the con-
and municipalities or may belong to the private individuals either text of the law, or the individual declaration, the contrary clearly appears.
individually or collectively. Such properties when they belong to the (346a)
State, provinces, cities and municipalities are called “patrimonial
property;” and when they belong to private entities or individuals, they — oOo —
are called “properties of private ownership.”
All lands are presumed, however, to be public lands until the
contrary is established.331
Under Sec. 7, Art. XII of the 1987 Constitution, no private lands
shall be transferred or conveyed except to individuals, corporations or
associations qualified to acquire or hold lands of the public domain, save
in cases of hereditary succession. However, a natural-born citizen of the
Philippines who has lost his Philippine citizenship may be a transferee
of private lands subject to limitations as may be provided by law.332 The
law that provides for such limitations is B.P. Blg. 185.
In J.G. Summit Holdings, Inc. v. Court of Appeals,333 the Court
clarified that the prohibition in the Constitution applies only to ownership
of lands and it does not extend to other real property as defined in Article
415 of the Civil Code. Otherwise, the Court added, we would have a
strange situation where the ownership of immovable property such as
trees, plants and growing fruit attached to the land would be limited to
Filipinos and Filipino corporations only.

PROVISIONS COMMON TO THE


THREE PRECEDING CHAPTERS

Art. 426. Whenever by provision of the law, or an individual dec-


laration, 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,

331
Municipality of Antipolo v. Zapanta, supra., citing Oh Cho v. Director of Lands, 75 Phil.
(1946); Director of Lands v. CA, 38 SCRA 635 (1971).
332
Sec. 8, Art. XII, 1987 Constitution.
333
G.R. No. 124293, Jan. 31, 2005.

103 104 PROPERTY

to whom it belongs (which concept, therefore, has a predominantly


objective meaning).5
Our Civil Code, however, clearly differentiates between property
Title II. – OWNERSHIP
and ownership. The concept of “property” under the Civil Code refers to
those things which are susceptible of appropriation while the concept of
“ownership” refers to the mass or bundle of rights that may be exercised
Chapter 1
over a property. In other words, ownership refers to the bundle of rights
OWNERSHIP IN GENERAL that may be exercised over a property while the latter is the object of the
exercise of such rights.
Art. 427. Ownership may be exercised over things or rights. (n)
[30.2] Ownership, Defined
§ 30. Concept of Ownership
The Civil Code does not define ownership. Instead, the Code
[30.1] Property and Ownership, Distinguished simply enumerates the rights which are included therein, as follows:
As discussed in supra § 1.1, the word “property” is derived from (1) the right to enjoy the property (Art. 428, par. 1, NCC);
the Roman word proprius, meaning one’s own which, in essence, is
(2) the right to dispose the property (Art. 428, par. 1, NCC);
the concept of ownership. In fact, the Roman word proprietas1 means
ownership in Roman Law, although the more usual word is dominium, (3) the right to recover the property from any holder or possessor
which means the mastery or the absolute control over a thing except as (Art. 428, par. 2, NCC);
may be restrained by law.2 Dominion or ownership, on the other hand, (4) the right to exclude any person from enjoyment and disposal
comes from domus or house for in Roman Law the master of the house of the property (Art. 429, NCC);
is called dominus and his domestic power over the household is called
(5) the right to enclose or fence the land or tenement (Art. 430,
dominium.3 Thus, in Roman Law, there appears to be no difference
NCC);
between the concepts of property and ownership.
(6) the right to demand indemnity for damages suffered due to
Castan is likewise of the view that between property and
lawful interference by a third person to avert an imminent
ownership, there is really no difference in extent or contents but simply
danger (Art. 432, NCC);
a difference of viewpoint.4 According to him, while ownership implies
the power over a thing which belongs to the owner (which concept, (7) the right to just compensation in case of eminent domain
therefore, has a predominantly objective meaning); property, on the (Art. 435, NCC);
other hand, accentuates the relation between the thing and the owner (8) the right to construct any works or make any plantations and
excavations on the surface or subsurface of the land (Art.
437, NCC);
1
Derived from proprius.
2
The Principles of Roman Law and Their relation to modern law by William L. Burdick, (9) the right to hidden treasure found in the owner’s property
2004 ed., 325-326. (Art. 438, NCC); and
3
II Caguioa, Civil Code of the Philippines, 1966 ed., 48.
4
2 Castan, 8th ed., 49, 52, 53, cited in II Caguioa, Civil Code of the Philippines, 1966 ed., (10) the right to accessions. (Art. 440, NCC)
48.

103 5
Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 105 106 PROPERTY
OWNERSHIP
Ownership in General

At least, in our jurisdiction, the more acceptable definition of to exclude any person from its enjoyment and disposal11 save for the
ownership is that given by Justice J.B.L. Reyes. He defines ownership exception mentioned in Article 432 of the Civil Code which will be
as “an independent right of exclusive enjoyment and control of the thing discussed in subsequent sections of this Book.
for the purpose of deriving therefrom all advantages required by the
reasonable needs of the owner (holder of the right) and the promotion [30.4] Other Real Rights Aside From Ownership
of the general welfare but subject to the restrictions imposed by law and Apart from ownership, the Civil Code recognizes the existence
the right of others.”6 of other real rights that may be exercised in relation to property, i.e.,
possession, usufruct, easement, pledge and mortgage, etc. Of all these
[30.3] Ownership Is A Real Right
rights, however, ownership is considered as the most complete because
[30.3.1] Jus In Re and Jus In Personam it provides the owner the most ample power of dominion over the prop-
Personal right or jus in personam is one which imposes an erty.12 In contrast, however, the other real rights are necessarily limited
obligation on a definite person.7 Stated otherwise, personal right or since they merely serve as restrictions on one’s exercise of ownership.
more properly called the right of obligation is the power belonging to For this purpose, we should classify real rights into two general
one person to demand from another, as a definite passive subject, the categories: (1) real rights over one’s own property (jus in re propria); and
fulfillment of a prestation to give, to do or not to do.8 (2) real rights over the property of another (jus in re aliena). These latter
A real right or jus in re, on the other hand, has been defined as rights are lesser rights than the right of ownership yet they make inroads
the power belonging to a person over a specific thing without a definite upon and curtail the rights of the owner.13 Examples of jus in re aliena
passive subject against whom such right may be personally enforced.9 A are usufruct, easement, possession and mortgage. In these examples,
right in rem, therefore, is one which imposes an obligation on persons the owner of the property has for the time being parted with some of his
generally, i.e., either on all the world or on all the world except certain rights, thereby restricting and abridging the right of ownership.
determinate persons. Thus, if I am entitled to exclude all persons from Compared to ownership, the other real rights cannot exist inde-
a given piece of land, I have a right in rem in respect of that land; and, pendently of ownership. In other words, the other real rights are depen-
if there are one or more persons, A, B and C, whom I am not entitled to dent because they presuppose the existence of ownership. On the other
exclude from it, my right is still a right in rem.10 hand, and based from the definition cited in supra § 30. 2, ownership
is an independent real right since it can exist without the necessity of
[30.3.2] Ownership as Real Right other rights.
As can be seen from the discussion above, a real right creates
a direct relation between the specific thing and its holder in such a [30.5] Objects of Ownership
way that it permits the holder to exclude others from the enjoyment As discussed in supra § 30.1, the relationship that exists between
of the thing. Correspondingly, it creates an obligation on the part of ownership and property is that the latter is the object of the former.
third persons not to interfere in such enjoyment. These elements are
In accordance with Article 427 of the Code, the subject matter
clearly present in ownership. Hence, the owner of a thing has the right
of ownership may either be things or rights. But as discussed in supra
§ 1.2, the concept of things under the Civil Code, specifically Article
6
Outline of Civil Law by Reyes and Puno, Vol. II, 20.
7 11
Black’s Law Dictionary, 5th ed., 1189. Art. 429, NCC.
8 12
3 Sanchez Roman 8. See Castan, 8th Ed., 90-91.
9 13
3 Sanchez Roman 6. The Principles of Roman Law and Their Relation to Modern Law by William L. Burdick,
10
Black’s Law Dictionary, 5th ed., 1189. 2004 ed., 354.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 107 108 PROPERTY


OWNERSHIP
Ownership in General

414, embraces both material objects and rights. In other words, the term enjoyment may consist simply of its possession (jus possidendi), or
“things” in Article 414 is used, not in its ordinary meaning, but in the its consumption (jus abutendi), or its use (jus utendi), enjoyments
juridical sense. In Article 427, however, it is quite obvious that the word of its products or fruits (jus fruendi) or the enjoyment of anything
“things” has reference only to material objects as contra distinguished attached or incorporated to it, either naturally or artificially (the right
from rights. Then again, Article 428 the Code mentions “things” only but of accession).
this time the concept embraces both material objects and rights. Hence,
it would have been better if Article 427 simply stated that “ownership [32.1] Right To Use and Abuse
is exercised over property.” After all, the concept of property under the To use a thing consists in employing it for the purpose for which
Civil Code embraces both material objects and rights. it is fit, without destroying it, and which employment can therefore be
repeated. Hence, the phrase jus utendi is used in contradistinction to the
Art. 428. The owner has the right to enjoy and dispose of a thing, jus abutendi. The latter right involves consumption of the thing by its
without other limitations than those established by law. use. As explained by the late Senator Tolentino, citing Sanchez Roman
The owner has also a right of action against the holder and pos- and Valverde, the jus abutendi should not be understood as the right
sessor of the thing in order to recover it. (348a) of the owner to exercise absolute and unlimited power over the thing
to the point of destroying it by any means, however inconvenient and
§ 31. Attributes of Ownership prejudicial to the public interest or to the right of others. According
In Roman Law, the attributes of ownership are the following: (1) to him, jus abutendi properly meant the use that extinguishes, that
jus utendi or the right to use property without destroying its substance; consumes, by acts of the owner, things which are consumable.14
(2) jus fruendi or the right to the fruits; (3) jus disponendi or the right to As a consequence, for example, of the owner’s right to use his
dispose or alienate; (4) jus abutendi or the right to abuse or to consume property, it has been held that the purchaser of a house which is leased is
the thing by its use; (5) jus possidendi or the right to possess; and (6) jus entitled to terminate the lease, there being no stipulation to the contrary
vindicandi or the right to recover. and the lease not being recorded. This is so because the right to the use
It is noticeable, however, that the present article mentions only of the said house is one of the rights transferred to him by virtue of
three rights — the rights to enjoy, dispose and recover. While this may his ownership.15 Also, the owner may not be prevented from enjoying
be the case, it is not the intention of the Code to do away with the other his property on the mere pretext that the present occupant badly needs
rights which are traditionally included in ownership. This is because the the same in view of an acute housing shortage brought about by the
right to enjoy already includes in it the right to use (jus utendi), the right destruction of the City of Manila during the Second World War.16
to the fruits (jus fruendi), the right to possess (jus possidendi) and the
§ 33. Right to Dispose
right to abuse or consume (jus abutendi).
Jus disponendi or the power of the owner to dispose of his property
Another attribute of ownership which is not included in the present
includes the power to alienate, to encumber, to limit, to transform, to
article but treated in a separate chapter is the right of accession. The
destroy and to merge.17
Code deems it fit to devote an entirely separate chapter solely for this
right because of the importance of the subject.
14
§ 32. Right to Enjoy See Footnote No. 2, II Tolentino, Civil Code, 1992 ed., p. 46.
15
Saul v. Hawkins, 1 Phil. 275.
The essence of ownership is the right of the owner to freely 16
Roque v. Cavestani, G.R. No. L-218, Aug. 18, 1946; Villanueva v. Carlos, G.R. No. L-
329, Sep. 16, 1946.
enjoy either the property itself or the benefits derived therefrom, which 17
2 Castan, 8th ed., 106.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 109 110 PROPERTY
OWNERSHIP
Ownership in General

The right to alienate is the right of the owner to transmit either by directs the true owner to “resort to judicial process for the recovery of
onerous or gratuitous title his right to another by any act inter vivos or the property” and Article 536 of the same Code which states:
mortis causa. Such right is exclusively vested upon the owner based
upon the principle that “no one can give what he does not have.” “Art. 536. In no case may possession be acquired
Examples of alienation are sale and donation. through force or intimidation as long as there is a possessor
who objects thereto. He who believes that he has an action
The right to limit or encumber is the power of the owner to or a right to deprive another of the holding of a thing, must
deprive himself of several of the rights included in ownership and invoke the aid of the competent court, if the holder should
transfer them to another. Thus, the owner may deprive himself of the refuse to deliver the thing. (441a)” (Italics supplied)
use and possession of his property by entering into contracts of lease
and commodatum, for example. He may also deprive himself of the Thus, in one case,20 the Supreme Court held that the owners of a
right to enjoy his property, including the right to receive the fruits, by property have no authority to use force and violence to eject alleged
constituting a usufruct in favor of a third person. usurpers who were in prior physical possession of it. The Court held
further that the owners must file the appropriate action in court and
The right to transform, on the other hand, is the power to change should not take the law into their own hands.
the nature of the thing, or its form or destination and the power to destroy
is the power to render useless or to abandon or annihilate the thing. [34.2] Actions for Recovery of Possession
Under existing laws and jurisprudence, there are three kinds of
§ 34. Right to Recover
actions available to recover possession of real property: (a) accion
[34.1] Right to Possession interdictal; (b) accion publiciana; and (c) accion reivindicatoria.21 For
Possession is essential to both free enjoyment and disposal. the recovery of possession of a personal property, on the other hand, the
Possession, as an incident of ownership or a right included in ownership, available remedy is called replevin.22
must be distinguished from possession, as a right independent and
[34.2.1] Accion Interdictal
apart from ownership. The former is jus possidendi and the latter is
jus possessionis. Some authors refer to jus possidendi as the right to Accion interdictal comprises two distinct causes of action, namely,
possession and to jus possessionis as the right of possession. The latter forcible entry (detentacion) and unlawful detainer (desahuico).23 Forcible
concept of possession (jus possessionis) is discussed separately in Title entry is a summary action to recover material or physical possession
V of Book II. of real property when the person who originally held it was deprived
of possession by “force, intimidation, threat, strategy, or stealth.”24
The owner is entitled to the exclusive possession of his property.
An action for unlawful detainer, on the other hand, may be filed when
For this purpose, he may exclude any person from the enjoyment and
possession by “a lessor, vendor, vendee, or other person against whom
disposal thereof by force if necessary18 and he may also enclose or fence
his property by any means.19 In the event, however, that the possessor
is unlawfully deprived of possession he is not justified to take the law 20
Heirs of Pedro Laurora, et al. v. Sterling Technopark III, G.R. No. 148615, April 9,
into his own hands. Instead, he is required to resort to the proper legal 2003.
21
Valdez v. CA, G.R. No. 132424, May 2, 2006, citing Javier v. Veridiano II, 237 SCRA
processes for the purpose of obtaining recovery of possession. This 565, 572-573 (1994).
principle is embodied in Article 433 of the New Civil Code which 22
Rule 60, 1997 Rules of Civil Procedure.
23
Valdez v. CA, G.R. No. 132424, May 2, 2006, citing Javier v. Veridiano II, 237 SCRA
565, 572-573 (1994).
18 24
See Art. 429, NCC. See Sec. 1, Rule 70, 1997 Rules of Civil Procedure; Dela Cruz v. Panis, 245 SCRA 242
19
See Art. 430, NCC. (1995).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 111 112 PROPERTY


OWNERSHIP
Ownership in General

the possession of any land or building is unlawfully withheld after the or building nor shall it be held conclusive of the facts therein found in
expiration or termination of the right to hold possession, by virtue of the case between the same parties upon a different cause of action not
any contract, express or implied.”25 involving possession.31
Both actions are within the exclusive and original jurisdiction of Forcible entry and unlawful detainer, which deal with physical or
the Metropolitan or Municipal Trial Courts26 and which are required de facto possession, may be distinguished as follows:
to be brought within one year from the date of actual entry, in case of (1) Their main difference lies in the time when possession became
forcible entry, and from the date of the last demand, in case of unlawful unlawful: in forcible entry, the possession by the defendant is unlawful
detainer.27 The one-year prescriptive period for the filing of an ejectment ab initio because he acquires possession by force, intimidation, threat,
case is pursuant to the provisions of Article 555(4) of the New Civil strategy, or stealth; while in unlawful detainer, possession is originally
Code which states that possession de facto is lost if the possession by lawful but becomes illegal by reason of the termination of his right of
another person has lasted for more than one year. Forcible entry and possession under his contract with the plaintiff.32
unlawful detainer are quieting processes and the one-year time bar to
the suit is in pursuance of the summary nature of the action.28 The use (2) In an action for forcible entry, the plaintiff must allege and
of summary procedure in ejectment cases is intended to provide an prove that he was in prior physical possession of the premises until
expeditious means of protecting actual possession or right to possession deprived thereof, while in illegal detainer, the plaintiff need not have
of the property.29 They are not processes to determine the actual title to been in prior physical possession.33 A complaint for unlawful detainer
an estate.30 should be distinguished from that of forcible entry. In forcible entry, the
plaintiff has prior possession of the property and he is deprived thereof
In ejectment cases, the sole question for resolution is the physical by the defendant through force, intimidation, threat, strategy or stealth.
or material possession (possession de facto) of the property in question In an unlawful detainer, the defendant unlawfully withholds possession
and neither a claim of juridical possession (possession de jure) nor an of the property after the expiration or termination of his right thereto
averment of ownership by the defendant can outrightly deprive the court under any contract, express or implied; hence, prior physical possession
from taking due cognizance of the case. So that, even if the question is not required. This is especially so where a vendee seeks to obtain
of ownership is raised in the pleadings the court may pass upon such possession of the thing sold.34
issue but only to determine the question of possession especially if
(3) The one year period within which to bring an action for
the former is inseparably linked with the latter. Thus, all that the trial
forcible entry is generally counted from the date of actual entry on
court may do is to make an initial determination of who is the owner
the land, except that when entry was made through stealth, the one
of the property so that it can resolve who is entitled to its possession
year period is counted from the time the plaintiff learned thereof.35 In
absent other evidence to resolve the latter. But such determination of
unlawful detainer, however, the one year prescriptive period is counted
ownership is not clothed with finality. Neither will it affect ownership
from the date of the last demand.36 Hence, in the latter type of action,
of the property nor constitute a binding and conclusive adjudication on
the plaintiff must first make such demand, which is jurisdictional in
the merits with respect to the issue of ownership. Such judgment shall
nature.37
not bar an action between the same parties respecting title to the land
31
Pengson v. Ocampo, 360 SCRA 420, 425-426.
25 32
Id. Heirs of Demetrio Melchor v. Melchor, 415 SCRA 726.
26 33
Sec. 33(2), B.P. Blg. 129, as amended by R.A. No. 7691. Id.
27 34
Javier v. Veridiano II, 237 SCRA 565 (1994). Barba v. CA, 376 SCRA 210, 218-219.
28 35
De Leon v. CA, 245 SCRA 166, 173 (1995). Ong v. Parrel, 355 SCRA 691, 696.
29 36
Id. Valdez v. CA, G.R. No. 132424, May 2, 2006.
30 37
Id. See Sec. 2, Rule 70, 1997 Rules of Civil Procedure; Medel v. Militante, 41 Phil. 44.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 113 114 PROPERTY
OWNERSHIP
Ownership in General

[34.2.2] Accion Publiciana [ii] Distinguished From Accion Reivindicatoria


An accion publiciana is an action for recovery of the right to In accion publiciana, the basis of the recovery of possession is the
possess and is a plenary action38 in an ordinary civil proceeding to plaintiff’s real right of possession or jus possessionis — which is the
determine the better right of possession of realty independent of the right to the possession of the real estate independent of ownership. In
title39 or ownership of the property. Accion publiciana or plenaria accion reivindicatoria, however, the basis of the action for recovery of
de posesion is also used to refer to an ejectment suit filed after the possession is ownership itself. Hence, an accion reivindicatoria involves
expiration of one year from the accrual of the cause of action or from recovery of possession as an incident or attribute of ownership, or what
the unlawful withholding of possession of the realty.40 In other words, if is known as jus possidendi.
at the time of the filing of the complaint more than one year had elapsed
since defendant had turned plaintiff out of possession or defendant’s [34.2.3] Accion Reivindicatoria
possession had become illegal, the action will be, not one of the forcible An accion reinvindicatoria is a suit which has for its object the
entry or illegal detainer, but an accion publiciana.41 recovery of possession over the real property as owner.45 Also known as
Unlike ejectment cases which are always within the exclusive accion de reivindicacion, it is thus an action whereby plaintiff alleges
jurisdiction of the Metropolitan or Municipal Trial Courts,42 jurisdiction ownership over a parcel of land and seeks recovery of its full possession.46
over an accion publiciana shall depend on the location of the realty It is different from accion publiciana where plaintiff merely alleges
and its assessed value. If the property is located in Metro Manila and proof of a better right to possess without claim of title.47
its assessed value does not exceed P50,000.00, jurisdiction is with the In some decisions of the Court, accion reinvindicatoria is often
Metropolitan Trial Courts. But if the assessed value of the realty exceeds referred as an action to recover ownership.48 Such description is, however,
P50,000.00, it is the Regional Trial Court which exercises jurisdiction misleading and inaccurate. One of the characteristics of ownership is
over an accion publiciana.43 If the realty is, on the other hand, situated that it is an exclusive right, meaning, there can be only one ownership
outside of Metro Manila, it is the Municipal Trial Courts which has although there may be two or more owners.49 As such, it is not correct
jurisdiction if the assessed value thereof does not exceed P20,000.00, to say that an accion reivindicatoria involves recovery of ownership —
otherwise, it is the Regional Trial Court which has jurisdiction.44 which suggests that ownership had already been lost by the plaintiff to
another — when in fact, it is ownership which is the basis of an accion
[i] Distinguished From Accion Interdictal
reivindicatoria. What happens in an accion reivindicatoria is that the
What really distinguishes the summary action of ejectment (accion plaintiff has been deprived of the exercise of all the rights included
inderdictal) from the plenary action for recovery of possession (accion in ownership and what he seeks to recover by filing such an action is,
publiciana) is that the issue in the former is limited to the question of in reality, only the exercise of the rights included in ownership. Since
possession de facto while the issue in the latter is the determination of possession is essential to the exercise of the other rights included in
the better right of possession or possession de jure. ownership and it is the most visible expression of the exercise of such
rights, an accion reivindicatoria has been associated with the recovery
of possession over the real property as owner.
38
As distinguished from the summary nature of ejectment cases.
39
Cruz v. Torres, 316 SCRA 193, citing Aguilon v. Bohol, 79 SCRA 482 (1977) and Des-
45
barats v. De Laureano, 18 SCRA 116 (1966). Hilario v. Salvador, 457 SCRA 815, 825 (2005).
40 46
Id., citing Bernabe v. Dayrit, 125 SCRA 423, 425 (1983). Javier v. Veridiano II, supra.
41 47
Valdez v. CA, G.R. No. 132424, May 2, 2006. Id.
42 48
Sec. 33(2), B.P. Blg. 129, as amended by R.A. No. 7691. See De Leon v. CA, 245 SCRA 166, 173 (1995); Valdez v. CA, supra; Custodio v. Cor-
43
Sec. 33(3), B.P. Blg. 129, as amended by R.A. No. 7691. rado, 435 SCRA 500 (2004).
44 49
Id. See II Caguioa, Civil Code of the Philippines, 1966 ed., 50.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 115 116 PROPERTY


OWNERSHIP
Ownership in General

As in the case of accion publiciana, jurisdiction over an accion is available not only to owners of the property but also to any of its
reivindicatoria shall depend on the location of the realty and its assessed “lawful possessor.”55
value. If the property is located in Metro Manila and its assessed value
does not exceed P50,000.00, jurisdiction is with the Metropolitan Trial [35.3] When May the Doctrine Be Invoked
Courts. But if the assessed value of the realty exceeds P50,000.00, it is The use of reasonable force in defense of property under the
the Regional Trial Court which exercises jurisdiction over an accion doctrine of self-help is authorized only if the purpose is to “repel”
reivindicatoria.50 If the realty is, on the other hand, situated outside of or “prevent” an actual or threatened unlawful physical invasion or
Metro Manila, it is the Municipal Trial Courts which has jurisdiction if usurpation of the said property.56 In Article 429 of the Code, the word
the assessed value thereof does not exceed P20,000.00, otherwise, it is “repel” is, of course, referring to an “actual” unlawful physical
the Regional Trial Court which has jurisdiction.51 invasion or usurpation of the property; while the word “prevent” is
The requisites of an accion reivindicatoria are discussed in infra referring to a “threatened” unlawful physical invasion or usurpation
§ 38 in relation to Articles 433 and 434. of the property. It is clear, therefore, that the doctrine of self-help can
only be exercised at the time of actual or threatened dispossession, and
Art. 429. The owner or lawful possessor of a thing has the right to not when possession has already been lost.57 In the latter case, the owner
exclude any person from the enjoyment and disposal thereof. For this must resort to judicial process for the recovery of property as required
purpose, he may use such force as may be reasonably necessary to repel
in Article 536 of the Civil Code.58 In other words, the doctrine of self-
or prevent an actual or threatened unlawful physical invasion or usurpa-
tion of his property. (n) help cannot be invoked for the purpose of recovering property.

§ 35. Doctrine of Self-help German Management & Services, Inc. v. CA


177 SCRA 495 (1989)
[35.1] Statement of the Doctrine
In this case, the registered owners of a parcel of land situated in
As a necessary consequence of ownership, the owner has the right Antipolo, Rizal, who were based in the United States of America, authorized
of exclusive enjoyment and control over his property, as well as to its the petitioner German Management & Services, Inc. to develop their property
exclusive possession. He may, therefore, exclude any person from its into a residential subdivision. Finding that part of the property was occupied
enjoyment and disposal.52 This right of the owner is so important that by private respondents and twenty other persons, petitioner advised the
the law deems it appropriate to allow him to “use such force as may occupants to vacate the premises but the latter refused. Nevertheless, petitioner
proceeded with the development of the subject property which included the
be reasonably necessary to repel or prevent an actual or threatened
portions occupied and cultivated by private respondents. In so doing, the
unlawful physical invasion or usurpation of his property.”53 The petitioner forcibly removed and destroyed the barbed wire fence enclosing
employment of such reasonable force in defense of his property is what private respondents’ farmholdings. Petitioner likewise bulldozed the rice, corn,
is known in juridical science as the doctrine of self-help.54 fruit bearing trees and other crops of private respondents. Private respondents,
thereafter, sued the petitioner for ejectment (forcible entry). The Municipal
[35.2] Who May Invoke the Doctrine Trial Court dismissed the action, which dismissal was sustained by the
While Chapter 1, Title II, Book II of the New Civil Code, inclusive Regional Trial Court on appeal. Both courts have rationalized the petitioner’s
of Article 429 thereof, speaks of “ownership,” the doctrine of self-help drastic action of bulldozing and destroying the crops of private respondents on
the basis of the doctrine of self-help enunciated in Article 429 of the New Civil
50
Sec. 33(3), B.P. Blg. 129, as amended by R.A. No. 7691.
51 55
Id. See Art. 429, NCC.
52 56
Art. 429, NCC. Id.
53 57
Id. German Management & Services, Inc. v. CA, 177 SCRA 495 (1989).
54 58
People v. Depante (CA), 58 O.G. 926. Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 117 118 PROPERTY
OWNERSHIP
Ownership in General

Code. When the case reached the Supreme Court, the High Court held that In the case of People v. Narvaez,61 however, the Supreme Court,
what the petitioner did could not be justified under the doctrine of self-help. citing the provisions of Article 429 of the New Civil Code, credited the
The Court explained — accused with the special mitigating circumstance of incomplete defense
Both the Municipal Trial Court and the Regional Trial Court of property even if such defense is not coupled with an attack upon the
have rationalized petitioner’s drastic action of bulldozing and person of the accused.
destroying the crops of private respondents on the basis of the
doctrine of self-help enunciated in Article 429 of the New Civil It thus appears that Article 429 of the New Civil Code plugs the
Code. Such justification is unavailing because the doctrine of loophole in the Revised Penal Code where it is doubtful whether the
self-help can only be exercised at the time of actual or threatened defense of property is possible if the unlawful physical invasion of
dispossession which is absent in the case at bar. When possession one’s property is not accompanied by unlawful aggression against the
has already been lost, the owner must resort to judicial process person of the owner.62 Under this article, defense of property without
for the recovery of property. This is clear from Article 536 of the any aggression against the person of the owner is authorized.63 Thus,
Civil Code which states, “(I)n no case may possession be acquired in People v. Narvaez, supra, even if the aggression was directed not
through force or intimidation as long as there is a possessor who
on the person of the accused-appellant but only on his property, the
objects thereto. He who believes that he has an action or right to
deprive another of the holding of a thing, must invoke the aid of the Court nonetheless considered such unlawful aggression for the purpose
competent court, if the holder should refuse to deliver the thing.’’ of crediting him with the special mitigating circumstance of incomplete
self-defense.
[35.4] Defense of Property as Justifying Circumstance In order for defense of property to be appreciated as a justifying
circumstance, it is necessary that the means employed to prevent or repel
In the language of Viada, aside from the right to life on which rests
the aggression must also be reasonable.64 Note that under the doctrine of
the legitimate defense of our own person we have the right to property
self-help in Article 429 of the Civil Code, what is authorized is the use
acquired by us, and the right to honor which is not the least prized of
of force “as may be reasonably necessary” for the purpose of repelling
our patrimony.59 Hence, defense of property is deemed included in self-
or preventing any actual or threatened unlawful physical invasion or
defense under the provisions of Article 11, paragraph 1, of the Revised
usurpation of one’s property. In determining the reasonableness of the
Penal Code.
means employed, the absence of an attack against the person of the
In two cases decided by the Court of Appeals,60 it was held that owner or lawful possessor of the property must be considered since
defense of property whether complete or incomplete, to be available, defense of property is not of such importance as the right to life and
must be coupled with an attack on the person of the owner or lawful limb. In People v. Narvaez, for example, the Court held that when the
possessor. Thus, in People v. Goya, supra, the Court of Appeals did appellant fired his shotgun from his window, killing his two victims, his
not appreciate the mitigating circumstance of incomplete defense of resistance was disproportionate to the attack. Hence, he was credited
property because when the appellant (a security guard in the bodega only with special mitigating circumstance of incomplete defense of
of Cagayan Valley Agricultural Corporation) fired a shot at the victim, property.
who was caught in the act of stealing a sack of palay belonging to the
appellant’s employer, the victim did not lay hands on the appellant or
made any attempt to attack the latter.

61
121 SCRA 389 (1983).
59 62
1 Viada, Codigo Penal, 5th ed., pp. 172-173, cited in People v. Jaurigue, 76 Phil. 174. II Caguioa, Civil Code of the Philippines, 1966 ed., 58.
60 63
People v. Apolinar, (CA) 38 O.G. 2870 and People v. Goya, CA-GR. No. 16373-R, Sep. Id.
64
29, 1965. Art. 11(1), RPC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 119 120 PROPERTY


OWNERSHIP
Ownership in General

People v. Goya, CA-GR. No. 16373 Art. 430. Every owner may enclose or fence his land or tenements
Sept. 29, 1965 by means of walls, ditches, live or dead hedges, or by any other means
without detriment to servitudes constituted thereon. (388)
In this case, the accused was a guard in the bodega of the Cagayan Valley
Agricultural Corporation. On the night in question, he surprised the private
complainant in the act of going out through the door of the warehouse with
§ 36. Right to Enclose or Fence
a sack of palay. To prevent the latter from taking away the sack of palay, the Corollary to the right to exclude others from the enjoyment of
accused-appellant fired a shot at complainant. The shot hit complainant on the his property, the owner of a parcel of land or tenement has the right to
back for which he was hospitalized for 18 days. The guard was prosecuted and enclose or fence the same by whatever means.65 In so doing, the owner
adjudged by the trial court guilty of frustrated homicide. The defense, however,
is effectively giving notice to everybody that they are not welcome in
claimed that the mitigating circumstance of incomplete defense of property was
present in the commission of the crime. The Court of Appeals, however, found
his property without his consent and he may, therefore, validly consider
that the accused-appellant was guilty only of less serious physical injuries. any unauthorized intrusion into his property as an act of unlawful
The appellate court refused, however, to credit the accused-appellant with the aggression which will authorize him to resort to self-help.
mitigating circumstance of incomplete defense of property since, according However, it is required that the right to enclose or fence must be
to the Court of Appeals, defense of property whether complete or incomplete,
legitimately exercised and must not be attended with bad faith. Thus, if
to be available, must be coupled with an attack on the person defending the
property.
the lot owner fenced his property for the purpose of evicting its occupant
whose lease contract had already expired, the lot owner is liable to said
People v. Narvaez occupant for damages.66 In such a case, what the lot owner should do
121 SCRA 389 (1983) is to resort to the proper legal processes for the purpose of obtaining
recovery of possession pursuant to the provisions of Article 536 of the
Appellant’s house was situated on a land awarded to Fleischer and Civil Code.67
Company by virtue of a sales patent. The validity of the award was, however,
questioned before the court by a group of settlers, including the Appellant The right to enclose or fence in Article 430 is also subject to the
(Narvaez). On August 22, 1968 or while the case was still pending, a group of limitation that it should not work detriment to the servitudes constituted
men headed by the son (Davis Fleischer) of the landowner (George Fleischer) therein. The concept of servitude or easement is discussed in Title VII
were fencing the land of the latter. At that time, Appellant was taking his rest of this Book. Easement or servitude is defined as a real right constituted
but when he heard that the walls of his house were being chiseled, he arose in another person’s property, corporeal and immovable, by virtue of
and there he saw the fencing going on. If the fencing would go on, Appellant
which the owner of the same has to abstain from doing or to allow
would be prevented from getting into his house and the bodega of his rice mill.
So the Appellant addressed the group, “Pare, if possible you stop destroying somebody else to do something in his property for the benefit of another
my house and if possible we will talk it over what is good.” Davis Fleischer, thing or person.68 An example of this is easement of drainage of waters
however, answered: “No, gademit, proceed, go ahead.” Appellant apparently embodied in Article 637 of the New Civil Code, which reads:
lost his equilibrium and he got his gun and shot dead Fleischer and the latter’s “Art. 637. Lower estates are obliged to receive the
companion, Rubia. On appeal to the Supreme Court, the Court appreciated
waters which naturally and without the intervention of man
in favor of the Appellant the special mitigating circumstance of incomplete
defense of property, citing the provisions of Article 429 of the Civil Code descend from the higher estates, as well as the stones or earth
in relation to paragraph 6, Article 13 of the Revised Penal Code. The Court which they carry with them.
considered the unlawful physical invasion of Appellant’s property as unlawful
aggression but held that his resistance was disproportionate to the attack. 65
Art. 430, NCC.
66
See Villafuerte v. CA, G.R. No. 134239, May 26, 2005.
67
Id.
68
2 Sanchez Roman 572.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 121 122 PROPERTY
OWNERSHIP
Ownership in General

The owner of the lower estate cannot construct works Art. 431. The owner of a thing cannot make use thereof in such man-
which will impede this easement; neither can the owner of ner as to injure the rights of a third person. (n)
the higher estate make works which will increase the burden. Art. 432. The owner of a thing has no right to prohibit the interfer-
(552)” ence of another with the same, if the interference is necessary to avert an
imminent danger and the threatened damage, compared to the damage
Pursuant to such kind of easement or servitude, the owner of the arising to the owner from the interference, is much greater. The owner
lower tenement cannot block or impede the servitude and the owner of may demand from the person benefited indemnity for the damage to him.
(n)
the higher tenement cannot construct works to increase the burden of
the servitude. Clearly, the existence of this kind of servitude works as a
limitation upon the right of the owner of the lower tenement to enclose § 37. Limitations on Ownership
his property with walls or other means if the same will prevent the
Ownership is not an absolute right. Like all other social and con-
passage of the water which naturally falls from the higher tenement.
ventional rights, rights arising from ownership are subject to such rea-
sonable limitations in their enjoyment as shall prevent them from being
Villafuerte v. Court of Appeals injurious, and to such reasonable restraints and regulations, established
G.R. No. 134239, May 26, 2005 by law, as the legislature, under the governing and controlling power
In this case, the petitioners (Spouses Villafuerte) operated a gasoline vested in them by the constitution, may think necessary and expedient.
station on the premises of three adjoining lots, two of which were owned As such, the exercise of rights arising from ownership is always
by private respondents De Mesa and Daleon. Private respondents De Mesa subject to the restrictions imposed by law, the exercise of the inherent
and Daleon acquired their respective lots subject to the lease by Petrophil powers of the State and the rights of others. Aside from the foregoing
Corporation which had built thereon the gasoline station being managed by
restrictions, the owner himself may impose limitations upon his own
the Villafuerte couple. When the lease of Petrophil Corporation expired on
December 31, 1988, the petitioners Villafuertes obtained a new lease on the
right.
lot owned by private respondent De Mesa for a period expiring on December
[37.1] General Limitations Pursuant to the Exercise of the Inherent
31, 1989. Daleon, on the other hand, refused to enter into a lease contract with
Powers of the State
the Villafuertes and demanded that they vacate the lot owned by him. Upon
the expiration of the lease contract with De Mesa, the latter likewise refused to There are three inherent powers of government by which the State
renew the same. Instead, De Mesa and Daleon, with the aid of several persons interferes with the property rights, namely: (1) police power, (2) eminent
and without the knowledge of the Villafuertes, caused the closure of the latter’s domain, and (3) taxation.69 These powers are said to exist independently
gasoline station by constructing fences around it. Since then, the Villafuertes of the Constitution as necessary attributes of sovereignty.70 In other
were unable to operate the gasoline station. Hence, they sued for damages. On words, these powers need not be clothed with any constitutional gear to
appeal to the Supreme Court, the High Court sustained the award of exemplary
exist; instead, the provisions in our Constitution on the subject are meant
damages in favor of the Villafuertes. The Court held that Article 536 of the
Civil Code explicitly provides for the proper recourse of one who claims to more to regulate, rather than to grant, the exercise of these powers.71
be entitled to the possession of a thing. When private respondents personally
[37.1.1] Police Power
took it upon themselves to evict petitioners from their properties, which act
was in clear contravention of the law, they became liable for all the necessary The police power is a governmental function, an inherent attribute
and natural consequences of their illegal act. The Court further observed that of sovereignty, which was born with civilized government. It is founded
private respondents’ arbitrary conduct of fencing their properties under the
claim that they own the same brazenly violates the law and circumvents the 69
City Government of Quezon City v. Ericta, G.R. No. L-34915, June 24, 1983.
proper procedure which should be obtained before the court. 70
Id.
71
Manosca v. CA, G.R. No. 106440, Jan. 29, 1996.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 123 124 PROPERTY


OWNERSHIP
Ownership in General

largely on the maxims, “Sic utere tuo et alienum non laedas”72 and is noxious or intended for a noxious purpose, such as a building on the
“Salus populi est suprema lex.”73 Its fundamental purpose is securing verge of collapse, which should be demolished for the public safety, or
the general welfare, comfort and convenience of the people.74 obscene materials, which should be destroyed in the interest of public
morals. The confiscation of such property is not compensable, unlike
Freund defined police power as “the power of promoting the public
the taking of property under the power of expropriation, which requires
welfare by restraining and regulating the use of liberty and property.”75
the payment of just compensation to the owner.
Police power is usually exercised in the form of mere regulation or
restriction in the use of liberty or property for the promotion of the
general welfare.76 It does not involve the taking or confiscation of City Government of Quezon City v. Ericta
property with the exception of a few cases where there is a necessity G.R. No. L-34915, June 24, 1983
to confiscate private property in order to destroy it for the purpose of This case involves Ordinance No. 6118, Series of 1964, passed by the
protecting the peace and order and of promoting the general welfare as City Council of Quezon City which required, in Section 9 thereof, private
for instance, the confiscation of an illegally possessed article, such as cemeteries in Quezon City to set aside at least six percent (6%) of their total
opium and firearms.77 Thus, in police power, the owner does not recover area for charity burial grounds of the city’s deceased paupers. Pursuant thereto,
from the government for injury sustained in consequence thereof.78 the Quezon City Engineer notified Himlayang Pilipino, Inc. that such ordinance
would be enforced by the City Government. Himlayang Pilipino, Inc. assailed
The foregoing principles are confirmed in Article 436 of the New the validity of the ordinance on the ground that the same involved confiscation
Civil Code, which states: of private property. The City Government, on the other hand, argued that the
taking of the Himlayang Pilipino’s property is a valid and reasonable exercise
“Art. 436. When any property is condemned or seized of police power and that the land is taken for a public use as it is intended for
by competent authority in the interest of health, safety or the burial ground of paupers. The Supreme Court declared Section 9 of the
security, the owner thereof shall not be entitled to compensa- said ordinance invalid. The Court held that the same is not a mere police power
tion, unless he can show that such condemnation or seizure regulation but an outright confiscation and deprives a person of his private
is unjustified.” property without due process of law and without compensation. The Court
observed that there is no reasonable relation between the setting aside of at
There are traditional distinctions between the police power and least six percent (6%) of the total area of a private cemeteries for charity burial
the power of eminent domain that logically preclude the application of grounds of deceased paupers and the promotion of health, morals, good order,
both powers at the same time on the same subject. In the case of City of safety, or the general welfare of the people. In effect, the ordinance is actually
Baguio v. NAWASA,79 for example, where a law required the transfer of a taking without compensation of a certain area from a private cemetery to
all municipal waterworks systems to the NAWASA in exchange for its benefit paupers who are charges of the municipal corporation. Instead of
assets of equivalent value, the Court held that the power being exercised building or maintaining a public cemetery for this purpose, the city passes the
burden to private cemeteries.
was eminent domain because the property involved was wholesome and
intended for a public use. Property condemned under the police power
[37.1.2] Power of Eminent Domain
72
So use your own as not to injure another’s property.
73
Eminent domain is an inherent power of the State that enables
The welfare of the people is the supreme law.
74
Binay v. Domingo, G.R. No. 92389, Sep. 11, 1991. it to forcibly acquire private lands intended for public use upon
75
Tañada and Carreon, Political Law, Vol. 11, p. 50, cited in City Government of Quezon payment of just compensation to the owner.80 Obviously, there is no
City v. Ericta, supra.
76
City Government of Quezon City v. Ericta, supra.
77
Id.
78 80
Id. Association of Small Landowners in the Phil. v. Sec. of Agrarian Reform, G.R. No.
79
106 Phil. 144. 78742, July 14, 1989.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 125 126 PROPERTY
OWNERSHIP
Ownership in General

need to expropriate where the owner is willing to sell under terms also and condemnable transgression of an individual’s basic right to property
acceptable to the purchaser, in which case an ordinary deed of sale may as well.85
be agreed upon by the parties.81 It is only where the owner is unwilling
to sell, or cannot accept the price or other conditions offered by the [37.1.3] Power of Taxation
vendee, that the power of eminent domain will come into play to assert Taxation focuses on the power of government to raise revenue in
the paramount authority of the State over the interests of the property order to support its existence and carry out its legitimate objectives.86
owner. Private rights must then yield to the irresistible demands of the
public interest on the time-honored justification, as in the case of the As a general rule, the power to tax is an incident of sovereignty
police power, that the welfare of the people is the supreme law.82 and is unlimited in its range, acknowledging in its very nature no limits,
so that security against its abuse is to be found only in the responsibility
The exercise of the power of eminent domain is constrained by of the legislature which imposes the tax on the constituency who are to
two constitutional provisions: (1) that private property shall not be pay it. Nevertheless, effective limitations thereon may be imposed by
taken for public use without just compensation under Article III (Bill the people through their Constitutions.87 Our Constitution, for instance,
of Rights), Section 9; and (2) that no person shall be deprived of his/her provides that the rule of taxation shall be uniform and equitable and
life, liberty, or property without due process of law under Art. III, Sec. Congress shall evolve a progressive system of taxation.88
1. The foregoing requirement is echoed in Article 435 of the New Civil
So potent indeed is the power that it was once opined that “the
Code, which states:
power to tax involves the power to destroy.”89 Verily, taxation is a
“Art. 435. No person shall be deprived of his property destructive power which interferes with the personal and property
except by competent authority and for public use and always rights of the people and takes from them a portion of their property
upon payment of just compensation. for the support of the government.90 Accordingly, tax statutes must be
construed strictly against the government and liberally in favor of the
Should this requirement be not first complied with, the
taxpayer.91
courts shall protect and, in a proper case, restore the owner
in his possession. (349a)” [37.2] Specific Limitations Imposed By Law
In view of the foregoing proscription, the power of eminent domain Examples of limitations on ownership which are specifically
can only be exercised for public use and with just compensation. This provided by law are the following:
proscription is intended to provide a safeguard against possible abuse
and so to protect as well the individual against whose property the (1) Legal easements which can be enforced by law and, therefore,
power is sought to be enforced.83 Taking an individual’s private property
is a deprivation which can only be justified by a higher good — which is 85
Id.
public use — and can only be counterbalanced by just compensation.84 86

87
LTO v. City of Butuan, G.R. No. 131512, Jan. 20, 2000.
Mactan Cebu International Airport v. Hon. Marcos, G.R. No. 120082, Sep. 11, 1996; cit-
Without these safeguards, the taking of property would not only be ing Cooley on Constitutional Law, 4th ed. (1931), 62.
unlawful, immoral, and null and void, but would also constitute a gross 88
Sec. 28(1), Article VI, 1987 Constitution.
89
Chief Justice Marshall in McCulloch v. Maryland, 4 Wheat, 316, 4 L ed. 579, 607. Later
Justice Holmes brushed this aside by declaring in Panhandle Oil Co. v. Mississippi (277 U.S. 218)
that “the power to tax is not the power to destroy while this Court sits.” Justice Frankfurter in
81
Noble v. City of Manila, 67 Phil. 1, cited in Association of Small Landowners in the Phil. Graves v. New York (306 U.S. 466) also remarked that Justice Marshall’s statement was a “mere
v. Sec. of Agrarian Reform, supra. flourish or rhetoric” and a product of the “intellectual fashion of the times” to indulge in “a free
82
Association of Small Landowners in the Phil. v. Sec. of Agrarian Reform, supra. case of absolutes.” (See Note 15 in Mactan Cebu International Airport v. Hon. Marcos, supra.).
83 90
Manosca v. CA, supra. Mactan Cebu International Airport v. Hon. Marcos, supra.
84 91
Barangay Sindalan, San Fernando, Pampanga v. CA, G.R. No. 150640, March 22, 2007. Id., citing Agpalo, Ruben E., Statutory Construction [1990 ed.], 216.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 127 128 PROPERTY


OWNERSHIP
Ownership in General

may be established even against the will of the owner of the servient only when he acts in the legitimate exercise of his right, that is, when
estate.92 he acts with prudence and in good faith; but not when he acts with
negligence or abuse. The principle is outlined in Article 19 of the Code
(2) During a period of acute public want or emergency, thought-
which provides that “every person must, in the exercise of his rights
less extravagance in expenses for pleasure or display may be stopped by
and in the performance of his duties, act with justice, give everyone his
order of the courts at the instance of any government or private chari-
due, and observe honesty and good faith.” In relation to the exercise of
table institution.93
the right to use property, Article 431 of the Code specifically mandates
(3) Lands acquired under free patent or homestead cannot be that “the owner of a thing cannot make use thereof in such a manner as
subject to encumbrance or alienation within five years from the issuance to injure the rights of a third person.” Not only that, our Constitution
of the patent.94 even went farther by declaring that “the use of property bears a social
function, and all economic agents shall contribute to the common
[37.3] Inherent Limitations Arising From Conflicts With Other good.”97
Similar Rights
The absence of good faith is essential in determining whether the
It is a well-settled principle, growing out of the nature of well-
owner can be held liable for any consequential damage arising from
ordered civil society, that every holder of property, however absolute
the exercise of his right to use the property. When the owner acts in the
and unqualified may be his title, holds it under the implied liability
legitimate exercise of his right, that is, when he acts with prudence and
that his use of it shall not be injurious to the equal enjoyment of others
in good faith, he does no actionable injury and cannot be held liable
having an equal right to the enjoyment of their property, nor injurious
for damages.98 The damage resulting from the legitimate exercise of a
to the rights of the community.95
person’s right is a loss without injury — damnum absque injuria. If
[37.3.1] Limitations on Owner’s Right To Use the right is exercise in bad faith, however, and for the sole intent of
prejudicing or injuring another, there is liability under the principle of
The classical theory is that “he who uses a right injures no one.” abuse of right99 for the exercise of a right ends when the right disappears,
Traditionally, therefore, it has been held that no person can be held and it disappears when it is abused especially to the prejudice of
liable for damages occasioned to another by the exercise of a right. The others.100
modern tendency, however, is to depart from the classical and traditional
theory, and to grant indemnity for damages in cases where there is an The foregoing principles are best illustrated when we compare the
abuse of right, even when the act is not illicit. The reason for this is that case of Villafuerte v. Court of Appeals, cited in supra., §36, with the case
law cannot be given an anti-social effect. If mere fault or negligence in of Sps. Custodio and Sps. Santos v. Court of Appeals,101 both involving
one’s act can make him liable for damages for injury caused thereby, the exercise of the owner’s right to enclose or fence his property. In
with more reason should abuse or bad faith make him liable.96 Villafuerte, the lot owners were held liable to pay damages because the
exercise of the right was attended with bad faith — it was resorted to for
Our Civil Code, noticeably, has departed from the classical and the purpose of evicting the occupants whose lease contract had already
traditional theory and adopted the view that a person will be protected expired. In Sps. Santos, however, the Court held that the petitioners
were not liable to the private respondents for their act of constructing
92
See Chapter 2, Title VII, Book II of the New Civil Code.
93 97
Art. 25, NCC. Sec. 6, Art. XII, 1987 Phil. Constitution.
94 98
Sec. 118, C.A. No. 141, as amended. Amonoy v. Gutierrez, 351 SCRA 731.
95 99
Case v. Board of Health, 24 Phil. 250. Albenson Enterprises Corp. v. CA, 217 SCRA 18.
96 100
See Footnote No. 32, National Power Corp. v. Philipp Brothers Oceanic, Inc., 369 SCRA MBTC v. Wong, 359 SCRA 608, 618.
101
629, 642. G.R. No. 116100, Feb. 9, 1996.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 129 130 PROPERTY
OWNERSHIP
Ownership in General

a fence within their property since at the time of such construction, the the owner the right to enjoy and dispose of a thing, without other
lot of the petitioners was not subjected yet to any servitude and there limitations than those established by law. It is within the right of
was no easement of way existing in favor of the private respondents, petitioners, as owners, to enclose and fence their property. Article
either by law or contract. The private respondents were granted by the 430 of the Civil Code provides that ‘(e)very owner may enclose or
fence his land or tenements by means of walls, ditches, live or dead
court a right of way to petitioners’ lot only when the former went to
hedges, or by any other means without detriment to servitudes
court to pray for such access. But prior to the decision of the court, the constituted thereon.’
petitioners were declared to have an absolute right over their property
and their act of fencing and enclosing the same was an act which they At the time of the construction of the fence, the lot was not
may lawfully perform in the enjoyment and exercise of said right. subject to any servitudes. There was no easement of way existing
in favor of private respondents, either by law or by contract. The
fact that private respondents had no existing right over the said
Sps. Custodio and Sps. Santos v. Court of Appeals passageway is confirmed by the very decision of the trial court
G.R. No. 116100, Feb. 9, 1996 granting a compulsory right of way in their favor after payment
of just compensation. It was only that decision which gave private
The private respondents own a parcel of land with a two-door apartment respondents the right to use the said passageway after payment of
erected thereon situated at Interior P. Burgos St., Palingon, Tipas, Taguig, the compensation and imposed a corresponding duty on petitioners
Metro Manila. They were able to acquire said property through a contract not to interfere in the exercise of said right.
of sale with spouses Mamerto Rayos and Teodora Quintero as vendors. Said
property may be described to be surrounded by other immovables pertaining Hence, prior to said decision, petitioners had an absolute
to petitioners. Taking P. Burgos Street as the point of reference, on the left right over their property and their act of fencing and enclosing
side, going to private respondents’, the row of houses will be as follows: That the same was an act which they may lawfully perform in the
of petitioners Spouses Custodio, then that of petitioner Spouses Santos and employment and exercise of said right. To repeat, whatever injury
then that of the private respondents. As an access to P. Burgos Street from or damage may have been sustained by private respondents by
private respondents’ property, there are two possible passageways. The first reason of the rightful use of the said land by petitioners is damnum
passageway is approximately one meter wide and is about 20 meters distant absque injuria.
from the private respondents’ residence to P. Burgos Street. Such path is passing A person has a right to the natural use and enjoyment of his
in between the previously mentioned row of houses. The second passageway is own property, according to his pleasure, for all the purposes to
about 3 meters in width and length from the private respondents’ residence to P. which such property is usually applied. As a general rule, therefore,
Burgos Street; it is about 26 meters. Thereafter, the petitioners constructed an there is no cause of action for acts done by one person upon his
adobe fence in their respective properties such that the entire first passageway own property in a lawful and proper manner, although such acts
was enclosed. Subsequently, the private respondents filed a complaint against incidentally cause damage or an unavoidable loss to another, as
the petitioners for the grant of an easement of right of way with prayer for such damage or loss is damnum absque injuria. When the owner
damages. After trial, the trial court ordered the petitioners to grant the private of property makes use thereof in the general and ordinary manner
respondents access to the passageway upon payment of just compensation. Not in which the property is used, such as fencing or enclosing the
satisfied with the judgment, the private respondents faulted the trial court for same as in this case, nobody can complain of having been injured,
not awarding them damages. On the sole issue of whether the trial court erred because the inconvenience arising from said use can be considered
in not awarding damages in their favor, the matter reached the High Court. as a mere consequence of community life.
In ruling that the private respondents were not entitled to damages, the Court
The proper exercise of a lawful right cannot constitute a legal
explained —
wrong for which an action will lie, although the act may result in
The act of petitioners in constructing a fence within their damage to another, for no legal right has been invaded. One may
lot is a valid exercise of their right as owners, hence not contrary use any lawful means to accomplish a lawful purpose and though
to morals, good customs or public policy. The law recognizes in the means adopted may cause damage to another, no cause of

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 131 132 PROPERTY


OWNERSHIP
Ownership in General

action arises in the latter’s favor. Any injury or damage occasioned Under the provisions of Article 432 of the New Civil Code of the
thereby is damnum absque injuria. The courts can give no redress Philippines, the interference by a third person with another’s property
for hardship to an individual resulting from action reasonably is justified and cannot be prevented by the latter if such interference
calculated to achieve a lawful end by lawful means.” is necessary to avert an imminent danger and the threatened damage,
compared to the damage arising to the owner from the interference, is
[37.3.2] Limitations on the Right of Excluding Others much greater. An example of the application of the principle of state of
While an owner is entitled to exclusive and undisturbed possession necessity is when a fire is threatening to spread and destroy other houses
of his property and has the right to exclude other persons from its and properties and the destruction of some houses will avert the spread
enjoyment and disposal, such right is unavailing if the interference by a of the fire, such destruction is justified and will not be considered as
third person is borne out of a state of necessity. This is provided for in unlawful physical invasion upon another’s property.
Article 432 of the New Civil Code, which states: In order for the interference to be justified under the state of
“Art. 432. The owner of a thing has no right to prohibit necessity, the following requisites must be present:
the interference of another with the same, if the interference (1) there must be a situation of grave peril, an actual or imminent
is necessary to avert an imminent danger and the threatened danger, either upon the person of the actor or a third person or their
damage, compared to the damage arising to the owner from property;103
the interference, is much greater. The owner may demand
from the person benefited indemnity for the damage to him. (2) the interference is necessary to avert such danger;104
(n)” (3) the threatened damaged, compared to the damage arising to
the owner from the interference, is much greater;105 and
[i] State of Necessity, Explained
(4) the state of necessity must not be brought about by the
The phrase “state of necessity” is of German origin.102 Articles
intentional provocation of the party invoking the same.106
228 and 904 of the German Civil Code provide, as follows:
[ii] State of Necessity as Justifying Circumstance
“Art. 228. He who injures or destroys another’s property
in order to avoid an imminent danger to himself or a third The defense of a state of necessity is a justifying circumstance
person, which danger comes from such property, shall not under Article 11, paragraph 4 of the Revised Penal Code, which reads:
be acting unlawfully, if the injury or destruction is necessary
to avoid the danger, and the damage is not disproportionate “Art. 11. Justifying circumstances. — The following
to the latter. If the author has caused the danger, he shall be do not incur any criminal liability:
liable to indemnify for losses and damages.” xxx xxx xxx
“Art. 904. The owner of a thing cannot prohibit the 4. Any person who, in order to avoid an evil or
interference therein by another, if such interference is injury, does an act which causes damage to another provided
necessary to avoid an actual danger, and the injury with that the following requisites are present:
which the latter is threatened is much greater than that to be
suffered by the owner. The owner can recover indemnity for
the damage suffered.” 103
Art. 432, NCC.
104
Id.
105
Id.
102 106
People v. Rebutado, G.R. No. 124058, Dec. 10, 2003. People v. Rebutado, supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 133 134 PROPERTY
OWNERSHIP
Ownership in General

First. That the evil sought to be avoided actually [iv] Doctrine of Self-help vs. State of Necessity
exists; The doctrine of self-help is invoked by the owner or lawful
Second. That the injury feared be greater than that done possessor in protection of his right to prevent other persons from
to avoid it; interfering with the property. The state of necessity, on the other hand,
is availed of by another person against someone else’s property for the
Third. That there be no other practical and less harmful
purpose of averting an imminent danger to himself or to another person
means of preventing it.”
or to their property.
Since “state of necessity” is a justifying circumstance, the accused Note that it is not possible for the application of both doctrines to
does not commit a crime in legal contemplation; hence, is not criminally result in conflict of rights. If the application of one doctrine is proper,
and civilly liable. Civil liability is borne by the person/persons benefited it necessarily follows that the application of the other doctrine is not
by the act of the accused.107 This is the only case among the justifying proper. If, for example, all the requisites for the application of the
circumstances where there is civil liability, but the civil liability is doctrine of state of necessity are present, the owner cannot rightfully
borne by the persons for whose benefit the harm has been prevented in invoke the doctrine of self-help to defeat the application of the former.
proportion to the benefit which they may have received.108 If the application of the doctrine of state of necessity is proper, the same
[iii] Indemnity For Damages
is justified under the provisions of Article 432 of the New Civil Code
and it is, in fact, considered a justifying circumstance under Article 11,
While interference to one’s property pursuant to a state of necessity fourth paragraph, of the Revised Penal Code. Such being the case, the
is justified and does not constitute unlawful aggression, the persons interference made is not considered as an “unlawful physical invasion
benefited by such interference are duty bound to indemnify the owner or usurpation” of another’s property, which is a requisite for the proper
for the damage suffered by the latter.109 application of the doctrine of self-help under Article 429 of the New
On this respect, the distinction made by the Senator Tolentino Civil Code.
between acts in a state of necessity and defense against unlawful ag-
[37.4] Limitations Imposed By the Owner Himself
gression or defense against dangerous objects must be taken into con-
sideration. If the danger comes from another’s property, the case is one The owner of the property may impose restrictions or limitations
of defense against danger,110 in which case, there is no obligation to on ownership in two situations: (1) at the time that he transmits the
indemnify the owner for the damage caused if the latter himself was property to another person; or (2) at the time that he continues to be the
responsible for such damage.111 But if another’s property is used to avert owner of the property.
danger not arising from it, the act is essentially one in a state of neces- The owner of the property may, by reason of his right to dispose
sity112 which will entitle the owner to the indemnity provided in Article (jus disponendi) as discussed in supra § 33, for the time being part with
432 of the Civil Code. some of the attributes of ownership, thereby restricting and abridging
his right. He may for example, enter into a contract of commodatum
wherein he grants to another person the jus utendi over the property
during the effectivity of the contract. Or he may constitute a usufruct
107
Id. over his property in favor of another person, in which case, he parts
108
See Art. 101, 2nd par., RPC.
109
Art. 432, NCC.
with the right of free enjoyment of his property (jus utendi) and the
110
II Tolentino, Civil Code of the Philippines, 1992 ed., 68. right to receive the fruits (jus fruendi) thereof. In a contract of lease, the
111
Id., 70. owner parts with the right to the possession of the property. These rights
112
Id., 68.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 135 136 PROPERTY


OWNERSHIP
Ownership in General

which may be exercised by another person against the property of the [37.4.2] Validity of Stipulations In The Deed of Restric-
owner, if they are in the nature of real rights, are referred to in Roman tions
Law as jus in re aliena. The provision in the deed of restrictions which required a purchaser
The right of the owner to impose reasonable restrictions or of a parcel of land to pay association fees is a valid stipulation.118 A case in
limitations on the right of ownership may even affect the property even point is Bel Air Village Association, Inc. v. Dionisio119 where the village
after it has ceased to belong to the person imposing the limitation113 association filed a complaint for collection of the association dues and
subject to the qualification that such limitation must not be contrary to also claimed for penalty and other charges. The Court affirmed the rule
the nature of ownership and not prohibited by law. A donor or testator, that an annotation to the effect that the lot owner becomes an automatic
for example, may prohibit partition of the subject property but such member of the village association and must abide by such rules and
prohibition cannot exceed twenty years.114 regulations laid down by said association was a valid restraint on one’s
ownership over the property as the same was for the interest of the
[37.4.1] Prohibition to Alienate sanitation, security and the general welfare of the community. In South
Prohibitions to alienate imposed by the will of the transmitting Pachem Development, Inc. v. Court of Appeals,120 one of the real estate
owner are generally valid except when they are forbidden by law or owners (SPDI) in the Makati commercial area and a member of the
contrary to public policy. A testator, for example, may prohibit alienation Makati Commercial Estate Association, Inc. (MACEA) questioned the
of the property given by will but such prohibition cannot exceed twenty validity of the stipulation in the deed of restrictions requiring purchasers
years.115 By analogy, therefore, a prohibition to alienate should not of land from Ayala Corporation to pay association dues to MACEA for a
exceed at most a period of twenty years whether the transmission of period of 47 years from date of purchase. SPDI maintains that the period
ownership is done gratuitously or onerously, otherwise there would be of 47 years constitutes a restriction on its right to enjoy and dispose of
subversion of public policy, which naturally frowns on unwarranted the property under Article 428 of the Civil Code as the non-payment of
restrictions on the right of ownership. the association dues would constitute a lien on the subject property. The
Court upheld the validity of the deed of restrictions because a contract
A perpetual prohibition against alienation is, however, void for becomes the law between the parties and each one is bound to comply
being contrary to public policy. When, for example, the vendee of a therewith.
parcel of land was prohibited from selling the subject property except
to the vendor or to the latter’s heirs or successors, the Court held that In Cariday Investment Corporation v. Court of Appeals,121 it was
such prohibition to sell to third parties is contrary to public policy recognized that residents and lot owners in the subdivision automatically
because the same virtually amounts to a perpetual restriction to the become members of the Forbes Park Association and are bound by its
right of ownership, specifically the owner’s right to freely dispose of rules and regulations stipulated in the “deed of restrictions.” A provision
his properties.116 According to the Court, any such prohibition, indefinite in the “deed of restrictions” annotated at the back of the certificate of
and stated as to time, so much so that it shall continue to be applicable title of a lot owner in the Forbes Park Subdivision required the owner
even beyond the lifetime of the original parties to the contract, is, to use his lot for residential purposes and stated that not more than one
without doubt, a nullity.117 single family residential building will be constructed thereon; that the
property would be subject to an easement of two meters within the lot

113
II Tolentino, Civil Code, 1992 ed., 61.
114 118
Art. 494, 3rd par., NCC. South Pacem Development, Inc. v. CA, G.R. No. 126260, Dec. 16, 2004.
115 119
Art. 870, NCC. 174 SCRA 589 (1989).
116 120
Leal v. CA, G.R. No. L-65425, Nov. 5, 1987. Supra.
117 121
Id. 176 SCRA 31 (1989).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 137 138 PROPERTY
OWNERSHIP
Ownership in General

and adjacent to the rear and two sides thereof for the purpose of drainage, presumption of ownership arising from actual possession is expressly
sewerage water and other public facilities as may be necessary and recognized in Article 433 of the Civil Code which states that “actual
desirable; and that additional restrictions, reservations, or servitudes as possession under claim of ownership raises a disputable presumption
the association may, from time to time, adopt and prescribe would be of ownership.” This presumption is a necessary consequence of the
for a period of fifty (50) years from January 1, 1949. Therein petitioner existence of presumptions in favor of the innocence of a person from any
allowed the occupancy by two families, thereby violating the “single- wrongdoing123 and of his good faith.124 Hence, when a person has actual
family residential building restriction.” The Supreme Court declared possession of property under claim of ownership, the law presumes
that the purpose of the restriction is valid as it avoids overcrowding both him innocent of any wrongdoing and, therefore, he must be the owner
in the houses and in the subdivision which would result in pressure upon since possession is one of the rights included in ownership.125 The
the common facilities such as water, power and telephone connections; presumption, however, is merely disputable126 and may be overthrown
accelerate the deterioration of the roads; and create problems of by proof to the contrary.
sanitation and security in the subdivision. Likewise, the restrictions
were for aesthetic consideration and for the preservation of the peace, Since actual possession under claim of ownership raises a disputable
beauty, tranquility, and serenity of living at Forbes Park. presumption of ownership, such possession must be respected until it
is shown that another person has a better right over the property. This
principle is expressly recognized in Article 539 which provides:
Art. 433. Actual possession under claim of ownership raises a dis-
putable presumption of ownership. The true owner must resort to judicial “Art. 539. Every possessor has a right to be respected
process for the recovery of the property. (n)
in his possession; and should he be disturbed therein he shall
Art. 434. In an action to recover, the property must be identified, and be protected in or restored to said possession by the means
the plaintiff must rely on the strength of his title and not on the weakness
of the defendant’s claim. (n)
established by the laws and the Rules of Court.
Art. 435. No person shall be deprived of his property except by com- A possessor deprived of his possession through forcible
petent authority and for public use and always upon payment of just com- entry may within ten days from the filing of the complaint
pensation. present a motion to secure from the competent court in the
Should this requirement be not first complied with, the courts action for forcible entry, a writ of preliminary mandatory
shall protect and, in a proper case, restore the owner in his possession. injunction to restore him in his possession. The court shall
(349a)
decide the motion within thirty (30) days from filing thereof.
Art. 436. When any property is condemned or seized by competent (446a)”
authority in the interest of health, safety or security, the owner thereof
shall not be entitled to compensation, unless he can show that such con- Consequently, if another person claims to be the true owner of the
demnation or seizure is unjustified. (n)
property, he cannot recover the property by force if the actual possessor
objects thereto.127 Even the true owner is required by law to resort to
§ 38. Recovery of Property
judicial process in order to recover his property.128 If he resorts to force
[38.1] Presumption of Ownership
Possession is viewed by the Civil Code as presumed ownership.122
123
See Rule 131, Sec. 3(a), Rules of Court.
Hence, if a person is in actual possession of a property and claiming 124
See Art. 527, NCC.
to be its owner, the law presumes that he is the owner thereof. This 125
II Caguioa, Civil Code, 1966 ed., 61.
126
Art. 433, NCC.
127
Art. 536, NCC.
122 128
II Caguioa, Civil Code, 1966 ed., 165. Art. 433, NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 139 140 PROPERTY


OWNERSHIP
Ownership in General

or violence in recovering the property, such recovery of possession is [38.2.1] Proof of Identity
not recognized by law as valid.129 In an accion reinvindicatoria, the person who claims that he has
[38.2] Requisites of Accion Reivindicatoria a better right to the property must first fix the identity of the land he
is claiming by describing the location, area and boundaries thereof.138
In civil cases, the law requires that the party who alleges a fact The rule is that he who claims to have a better right to the property
and substantially asserts the affirmative of the issue has the burden must clearly show that the land possessed by the other party is the very
of proving it.130 This evidentiary rule is based on the principle that the land that belongs to him.139 So that when the record does not show that
suitor who relies upon the existence of a fact should be called upon to the land subject matter of the action has been exactly determined, the
prove it.131 In relation to accion reivindicatoria, Article 434 of the New action cannot prosper, inasmuch as the plaintiff’s ownership rights in
Civil Code provides that to successfully maintain an action to recover the land claimed do not appear satisfactorily and conclusively proven
the ownership of a real property, the person who claims a better right to at the trial.140
it must prove two (2) things: first, the identity of the land claimed; and
second, his title thereto.132 What really defines a piece of land is the boundaries therein laid
down,141 which boundaries may either be natural or artificial.142 The
If the plaintiff is unable to prove any of the foregoing requisites, boundaries are considered natural if they are permanent landmarks
his action will fail even if the defendant cannot prove his title to the established by nature such as for example a river, a lake, a stream, etc.143
property. In an action to recover real property, the settled rule is that the It is artificial if it is through concrete monuments established by the
plaintiff must rely on the strength of his title, not on the weakness of the Bureau of Lands or it consists in the property of neighbors.144 However,
defendant’s title.133 This requirement is based on two (2) reasons: first, it in order that natural boundaries of land may be accepted for the purpose
is possible that neither the plaintiff nor the defendant is the true owner of varying the extent of the land included in a deed of conveyance, the
of the property in dispute;134 and second, the burden of proof lies on the evidence as to such natural boundaries must be clear and convincing.145
party who substantially asserts the affirmative of an issue for he who Such natural boundaries must be of such a character as to definitely and
relies upon the existence of a fact should be called upon to prove that accurately segregate the land in question from the adjoining property146
fact.135 Failure on the part of the plaintiff to prove his right of ownership and there must be no doubt left that the land included within the natural
will bar an action to recover the property; his right to recover must be boundaries is the same land which was intended to be recovered by the
founded on positive title or right, and not merely on negative ones, such plaintiff.
as the lack or insufficiency of title on the part of the defendant.136 The
possessor has a presumption of title, and unless the plaintiff proves he The rule is that when there is a conflict between the area and the
has a better right, he cannot recover the property from the defendant.137 boundaries of a land, the latter prevails for what really defines a piece
of land is not the area mentioned in its description, but the boundaries

129
Art. 536, NCC.
130 138
Alonzo v. San Juan, G.R. No. 137549, February 11, 2005. Navalle-Hutchison v. Buscas, supra, citing Heirs of Anastacio Fabela v. Court of
131
Ramcar, Inc. v. Garcia, 114 Phil. 1026 (1962). Appeals, 362 SCRA 531 (2001).
132 139
Navalle-Hutchison v. Buscas, G.R. No. 158554, May 26, 2005. Beo v. CA, 200 SCRA 575.
133 140
Art. 434, NCC; see also Turquesa v. Valera, 322 SCRA 573 (2000). Bordalba v. CA, G.R. No. 112443, Jan. 25, 2002, citing Beo v. CA, 200 SCRA 575.
134 141
Navalle-Hutchison v. Buscas, supra, citing Civil Code of the Philippines, Annotated, Intestate of Fausto Bayot v. Director of Lands, G.R. No. L-8536, April 28, 1956.
142
Justice Edgardo L. Paras, vol. two, 14th ed. at 130. II Caguioa, Civil Code, 1966 ed., 62, citing Rosado v. Director of Lands, 58 Phil. 83.
135 143
Navalle-Hutchison v. Buscas, supra, citing Ramcar, Inc. v. Garcia, 114 Phil. 1026 Id.
144
(1962). Id., citing Government v. Abad, 47 Phil. 573.
136 145
Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001). Waldroop v. Castaxda, G.R. No. G.R. No. L-6852, 25 Phil. 30, August 9, 1913.
137 146
Id., see also Art. 433, NCC. Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 141 142 PROPERTY
OWNERSHIP
Ownership in General

therein laid down, as enclosing the land and indicating its limits.147 Regarding tax declarations and receipts, they are not conclusive
However, it is only when the boundaries given are sufficiently certain and evidence of ownership.155 At most, they constitute mere prima facie
the identity of the land clearly proved by the boundaries thus indicated proof of ownership or possession of the property for which taxes have
that an erroneous statement concerning the area can be disregarded or been paid.156 In the absence of actual public and adverse possession, the
ignored.148 Otherwise, the area stated should be followed.149 This is the declaration of the land for tax purposes does not prove ownership.157 Yet,
exception to the rule.150 when coupled with proof of actual possession, they are strong evidence
of ownership.158 Thus, where it was shown that plaintiff has never paid
[38.2.2] Proof of Title the land tax, while the defendant has faithfully done so for many years,
As previously stated, the lack or insufficiency of title on the part of there being no explanation offered, it was held that such payment of
taxes should be taken into consideration in favor of defendant.159
the defendant does not entitle the plaintiff in an accion reivindicatoria
to a favorable decision unless he himself is able to support his claim of
Art. 437. The owner of a parcel of land is the owner of its surface and
ownership by evidence of title. In our jurisdiction, a certificate of title is of everything under it, and he can construct thereon any works or make
considered as conclusive evidence of ownership of the land described any plantations and excavations which he may deem proper, without det-
therein, the validity of which is not subject to collateral attack.151 Hence, riment to servitudes and subject to special laws and ordinances. He can-
as against an array of proofs consisting of tax declarations and/or tax not complain of the reasonable requirements of aerial navigation. (350a)
receipts which are not conclusive evidence of ownership nor proof of Art. 438. Hidden treasure belongs to the owner of the land, building,
the area covered therein, an original certificate of title indicates true and or other property on which it is found.
legal ownership by the registered owners over the disputed premises.152 Nevertheless, when the discovery is made on the property of an-
However, it has been held that if a person or entity obtains a title which other, 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
includes by mistake or oversight land which cannot be registered under not be entitled to any share of the treasure.
the Torrens System or over which the buyer has no legal right, said
If the things found be of interest to science or the arts, the State may
buyer does not, by virtue of said certificate alone, become the owner of acquire them at their just price, which shall be divided in conformity with
the land illegally or erroneously included153 and where there is such an the rule stated. (351a)
error, the courts may decree that the certificate of title be cancelled and Art. 439. By treasure is understood, for legal purposes, any hidden
a correct one issued to the buyer.154 and unknown deposit of money, jewelry, or other precious objects, the
lawful ownership of which does not appear. (352)

§ 39. Right to Sub-surface and Airspace

147
It is a well-known principle that the owner of piece of land has
Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001), citing Vda. de Tan
v. IAC, 213 SCRA 95, citing Dichoso v. CA, 192 SCRA 169; Erico v. Chigas, 98 SCRA 575. rights not only to its surface but also to everything underneath and the
148
Intestate of Fausto Bayot v. Director of Lands, supra. airspace above it up to a reasonable height.160 This principle has its origin
149
Id., citing Sanchez v. Director of Lands, 63 Phil., 378, 386.
150
Id., see also Pamintuan v. Insular Government (1907), 8 Phil., 512; Paras v. Insular Gov-
155
ernment (1908), 11 Phil. 378; and Waldroop v. Castaxda, 25 Phil. 30. Director of Lands v. IAC, 195 SCRA 38.
151 156
Tubo-Rodriguez v. Rodriguez, G.R. No. 175720, Sept. 11, 2007. Heirs of Vencilao v. CA, 288 SCRA 574, 581-582; Deiparine v. CA, 299 SCRA 668, 675;
152
Cureg v. IAC, G.R. No. 73465 Sept. 7, 1989; citing Ferrer-Lopez v. Court of Appeals, Tiong v. CA, 287 SCRA 102, 115.
157
G.R. No. 50420, May 29, 1987, 150 SCRA 393,401-402 Cequeña v. Bolante, G.R. No. 137944, April 6, 2000.
153 158
Ledesma v. Mun. of Iloilo, 49 Phil. 773 (1926), citing Legarda and Prieto v. Saleeby, 31 Heirs of Anastacio Fabela v. Court of Appeals, 362 SCRA 531 (2001).
159
Phil. 590. Id.
154 160
Veterans Federation of the Philippines v. Court of Appeals, 345 SCRA 348 (2000), citing Republic of the Philippines v. Court of Appeals, 160 SCRA 228 (1988), citing Art. 437,
Consul v. Buhay, 64 O.G. 29, July 15, 1968, CA. NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 143 144 PROPERTY


OWNERSHIP
Ownership in General

in the ad coelum rule of the Roman Law — Cujus est solum, ejus est that the same was agricultural land and that he acquired ownership over
usque ad coelum ad infernos (to whomsoever the soil belongs, he owns it by virtue of acquisitive prescription, the same being in possession
also to the sky and to the depths). However, the literal construction of of his predecessors-in-interest for a period long enough to meet the
the ad coelum doctrine has already been rejected by the courts.161 This requirements of the law. Such application was opposed by Benguet
formula “from the center of the earth to the sky” was invented at some Consolidated, Inc., Atok Big Wedge Corporation and the Republic of
remote time in the past when the use of space above land actual or the Philippines, through the Bureau of Forestry Development. Benguet
conceivable was confined to narrow limits, and simply meant that the and Atok each claimed that they acquired minerals claims over certain
owner of the land could use the overlying space to such an extent as portions of the land. The Republic, on the other hand, claimed that the
he was able, and that no one could ever interfere with that use.162 This land was covered by the Central Cordillera Forest Reserve and, thus,
formula was never taken literally, but was a figurative phrase to express part of public dominion.
the full and complete ownership of land and the right to whatever
With respect to the claim of the Republic of the Philippines, the
superjacent airspace was necessary or convenient to the enjoyment of
Supreme Court held that while the subject property was considered
the land.163 Our Civil Code, even as it adopted the ad coelum rule in
forest land and included in the Central Cordillera Forest Reserve, the
Article 437, has subjected the same to certain limitations: (1) that it
same did not impair the rights already vested in Benguet and Atok
cannot work detriment to servitudes; (2) that it is subject to special laws
at that time. The Court reasoned that under the law then in force, the
and ordinances; and (3) that it is subject to reasonable requirements of
perfection of the mining claim converted the property to mineral land
aerial navigation.
and removed it from the public domain. By such act, the locators of the
As a consequence of the foregoing principle, the owner of the mining claims from whom Benguet and Atok acquired their respective
land can make any construction thereon or make any plantation or claims, already acquired exclusive rights over the land, against even
excavation which he may deem proper provided it does not impair the government, without need of any further act such as the purchase of
servitudes and, of course, subject to special laws and ordinances and the land or the obtention of a patent over it. As the land had become the
reasonable requirements of aerial navigation.164 private property of the locators, they had the right to transfer the same,
as they did, to Benguet and Atok.
[39.1] Right To the Sub-Surface or Subsoil
With respect to the claim of ownership by Dela Rosa, the Court
[39.1.1] Rights Over Land Are Indivisible held that even if it be assumed that his predecessors-in-interest had
The ownership of land extends to the surface as well as to the really been in possession of the subject property, their possession was
subsoil underneath. In Republic of the Philippines v. Court of Appeals,165 not in the concept of owner of the mining claim but of the property as
this principle was applied to show that rights over lands are indivisible agricultural land, which it was not. The property was mineral land, and
and, consequently, require a definitive and categorical classification. they were claiming it as agricultural land. The Court noted that said
predecessors-in-interest did not dispute the rights of the mining locators
In the above mentioned case, Jose Dela Rosa filed an application
nor did they seek to oust them as such and to replace them in the mining
for registration of a parcel of land situated in Itogon, Benguet claiming
land. In fact, one of the predecessors-in-interest testified that she was
aware of the diggings being undertaken “down below” but she did not
161
mind and did not protest the same although she claimed to be the owner
See US v. Causby, 328 U.S. 256, 66 S. Ct. 1062, 90 L.Ed. 1206 (1946); Hinman v. Pacific
Air Transport, US Court of Appeals, 9th Circuit, 84 F.2d 755 (1936). of the said land.
162
Hinman v. Pacific Air Transport, supra.
163
Id. When the case was decided by the Court of Appeals, the appellate
164
Art. 437, NCC. court held that there was no conflict of interest between the owners
165
Id.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 145 146 PROPERTY
OWNERSHIP
Ownership in General

of the surface rights (referring to the predecessors-in-interest of Dela mining claims were perfected. As long as mining operations
Rosa) and the owners of the sub-surface rights (referring to the mining were being undertaken thereon, or underneath, it did not
locators). When the case was elevated to the Supreme Court, the High cease to be so and become agricultural, even if only partly
Court found the Court of Appeal’s ruling to be a strange doctrine for so, because it was enclosed with a fence and was cultivated
the land would be classified as mineral underneath and agricultural by those who were unlawfully occupying the surface.166
on the surface, subject to separate claims of title. The Supreme Court
then held that rights over the land are indivisible and that the land itself [39.1.2] Extent of Rights Over The Sub-Surface
cannot be half agricultural and half mineral. According to the Court, the With respect to the land owner’s right to the subsoil, the question
classification must be categorical; the land must be either completely that comes to mind is this: up to what extent will the land owner’s right
mineral or completely agricultural. In this case, the Court categorically be with respect to the sub-surface? This is the question that confronts
classified the land as mineral land. The Court explained, thus — the Supreme Court in the case of National Power Corporation v.
The Court of Appeals justified this by saying there is Ibrahim.167
“no conflict of interest” between the owners of the surface In the above-mentioned case, the National Power Corporation
rights and the owners of the sub-surface rights. This is rather constructed underground tunnels on several parcels of land owned
strange doctrine, for it is a well-known principle that the in common by Ibrahim and his co-owners situated in Lanao Del Sur.
owner of piece of land has rights not only to its surface but NAPOCOR constructed the tunnels in 1978 but its existence was
also to everything underneath and the airspace above it up discovered by the land owners only in 1992. The tunnels were apparently
to a reasonable height. Under the aforesaid ruling, the land being used by NAPOCOR in siphoning the water of Lake Lanao and
is classified as mineral underneath and agricultural on the in the operation of NAPOCOR’s other projects located in other parts
surface, subject to separate claims of title. This is also difficult of Mindanao. The existence of the tunnels came to the attention of the
to understand, especially in its practical application. co-owners only when one of them applied for a permit with the Marawi
Under the theory of the respondent court, the surface City Water District to construct and/or install a motorized deep well.
owner will be planting on the land while the mining locator The application was denied on the ground that the construction of the
will be boring tunnels underneath. The farmer cannot dig deep well would cause danger to lives and property because Marawi
a well because he may interfere with the operations below City lies in an area of local volcanic and tectonic activity and because
and the miner cannot blast a tunnel lest he destroy the of the existence of tunnels underneath the surface of their property. He
crops above. How deep can the farmer, and how high can was then informed that underneath the land are underground tunnels
the miner, go without encroaching on each other’s rights? of the NAPOCOR. Upon such discovery, the co-owners filed an action
Where is the dividing line between the surface and the sub- against NAPOCOR for recovery of land and damages.
surface rights? The trial court denied the prayer of the co-owners for the
The Court feels that the rights over the land are dismantling of the tunnels but ordered NAPOCOR to pay them just
indivisible and that the land itself cannot be half agricultural compensation since there was “taking” of their property. The Court of
and half mineral. The classification must be categorical; Appeals sustained the decision of the trial Court. Hence, NAPOCOR
the land must be either completely mineral or completely elevated the matter to the Supreme Court.
agricultural. In the instant case, as already observed, the land
which was originally classified as forest land ceased to be so
166
and became mineral — and completely mineral — once the At pp. 237-238.
167
526 SCRA 149 (2007).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 147 148 PROPERTY


OWNERSHIP
Ownership in General

NAPOCOR maintains that the sub-terrain portion where the is liable to pay not merely an easement fee but rather the full
underground tunnels were constructed does not belong to the private compensation for land. This is so because in this case, the
respondents (the co-owners) even if they owned the property because nature of the easement practically deprives the owners of
their right to the subsoil does not extend beyond what is necessary to its normal beneficial use. Respondents, as the owners of the
enable them to obtain all the utility and convenience that such property property thus expropriated, are entitled to a just compensation
can normally give. NAPOCOR also asserts that respondents were still which should be neither more nor less, whenever it is possible
able to use the subject property even with the existence of the tunnels. to make the assessment, than the money equivalent of said
property.168
In finding the arguments of NAPOCOR to be without merit, the
Supreme Court held that pursuant to Article 437 of the Civil Code, [39.2] Right to Hidden Treasure
the ownership of land extends to the surface as well as to the subsoil
under it. The Court explained that the argument by the petitioner that Since the owner of the land is likewise the owner of its sub-surface
the landowners’ right extends to the sub-soil insofar as necessary for or sub-soil, any “hidden treasure” on the sub-surface also belongs to
their practical interests serves only to further weaken its case because him.169 The same rule applies if the “hidden treasure” is located on a
the theory would limit the right to the sub-soil upon the economic utility building or other property — the same belong to the owner of the building
which such area offers to the surface owners. Presumably, according to or other property on which it is found.170 However, when the discovery
the Court, the landowners’ right extends to such height or depth where is made by a stranger who is not a trespasser and the discovery is by
it is possible for them to obtain some benefit or enjoyment, and it is chance, the finder is entitled to one-half of the treasure.171 If the finder is
extinguished beyond such limit as there would be no more interest a trespasser, he shall not be entitled to any share of the treasure.172
protected by law. In this case, the landowners could have dug upon
[39.2.1] Concept of “Hidden Treasure”
their property motorized deep wells but were prevented from doing so
by the authorities precisely because of the construction and existence For legal purposes, “hidden treasure” is understood to be any
of the tunnels underneath the surface of their property. Hence, the land hidden and unknown deposit of money, jewelry, or other precious
owners still had a legal interest in the sub-terrain portion insofar as they objects, the lawful ownership of which does not appear.173 Hence, for a
could have excavated the same for the construction of the deep well. property to be considered as “hidden treasure” the following requisites
must be satisfied: (1) the deposit of money, jewelry or other precious
There was, therefore, in this case, “taking” of private respondents’
objects must be hidden or unknown; and (2) the lawful ownership of
property which entitled the latter to the payment of just compensation.
which must not appear.
The Court explained —
Under the ejusdem generis rule, the term “other precious objects”
In disregarding this procedure and failing to recognize should be understood as being similar to money or jewelry.174 Hence, the
respondents’ ownership of the sub-terrain portion, petitioner concept does not include natural wealth, i.e., minerals and petroleum.
took a risk and exposed itself to greater liability with the The Regalian doctrine reserves to the State all natural wealth that may
passage of time. It must be emphasized that the acquisition
of the easement is not without expense. The underground
tunnels impose limitations on respondents’ use of the property 168
At pp. 163-164.
169
for an indefinite period and deprive them of its ordinary use. Art. 438, 1st par., NCC.
170
Id.
Based upon the foregoing, respondents are clearly entitled 171
Art. 438, 2nd par., NCC.
to the payment of just compensation. Notwithstanding the 172
Id.
173
fact that petitioner only occupies the sub-terrain portion, it Art. 439, NCC.
174
Vitug, Civil Law, Vol. 1, 2003 ed., p. 15.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 149 150 PROPERTY
OWNERSHIP
Ownership in General

be found in the bowels of the earth even if the land where the discovery 1. There is no question as to the jurisdiction of the parties and the
is made be private.175 As such, the right of the owner of the land with subject matter. It is only whether the court is proceeding erroneously within
respect to the sub-surface or subsoil is subject to the application of the its jurisdiction in entering and enforcing the order directing the survey of
Regalian doctrine. the subterranean premises of the petitioners. There is but little authority of
particular and special application to caves and cave rights. In few places, if
any, can be found similar works of nature of such grandeur and of such unique
EDWARDS v. SIMS and marvelous character as to give to caves a commercial value sufficient to
Court of Appeals of Kentucky, 1929. cause litigation as those peculiar to Edmonson and other countries in Kentucky.
232 Ky. 791, 24 S.W.2d 619. The reader will find of interest the address on “The Legal Story of Mammoth
Cave” by Hon. John B. Rodes, of Bowling Green, before the 1929 Session
STANLEY, C. This case presents a novel question. of the Kentucky State Bar Assocation, published in its proceedings. In Cox v.
In the recent case of Edwards v. Lee, 230 Ky. 375, 19 S.W.2d 992, an Colossal Cavern Co., 210 Ky. 612, 276 S.W. 540, the subject of cave rights
appeal was dismissed which sought a review and reversal of an order of the was considered, and this court held there may be a severance of the estate in
Edmonson circuit court directing surveyors to enter upon and under the lands the property, that is, that one may own the surface and another the cave rights,
of Edwards and others and survey the Great Onyx Cave for the purpose of the conditions being quite similar to but not exactly like those of mineral lands.
securing evidence on an issue as to whether or not a part of the cave being But there is no such severance involved in this case, as it appears that the
exploited and shown by the appellants runs under the ground of Lee. The defendants are the owners of the land and have in it an absolute right.
nature of the litigation is stated in the opinion and the order set forth in full. It Cujus est solum, ejus est usque ad coelum ad infernos (to whomsoever
was held that the order was interlocutory and consequently one from which no the soil belongs, he owns also to the sky and to the depths), is an old maxim
appeal would lie. and rule. It is that the owner of realty, unless there has been a division of the
Following that decision, this original proceeding was filed in this court estate, is entitled to the free and unfettered control of his own land above,
by the appellants in that case (who were defendants below) against Hon. N.P. upon, and beneath the surface. So whatever is in a direct line between the
Sims, judge of the Edmonson circuit court, seeking a writ of prohibition to surface of the land and the center of the earth belongs to the owner of the
prevent him enforcing the order and punishing the petitioners for contempt surface. Ordinarily that ownership cannot be interfered with or infringed by
for any disobedience of it. It is alleged by the petitioners that the lower court third persons. 17 C.J. 391; 22 R.C.L. 56; Langhorne v. Turman, 141 Ky. 809,
was without jurisdiction or authority to make the order, and that their cave 133 S.W. 1008, 34 L.R.A., N.S., 211. There are, however, certain limitations
property and their right of possession and privacy will be wrongfully and on the right of enjoyment of possession of all property, such as its use to the
illegally invaded, and that they will be greatly and irreparably injured and detriment or interference with a neighbor and burdens which it must bear in
damaged without having an adequate remedy, since the damage will have been common with property of a like kind. 22 R.C.L. 77.
suffered before there can be an adjudication of their rights on a final appeal. With this doctrine of ownership in mind, we approach the question as to
It will thus be seen that there are submitted the two grounds upon which this whether a court of equity has a transcendent power to invade that right through
court will prohibit inferior courts from proceeding, under the provisions of its agents for the purpose of ascertaining the truth of a matter before it, which fact
Section 110 of the Constitution, namely: (1) Where it is a matter in which it thus disclosed will determine certainly whether or not the owner is trespassing
has no jurisdiction and there is no remedy through appeal, and (2) where the upon his neighbor’s property. Our attention has not been called to any domestic
court possesses jurisdiction but is exercising or about to exercise its power case, nor have we found one, in which the question was determined either
erroneously, and which would result in great injustice and irreparable injury to directly or by analogy. It seems to the court, however, that there can be little
the applicant, and there is no adequate remedy by appeal or otherwise. Duffin differentiation, so far as the matter now before us is concerned, between caves
v. Field, Judge, 208 Ky. 543, 271 S.W. 596; Potter v. Gardner, 222 Ky. 487, 1 and mines. And as declared in 40 C.J. 947: “A court of equity, however, has the
S.W.2d 537; Litteral v. Woods, 223 Ky. 582, 4 S.W.2d 395. inherent power, independent of statute, to compel a mine owner to permit an
inspection of his works at the suit of a party who can show reasonable ground
for suspicion that his lands are being trespassed upon though them, and may
175
Republic v. CA, 160 SCRA 228. issue an injunction to permit such inspection.”

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 151 152 PROPERTY


OWNERSHIP
Ownership in General

There is some limitation upon this inherent power, such as that the person is located either in a private or public land and whether such entrance is
applying for such an inspection must show a bona fide claim and allege facts naturally formed or man made.177
showing a necessity for the inspection and examination of the adverse party’s
property; and, of course, the party whose property is to be inspected must have The conservation, protection and management of caves and cave
had an opportunity to be hear in relation thereto. In the instant case it appears resources in the Philippines is governed by R.A. No. 9072, otherwise
that these conditions were met. * * * known as the “National Caves and Caves Resources Management and
We can see no difference in principle between the invasion of a mine on
Protection Act,” which directs and empowers the DENR, in coordination
adjoining property to ascertain whether or not the minerals are being extracted with the Department of Tourism (DOT), the National Museum, the
from under the applicant’s property and an inspection of this respondent’s National Historical Institute and concerned local government units
property through his cave to ascertain whether or not he is trespassing under (LGUs) for specific caves, to implement the provisions of the aforesaid
this applicant’s property. law.
It appears that before making this order the court had before him surveys
of the surface of both properties and the conflicting opinions of witnesses REPUBLIC ACT NO. 9072
as to whether or not the Great Onyx Cave extended under the surface of the (National Caves and Cave Resources Management and Protection Act)
plaintiff’s land. This opinion evidence was of comparatively little value, and as
the chancellor (now respondent) suggested, the controversy can be quickly and AN ACT TO MANAGE AND PROTECT CAVES AND CAVE
accurately settled by surveying the cave; and “if defendants are correct in their RESOURCES AND FOR OTHER PURPOSES.
contention this survey will establish it beyond all doubt and their title to this
cave will be forever quieted. If the survey shows the Great Onyx Cave extends Sec. 1. Title. — This Act shall be known as the “National Caves and
under the lands of plaintiffs, defendants should be glad to know this fact and Cave Resources Management and Protection Act.”
should be just as glad to cease trespassing upon plaintiff’s lands, if they are in Sec. 2. Declaration of Policy. — It is hereby declared the policy of
fact doing so.” The peculiar nature of these conditions, it seems to us, makes it the State to conserve, protect and manage caves and cave resources as part
imperative and necessary in the administration of justice that the survey should of the country’s natural wealth. Towards this end, the State shall strengthen
have been ordered and should be made. cooperation and exchange of information between governmental authorities
It appearing that the circuit court is not exceeding its jurisdiction or and people who utilize caves and cave resources for scientific, educational,
proceeding erroneously, the claim of irreparable injury need not be given recreational, tourism and other purposes.
consideration. It is only when the inferior court is acting erroneously, and great Sec. 3. Definition of Terms. — For purposes of this Act, the following
or irreparable damage will result, and there is no adequate remedy by appeal, terms shall be defined as follows:
that a writ of prohibition will issue restraining the other tribunal, as held by
authorities cited above. (a) “Cave” means any naturally occurring void, cavity, recess or
system of interconnected passages beneath the surface of the earth or within a
The writ of prohibition is therefore denied. cliff or ledge and which is large enough to permit an individual to enter, whether
Whole court sitting. or not the entrance, located either in private or public land, is naturally formed
or man made. It shall include any natural pit, sinkhole or other feature which
If the case of Edwards v. Sims, however, will transpire in the is an extension of the entrance. The term also includes cave resources therein,
Philippines, the ad coelum rule will not apply because caves in this but not any vug, mine tunnel, aqueduct or other manmade excavation.
country are considered part of the national wealth, hence, owned by (b) “Cave resources” includes any material or substance occurring
the State by virtue of its regalian right,176 whether the entrance thereof naturally in caves, such as animal life, plant life, including paleontological

177
See Sec. 3(a), R.A. No. 9072, otherwise known as the “National Caves and Caves Re-
176
See Sec. 2, Art. XII, 1987 Phil. Constitution. sources Management and Protection Act.”
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 153 154 PROPERTY
OWNERSHIP
Ownership in General

and archaeological deposits, cultural artifacts or products of human activities, or fails to comply with any other condition upon which the permit was issued:
sediments, minerals, speleogems and speleothems. Provided, furthermore, That the Secretary cannot issue permits for the removal
of stalactites and stalagmites, and when it is established that the removal of the
(c) “Secretary” means the Secretary of the Department of Environment
resources will adversely affect the value of a significant cave: Provided, finally,
and Natural Resources (DENR).
That caves located within a protected area shall be subjected to the provisions
(d) “Speleogem” means relief features on the walls, ceilings and floor of Republic Act No. 7586 or the National Integrated Protected Area System
of any cave or lava tube which are part of the surrounding bedrock, including Act of 1992;
but not limited to anastomoses, scallops, meander niches, petromorphs and
(d) Call on any local government unit, bureau, agency, state university
rock pendants in solution caves and similar features unique to volcanic caves.
or college and other instrumentalities of the government for assistance as the
(e) “Speleothem” means any natural mineral formation or deposit need arises in the discharge of its functions;
occurring in a cave or lava tube, including but not limited to any stalactite,
(e) Enter into a memorandum of agreement with any local government
stalagmite, helictite, cave flower, flowstone, concretion, drapery, rimstone or
unit (LGU) for the preservation, development and management of cave or
formation of clay or mud.
caves located in their respective territorial jurisdiction;
(f) “Significant Cave” refers to a cave which contains materials or
(f) Tap the cooperation of people’s and non-governmental organiza-
possesses features that have archaeological, cultural, ecological, historical or
tions as active partners in the conservations and protection of our caves and
scientific value as determined by the DENR in coordination with the scientific
cave resources; and
community and the academe.
(g) Exercise other powers and perform other functions as may be
Sec. 4. Implementing Agency. — The DENR shall be the lead agency
necessary to implement the provisions of this Act.
tasked to implement the provisions of this Act in coordination with the
Department of Tourism (DOT), the National Museum, the National Historical Sec. 6. Information Concerning the Nature and Location of Significant
Institute and concerned local government units (LGUs) for specific caves, Caves. — Information concerning the nature and specific location of a
except that in the Province of Palawan, the Palawan Council for Sustainable potentially significant cave shall not be made available to the public within
Development shall be the lead implementing agency pursuant to Republic Act one (1) year after its discovery by the DENR, during which time the DENR
No. 7611 or the Strategic Environmental Plan for Palawan Act. in coordination with the DOT, the National Museum, the National Historical
Institute, concerned LGUs the scientific community and the academe shall
Sec. 5. Powers and Functions of the Department of Environment and
assess its archaeological, cultural, ecological, historical and scientific value,
Natural Resources (DENR). — In the implementation of this Act, the DENR
unless a written request is made and the Secretary determines that disclosure
shall exercise the following powers and functions:
of such information will further the purpose of this Act and will not create a
(a) Formulate, develop and implement a national program for the substantial risk of harm, theft or destruction on such cave.
management, protection and conservation of caves and cave resources;
The written request shall contain, among others, the following:
(b) Disseminate information and conduct educational campaign on the
(a) a description of the geographic site for which the information is
need to conserve, protect and manage our caves and cave resources;
sought;
(c) Issue permits for the collection and removal of guano and other cave
(b) an explanation of the purpose for which the information is
resources which shall be determined in coordination with the DOT, National
sought;
Museum, concerned LGUs, the scientific community and the academe, with
regard to specific caves taking into consideration biodiversity as well as the (c) an assurance or undertaking satisfactory to the Secretary that
aesthetic and archaeological value of the cave: Provided, That the permittee adequate measures are to be taken to protect the confidentiality of such
shall be required to post a bond to ensure compliance with the provisions of any information and to ensure the protection of the cave from destruction by
permit: Provided, further, That any permit issued under this Section shall be vandalism and unauthorized use.
revoked by the Secretary when the permittee violates any provision of this Act

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 155 156 PROPERTY


OWNERSHIP
Ownership in General

Sec. 7. Prohibited Acts. — The following shall be considered Prohibited Sec. 13. Separability Clause. — If any provisions of this Act is subse-
Acts: quently declared unconstitutional, the remaining provisions shall remain in full
force and effect.
(a) Knowingly destroying, disturbing, defacing, marring, altering,
removing, or harming the speleogem or speleothem of any cave or altering the Sec. 14. Repealing Clause. — Presidential Decree No. 1726-A is hereby
free movement of any animal or plant life into or out of any cave; modified. Treasure hunting in caves shall be governed by the provisions of this
Act.
(b) Gathering, collecting, possessing, consuming, selling, bartering or
exchanging or offering for sale without authority any, cave resource; and Except Presidential Decree No. 412 and Republic Act No. 4846, all other
laws, decrees, orders and regulations or parts thereof which are inconsistent with
(c) Counselling, procuring, soliciting or employing any other person
any of the provisions of this Act are hereby repealed or amended accordingly.
to violate any provisions of this Section.
Sec. 15. Effectivity. — This Act shall take effect fifteen (15) days following
Sec. 8. Penalties. — Any person found guilty of any of the offenses
its publication in two (2) national newspapers of general circulation.
enumerated under Section 7 hereof shall be punished by imprisonment
from two (2) years to six (6) years or a fine ranging from Twenty thousand
pesos (P20,000) to five hundred thousand pesos (P500,000.00) or both at the [39.2.2] Rule on Ownership of “Hidden Treasure” under
discretion of the Court: Provided, That the person furnishing the capital to Article 438
accomplish the acts punishable herein shall be punished by imprisonment from
six (6) years and one (1) day to eight (8) years or by a fine ranging from Five If the finder of the hidden treasure is the owner of the land, building
hundred thousand pesos (P500,000.00) to One million pesos (P1,000,000.00) or property on which it is found, the treasure shall belong to him.178 If
or both at the discretion of the Court: Provided, further, That if the area requires the finder is a third person, he is entitled to one-half of the treasure if he
rehabilitation or restoration as determined by the Court, the offender shall also is not a trespasser and the discovery of the treasure is only by chance;
be required to restore the same, whenever practicable or compensate for the otherwise, he shall not be entitled.179 The same rule shall apply even if
damage: Provided, finally, That if the offender is a government employee, he the land belongs to the State.180 However, if the thing found be of interest
or she shall likewise be removed from office. to science or the Arts, the State may acquire them by paying just price,
Sec. 9. Administrative Confiscation and Conveyance. — The Secretary whether the finder of the treasure is the owner of the property on which
shall order the confiscation, in favor of the Government of the cave resources it is found or a third person.181
gathered, collected, removed, possessed or sold including the conveyance and
equipment used in violation of Section 7 hereof. [39.2.3] Rule on “Treasure Hunting”
Sec. 10. Fees. — Any money collected by the DENR as permit fees for The provisions of Article 438 of the New Civil Code on “hidden
collection and removal of cave resources, as a result of the forfeiture of a bond treasure” shall apply only if the discovery of the treasure is by chance.
or other security by a permittee who does not comply with the requirements of If the search for the hidden treasure is deliberate, otherwise known as
such permit issued under this Act or by way of fines for violations of this Act “treasure hunting,” such activity is governed by the following:
shall be remitted to the National Treasury.
(1) Republic Act No. 8492, otherwise known as the National
Sec. 11. Implementing Rules and Regulations. — The DENR shall,
Museum Act of 1998, for issuance of permits for the discovery/recovery
within six (6) months from the effectivity of this Act, issue rules and regulations
necessary to implement the provisions hereof. of hidden treasures, shipwrecks/sunken vessels recovery exclusively
for materials of cultural and historical values, such as objects of arts,
Sec. 12. Appropriations. — The amount necessary to carry out the
provisions of this Act shall be included in the General Appropriations Act of 178
Art. 438, 1st par., NCC.
the year following its enactment into law and thereafter. 179
Art. 438, 2nd par., NCC.
180
Id.
181
Art. 438, 3rd par., NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 157 158 PROPERTY
OWNERSHIP
Ownership in General

archaeological artifacts, ecofacts, relics and other materials embodying (2) for treasure hunting in private lands – 30% to the Govern-
the cultural and natural heritage of the Filipino nation, as well as those ment and 70% to be shared by the permit holder and the
of foreign origin; landowner; and
(2) As to issuance of permits not covered by R.A. No. 8492, (3) for shipwreck/sunken vessel recovery – 50% to the Govern-
the same shall be governed by DENR Administrative Order No. 2002- ment and 50% to the permit holder.
04, as amended by DENR AO No. 2004-2003, in relation to Executive
Order No. 35, dated September 15, 2001. Pursuant to EO No. 35, the [39.3] Right to the Airspace
function to issue licenses and permits for treasure hunting and shipwreck [39.3.1] Extent of Landowner’s Right to Airspace
recovery has been transferred from the Office of the President to the
The air, like the sea, is by its nature incapable of private ownership,
Department of Environment and Natural Resources.
except insofar as one may actually use it.187 While the airspace is a public
In case of treasure hunting for treasures which are not of cultural highway, it is obvious that if the landowner is to have full enjoyment of
and historical values, the same shall require the issuance of a permit for the land, he must have exclusive control of the “immediate reaches of
treasure hunting or shipwreck/sunken vessel recovery to be issued by the the enveloping atmosphere.”188 Otherwise buildings could not be erected,
Department of Environment and Natural Resources, whether the treasure trees could not be planted, and even fences could not be run.189 However,
hunting is to be undertaken on private lands or government lands182 and when it is said that man owns, or may own, to the heavens, that merely
subject to the consent of the private landowners or government agencies means that no one can acquire a right to the space above him that will
concerned.183 Upon discovery of valuable items such as monies, things limit him in whatever use he can make of it as a part of his enjoyment
and articles of value, resulting from treasure hunting and shipwreck/ of the land.190 In other words, the landowner owns at least as much of the
sunken vessel recovery activities, the National Museum shall be called space above the ground as he can occupy or use in connection with the
upon to determine whether or not they are considered to have cultural land.191 To this extent his title to the air is paramount.192 No other person
and/or historical value.184 In the event that the items are considered to can acquire any title or exclusive right to any space above him.193
have historical and cultural value, it shall be turned over to the National To the extent that one’s land includes air space above the land, any
Museum for appropriate action. Otherwise, the same shall be turned to unauthorized physical entry into that space is to be considered a trespass,
an oversight committee created pursuant to DENR AO No. 2002-04 if done by a private person, or a case of “taking” of private property, if
for valuation and disposition.185 All treasures found shall be allowed for done under governmental authority. Thus, in the case of United States
export only upon the approval of the National Heritage Commission v. Causby,194 it was held that repeated flights at low levels directly over
and other concerned government agencies.186 After an audited report of private land may amount to a taking for which just compensation must
expenses has been evaluated and approved by the oversight committee, be paid to the landowner.
the sharing of the net proceeds shall be as follows:
(1) for treasure hunting within public lands – 75% to the
Government and 25% to the permit holder;
187
Hinman v. Pacific Air Transport, supra.
188
US v. Causby, 328 U.S. 256 (1946).
189
Id.
182 190
Sec. 2, DENR AO No. 2002-04, as amended. Hinman v. Pacific Air Transport, supra.
183 191
Sec. 7, DENR AO No. 2002-04, as amended. US v. Causby, supra.
184 192
Sec. 12, DENR AO No. 2002-04, as amended. Hinman v. Pacific Air Transport, supra.
185 193
Id. Id.
186 194
Id. Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 159 160 PROPERTY


OWNERSHIP
Ownership in General

Hinman v. Pacific Air Transport This formula was never taken literally, but was a figurative phrase to
United States Court of Appeals, Ninth Circuit, 1936 express the full and complete ownership of land and the right to whatever
84 F.2d 755 superjacent airspace was necessary or convenient to the enjoyment of the
land.
HANEY, Circuit Judge. From decrees sustaining motions to dismiss filed
by defendants in two suits, appellants appeal and bring for review by this court In applying a rule of law, or construing a statute or constitutional provision,
the rights of a landowner in connection with the flight of aircraft above his land. we cannot shut our eyes to common knowledge, the progress of civilization,
Appellant filed one bill against Pacific Air Transport, an Oregon corporation, or the experience of mankind. A literal construction of this formula will bring
and another bill against United Air Lines Transport Corporation, a Delaware about an absurdity. The sky has no definite location. It is that which presents
corporation, in each of which the allegations are nearly identical. Although two itself to the eye when looking upward; as we approach it, it recedes. There can
appeals are before the court, briefs filed discuss both cases, and therefore we be no ownership of infinity, nor can equity prevent a supposed violation of an
will consider them together. * * * abstract conception.
It is * * * alleged that defendants are engaged in the business of operating The appellants’ case, then, rests upon the assumption that as owners
a commercial airline, and that at all times “after the month of May, 1929, of the soil they have an absolute and present title to all the space above the
defendants daily, repeatedly and upon numerous occasions have disturbed, earth’s surface, owned by them, to such a height as is, or may become, useful
invaded and trespassed upon the ownership and possession of plaintiffs’ tract;” to the enjoyment of their land. This height, the appellants assert in the bill, is
that at said times defendants have operated aircraft in, across, and through said of indefinite distance, but not less than 150 feet. * * * This, then, is appellants’
airspace at altitudes less than 100 feet above the surface; that plaintiffs notified premise, and upon this proposition they rest their case. Such an inquiry was
defendants to desist from trespassing on said airspace; and that defendants never pursued in the history of jurisprudence until the occasion is furnished by
have disregarded said notice, unlawfully and against the will of plaintiffs, and the common use of vehicles of the air.
continue and threaten to continue such trespasses. * * * We believe, and hold, that appellants’ premise is unsound. The question
The prayer asks an injunction restraining the operation of the aircraft presented is applied to a new status and little aid can be found in actual precedent.
through the airspace over plaintiffs’ property and for $90,000 damages in each The solution is found in the application of elementary legal principles. The first
of the cases. and foremost of these principles is that the very essence and origin of the legal
right of property is dominion over it. Property must have been reclaimed from
Appellees contend that it is settled law in California that the owner of the general mass of the earth, and it must be capable by its nature of exclusive
land has no property rights in superjacent airspace, either by code enactments possession. Without possession, no right in it can be maintained.
or by judicial decrees and that the ad coelum doctrine * * * does not apply in
California. We have examined the statutes of California, particularly California The air, like the sea, is by its nature incapable of private ownership,
Civil Code, § 659 and § 829, as well as Grandona v. Lovdal, 21 P. 366; Wood v. except insofar as one may actually use it. This principle was announced long
Moulton, 80 P. 92; and Kafka v. Bozio, 218 P. 753, but we find nothing therein to ago by Justinian. It is in fact the basis upon which practically all of our so-
negative the ad coelum formula. Furthermore, if we should adopt this formula called water codes are based.
as being the law, there might be serious doubt as to whether a state statute We own so much of the space above the ground as we can occupy or
could change it without running counter to the Fourteenth amendment to the make use of, in connection with the enjoyment of our land. This right is not
Constitution of the United States. If we could accept and literally construe the fixed. It varies with our varying needs and is co-extensive with them. The
ad coelum doctrine, it would simplify the solution of this case; however, we owner of land owns as much of the space above him as he uses, but only so
reject that doctrine. We think it is not the law, and that it never was the law. long as he uses it. All that lies beyond belongs to the world.
This formula “from the center of the earth to the sky” was invented When it is said that man owns, or may own, to the heavens, that merely
at some remote time in the past when the use of space above land actual or means that no one can acquire a right to the space above him that will limit him
conceivable was confined to narrow limits, and simply meant that the owner in whatever use he can make of it as a part of his enjoyment of the land. To this
of the land could use the overlying space to such an extent as he was able, and extent his title to the air is paramount. No other person can acquire any title or
that no one could ever interfere with that use. exclusive right to any space above him.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 161 162 PROPERTY
OWNERSHIP
Ownership in General

Any use of such air or space by others which is injurious to his land, or Appellants do not, therefore, in their bill state a case of trespass, unless
which constitutes an actual interference with his possession or his beneficial they allege a case of actual and substantial damage. The bill fails to do this. It
use thereof, would be a trespass for which he would have remedy. But any merely draws a naked conclusion as to damages without facts or circumstances
claim of the landowner beyond this cannot find a precedent in law, nor support to support it. It follows that the complaint does not state a case for injunctive
in reason. relief. * * *
It would be, and is, utterly impracticable and would lead to endless The decree of the District Court is affirmed.
confusion, if the law should uphold attempts of landowners to stake out, or
MATHEWS, Circuit Judge, dissents.
assert claims to definite, unused spaces in the air in order to protect some
contemplated future use of it. Such a rule, if adopted, would constitute a
departure never before attempted by mankind, and utterly at variance with the UNITED STATES v. CAUSBY
reason of the law. If such a rule were conceivable, how will courts protect Supreme Court of the United States, 1946.
the various landowners in their varying claims of portions of the sky? How 328 U.S. 256, 66 S. Ct. 1062, 90 L. Ed. 1206
enforce a right of ejectment or restitution? Such a rule is not necessary for the
Mr. Justice DOUGLAS delivered the opinion of the Court.
protection of the landowner in any right guaranteed him by the Constitution in
the enjoyment of his property. If a right like this were recognized and upheld This is a case of first impression. The problem presented is whether
by the courts, it would cause confusion worse confounded. It is opposed to respondents’ property was taken within the meaning of the Fifth Amendment
common sense and to all human experience. by frequent and regular flights of army and navy aircraft over respondents’
land at low altitudes. The Court of Claims held that there was a taking and
We cannot shut our eyes to the practical result of legal recognition of
entered judgment for respondent, one judge dissenting. 60 F. Supp. 751. The
the asserted claims of appellants herein, for it leads to a legal implication to
case is here on a petition for a writ of certiorari which we granted because of
the effect that any use of airspace above the surface owner of land, without
the importance of the question presented.
his consent would be a trespass either by the operator of an airplane or a radio
operator. We will not foist any such chimerical concept of property rights upon Respondents own 2.8 acres near an airport outside of Greensboro, North
the jurisprudence of this country. Carolina. It has on it a dwelling house, and also various outbuildings which
were mainly used for raising chickens. The end of the airport’s northwest-
We now consider the allegation of the bill that appellees’ airplanes, in
southeast runway is 2,220 feet from respondents’ barn and 2,275 feet from
landing, glide through the air, within a distance of less than 100 feet to the
their house. The path of glide to this runway passes directly over the property
surface of appellants’ land, or possibly to a distance within five feet thereof,
— which is 100 feet wide and 1,200 feet long. The 30 to 1 safe glide angle1
at one end of his tract. This presents another question for discussion. Whether
approved by the Civil Aeronautics Authority passes over this property at 83
such close proximity to appellants’ land may constitute an impairment of his
feet, which is 67 feet above the house, 63 feet above the barn and 18 feet above
full enjoyment of the same is a question of fact. If it does, he may be entitled
the highest tree. The use by the United States of this airport is pursuant to a
to relief in a proper case.
lease executed in May, 1942, for a term commencing June 1, 1942 and ending
Appellants are not entitled to injunctive relief upon the bill filed here, June 30, 1942, with a provision for renewals until June 30, 1967, or six months
because no facts are alleged with respect to circumstances of appellants’ use of after the end of the national emergency, whichever is the earlier.
the premises which will enable this court to infer that any actual or substantial
Various aircraft of the United States use this airport — bombers,
damage will accrue from the acts of the appellees complained of.
transports and fighters. The direction of the prevailing wind determines when
The case differs from the usual case of enjoining a trespass. Ordinarily, a particular runway is used. The north-west-southeast runway in question is
if a trespass is committed upon land, the plaintiff is entitled to at least nominal used about four per cent of the time in taking off and about seven per cent of
damages without proving or alleging any actual damage. In the instant case, the time in landing. Since the United States began operations in May, 1942, its
traversing the airspace above appellants’ land is not, of itself, a trespass at all, four-motored heavy bombers, other planes of the heavier type, and its fighter
but it is a lawful act unless it is done under circumstances which will cause planes have frequently passed over respondents’ land buildings in considerable
injury to appellants’ possession. numbers and rather close together. They come close enough at times to appear

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 163 164 PROPERTY


OWNERSHIP
Ownership in General

barely to miss the tops of the trees and at times so close to the tops of the trees property rendered it uninhabitable, there would be a taking compensable under
as to blow the old leaves off. The noise is startling. And at night the glare from the Fifth Amendment. * * * If, by reason of the frequency and altitude of the
the planes brightly lights up the place. As a result of the noise, respondents flights, respondents could not use this land for any purpose, their loss would be
had to give up their chicken business. As many as six to ten of their chickens complete. It would be as complete as if the United States had entered upon the
were killed in one day by flying into the walls from fright. The total chickens surface of the land and taken exclusive possession of it.
lost in that manner was about 150. Production also fell off. The result was
We agree that in those circumstances there would be a taking. Though
the destruction of the use of the property as a commercial chicken farm.
it would be only an easement of flight which was taken, that easement, if
Respondents are frequently deprived of their sleep and the family has become
permanent and not merely temporary, normally would be the equivalent of a
nervous and frightened. Although there have been no airplane accidents on
fee interest. It would be a definite exercise of complete dominion and control
respondents’ property, there have been several accidents near the airport and
over the surface of the land. The fact that the planes never touched the surface
close to respondents’ place. These are the essential facts found by the Court
would be as irrelevant as the absence in this day of the feudal livery of seisin
of Claims. On the basis of these facts, it found that respondents’ property had
on the transfer of real estate. The owner’s right to possess and exploit the land
depreciated in value. It held that the United States had taken an easement over
— that is to say, his beneficial ownership of it — would be destroyed. It would
the property on June 1, 1942, and that the value of the property destroyed and
not be a case of incidental damages arising from a legalized nuisance such as
the easement taken was $2,000.
was involved in Richards v. Washington Terminal Co., 233 U.S. 546, 34 S. Ct.
The United States relies on the Air Commerce Act of 1926, 44 Stat. 654, L.R.A.1915A, 887. In that case property owners whose lands adjoined
568, 49 U.S.C. 171 et seq., 49 U.S.C.A. 171 et seq., as amended by the Civil a railroad line were denied recovery for damages resulting from the noise,
Aeronautics Act of 1938, 52 Stat. 973, 49 U.S.C. 401 et seq., 49 U. S.C.A. vibrations, smoke and the like, incidental to the operations of the trains. In the
401 et seq. * * * It is, therefore, argued that since these flights were within supposed case the line of flight is over the land. And the land is appropriated as
the minimum safe altitudes of flight which had been prescribed, they were an directly and completely as if it were used for the runways themselves.
exercise of the declared right of travel through the airspace. The United States
There is no material difference between the supposed case and the
concludes that when flights are made within the navigable airspace without any
present one, except that here enjoyment and use of the land are not completely
physical invasion of the property of the landowners, there has been no taking
destroyed. But that does not seem to us to be controlling. The path of glide
of property. It says that at most there was merely incidental damage occurring
for airplanes might reduce a valuable factory site to grazing land, an orchard
as a consequence of authorized air navigation. It also argues that the landowner
to a vegetable patch, a residential section to a wheat field. Some value would
does not own super-adjacent airspace which he has not subjected to possession
remain. But the use of the airspace immediately above the land would limit the
by the erection of structures or other occupancy. Moreover, it is argued that
utility of the land and cause a diminution in its value. * * *
even if the United States took airspace owned by respondents, no compensable
damage was shown. Any damages are said to be merely consequential for The fact that the path of glide taken by the planes was that approved
which no compensation may be obtained under the Fifth Amendment. by the Civil Aeronautics Authority does not change the result. The navigable
airspace which Congress has placed in the public domain is ‘airspace above
It is ancient doctrine that at common law ownership of the land extended
the minimum safe altitudes of flight prescribed by the Civil Aeronautics
to the periphery of the universe — Cujus est solum ejus est usque ad coelum.
Authority.’ 49 U.S.C. 180, 49 U.S.C.A. 180. If that agency prescribed 83 feet
But that doctrine has no place in the modern world. The air is a public highway,
as the minimum safe altitude, then we would have presented the question of
as Congress has declared. Were that not true, every transcontinental flight
the validity of the regulation. But nothing of the sort has been done. The path
would subject the operator to countless trespass suits. Common sense revolts
of glide governs the method of operating of landing or taking off. The altitude
at the idea. To recognize such private claims to the airspace would clog these
required for that operation is not the minimum safe altitude of flight which is
highways, seriously interfere with their control and development in the public
the downward reach of the navigable airspace. The minimum prescribed by
interest, and transfer into private ownership that to which only the public has
the authority is 500 feet during the day and 1000 feet at night for air carriers
a just claim.
(Civil Air Regulations, Pt. 61, 61.7400, 61.7401, Code Fed. Reg. Cum. Supp.,
But that general principle does not control the present case. For the Tit. 14, ch. 1) and from 300 to 1000 feet for other aircraft depending on the
United States conceded on oral argument that if the flights over respondents’ type of plane and the character of the terrain. Id., Pt. 60, 60.350-60.3505, Fed.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 165 166 PROPERTY
OWNERSHIP
Ownership in General

Reg. Cum. Supp., supra. Hence, the flights in question were not within the there was a diminution in value of the property and that the frequent, low-level
navigable airspace which Congress placed within the public domain. If any flights were the direct and immediate cause. We agree with the Court of Claims
airspace needed for landing or taking off were included, flights which were so that a servitude has been imposed upon the land. * * *
close to the land as to render it uninhabitable would be immune. But the United
The Court of Claims held, as we have noted, that an easement was taken.
States concedes, as we have said, that in that event there would be a taking.
But the findings of fact contain no precise description as to its nature. It is
Thus, it is apparent that the path of glide is not the minimum safe altitude of
not described in terms of frequency of flight, permissible altitude, or type of
flight within the meaning of the statute. The Civil Aeronautics Authority has,
airplane. Nor is there a finding as to whether the easement taken was temporary
of course, the power to prescribe air traffic rules. But Congress has defined
or permanent. Yet an accurate description of the property taken is essential,
navigable airspace only in terms of one of them — the minimum safe altitudes
since that interest vests in the United States. United States v. Cress, supra., 243
of flight.
U.S. 328, 329, 37 S.Ct. 385, 386, and cases cited. * * *
We have said that the airspace is a public highway. Yet it is obvious that
Since on this record it is not clear whether the easement taken is a
if the landowner is to have full enjoyment of the land, he must have exclusive
permanent or a temporary one, it would be premature for us to consider whether
control of the immediate reaches of the enveloping atmosphere. Otherwise
the amount of the award made by the Court of Claims was proper.
buildings could not be erected, trees could not be planted, and even fences
could not be run. The principle is recognized when the law gives a remedy The judgment is reversed and the cause is remanded to the Court of
in case overhanging structures are erected on adjoining land. The landowner Claims so that it may make the necessary findings in conformity with this
owns at least as much of the space above the ground as the can occupy or use in opinion.
connection with the land. See Hinman v. Pacific Air Transport, 9 Cir., 84 F.2d
Reversed.
755. The fact that he does not occupy it in a physical sense – by the erection of
buildings and the like — is not material. As we have said, the flight of airplanes, Mr. Justice JACKSON took no part in the consideration or decision of
which skim the surface but do not touch it, is as much an appropriation of the this case.
use of the land as a more conventional entry upon it. We would not doubt that
Mr. Justice BLACK, dissenting.
if the United States erected an elevated railway over respondents’ land at the
precise altitude where its planes now fly, there would be a partial taking, even The Fifth Amendment provides that ‘private property’ shall not ‘be
though none of the supports of the structure rested on the land. The reason is taken for public use, without just compensation.’ The Court holds today that
that there would be an intrusion so immediate and direct as to subtract from the the Government has ‘taken’ respondents’ property by repeatedly flying Army
owner’s full enjoyment of the property and to limit his exploitation of it. While bombers directly above respondents’ land at a height of eighty-three feet where
the owner does not in any physical manner occupy that stratum of airspace or the light and noise from these planes caused respondents to lose sleep and their
make use of it in the conventional sense, he does use it in somewhat the same chickens to be killed. Since the effect of the Court’s decision is to limit, by
sense that space left between buildings for the purpose of light and air is used. the imposition of relatively absolute Constitutional barriers, possible future
The super-adjacent airspace at this low altitude is so close to the land that adjustments through legislation and regulation which might become necessary
continuous invasions of it affect the use of the surface of the land itself. We with the growth of air transportation, and since in my view the Constitution
think that the landowner, as an incident to his ownership, has a claim to it and does not contain such barriers, I dissent.
that invasions of it are in the same category as invasions of the surface. * * *
* * * It is inconceivable to me that the Constitution guarantees that the
The airplane is part of the modern environment of life, and the airspace of this Nation needed for air navigation, is owned by the particular
inconveniences which it causes are normally not compensable under the Fifth persons who happen to own the land beneath to the same degree as they own
Amendment. The airspace, apart from the immediate reaches above the land, the surface below. 3 No rigid Constitutional rule, in my judgment, commands
is part of the public domain. We need not determine at this time what those that the air must be considered as marked off into separate compartments by
precise limits are. Flights over private land are not a taking, unless they are imaginary metes and bounds in order to synchronize air ownership with land
so low and so frequent as to be a direct and immediate interference with the ownership. * * * Old concepts of private ownership of land should not be
enjoyment and use of the land. We need not speculate on that phase of the introduced into the field of air regulation. I have no doubt that Congress will,
present case. For the findings of the Court of Claims plainly establish that if not handicapped by judicial interpretations of the Constitution, preserve the

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 167 168 PROPERTY


OWNERSHIP
Ownership in General

freedom of the air, and at the same time, satisfy the just claims of aggrieved and therefore, may require the property owners to apply for a Height
persons. The noise of newer, larger, and more powerful planes may grow Clearance Permit if the proposed site of the building/structure is covered
louder and louder and disturb people more and more. But the solution of the by any restrictions.
problems precipitated by these technological advances and new ways of living
cannot come about through the application of rigid Constitutional restraints (3) For properties far from the airport, they are subject to the
formulated and enforced by the courts. What adjustments may have to be provisions of the National Building Code196 and local ordinances.
made, only the future can reveal. It seems certain, however, the courts do not
possess the techniques or the personnel to consider and act upon the complex
combinations of factors entering into the problems. The contribution of courts Chapter 2
must be made through the awarding of damages for injuries suffered from the
flying of planes, or by the granting of injunctions to prohibit their flying. When RIGHT OF ACCESSION
these two simple remedial devices are elevated to a Constitutional level under GENERAL PROVISIONS
the Fifth Amendment, as the Court today seems to have done, they can stand
as obstacles to better adapted techniques that might be offered by experienced Art. 440. The ownership of property gives the right by accession
experts and accepted by Congress. Today’s opinion is, I fear, an opening to everything which is produced thereby, or which is incorporated or at-
tached thereto, either naturally or artificially. (353)
wedge for an unwarranted judicial interference with the power of Congress to
develop solutions for new and vital and national problems. In my opinion this
case should be reversed on the ground that there has been no ‘taking’ in the § 40. Accession
Constitutional sense.
[40.1] Definition and Concept
Mr. Justice BURTON joins in this dissent.
The ownership of property gives the right by accession to
everything which is produced thereby, or which is incorporated or
[39.3.2] Limitations Upon Landowner’s Right to Airspace attached thereto, either naturally or artificially.197 Accession, therefore,
The landowner’s right over the airspace is limited by the follow- is the right of an owner of a thing to the products of said thing as well as
ing: to whatever is inseparably attached thereto as an accessory.198
(1) He is bound by height restrictions annotated on the certificate From the provisions of Article 440, it is clear that “accession”
of title if he acquired the property subject to such restrictions following presupposes a previously existing ownership by the owner over the
the principle that “contractual obligations between parties have the principal, such that it is considered merely as an incident or an attribute
force of law between them.”195 of ownership. It is not, therefore, a mode of acquiring ownership but
a right included in ownership. At any rate, Article 712 of the New
(2) For properties situated near the airport, their owners cannot
Civil Code which enumerates the seven modes of acquiring ownership
complain of the reasonable requirements of aerial navigation. They are
(occupation, intellectual creation, law, donation, succession, tradition
required to secure a height clearance permit from the Air Transportation
and prescription) does not consider “accession” as one of such modes.
Office (ATO), which permit is a pre-requisite for the issuance of a
In addition, the concept of accession is discussed by the Code only in
building permit. This permit allows the owner to construct the proposed
relation to the right of ownership.
structure height approved by ATO. In addition, building officials of
local municipalities/provinces implement their own zoning ordinance,

195 196
Ayala Corporation v. Ray Burton Dev. Corp., G.R. No. 126699, Aug. 7, 1998; see also R.A. No. 6541.
197
Ayala Corporation v. Rosa Diana Realty and Development Corp., G.R. No. 134284, Dec. 1, Art. 440, NCC.
198
2000. Sanchez Roman, Vol. II, p. 89.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 169 170 PROPERTY
OWNERSHIP
Right of Accession General Provisions

[40.2] Kinds of Accession Industrial fruits are those produced by lands of any kind through
cultivation or labor.
Based from the provisions of Article 440, accession is classified
Civil fruits are the rents of buildings, the price of leases of lands
into two: (1) accesion discreta; and (2) accesion continua. The first part and other property and the amount of perpetual or life annuities or other
of the article defines the concept of accesion discreta or the right of similar income. (355a)
the owner to anything which is produced by his property. The second Art. 443. He who receives the fruits has the obligation to pay the
part of the article, on the other hand, defines the concept of accesion expenses made by a third person in their production, gathering, and pres-
continua or the right of the owner to anything which is incorporated or ervation. (356)
attached to his property, whether such attachment is through natural or Art. 444. Only such as are manifest or born are considered as natu-
artificial causes. ral or industrial fruits.

Accesion discreta is subdivided into: (1) natural fruits, (2) With respect to animals, it is sufficient that they are in the womb of
the mother, although unborn. (357)
industrial fruits, and (3) civil fruits. Accesion continua, in turn, may
refer to either immovable property or movable property.
§ 41. Accesion Discreta
With regard to immovable property, accesion continua is classified
[41.1] Basic Rule
into either industrial accession or natural accession depending on
the manner by which the attachment or incorporation takes place. As defined, accesion discreta is the right of the owner to the
In industrial accession, the incorporation takes place artificially; products of his property or to the fruits of the same. In our Civil Code, the
while natural accession takes place through natural means. Industrial basic rule on accesion discreta is stated in Article 441, which provides
accession, in turn, may take the form of either building, planting that “to the owner belongs: (1) the natural fruits, (2) the industrial fruits,
or sowing. Natural accession, on the other hand, has four forms: (1) and (3) the civil fruits.”
alluvion, (2) avulsion; (3) change of course of river; and (4) formation
of islands. [41.2] Exceptions to the Rule

With respect to movable property, accesion continua may either The rule in Article 441 is not absolute inasmuch as there are
be: (1) adjunction or conjunction, (2) commixtion or confusion, and cases where the owner is not entitled to the fruits of his property. The
(3) specification. Adjunction or conjunction, in turn, may take place exceptions to the rule are the following:
by: (1) inclusion (engraftment), (2) soldadura (attachment); (3) tejido (a) in usufruct
(weaving); (4) pintura (painting); or (5) escritura (writing).
It is the essence of usufruct that the usufructuary199 is entitled not
only to the enjoyment of the property subject matter thereof but also to
Section 1. — Right of Accession with Respect to its fruits. Thus, Article 566 of the New Civil Code provides:
What is Produced by Property
“Art. 566. The usufructuary shall be entitled to all the
Art. 441. To the owner belongs: natural, industrial and civil fruits of the property in usufruct.
(1) The natural fruits; With respect to hidden treasure which may be found on the
(2) The industrial fruits; land or tenement, he shall be considered a stranger.”
(3) The civil fruits. (354)
Art. 442. Natural fruits are the spontaneous products of the soil, and
the young and other products of animals. 199
He is the person in whose favor the usufruct was constituted.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 171 172 PROPERTY


OWNERSHIP
Right of Accession General Provisions

(b) in lease of rural lands grass; and (b) the young and other products of animals, such as milk,
hair, wool, horn, hide, eggs, and animals dung or manure.
In lease of rural land, the lessee is entitled to the natural and
industrial fruits of the thing leased while the lessor is entitled to civil With respect to the natural fruit of the first kind, it is required that
fruits in the form of the rent paid by the lessee.200 the same must be spontaneous product of the soil. In other words, it is
necessary that there must be no human labor which has intervened in its
(c) in antichresis generation. If human labor intervenes in the production of the fruit, the
By the contract of antichresis the creditor acquires the right to same is classified as an industrial fruit.
receive the fruits of an immovable of his debtor, with the obligation to Trees which grew spontaneously on the soil and adhering thereto
apply them to the payment of the interest, if owing, and thereafter to the are not considered as natural fruits in contemplation of the first
principal of his credit.201 paragraph of Article 442 because they are themselves immovables.
(d) in possession in good faith Trees may, however, be exceptionally considered as fruits if they are
being exploited for an industry.204 In such a case, they are classified as
According to Article 544 of the New Civil Code, a possessor in industrial fruits because human labor intervenes.
good faith is entitled to the fruits received by him before his possession
is legally interrupted. With regard to the natural fruit of the second kind, there may be a
situation where the young or offspring is a product of animals belonging
(e) fruits naturally falling to different owners. Note that our Civil Code is silent with respect to
the ownership of the young if the male and female parents belonged
According to Article 681 of the New Civil Code, fruits naturally
to different owners. There is no problem if the mating of the parent-
falling upon adjacent land belong to the owner of the said land and not
animals is agreed upon by their respective owners and they provided for
to the owner of the tree.
the ownership of the offspring. In the absence of any agreement to settle
[41.3] Kinds of Fruits the ownership of the offspring, the rule is that “the young belongs to the
owner of the female parent.” This is the rule enunciated by the Supreme
In our Civil Code, fruits are classified into: (1) natural; (2) Court in the early case of US v. Caballero205 in consonance with the
industrial, and (3) civil. It has been held that the term natural, industrial express provisions of the Partidas based on the maxim partus sequitur
and civil fruits are highly technical, and are authoritatively defined in ventrem — the offspring follows the condition of the mother.206
Article 442 of the Civil Code so that, therefore, there can be no question
as to the meaning which should be given them when they occur in a [41.3.2] Industrial Fruits
decree entered by the court.202
Industrial fruits are those produced by lands of any kind through
[41.3.1] Natural Fruits cultivation or labor.207 Hence, for a fruit to be classified as an industrial
fruit, it must satisfy two requirements: (1) it is produced by the land; and
There are two kinds of natural fruits,203 namely: (a) the spontaneous (2) it is produced through cultivation or labor. Both the natural fruits of
products of the soil — those that appear without the intervention of the first kind and industrial fruits are products of the land. They differ,
human labor, such as the wild fruits in the forest, herbs, and common however, in the manner of their coming into existence. The former is

200 204
Arts. 1654, 1676, par. 2, NCC. 3 Manresa, 6th ed., p. 191.
201 205
Art. 2123, Civil Code. 25 Phil. 356 (1913).
202 206
Pamintuan v. Garcia, 39 Phil. 746. Bouvier’s Law Dict., 1934 ed., p. 784.
203 207
Art. 442, par. 1, NCC. Art. 442, par. 2, NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 173 174 PROPERTY
OWNERSHIP
Right of Accession General Provisions

produced naturally and spontaneously by the soil; while the latter is so long as the latter’s pregnancy is already manifest or evident. In the
produced through cultivation or through human labor. Examples of case of plants which produce only a single crop and then perish, they are
industrial fruits are the coffee beans in a coffee plantation; mango fruits deemed manifest or existing from the time the seedlings appear on the
in a mango plantation; palay, corn or sugar cane produced by farmers. ground, without waiting for the grains to appear.214 As to plants and trees
that live for years and yield periodic fruits, the latter are not deemed
By express provisions of the law, it is required that industrial fruits,
existing until they actually appear on the plants and trees.215
like natural fruits of the first kind, must come from the soil. Therefore,
manufactured products such as clothes, jeans, watches and cell phones, § 42. Production Expenses
although produced through human labor, are not considered industrial
fruits.208 [42.1] Situation Contemplated in Article 443
Article 443 of the New Civil Code contemplates a situation where
[41.3.3] Civil Fruits
the recipient of the fruits was not the same person who incurred the
Civil fruits, under the Civil Code, refers to “rents of building, the expenses in connection with its production, gathering and preservation.
price of leases of lands and other property and the amount of perpetual This may happen, for example, if the property was previously in the
or life annuity or other similar income.”209 Civil fruits, therefore, are the possession of a possessor in bad faith and the latter incurred expenses in
income or revenues derived from the property itself. Hence, a dividend, connection with the production, gathering and preservation of the fruits
whether in the form of cash or stock, is considered as civil fruit because but subsequently the owner recovered possession of the property and
it is declared out of the profits of a corporation and not out of the capital the possessor turned over to the owner such fruits he already gathered.
stock.210 But a bonus which is paid to the owner of a piece of land for In such a situation, Article 443 provides that the recipient of the fruits
undertaking the risk of securing with his property a loan given to a “has the obligation to pay the expenses made by a third person in their
sugar central is not civil fruits of the mortgaged property since it is not production, gathering and preservation.” This rule is but proper in order
income derived from the property itself but a compensation for the risk that no one may unjustly enrich himself at the expense of another.216
assumed by the owner.211
[42.2] Applicability of Article 443
[41.4] Existence of Fruits, When Recognized
Article 443 applies only when the fruits are already harvested and
When does the law recognize the existence of fruits? This question gathered since the article refers to persons “who receives the fruits.”
is answered by the provisions of Article 444 of the New Civil Code. Hence, the article does not apply to a situation where the fruits are still
pending. At the same time, the article refers to a recipient who did not
With respect to natural and industrial fruits, only those “manifest”
incur the expenses for the production, gathering and preservation of
or “born” are considered as such.212 In relation to the offspring or young
the fruits. This may happen only if the property was previously in the
of animals, they are deemed existing at the beginning of the maximum
possession of a possessor bad in faith but not if the possessor was in
period of gestation, this being the surest criterion of their existence in
good faith. Under the Civil Code, a possessor in good faith is entitled to
the mother’s womb.213 Hence, the offspring is already considered as a
the fruits received by him before his possession is legally interrupted.217
natural fruit even during the time that it is inside the womb of its mother
Hence, he cannot be compelled by the owner to return whatever fruits
208
3 Manresa, 6th ed., 191-192.
209
Art. 442, par. 3, NCC.
210 214
Bachrach v. Seifert, 87 Phil. 483; Orozco v. Araneta, 90 Phil. 399. Ibid.
211 215
Bachrach Motor Co. v. Talisay-Silay Milling Co., 56 Phil. 117. Ibid.
212 216
Art. 444, par. 1, NCC. 3 Manresa, 6th ed., 196.
213 217
3 Manresa, 6th ed., 199, cited in II Caguioa, Civil Code, 1966 ed., 78. Art. 544, par. 1, NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 175 176 PROPERTY


OWNERSHIP
Right of Accession General Provisions

he received prior to the interruption of his good faith. On the other and because if the owner himself had made the expenses he would have
hand, the possessor in bad faith is required to reimburse to the legitimate spent the same amount.221
possessor the fruits received by him and those which the legitimate
possessor could have received.218 Such being the case, the provisions of
Section 2. — Right of Accession with Respect to
Article 443 finds application in a case where the true owner recovers
Immovable Property
possession of the property from a possessor in bad faith who is required
by law to return to the owner not only the fruits he already received but Art. 445. Whatever is built, planted or sown on the land of another
also the fruits which the owner could have received. This is confirmed and the improvements or repairs made thereon, belong to the owner of
by the provisions of Article 549 of the New Civil Code which states the land, subject to the provisions of the following articles. (358)
that while the possessor in bad faith is obligated to reimburse the Art. 446. All works, sowing, and planting are presumed made by the
fruits received by him and those which the legitimate possessor could owner and at his expense, unless the contrary is proved. (359)
have received, he is, at the same time, entitled to recover the expenses
mentioned in Article 443. § 43. Accesion Continua
As defined, accesion continua is the right of the owner to anything
[42.3] Article 443 Does Not Apply To Pending Fruits
which is incorporated or attached to his property, whether the attachment
As discussed above, Article 443 does not apply to a situation is by reason of natural or artificial causes.222
where the fruits are still pending. In a situation where the fruits are As discussed in supra § 40.2, with respect to immovable property,
still pending (or ungathered) at the time the owner recovers possession accesion continua is classified into either industrial accession or
from a possessor in bad faith, it is the provisions of Article 449 of the natural accession. In industrial accession, the incorporation is caused
New Civil Code that will apply. Under the provisions of Article 449, the by the act of man while natural accession takes place independently of
planter or sower in bad faith on the land of another loses what is planted the act of man.
or sown. Except for the necessary expenses incurred for the preservation
of the land,219 the planter or sower in bad faith is not entitled to recover [43.1] Presupposes Absence of Agreement
any indemnity, including the expenses mentioned in Article 443.
Accesion continua involves the union of two or more things
[42.4] When Refundable belonging to different owners in such a manner that they cannot be
separated from each other or from one another without causing a
In order for the production expenses to be refundable, such expenses substantial injury to any of the things involved. The application of the
must have the following characteristics: (1) that they are dedicated to law on accesion continua presupposes, however, the absence of any
the annual production and not merely for purposes of improvement; agreement, whether express or implied, between or among the owners
(2) that they be not superfluous, excessive or for luxury but rather of the different things involved. If there is such agreement before the
that they be commensurate with that required by the products.220 If the attachment or incorporation, the situation shall be governed primarily
foregoing requisites are complied with, the same must be refunded by the agreement of the parties and secondarily by the pertinent law
by the recipient of the fruits to the one who incurred it irrespective of on the matter — not by the law on accesion continua. In other words,
whether the amount of the expenses far exceed the value of the fruits. the law on accesion continua applies only to situations where there is a
This must be the rule because Article 443 does not make any distinction controversy as to who shall be entitled to the resulting union of two or
218
Art. 549, NCC.
219 221
Art. 452, NCC. II Caguioa, Civil Code, 1966 ed., 76.
220 222
3 Manresa, 6th ed., 196-197, cited in II Caguioa, Civil Code, 1966 ed., 76. Art. 440, NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 177 178 PROPERTY
OWNERSHIP
Right of Accession General Provisions

more things belonging to different owners. It is not so applicable where another in good faith, he can appropriate the materials upon payment of
there is no such controversy. its value but he is not liable to pay damages.

[43.2] Basic Principles Governing Accesion Continua (5) That bad faith subjects a person to damages and other
unfavorable consequences. In Articles 449 and 451 of the New Civil
Accesion continua is based on the following basic principles: Code, for example, the builder in bad faith not only loses what he has
(1) That the union or attachment or the incorporation of two or built without right to indemnity but is likewise liable to the owner of the
more things belonging to different owners to each other or to one another land for damages.
must be such that they cannot be separated from each other or from
(6) That bad faith of one party neutralizes the bad faith of the
one another without causing a substantial physical or juridical injury to
other and, therefore, both should be considered as having acted in good
any one, to some, or to all of the things involved. If such separation is
faith. This principle is recognized for example in Article 453 of the
possible without injury, their respective owners retain their ownership
New Civil Code which states that “if there was bad faith not only on the
without effects on the others.
part of the person who built, planted or sowed on the land of another
This principle is shown, for example, in Article 447 of the New but also on the part of the owner of such land, the rights of one and the
Civil Code where the owner of the materials is allowed to demand other shall be the same as though both had acted in good faith.”
for the removal of his materials in case the same can be done without
injury to the work constructed or without the plantings, constructions or
works being destroyed. If separation is indeed possible without injury, A. INDUSTRIAL ACCESSION
there is no accesion continua. Hence, the owner of the materials retains
§ 44. Industrial Accession
ownership over his property.
[44.1] Three Forms
(2) That the accessory follows the principal (“accessio cedit
principali”). This means that the owner of the principal thing has the Industrial accession may take the form of building, planting or
right to claim ownership of the accessory thing and not vice versa. sowing.
This principle is shown, for example, in the provisions of Article 466
the New Civil Code which states that the owner of the principal thing (1) Building
acquires the accessory whenever two movable things belonging to The term building is a generic term for all architectural work
different owners are, without bad faith, united in such a way that they with roof, built for the purpose of being used as man’s dwelling, or
form a single object. for offices, clubs, theaters, etc.223 The term, however, does not refer
(3) That no one shall unjustly enrich himself at the expense of to partitions, railings, counters, shelves and other fixtures made in
another. In Article 466, for example, even if the owner of the principal a building belonging to the owner of the land.224 This is because the
thing can appropriate the accessory thing that has been attached or Spanish text of the provision uses the word “edificar” which means
incorporated to his property, he must, nonetheless, pay for its value if to undertake the construction of an edifice such as a house, stable or
no bad faith intervenes on the part of the owner of the accessory thing. similar structure.225 While one may build a partition, door, window or
(4) That good faith exonerates a person from punitive liability
and damages. He who acts in good faith may be held responsible for 223
II Tolentino, Civil Code, 107, cited in Songcuya v. Mr. & Mrs. Lim, CA-G.R. No. 57357,
his act, but he should not be penalized. In Article 447 of the New Civil Aug. 31, 2006.
Code, for example, if the owner of the land made use of the materials of 224

225
II Caguioa, Civil Code, 1966 ed., 83.
Id.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 179 180 PROPERTY


OWNERSHIP
Right of Accession General Provisions

even a chair or desk, it is improper to use the verb “edificar” to describe at his expense.232 Hence, the burden of proving that the works, sowing
the making of such partition, door, window, etc.226 and planting are not made by the landowner at his expense is incumbent
upon those who are alleging such fact. Hence, as a rule, “whatever is
(2) Planting and Sowing built, planted or sown on the land of another and the improvements or
Planting refers to trees, big or small, while sowing refers to crops repairs made thereon, belonged to the owner of the land.”233 This rule,
and plants caused by the scattering or strewing of seeds upon the soil. however, is subject to the provisions of Articles 448 up to 456 upon
The distinction between planting and sowing is material in applying presentation of proof that the works, sowing or planting is not made by
the second option available to the landowner in good faith under the the owner of the land nor made at his expense.
provisions of Article 448 of the New Civil Code. In Article 448, the
[44.3] Controversial Cases
option of compelling the builder or the planter to pay the price of the
land is not available against the sower. In general, there are three possible persons involved in industrial
accession: (1) the landowner; (2) the builder, planter or sower; and (3)
[44.2] Building, Planting or Sowing on One’s Own Land the owner of the materials. As discussed in supra § 44.2, if these three
Under the articles of the Civil Code on industrial accession by persons are merged into one, such that the landowner is at the same time
edification on the principal land (Articles 445 to 456), such accession is the builder, planter or sower with materials belonging to him, there is
limited either to buildings erected on the land of another, or buildings no controversy since it is clear that whatever has been built, planted or
constructed by the owner of the land with materials owned by someone sown belonged to him. A controversy will arise only if the landowner is
else.227 Nowhere in these articles on industrial accession is there any not the builder, planter or sower nor the owner of the materials. Hence,
mention of the case of a landowner building on his own land with there are three possible controversial situations in industrial accession:
materials owned by him.228 The reason for the omission is readily (1) When the landowner builds, plants or sows on his land but
apparent: recourse to the rules on accession is totally unnecessary and using materials belonging to another;
inappropriate where the ownership of the land and of the materials used
to build thereon are concentrated on one and the same person.229 Even if (2) When a person builds, plants or sows on another’s land but
the law did not provide for accession, the landowner would necessarily he made use of materials belonging to him; and
own the building, because he has paid for the materials and labor used (3) When a person builds, plants or sows on another’s land but
in constructing it.230 Thus, the Civil Code limits the cases of industrial he made use of materials belonging to another.
accession to those involving land and materials belonging to different
owners231 for in these cases a controversy arises as to the rights and Art. 447. The owner of the land who makes thereon, personally or
obligations of the parties to each other or to one another. 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
At any rate, in the absence of proof to the contrary, the law pre- be obliged to the reparation of damages. The owner of the materials shall
sumes that all works, sowing and planting are made by the owner and 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 indemni-
226
Id., citing Lao Chit v. Security Bank & Trust Co., L-11028, April 17, 1959. fied for damages. (360a)
227
Gaboya v. Cui, 38 SCRA 85, 92 (1971).
228
Id.
229
Id.
230 232
Id. Art. 446, NCC.
231 233
Id. Art. 445, NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 181 182 PROPERTY
OWNERSHIP
Right of Accession General Provisions

§ 45. Using Materials Belonging To Another owner of the materials acted in good faith, the legal effects of such
[45.1] Situation Contemplated in Article 447 a situation are determined by the provisions of Article 447. Applying
the provisions of Article 447 and the principles governing accesion
Article 447 of the New Civil Code contemplates a situation where continua, the following are the legal effects of a situation where both
the landowner, either personally or through the instrumentality of an parties acted in good faith:
agent, makes plantings, constructions or works on his own land but he
made use of materials belonging to another person. In such a situation, [i] Since the one responsible for the attachment or incorporation
the following questions may arise: (1) Who can claim the ownership (the landowner) acted in good faith, he is exonerated from punitive
of what has been built, planted or sown? (2) What are the rights and liability and damages.
obligations of the landowner and the owner of the materials as against [ii] Being the owner of the principal (the land) and following the
each other? These and other questions are addressed by the provisions principle of accesio cedit principali, the land owner is given the right to
of Article 447. appropriate what has been built, planted or sown but with the obligation
[45.2] Determining the Legal Consequences to indemnify the owner for the value of the materials234 following the
principle that no person should unjustly enrich himself at the expense
The legal effects of the situation contemplated in Article 447 shall of another.
depend on the good faith or bad faith of the landowner in making use
of the materials belonging to a third person. Note that in this article, the Instead of appropriating the materials, can the landowner choose
law presumes that the owner of the materials is in good faith because to return the same to its owner? Article 447 grants the right to demand
the rights of the parties when the owner of the materials is in bad faith for the removal and return of the materials only to the owner of the
are determined by the provisions of Article 455 of the Civil Code. materials if such removal can be done without injury to the work
While Article 455 refers to a situation of building, planting or sowing constructed or without the plantings, constructions or works being
on another’s land with the materials belonging to another person, destroyed. Notwithstanding the fact that the same right is not expressly
there is no reason why the effects of the presence of good faith or bad granted to the landowner, it is believed, however, that the landowner
faith on the part of the owner of the materials should not be applied may likewise choose to return the materials to its owner if removal is
to the situation contemplated in Article 447. Hence, if Article 447 is possible without causing injury to the work constructed or without the
interpreted in conjunction with the provisions of Article 455, we will plantings, constructions or works being destroyed. In such a situation,
have the following possible scenarios: there is really no accesion continua. As discussed in supra § 43.2, there
is accesion continua only if the union or attachment or the incorporation
(1) Both the landowner and the owner of the materials acted in of two or more things belonging to different owners to each other or
good faith;
to one another is in such a way that they cannot be separated from
(2) Both of them acted in bad faith; each other or from one another without causing substantial physical
(3) The owner of the materials acted in good faith while the or juridical injury to any one, to some, or to all of the things involved.
landowner acted in bad faith; and There being no accession, the provision of Article 447 limiting the
option of the landowner to the payment of the value of the materials
(4) The owner of the materials acted in bad faith while the does not apply. On the contrary, there being no accession, the owners
landowner acted in good faith. of the things attached or joined retain ownership over their respective
[45.2.1] Both Acted In Good Faith properties.

As stated earlier, Article 447 presumes that the owner of the


materials is in good faith. Hence, where both the landowner and the 234
Art. 447, NCC.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 183 184 PROPERTY


OWNERSHIP
Right of Accession General Provisions

[45.2.2] Both Acted In Bad Faith if it will cause injury to the land or to the materials — with a right to be
Following the principle that the bad faith of one party is neutralized indemnified for damages.236
by the bad faith of the other and, therefore, both should be considered as [iii] The foregoing is without prejudice to the criminal liability
having acted in good faith, the legal effects discussed in supra § 45.2.1 of the landowner for the unlawful taking and use of the materials of
shall likewise apply in the present situation. another without the latter’s knowledge and consent.
But what constitutes good faith or bad faith on the part of the [45.2.4] Landowner In Good Faith; Owner of the Materials
landowner and the owner of the materials in the situation contemplated In Bad Faith
in Article 447? The landowner is considered to have acted in good faith
if he honestly believed that the materials were his at the time that he This situation is not governed by Article 447 since the latter article
presumes that the owner of the materials is in good faith. Instead, what
made use of them. If he was aware that he had no right to make use
applies, by analogy, are the provisions of Articles 455 and 449 to the
of the materials at the time that he made use of them, he is considered
effect that the owner of the materials who acted in bad faith loses his
to have acted in bad faith. On the part of the owner of the materials,
materials without any right whatsoever and is furthermore liable to the
he is considered to have acted in good faith if he was not aware that
landowner for damages.
his materials were being used by the landowner at the time of the
construction, planting or work. He came to know of it only after the
materials have already been used by the landowner. If he knew at the Pacific Farms, Inc. v. Esguerra
time of the construction, planting or work that his materials were being 30 SCRA 684 (1969)
used by another but he did not object thereto, he is considered to have From 1956 to 1957, Carried Lumber Company sold and delivered lumber
acted in bad faith. and construction materials to the Insular Farms, Inc. which the latter used in
the construction of six buildings at its compound in Bolinao, Pangasinan.
[45.2.3] Landowner In Bad Faith; Owner of the Materials For failure of Insular Farms to pay the full purchase price, Carried Lumber
In Good Faith instituted in October 1958 a civil case against Insular Farms for the recovery
of the unpaid balance. In 1961, the trial court rendered judgment in favor of
Again, this situation is governed by the provisions of Article 447.
Carried Lumber. Insular Farms did not appeal. In 1962, Carried Lumber levied
Applying the provisions of Article 447 and the principles governing upon six buildings in Bolinao, Pangasinan. At this point, Pacific Farms, Inc.
accesion continua, the following are the legal effects of a situation filed a third-party claim, asserting ownership over the levied buildings which
where the landowner acted in bad faith while the owner of the materials it had allegedly acquired from Insular Farms by virtue of a deed of absolute
was in good faith: sale executed sometime in March 1958. The sheriff proceeded, however, with
the public auction and eventually sold the buildings to Carried Lumber as the
[i] Being in bad faith, the landowner is liable to the owner of the
highest bidder. Thereafter, Pacific Farms filed a complaint against Carried
materials for damages.235 Lumber and the sheriff for the nullification of the auction and for damages. The
[ii] Having acted in bad faith, the landowner shall also suffer trial court, after trial, rendered judgment annulling the levy and the certificate
the other unfavorable consequences of his act, such that the law grants of sale. Carried Lumber appealed from said judgment alleging, inter alia,
the owner of the materials the options of either: (1) demanding for the that there exists a materialman’s lien over the six buildings in its favor. In
resolving the controversy, the Supreme Court opted not to rule on the issue of
value of the materials, with a right to be indemnified for damages; or
the materialman’s lien but applied by analogy the rules of accession, thus —
(2) demanding for the removal of the materials “in any event” — even

235 236
Art. 447, NCC. Art. 447, NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 185 186 PROPERTY
OWNERSHIP
Right of Accession General Provisions

Article 447 of the Civil Code provides: Of course, the character of a buyer in good faith and for
value, if really possessed by the appellee, could possibly exonerate
“The owner of the land who makes thereon personally or it from making compensation.
through another, plantings, constructions or works with the materi-
als of another, shall pay their value; and, if he acted in bad faith, But the appellee’s stance that it is an innocent purchaser for
he shall also be obliged to the reparation of damages. The owner value and in good faith is open to grave doubt because of certain
of the materials shall have the right to remove them only in case facts of substantial import (evident from the records) that cannot
he can do so without injury to the work constructed, or without escape notice.
the plantings, constructions or works being destroyed. However, if
the landowner acted in bad faith, the owner of the materials may Art. 448. The owner of the land on which anything has been built,
remove them in any event with a right to be indemnified for dam- sown or planted in good faith, shall have the right to appropriate as his
ages.” own the works, sowing or planting, after payment of the indemnity pro-
vided for in Articles 546 and 548, or to oblige the one who built or planted
The above-quoted legal provision contemplates a principal
to pay the price of the land, and the one who sowed, the proper rent.
and an accessory, the land being considered the principal, and the However, the builder or planter cannot be obliged to buy the land if its
plantings, constructions or works, the accessory. The owner of the value is considerably more than that of the building or trees. In such case,
land who in good faith whether personally or through another — he shall pay reasonable rent, if the owner of the land does not choose to
makes constructions or works thereon, using materials belonging appropriate the building or trees after proper indemnity. The parties shall
to somebody else, becomes the owner of the said materials with agree upon the terms of the lease and in case of disagreement, the court
the obligation however of paying for their value. The owner of the shall fix the terms thereof. (361a)
materials, on the other hand, is entitled to remove them, provided Art. 449. He who builds, plants or sows in bad faith on the land of
no substantial injury is caused to the landowner. Otherwise, he has another, loses what is built, planted or sown without right to indemnity.
the right to reimbursement for the value of his materials. (362)
Although it does not appear from the records of this case that Art. 450. The owner of the land on which anything has been built,
the land upon which the six buildings were built is owned by the planted or sown in bad faith may demand the demolition of the work,
appellee, nevertheless, that the appellee claims that it owns the six 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
buildings constructed out of the lumber and construction materials
sowed; or he may compel the builder or planter to pay the price of the
furnished by the appellant, is indubitable. Therefore, applying land, and the sower the proper rent. (363a)
Article 447 by analogy, we perforce consider the buildings as the
principal and the lumber and construction materials that went into Art. 451. In the cases of the two preceding articles, the landowner is
their construction as the accessory. Thus the appellee, if it does entitled to damages from the builder, planter or sower. (n)
own the six buildings, must bear the obligation to pay for the value Art. 452. The builder, planter or sower in bad faith is entitled to reim-
of the said materials; the appellant — which apparently has no bursement for the necessary expenses of preservation of the land. (n)
desire to remove the materials, and, even if it were minded to do so, Art. 453. If there was bad faith, not only on the part of the person
cannot remove them without necessarily damaging the bui1dings who built, planted or sowed on the land of another, but also on the part of
— has the corresponding right to recover the value of the unpaid the owner of such land, the rights of one and the other shall be the same
lumber and construction materials. as though both had acted in good faith.

Well-established in jurisprudence is the rule that compensation It is understood that there is bad faith on the part of the landowner
should be borne by the person who has been benefited by the whenever the act was done with his knowledge and without opposition
accession. No doubt, the appellee benefited from the accession, on his part. (364a)
i.e., from the lumber and materials that went into the construction Art. 454. When the landowner acted in bad faith and the builder,
of the six buildings. It should therefore shoulder the compensation planter or sower proceeded in good faith, the provisions of Article 447
due to the appellant as unpaid furnisher of materials. shall apply. (n)

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 187 188 PROPERTY


OWNERSHIP
Right of Accession General Provisions

§ 46. Building With One’s Own Materials on the Land of Another owner and that he be unaware that there exists in his title or mode of
acquisition any flaw which invalidates it.238
Articles 448 up to 454 of the New Civil Code contemplate a
situation where a person built, planted or sown on the land of another However, as already previously intimated, the concept of builder
but he made use of materials belonging to him. This is the second of the in good faith or bad faith presupposes ownership in another.239 If a
controversial cases mentioned in supra § 44.3. In this situation, there are person builds on his own land with his own materials, he is not merely
actually two persons involved: (1) the landowner; and (2) the builder, a builder in good faith — he is a builder-owner.
planter or sower (who is at the same time the owner of the materials). In
determining the legal effects of this situation, it is necessary to take into Pershing Tan Queto v. CA
consideration the good faith or bad faith of both parties. Such being the 148 SCRA 54 (1987)
case, there are four possible scenarios: In this case, a parcel of land was acquired by the spouses Juan and
(1) Both the landowner and the builder, planter or sower (who Restituta Pombuena from the latter’s mother through onerous title (sale).
Thereafter, Juan filed for himself and his co-owner Restituta an application for
is at the same time the owner of the materials) acted in good
a Torrens title over the land. Subsequently, a decision was promulgated in the
faith; cadastral proceedings pronouncing Juan (married to Restituta) as the owner of
(2) Both of them acted in bad faith; the land. Some years after, a contract of lease over the land was entered into
between Pershing Tan Queto and Restituta (with the consent of Juan) for a
(3) The landowner acted in good faith while the builder, planter period of ten years. After the expiration of the lease, Juan and Restituta sued
or sower (who is at the same time the owner of the materials) Pershing for unlawful detainer. In the meantime, an Original Certificate of
acted in bad faith; and Title was issued in the name of Juan (married to Restituta) as a consequence
of the cadastral case. During the pendency of the ejectment case, Juan entered
(4) The landowner acted in bad faith while the builder, planter into a barter agreement with Pershing whereby the latter became the owner
or sower (who is at the same time the owner of the materials) of the leased premises, and the spouses Juan and Restituta in turn became the
acted in good faith. owners of a parcel of land with improvements previously owned by Pershing.
Subsequently, Pershing constructed a concrete building on the property
§ 47. Both Acted In Good Faith previously owned by Juan and Restituta. The construction of the building was
without any objection on the part of Restituta. Later, however, Restituta sued
[47.1] Concept of Good Faith
both Juan and Pershing for reconveyance of title over the disputed land, for the
[47.1.1] Good Faith of the Builder, Planter or Sower annulment of the barter, and for recovery of the land with damages. One of the
issues that crop up in the case was whether Pershing is a builder in good faith
Article 448 of the New Civil Code governs the situation where or in bad faith. The Supreme Court ruled that he is neither a builder in good
both the landowner and the builder, planter or sower (who is at the faith nor a builder in bad faith. The Court explained —
same time the owner of the materials) acted in good faith. However, this
article applies only when the builder, planter or sower believes he had “(2) Was Tan Queto a possessor and builder in good faith or
in bad faith?
the right so to build, plant or sow because he thinks he owns the land
or believes himself to have a claim of title.237 To be deemed a builder Even assuming that despite registration of the lot as conjugal,
in good faith, it is essential that a person asserts title to the land on Tan Queto nursed the belief that the lot was actually RESTlTUTA’s
which he builds, i.e., it is essential that he be a possessor in concept of (making him in bad faith), still RESTITUTA’s failure to prohibit

237 238
Floreza v. Evangelista, 96 SCRA 130, 136 (1980); citing Alburo v. Villanueva, 7 Phil. Mercado v. CA, 162 SCRA 75, 85 (1988); cited in Manotok Realty, Inc. v. Tecson, 164
277 (1907); Quemuel v. Olaes, 1 SCRA 1159 (1961); Racaza v. Susana Realty, Inc., 18 SCRA SCRA 587, 592 (1988).
239
1172 (1966). Pershing Tan Queto v. CA, 148 SCRA 54 (1987).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 189 190 PROPERTY
OWNERSHIP
Right of Accession General Provisions

him from building despite her knowledge that construction was “Good faith consists in the belief of the builder that the land
actually being done, makes her also in bad faith. The net resultant he is building on is his and his ignorance of any defect or flaw in
of mutual bad faith would entitle TAN QUETO to the rights of a his title. And as good faith is presumed, petitioner has the burden
builder in good faith (Art. 448, Civil Code), ergo, reimbursement of proving bad faith on the part of Kee.
should be given him if RESTITUTA decides to appropriate the
At that time he built improvements on lot 8, Kee believed
building for herself (Art. 448, Civil Code).
that said lot was what he bought from petitioner. He was not aware
However, as already previously intimated, TAN QUETO that the lot delivered to him was not lot 8. Thus, Kee’s good faith.
having bartered his own lot and small house with the questioned Petitioner failed to prove otherwise.”
lot with JUAN (who has been adverted to by a court decision and
by the OCT a conjugal owner) may be said to be the OWNER-
POSSESSOR of the lot. Certainly he is not merely a possessor Baltazar v. Caridad
or builder in good faith (this phrase presupposes ownership in 17 SCRA 460 (1966)
another); much less is he a builder in bad faith. He is a builder- In this case, the trial court rendered a decision in a cadastral proceeding
possessor (jus possidendi) because he is the OWNER himself. awarding Lot No. 8864 to spouses Julio Baltazar and Constancia Valencia
Please note that the Chapter on Possession (jus possessionis, as their conjugal partnership property. Said decision having become final,
not jus possidendi) in the Civil Code refers to a possessor other the corresponding decree was issued on July 12, 1941, and pursuant thereto,
than the owner. Please note further that the difference between a said lot was registered in the names of the applicant spouses under Original
builder (or possessor) in good faith and one in bad faith is that Certificate of Title No. O-1445. In the meanwhile, Julio Baltazar died. In 1961,
the former is NOT AWARE of the defect or flaw in his title or his surviving wife and children filed a motion in the cadastral case for writ
mode of acquisition while the latter is AWARE of such defect or of possession against Silvina Caridad and her daughter, Eduarda Caridad,
flaw (Art. 526, Civil Code). But in either case there is a flaw or who had been in possession of the southern portion of Lot No. 8864 since
defect. In the case of TAN QUETO there is no such flaw or defect 1939, while the cadastral case involving the lot was pending before the trial
because it is he himself (not somebody else) who is the owner of court, and before the decision and the corresponding decree issued in 1941.
the property.” The Caridads refused to remove their houses from the southern portion of Lot
No. 8864 insisting that they are builders in good faith and, as such, they are
accorded rights under article 448 of the new Civil Code. The houses were built
Pleasantville Development Corporation v. CA
in 1958 and 1959. In debunking the contention of the Caridads’, the Court
253 SCRA 10 (1996)
explained —
In this case, Edith Robillo purchased from Pleasantville Development
Corp. (PDC) a parcel of land designated as Lot 9, Phase II in Pleasantville “Appellants can not be regarded as builders in good faith
Subdivision, Bacolod City. In 1975, Eldred Jardinico bought the rights to the because they are bound by the 1941 decree of registration that
lot from Robillo. At that time, lot 9 was vacant. Upon completing payments, obligated their parents and predecessors-in-interest. Good faith
Jardinico secured from the Register of Deeds in 1978 title in his name. It must rest on a colorable right in the builder, beyond a mere
was then that he discovered that improvements had been introduced on lot stubborn belief in one’s title despite judicial adjudication. The
9 by Wilson Kee, who had taken possession thereof. It appears that in 1974, fact that in 1959 appellants demolished and replaced their old house
Kee bought on installment lot 8 of the same subdivision from C.T. Toress with new and bigger ones cannot enervate the rights of the registered
Enterprises, Inc. (CTTEI), the exclusive real estate agent of PDC. CCTEI owners. Otherwise, the rights of the latter to enjoy full possession
through its employee, accompanied Kee’s wife to inspect lot 8. Unfortunately, of their registered property could be indefinitely defeated by an
the parcel of land pointed by CCTEI’s employee was lot 9. Thereafter, Kee unsuccessful opponent through the simple subterfuge of replacing
proceeded to construct his residence, a store, an auto repair shop and other his old house with a new one from time to time.”
improvements on the lot. Is Kee a builder in good faith? The Supreme Court
answered in the affirmative. The Court held —

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 191 192 PROPERTY


OWNERSHIP
Right of Accession General Provisions

[47.1.2] A Lessee Is Not A Builder In Good Faith of the property leased, the lessor upon the termination
Article 448 applies only to a case where one builds on land in the of the lease shall pay the lessee one-half of the value of
belief that he is the owner thereof and it does not apply where one’s the improvements at that time. Should the lessor refuse
only interest in the land is that of a lessee under a rental contract.240 As to reimburse said amount, the lessee may remove the
ruled by the Court in Lopez, Inc. v. Phil. and Eastern Trading Co.,241 improvements, even though the principal thing may suffer
the principle of possessor in good faith refers only to a party who damage thereby. He shall not, however, cause any more
occupies or possess property in the belief that he is the owner thereof impairment upon the property leased than is necessary.
and said good faith ends only when he discovers a flaw in his title so With regard to ornamental expenses, the lessee shall
as to reasonably advise or inform him that after all he may not be the not be entitled to any reimbursement, but he may remove
legal owner of said property. It cannot apply to a lessee because as the ornamental objects, provided no damage is caused to the
such lessee he knows that he is not the owner of the leased premises. principal thing, and the lessor does not choose to retain them
Neither can he deny the ownership or title of his lessor. A lessee who by paying their value at the time the lease is extinguished.”
introduces improvements in the leased premises, does so at his own risk
in the sense that he cannot recover their value from the lessor, much less This article gives the lessor the option to appropriate the useful
retain the premises until such reimbursement.242 improvements by paying one-half of their value, and the lessee
cannot compel the lessor to appropriate the improvements and make
In a plethora of cases,243 the Supreme Court has held that Article reimbursement, for the lessee’s right under the law is to remove the
448 of the New Civil Code, in relation to Article 546 of the same Code, improvements even if the leased premises may suffer damage thereby.
which allows full reimbursement of useful improvements and retention But he shall not cause any more damage upon the property than is
of the premises until reimbursement is made, applies only to a possessor necessary.245 A lessee, in order to be entitled to one half the value of the
in good faith, i.e., one who builds on land with the belief that he is the improvements introduced by him in the leased premises, or to remove
owner thereof. It does not apply where one’s only interest is that of them should the lessor refuse to reimburse the half value thereof, must
a lessee under a rental contract; otherwise, it would always be in the show that the same were introduced in good faith; are useful; suitable
power of the tenant to “improve” his landlord out of his property.244 to the use for which the lease is intended without altering the form and
The law applicable to the lessee who introduced improvement substance of the premises.246
on the leased premises is Article 1678 of the New Civil Code, which
provides: Geminiano v. Court of Appeals
259 SCRA 344 (1996)
“Art. 1678. If the lessee makes, in good faith, useful
improvements which are suitable to the use for which the In this case, Lot No. 3765-B-1 was originally owned by the petitioners’
lease is intended, without altering the form or substance mother, Paulina Geminiano. On a portion of the said lot stood the petitioners’
unfinished bungalow which they sold in 1978 to Dominador and May Nicolas.
Subsequently, the petitioners’ mother subsequently executed a contract of lease
240
Bulacanag v. Francisco, 122 SCRA 498, 502 (1983). over a 126 square meter portion of the lot, including that portion on which the
241
98 Phil. 348.
242
Bulacanag v. Francisco, supra.
house stood, in favor of Dominador and Mary Nicolas (private respondents)
243
Alburo v. Villanueva, 7 Phil. 277, 280 (1907) (referring to the provisions of the Old Civil for a period of seven years commencing on November 15, 1978. The Nicolases
Code); Racaza v. Susana Realty, Inc., supra note 17, at 1177-1178; Bulacanag v. Francisco, Ibid.; then introduced additional improvements and registered the house in their
Gabrito v. Court of Appeals, 167 SCRA 771, 778-779 (1988); Cabangis v. Court of Appeals, 200
SCRA 414, 419-421 (1991); Heirs of the late Jaime Binuya v. Court of Appeals, 211 SCRA 761,
245
766 (1992). Ibid.
244 246
Geminiano v. CA, 259 SCRA 344 (1996). Imperial Insurance, Inc. v. Simon, 14 SCRA 855.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 193 194 PROPERTY
OWNERSHIP
Right of Accession General Provisions

names. After the expiration of the lease in 1985, the petitioners’ mother refused should have done was to reduce the alleged promise into writing,
to accept the monthly rentals. It turned out that the lot in question was the because under Article 1403 of the Civil Code, an agreement for the
subject of a suit, which resulted in its acquisition by one Maria Lee in 1972. sale of real property or an interest therein is unenforceable, unless
In 1982, Lee sold the lot to Lily Salcedo, who in turn sold it in 1984 to the some note or memorandum thereof be produced. Not having taken
spouses Agustin and Ester Dionisio. In 1992, the Dionisio spouses executed a any steps in order that the alleged promise to sell may be enforced,
Deed of Quitclaim over the said property in favor of the petitioners. As such, the private respondents cannot bank on that promise and profess
the lot was registered in the latter’s names. In 1993, the petitioners filed an any claim nor color of title over the lot in question.
ejectment case against Mary Nicolas. The issue in this case is whether the
There is no need to apply by analogy the provisions of Article
lessees were builders in good faith and entitled to reimbursement of the value
448 on indemnity as was done in Pecson v. Court of Appeals (244
of the houses and improvements. The Supreme Court ruled in the negative. The
SCRA 407 [1995]), because the situation sought to be avoided and
Court explained —
which would justify the application of that provision, is not present
Being mere lessees, the private respondents knew that their in this case. Suffice it to say, “a state of forced co-ownership” would
occupation of the premises would continue only for the life of the not be created between the petitioners and the private respondents.
lease. Plainly, they cannot be considered as possessors nor builders For, as correctly pointed out by the petitioners, the rights of the
in good faith. private respondents as lessees are governed by Article 1678 of the
Civil Code which allows reimbursement to the extent of one-half
In a plethora of cases (Alburo v. Villanueva, 7 Phil. 277, 280 of the value of the useful improvements.
[1907] referring to the provisions of the Old Civil Code; Racaza
v. Susana Realty, Inc., supra., note 17, at 1177-1178; Bulacanag It must be stressed, however, that the right to indemnity
v. Francisco, 122 SCRA 498, 502 [1983]; Gabrito v. Court of under Article 1678 of the Civil Code arises only if the lessor opts
Appeals, 167 SCRA 771, 778 779 [1988]; Cabangis v. Court of to appropriate the improvements. Since the petitioners refused to
Appeals, 200 SCRA 414, 419-421 [1991]; Heirs of the late Jaime exercise that option, the private respondents cannot compel them
Binuya v. Court of Appeals, 211 SCRA 761, 766 [1992]), this Court to reimburse the one-half value of the house and improvements.
has held that Article 448 of the Civil Code, in relation to Article Neither can they retain the premises until reimbursement is
546 of the same Code, which allows full reimbursement of useful made. The private respondents’ sole right then is to remove the
improvements and retention of the premises until reimbursement improvements without causing any more impairment upon the
is made, applies only to a possessor in good faith, i.e., one who property leased than is necessary.
builds on land with the belief that he is the owner thereof. It does
not apply where one’s only interest is that of a lessee under a rental Sps. Lacap v. Ong Lee
contract; otherwise, it would always be in the power of the tenant G.R. No. 142131, December 11, 2002
to “improve” his landlord out of his property. In this case, a certain Facundo mortgaged two parcels of land to Monte
Anent the alleged promise of the petitioners to sell the lot de Piedad Savings Bank. In 1981, the spouses Lacap assumed to pay Facundo’s
occupied by the private respondents’ house, the same was not mortgage obligation to the bank. Due to their failure to pay their obligation to
substantiated by convincing evidence. Neither the deed of sale over the bank, the latter foreclosed on the mortgage. During the auction sale, the
the house nor the contract of lease contained an option in favor of bank emerged as the highest bidder and title passed on to it. The bank, however,
the respondent spouses to purchase the said lot. And even if the allowed the spouses to stay in the premises as lessees paying a monthly rental.
petitioners indeed promised to sell, it would not make the private The spouses thereafter introduced improvements thereon after relying on the
respondents possessors or builders in good faith so as to be covered bank’s assurance that the property would be sold back to them. In 1996, when
by the provisions of Article 448 of the Civil Code. The latter cannot the spouses tried to pay their monthly rental, the bank refused to accept the
raise the mere expectancy of ownership of the aforementioned payment inasmuch as the property had already been sold to another person.
lot because the alleged promise to sell was not fulfilled nor its When the spouses offered to buy the property, the bank turned down their offer.
existence even proven. The first thing that the private respondents Sometime thereafter, the spouses received a letter demanding that they vacate

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 195 196 PROPERTY


OWNERSHIP
Right of Accession General Provisions

the premises because it was already owned by Ong Lee. The spouses instituted when they started paying monthly rentals to the mortgagee bank
a civil case against Ong Lee for cancellation of sale and damages. Ong Lee, after the foreclosure of the said property. We find this finding of the
on the other hand, filed a complaint for unlawful detainer. May the spouses be courts a quo conclusive on us in this petition for review.
considered as a builder in good faith pursuant to Article 448 of the Civil Code?
A conclusive presumption arises from the fact that, during
The Supreme Court said no. The Court explained —
the tenancy relationship, the petitioner spouses admitted the
In the event that their first assigned error is not resolved validity of the title of their landlord. This negated their previous
in their favor, the petitioner spouses assert that their right to be claim of title. If, indeed, they believed in good faith they had at
indemnified for the improvements they introduced should be based least an imperfect title of dominion over the subject premises, they
on Article 448 of the Civil Code which provides that: should have tried to prevent the foreclosure and objected to the
acquisition of title by the bank. In other words, their supposed
“Art. 448. The owner of the land on which belief in good faith of their right of dominion ended when the bank
anything has been built, sown or planted in good foreclosed and acquired title over the subject premises.
faith, shall have the right to appropriate as his own
the works, sowing or planting, after payment of the Hence, the applicable provision in the instant case is Article
indemnity provided for in Articles 546 and 548, or to 1678 of the Civil Code which provides that:
oblige the one who built or planted to pay the price
“Art. 1678. If the lessee makes, in good faith,
of the land, and the one who sowed, the proper rent.
useful improvements which are suitable to the use
However, the builder or planter cannot be obliged to
for which the lease is intended, without altering the
buy the land if its value is considerably more than
form or substance of the property leased, the lessor
that of the building or trees. In such case, he shall
upon the termination of the lease shall pay the lessee
pay reasonable rent, if the owner of the land does not
one-half of the value of the improvements at that time.
choose to appropriate the building or trees after proper
Should the lessor refuse to reimburse said amount, the
indemnity. The parties shall agree upon the terms of
lessee may remove the improvements, even though the
the lease and in case of disagreements the courts shall
principal thing may suffer damage thereby. He shall
fix the terms thereof.”
not, however, cause any more impairment upon the
Article 546 of the Civil Code provides that builders in property leased than is necessary.
good faith are entitled to reimbursement for necessary and useful
With regard to ornamental expenses, the lessee
expenses, with right of retention in both cases. The petitioners insist
shall not be entitled to any reimbursement, but he may
that they should be treated as builders in good faith inasmuch as
remove the ornamental objects, provided no damage
they stepped into the shoes of Victor Facundo, the former owner-
is cause to the principal thing, and the lessor does not
mortgagor, when the latter assigned to them the obligation to pay
choose to retain them by paying their value at the time
the bank the balance due on the mortgage. Since then, they occupied
the lease is extinguished.’’
the subject property and introduced improvements thereon. They
contend that they were not lessees and paid no rentals thereon. The petitioner spouses are therefore entitled to be paid only one-half
of the value of the useful improvements at the time of the termination of the
We do not think so.
lease or to have the said improvements removed if the respondent refuses to
Article 528 of the Civil Code provides that possession in reimburse them.
good faith continues to subsist until facts exist which show that the
possessor is already aware that he wrongfully possesses the thing. [47.1.3] As A Rule, Art. 448 Cannot Apply To A Co-Owner
Although, in the beginning, the petitioners were made to believe
that they had a claim of title over the said property by assuming Article 448 of the New Civil Code cannot apply where a co-owner
the mortgage and possessing the subject property, all this changed builds, plants or sows on the land owned in common for then he did
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 197 198 PROPERTY
OWNERSHIP
Right of Accession General Provisions

not build, plant or sow upon land that exclusively belongs to another However, when, as in this case, the co-ownership is terminated
but of which he is a co-owner. The co-owner is not a third person by the partition and it appears that the house of defendants overlaps
under the circumstances, and the situation is governed by the rules of or occupies a portion of 5 square meters of the land pertaining to
co-ownership.247 However, when the co-ownership is terminated by a plaintiffs which the defendants obviously built in good faith, then
the provisions of Article 448 of the New Civil Code should apply.
partition and it appears that the house of an erstwhile co-owner has
Manresa and Navarro Amandi agree that the said provision of the
encroached upon a portion pertaining to another co-owner which was Civil Code may apply even when there was co-ownership if good
however made in good faith, then the provisions of Article 448 should faith has been established.
apply to determine the respective rights of the parties.248
Applying the aforesaid provision of the Civil Code, the
plaintiffs have the right to appropriate said portion of the house of
Spouses Del Campo v. Abesia defendants upon payment of indemnity to defendants as provided
160 SCRA 379 (1988) for in Article 546 of the Civil Code. Otherwise, the plaintiffs may
oblige the defendants to pay the price of the land occupied by their
This case involves a parcel of land co-owned by the plaintiffs and
house. However, if the price asked for is considerably much more
defendants in the proportion of 2/3 and 1/3 each, respectively. An action for
than the value of the portion of the house of defendants built thereon,
partition was filed by plaintiffs in the CFI of Cebu. The trial court appointed
then the latter cannot be obliged to buy the land. The defendants
a commissioner in accordance with the agreement of the parties. The said
shall then pay the reasonable rent to the plaintiffs upon such terms
commissioner conducted a survey, prepared a sketch plan and submitted a
and conditions that they may agree. In case of disagreement, the
report to the court, recommending that the property be divided into two lots:
trial court shall fix the terms thereof. Of course, defendants may
lot 1161-A with an area of 30 square meters for plaintiffs and lot no-1161-B
demolish or remove the said portion of their house, at their own
for the defendants with an area of 15 square meters. The houses of plaintiffs
expense, if they so decide.
and defendants were surveyed and shown on the sketch plan. The house of
defendants occupied the portion of lot 1161-A of plaintiffs. The parties WHEREFORE, the decision appealed from is hereby
manifested their conformity to the report and asked the trial court to finally MODIFIED by ordering plaintiffs to indemnify defendants for the
settle and adjudicate who among the parties should take possession of the 5 value of the said portion of the house of defendants in accordance
square meters of the land in question. The trial court thereafter rendered a with Article 546 of the Civil Code, if plaintiffs elect to appropriate
decision which states that since Article 448 cannot be applied to a case where the same. Otherwise, the defendants shall pay the value of the 5
one has built, planted or sown on the land owned in common, the defendants square meters of land occupied by their house at such price as may
should remove and demolish, at their expense, the part of their house which be agreed upon with plaintiffs and if its value exceeds the portion
encroached upon the land of the plaintiffs. The defendants appealed from said of the house that defendants built thereon, the defendants may
decision. On appeal, the Supreme Court held that Article 448 of the Civil Code choose not to buy the land but defendants must pay a reasonable
is applicable. The Court explained — rental for the use of the portion of the land of plaintiffs as may
be agreed upon between the parties. In case of disagreement, the
The court a quo correctly held that Article 448 of the Civil rate of rental shall be determined by the trial court. Otherwise,
Code cannot apply where a co-owner builds, plants or sows on the defendants may remove or demolish at their own expense the said
land owned in common for then he did not build, plant or sow upon portion of their house.
land that exclusively belongs to another but of which he is a co-
owner. The co-owner is not a third person under the circumstances, Ignao v. IAC
and the situation is governed by the rules of co-ownership. 193 SCRA 17 (1991)
In this case, Florencio Ignao and his uncles, Juan Ignao and Isidro Ignao,
247
were co-owners of a parcel of land with an area of 534 square meters. Pursuant
Spouses Del Campo v. Abesia, 160 SCRA 379, 382 (1988).
248
Ignao v. IAC, 193 SCRA 17, 23 (1991); Sps. Del Campo v. Abesia, supra.
to an action for partition, the CFI of Cavite in 1975 directed the partition of the

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 199 200 PROPERTY


OWNERSHIP
Right of Accession General Provisions

aforesaid land, allotting 133.5 square meters or 2/8 thereof to Juan and Isidro, was however made in good faith, then the provisions of Article 448
and giving the remaining portion with a total area of 266.5 square meters should apply to determine the respective rights of the parties.
to Florencio. However, no actual partition was effected. In 1978, Florencio
Petitioner’s second assigned error is however well taken.
instituted a complaint for recovery of possession of real property against Juan
Both the trial court and the Appellate Court erred when they
and Isidro alleging that the area occupied by the two houses built by Juan and
peremptorily adopted the “workable solution” in the case of Grana
Isidro exceeded the 133.5 square meters previously allotted to them by the trial
v. Court of Appeals (109 Phil. 260), and ordered the owner of the
court. When the property was surveyed upon the agreement of the parties, it
land, petitioner Florencio, to sell to private respondents, Juan and
was disclosed that the house of Juan occupied 42 square meters while that of
Isidro, the part of the land they intruded upon, thereby depriving
Isidro occupied 59 square meters of Florencio’s land or a total of 101 square
petitioner of his right to choose. Such ruling contravened the
meters. The trial court applied article 448 of the Civil Code in resolving the
explicit provisions of Article 448 to the effect that “(t)he owner
conflicting rights of the parties, which decision was affirmed by the Court of
of the land xxx shall have the right to appropriate xxx or to oblige
Appeals. Florencio appealed to the Supreme Court contending that the CA
the one who built xxx to pay the price of the land xxx.” The law
erred in applying Article 448 of the Civil Code since this article contemplates
is clear and unambiguous when it confers the right of choice upon
a situation wherein the land belongs to one person and the thing built, sown or
the landowner and not upon the builder and the courts.
planted belongs to another. In holding that Article 448 applies in this particular
case, the Supreme Court explained — Thus, in Quemuel v. Olaes (1 SCRA 1159 [1961]), the
Court categorically ruled that the right to appropriate the works or
Whether or not the provisions of Article 448 should apply
improvements or to oblige the builder to pay the price of the land
to a builder in good faith on a property held in common has been
belongs to the landowner.
resolved in the affirmative in the case of Spouses del Campo v.
Abesia (160 SCRA 379 [1988]) wherein the Court ruled that: As to the third assignment of error, the question on the price
to be paid on the land need not be discussed as this would be
“The court a quo correctly held that Article 448
premature inasmuch as petitioner Florencio has yet to exercise his
of the Civil Code cannot apply where a co-owner
option as the owner of the land.
builds, plants or sows on the land owned in common
for then he did not build, plant or sow upon land that WHEREFORE, the decision appealed from is hereby
exclusively belongs to another but of which he is a MODIFIED as follows: Petitioner Florencio Ignao is directed
co-owner. The co-owner is not a third person under within thirty (30) days from entry of judgment to exercise his
the circumstances, and the situation is governed by the option to either appropriate as his own the portions of the houses
rules of co-ownership. of Juan and Isidro Ignao occupying his land upon payment of
indemnity in accordance with Articles 546 and 548 of the Civil
“However, when, as in this case, the ownership
Code, or sell to private respondents the 101 square meters occupied
is terminated by the partition and it appears that the
by them at such price as may be agreed upon. Should the value of
home of defendants overlaps or occupies a portion
the land exceed the value of the portions of the houses that private
of 5 square meters of the land pertaining to plaintiffs
respondents have erected thereon, private respondents may choose
which the defendants obviously built in good faith,
then the provisions of Article 448 of the New Civil not to buy the land but they must pay reasonable rent for the use
Code should apply. Manresa and Navarro Amandi of the portion of petitioner’s land as may be agreed upon by the
agree that the said provision of the Civil Code may parties. In case of disagreement, the rate of rental and other terms of
apply even when there is a co-ownership if good faith the lease shall be determined by the trial court. Otherwise, private
has been established.’’ respondents may remove or demolish at their own expense the said
portions of their houses encroaching upon petitioner’s land.
In other words, when the co-ownership is terminated by a
partition and it appears that the house of an erstwhile co-owner has
encroached upon a portion pertaining to another co-owner which
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 201 202 PROPERTY
OWNERSHIP
Right of Accession General Provisions

[47.1.4] Art. 448 Made Applicable Under Peculiar Circum- Court of Appeals,254 however, the Court applied by analogy the provision
stances of Article 448 on indemnity to a builder who loses ownership of his
In Sarmiento v. Agana,249 the Supreme Court, deviating from the land when the same was auctioned off by a local government unit for
general rule that Article 448 applies only when a builder builds in the failure of the landowner to pay the real estate taxes.
concept of an owner, ruled that the Valentino spouses were builders
in good faith in view of the peculiar circumstances under which they Pecson v. Court of Appeals
constructed their residential house. As far as the couple knew, the land 244 SCRA 407 (1995)
was owned by the husband’s mother-in-law who, having stated they In this case, Pedro Pecson was the owner of a commercial lot located
could build on the property, could reasonably be expected to later on in Kamias Street, Quezon City, on which he built a four-door two-storey
give them the land. It turned out that the land had been titled in the name apartment building. For his failure to pay realty taxes, the lot was sold at public
of another person. The Supreme Court, however, applied in this case the auction by the City Treasurer of Quezon City to Mamerto Nepomuceno whoin
provisions of Article 448. turn sold it in 1983 to the spouses Juan and Erlinda Nuguid. Pecson challenged
the validity of the auction sale. The trial court dismissed the complaint but
In Macasaet v. Macasaet,250 the Court also held that the children held that the apartment building was not included in the auction sale. Both
have the right to be indemnified for the useful improvements constructed parties appealed. The Court of Appeals, on the other hand, affirmed in toto
in good faith on a lot owned by the parents, applying the provisions of the decision of the trial court. When the decision became final, the spouses
Article 448. In this case, the parents invited their children to occupy the Nuguid filed with the trial court a motion for the delivery of possession of the
formers’ lots, out of parental love and desire to foster family solidarity. lot and the apartment building citing Article 546 of the Civil Code. The trial
Because of that invitation, the children constructed their residential court granted the motion. Pecson elevated the matter to the CA in a special
house on the property. Unfortunately, an unresolved conflict terminated civil action for certiorari. The Court of Appeals affirmed in part the order of
this situation and out of pique, the parents asked the children to vacate the trial court citing Article 448 of the Civil Code. Aggrieved by the decision
the premises. Deviating again from the general rule that Article 448 of the CA, Pecson went to the Supreme Court on appeal. The parties agree that
Pecson was a builder in good faith of the apartment building on the theory that
applies only when a builder builds in the concept of an owner, the Court
he constructed it at the time when he was still the owner of the lot. The key
held that the children were builders in good faith. issue in this case is the application of Articles 448 and 546 of the Civil Code.
The Macasaet case is factually similar to Javier v. Javier.251 In The Court held —
that case, the Court deemed the son to be in good faith for building the By its clear language, Article 448 refers to a land whose
improvement (the house) with the knowledge and consent of his father, ownership is claimed by two or more parties, one of whom has
to whom belonged the land upon which it was built. Thus, Article 448 built some works, or sown or planted something. The building,
(then Article 361 of the Old Civil Code) was applied. sowing or planting may have been made in good faith or in bad
faith. The rule on good faith laid down in Article 526 of the Civil
Ordinarily, Article 448 does not apply to a case where the owner of
Code shall be applied in determining whether a builder, sower or
the land is the builder, sower or planter who then later loses ownership planter had acted in good faith.
of the land by sale or donation,252 for then there can be no question as
to good or bad faith on the part of the builder.253 In the case of Pecson v. Article 448 does not apply to a case where the owner of the
land is the builder, sower, or planter who then later loses ownership
of the land by sale or donation. This Court said so in Coleongco v.
249
129 SCRA 122 (1984). Regalado (92 Phil. 387, 395 [1952]):
250
439 SCRA 625.
251
7 Phil. 261 (1907).
252
Pecson v. CA, 244 SCRA 407 (1995).
253 254
Colengco v. Regalado, 92 Phil. 387, 395 (1952). Supra.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 203 204 PROPERTY


OWNERSHIP
Right of Accession General Provisions

Article 361 of the old Civil Code is not applicable in this Manila (40 Phil. 717 [1920]) that the said provision was formu-
case, for Regalado constructed the house on his own land before lated in trying to adjust the rights of the owner and possessor in
he sold said land to Coleongco. Article 361 applies only in cases good faith of a piece of land, to administer complete justice to
where a person constructs a building on the land of another in good both of them in such a way as neither one nor the other may enrich
or in bad faith, as the may be. It does not apply to a case where a himself of that which does not belong to him. Guided by this pre-
person constructs a building on his own land, for then there can be cept, it is therefore the current market value of the improvements
no question as to good or bad faith on the part of the builder. which should be made the basis of reimbursement. A contrary
Elsewise stated, where the true owner himself is the builder ruling would unjustly enrich the private respondents who would
of works on his own land, the issue of good faith or bad faith is otherwise be allowed to acquire a highly valued income-yielding
entirely irrelevant. four unit apartment building for a measly amount. Consequently,
the parties should therefore be allowed to adduce evidence on the
Thus in strict point of law, Article 448 is not apposite to the present market value of the apartment building upon which the
case at bar. Nevertheless, we believe that the provision therein on trial court should base its finding as to the amount of reimburse-
indemnity may be applied by analogy considering that the primary ment to be paid by the landowner.
intent of Article 448 is to avoid a state of forced co-ownership
and that the parties, including the two courts below, in the main The trial court also erred in ordering the petitioner to pay
agree that Articles 448 and 546 of the Civil Code are applicable monthly rentals equal to the aggregate rentals paid by the lessees of
and indemnity for the improvements may be paid although they the apartment building. Since the private respondents have opted to
differ as to the basis of the indemnity. appropriate the apartment building, the petitioner is thus entitled to
the possession and enjoyment of the apartment building, until he is
Article 546 does not specifically state how the value of the paid the proper indemnity, as well as of the portion of the lot where
useful improvements should be determined. The respondent court the building has been constructed. This is so because the right to
and the private respondents espouse the belief that the cost of
retain the improvements while the corresponding indemnity is not
construction of the apartment building in 1965, and not its current
paid implies the tenancy or possession in fact of the land on which
market value, is sufficient reimbursement for necessary and useful
it is built, planted or sown. The petitioner not having been so paid,
improvements made by the petitioner. This position is, however,
he was entitled to retain ownership of the building and, necessarily,
not in consonance with previous rulings of this Court in similar
the income therefrom.
cases. In Javier v. Concepcion, Jr. (94 SCRA 212 [1979]), this
Court pegged the value of the useful improvements consisting It follows, too, that the Court of Appeals erred not only in
of various fruits, bamboos, a house and camarin made of strong upholding the trial court’s determination of the indemnity, but also
material based on the market value of the said improvements. In in ordering the petitioner to account for the rentals of the apartment
Sarmiento v. Agana (129 SCRA 122 [1984]), despite the finding building from 23 June 1993 to 23 September 1993.
that the useful improvement, a residential house, was built in
1967 at a cost of between Eight thousand pesos (P8,000.00) to WHEREFORE, the decision of the Court of Appeals in CA-
Ten thousand pesos (P10,000.00), the landowner was ordered G.R. SP No. 32679 and the Order of 15 November 1993 of the
to reimburse the builder in the amount of Forty thousand pesos Regional Trial Court, Branch 101, Quezon City in Civil Case No.
(P40,000.00), the value of the house at the time of the trial. In the Q-41470 are hereby SET ASIDE.
same way, the landowner was required to pay the “present value” The case is hereby remanded to the trial court for it to deter-
of the house, a useful improvement, in the case of De Guzman v. mine the current market value of the apartment building on the lot.
De la Fuente (55 Phil. 501 [1930]), cited by the petitioner. For this purpose, the parties shall be allowed to adduce evidence
The objective of Article 546 of the Civil Code is to adminis- on the current market value of the apartment building. The value
ter justice between the parties involved. In this regard, this Court so determined shall be forthwith paid by the private respondents
had long ago stated in Rivera v. Roman Catholic Archbishop of to the petitioner otherwise the petitioner shall be restored to the
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 205 206 PROPERTY
OWNERSHIP
Right of Accession General Provisions

possession of the apartment building until payment of the required [47.1.5] Art. 448 Can Be Invoked By Successor-In-Interest
indemnity.
In the case of Technogas Philippines Manufacturing Corp. v.
Sarmiento v. Agana Court of Appeals,255 Technogas was allowed to invoke the benefits of
129 SCRA 122 (1984) Article 448 of the New Civil Code, i.e., to compel the landowner to
make a choice between two options: (1) to appropriate the building by
While Ernesto Valentino was still courting his wife, Rebecca, the latter’s
mother had told him the couple could build a residential house on a certain lot
paying the indemnity required by law, or (2) sell the land to the builder,
of a subdivision in Parañaque. Assuming that the wife’s mother was the owner although it is not the builder of the buildings and/or improvements but
of the land, Ernesto did construct a house on the said land in 1967 at a cost of merely acquired the same, by sale, from the builder in good faith.
P8,000 to P10,000. It turned out that the land had been titled in the name of
Mr. & Mrs. Jose Santos, Jr., who in 1974, sold the same to Leonila Sarmiento.
Technogas Philippines Manufacturing Corp. v. CA
In 1975, Sarmiento asked the spouses Valentino to vacate the land. Thereafter,
268 SCRA 5 (1997)
Sarmiento filed an ejectment case against the spouses. The Municipal Court
found that the spouses Valentino had built the house in good faith and that it In 1970, Technogas purchased a parcel of land, with all the buildings
had a value of P20,000.00. It then ordered the spouses to vacate after Sarmiento and improvements including the wall existing thereon, from Pariz Industries,
has paid them the mentioned sum of P20,000.00. On appeal, the CFI of Pasay Inc. Eduardo Uy, on the other hand, owns the adjoining parcel of land which
modified the decision pursuant to Article 448 of the Civil Code. Sarmiento he acquired from a certain Enrile Antonio in 1970. In 1971, Uy purchased
was required, within 60 days, to exercise the option to reimburse the spouses another lot also adjoining Technogas’ land from a certain Miguel Rodriguez.
Valentino the sum of P40,000.00 as the value of the residential house, or the It turned out that portions of the buildings and wall bought by Technogas are
option to allow them to purchase the land for P25,000.00. Sarmiento did not occupying portions of Uy’s adjoining land. Upon learning of the encroachment,
exercise any of the two options within the indicated period, and Ernesto was Technogas offered to buy from Uy that particular portion of Uy’s land occupied
then allowed to deposit the sum of P25,000.00 with the court as the purchase by portions of its buildings and wall. Uy, however, refused the offer. Technogas
price for the land. Subsequently, Sarmiento questioned the action of the court. filed an action in court to compel Uy to sell the portions of Uy’s land occupied
(1) Are the spouses Valentino builders in good faith? by its buildings and wall.
The Supreme Court ruled in the affirmative. The Court said — “We agree (1) Can the benefit of Article 448 of the Civil Code be invoked by
that ERNESTO and wife are builders in good faith in view of the peculiar Technogas even if it is not the builder of the offending structures but merely
circumstances under which they had constructed the RESIDENTIAL HOUSE. possessors of the same as buyers?
As far as they knew, the LAND was owned by ERNESTO’s mother-in-law
The Supreme Court ruled in the affirmative. Said the Court —
who, having stated they could build on the property, could reasonably expected
to later on give them the LAND.” The question, however, is whether the same benefit can be
(2) Can Sarmiento refuse either to pay for the building or to sell the invoked by petitioner who, as earlier stated, is not the builder of
land and insist on the removal of the building? the offending structures but possesses them as buyer.

NO. “The owner of the building erected in good faith on a land owned by We answer such question in the affirmative.
another, is entitled to retain the possession of the land until he is paid the value In the first place, there is no sufficient showing that petitioner
of his building, under Article 453 (now Article 546). The owner of the land, was aware of the encroachment at the time it acquired the property
upon the other hand, has the option, under Article 361 (now Article 448), either from Pariz Industries. We agree with the trial court that various
to pay for the building or to sell his land to the owner of the building. But he factors in evidence adequately show petitioner’s lack of awareness
cannot, as respondents did here, refuse both to pay for the building and to sell thereof. In any case, contrary proof has not overthrown the
the land and compel the owner of the building to remove it from the land where
it is erected. He is entitled to such remotion only when, after having chosen to
sell his land, the other party fails to pay for the same. 255
268 SCRA 5 (1997).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 207 208 PROPERTY


OWNERSHIP
Right of Accession General Provisions

presumption of good faith under Article 527 of the Civil Code, have come to know of the intrusion — in short, when both parties shall have
as already stated, taken together with the disputable presumptions become aware of it. Only then will the occasion for exercising the option arise,
of the law on evidence. These presumptions state, under Section for it is only then that both parties will have been aware that a problem exists
3(a) of Rule 131 of the Rules of Court, that the person is innocent in regard to their property rights.”
of a crime or wrong; and under Section 3(ff) of Rule 131, that
the law has been obeyed. In fact, private respondent Eduardo Uy [47.2] Good Faith of the Landowner
himself was unaware of such intrusion into his property until after
The landowner, on the other hand, is said to have acted in good
1971 when he hired a surveyor, following his purchase of another
adjoining lot, to survey all his newly acquired lots. Upon being faith if he did not know or was not aware that something was being
apprised of the encroachment, petitioner immediately offered built, planted or sown on his land; he learned of it only after the act
to buy the area occupied by its building — a species of conduct was done. This is clear from the provisions of the second paragraph of
consistent with good faith. Article 453 of the New Civil Code which states “it is understood that
there is bad faith on the part of the landowner whenever the act was
In the second place, upon delivery of the property by Pariz
Industries, as seller, to the petitioner, as buyer, the latter acquired done with his knowledge and without opposition on his part.”
ownership of the property. Consequently and as earlier discussed,
[47.3] Legal Effects Where Both Parties Are In Good Faith
petitioner is deemed to have stepped into the shoes of the seller
in regard to all rights of ownership over the immovable sold, What then are the legal effects of a situation where both the
including the right to compel the private respondent to exercise landowner and the builder, planter or sower (who is at the same time the
either of the two options provided under Article 448 of the Civil owner of the materials) acted in good faith? Article 448 governs such a
Code.”256
situation. Under Article 448, the landowner, as owner of the principal
(2) Uy contends that Technogas cannot be considered in good faith thing, is given two alternative rights: (1) to appropriate as his own the
because as landowner, it is presumed to know the metes and bounds of its own works, sowing or planting after payment to the builder, planter or sower
property? Is the contention correct? of the necessary and useful expenses, and in the proper cases, expenses
The Supreme Court said no. Bad faith cannot be imputed to a registered for pure luxury or mere pleasure, incurred by the latter; or (2) to oblige
owner of land when a part of his building encroaches upon a neighbor’s land the one who built or planted to pay the price of the land, if the value of
simply because he is supposedly presumed to know the boundaries of his land the land is not considerably more than that of the building or trees, and
as prescribed in his certificate of title. Unless one is versed in the science of the one who sowed, the proper rent. The essential fairness of this codal
surveying, “no one can determine the precise extent or location of his property provision has been pointed out by Mme. Justice Ameurfina Melencio-
by merely examining his paper title.”257 Herrera, citing Manresa and applicable precedents, in the case of Depra
(3) May Technogas lose its rights under Article 448 on the basis merely v. Dumlao,258 to wit:
of the fact that some years after acquiring the property in good faith, it learned
Where the builder, planter or sower has acted in good
about and recognized the right of Uy to a portion of the land occupied by its
buildings? faith, a conflict of rights arises between the owners, and it
becomes necessary to protect the owner of the improvements
NO. “The supervening awareness of the encroachment by (Technogas) without causing injustice to the owner of the land. In view of
does not militate against its right to claim the status of a builder in good faith.
the impracticality of creating a state of forced co-ownership,
In fact, a judicious reading of said Article 448 will readily show that the
the law has provided a just solution by giving the owner
landowner’s exercise of his option can only take place after the builder shall
of the land the option to acquire the improvements after
256
At p. 17.
257 258
At pp. 14-15. 136 SCRA 475, 483 (1985).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 209 210 PROPERTY
OWNERSHIP
Right of Accession General Provisions

payment of the proper indemnity, or to oblige the builder or the judgment, the Quemel spouses filed a complaint against the Olaes spouses
planter to pay for the land and the sower to pay the proper seeking to reduce the monthly rental and to compel the Olaes spouses to sell
rent. It is the owner of the land who is authorized to exercise to them the portion of the lot where their house is erected. The Olaes spouses
the option, because his right is older, and because, by the filed a motion to dismiss the complaint on the ground of lack of cause of action
and res judicata. The trial court dismissed the complaint. The Quemel spouses
principle of accession, he is entitled to the ownership of the
appealed to the Court of Appeals. The appeal, however, was certified to the
accessory thing. (3 Manresa 213; Bernardo v. Bataclan, 37 Supreme Court. The plaintiffs (Quemel spouses) claim that their cause of
Off. Gaz. 1382; Co Tao v. Chan Chico, G.R. No. 49167, action to compel the Olaes spouses to sell to them the land is based on Article
April 30, 1949; Article applied; see Cabral, et al. v. Ibañez 448 in connection with Article 546 of the New Civil Code. On this issue, the
[S.C.] 52 Off. Gaz. 217; Marfori v. Velasco, [CA] 52 Off. Supreme Court held —
Gaz. 2050).
On the assumption that the allegations of the second cause
of action are true, what would be the rights of the parties? The
[47.3.1] Option Is Given To the Landowner
plaintiffs claim that their second cause of action is based on Article
Under Article 448, the right to choose between appropriating 448 in connection with Article 546, of the New Civil Code. A
the improvement or selling the land on which the improvement of the cursory reading of these provisions, however, will show that they
builder, planter or sower stands, is given to the owner of the land,259 a are not applicable to plaintiffs’ case. Under Article 448, the right to
appropriate the works or improvements or “to oblige the one who
rule that accords with the principle of accession, i.e., that the accessory
built or planted to pay the price of the land” belongs to the owner
follows the principal.260 The only right given to the builder in good faith of the land. The only right given to the builder in good faith is the
is the right to reimbursement for the improvements; the builder cannot right to reimbursement for the improvements; the builder, cannot
compel the owner of the land to sell such land to the former.261 It is the compel the owner of the land to sell such land to the former. This
owner of the land who is authorized to exercise the option, because his is assuming that the plaintiffs are builders in good faith. But the
right is older, and because, by the principle of accession, he is entitled plaintiffs are not builders in good faith. xxx
to the ownership of the accessory thing.262
San Diego v. Montesa
Quemel v. Olaes 6 SCRA 207 (1962)
1 SCRA 1159 (1961) After trial in Civil Case No. 770 for recovery of a parcel of land filed
The Olaes spouses (Angel and Juliana) sued the Quemuel spouses by Jose, Maria and Urbano, all surnamed “de la Cruz,” against Gil San Diego
(Alejandro and Ruperta) for recovery of possession of a parcel of land. In their and Rufino San Diego, the trial court rendered a decision. Under the dipositive
answer, the Quemel spouses admitted plaintiffs’ ownership but contended that portion of said decision, the defendants and third-party plaintiffs were ordered
their occupation was gratuitous. In 1954, the trial court ordered the Quemel to vacate the land in question upon payment to them by the plaintiffs and
spouses to return the possession of the land to the Olaes spouses and to pay third-party defendants, within thirty days after the decision has become final,
the latter P20.00 a month from January 1954, until they shall have vacated the of the sum of P3,500.00. The judgment became final and executory. The
defendants and third-party plaintiffs, who were in possession of the land in
premises. The Quemel spouses did not appeal. To forestall the execution of
litigation, moved to execute the portion of the decision which required the
payment of P3,500.00. The plaintiffs opposed the motion on the ground that,
as owners, they have the right to exercise the option to either pay the value of
259
Ballatan v. CA, 304 SCRA 34, 46 (1999), citing Grana and Torralba v. CA, 109 Phil. 260, improvements or demand reasonable rent if they do not choose to appropriate
263 (1960); Acuna v. Furukawa Plantation Co., 93 Phil. 957, 961 (1953); Aringo v. Arena, 14 Phil.
263, 269 (1909); also in Quemuel v. Olaes, 1 SCRA 1159 (1961).
the building.
260
Rosales v. Castelltort, 472 SCRA SCRA 144, 155 (2005).
261
Quemuel v. Olaes, supra., at p. 1163
We find the petition meritorious. The judgment affirmed by
262
Depra v. Dumlao, 136 SCRA 475, 483 (1985). the Court of Appeals, and now final, explicitly ordains the payment

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 211 212 PROPERTY


OWNERSHIP
Right of Accession General Provisions

by the respondents dela Cruz of the amount of P3,500.00 “within of remotion is available only if and when the owner of the land chooses
30 days after this decision becomes final” to petitioners San Diego. to compel the builder to buy the land at a reasonable price but the latter
If it also orders petitioners to vacate only upon the payment, it did fails to pay such price.266 In a situation where the landowner is refusing
so in recognition of the right of retention granted to possessors to exercise any of the options granted him under Article 448, the build-
in good faith by Article 546 of the Civil Code of the Philippines.
er in good faith can, under the same Article, compel the landowner to
This provision is expressly made applicable to builders in good
faith (Article 448). The right of retention thus granted is merely a make a choice between appropriating the building by paying the proper
security for the enforcement of the possessor’s right to indemnity indemnity or obliging the builder to pay the price of the land.267
for the improvements made by him. As a result, the possessor in
good faith, in retaining the land and its improvements pending Technogas Philippines Manufacturing Corp. v. CA
reimbursement of his useful expenditures, is not bound to pay
268 SCRA 5 (1997)
any rental during the period of retention; otherwise, the value of
his security would be impaired (cf. Tufexis v. Chunaco [C.A.], 36 In 1970, Technogas purchased a parcel of land, with all the buildings
O.G. 2455). and improvements including the wall existing thereon, from Pariz Industries,
Inc. Eduardo Uy, on the other hand, owns the adjoining parcel of land which
Normally, of course, the landowner has the option to either
appropriate the improvement or to sell the land to the possessor. he acquired from a certain Enrile Antonio in 1970. In 1971, Uy purchased
This option is no longer open to the respondent landowners because another lot also adjoining Technogas’ land from a certain Miguel Rodriguez.
the decision in the former suit limits them to the first alternative It turned out that portions of the buildings and wall bought by Technogas are
by requiring the petitioners to vacate the land (and surrender the occupying portions of Uy’s adjoining land. Upon learning of the encroachment,
improvements) upon payment of P3,500.00. Evidently, the Courts Technogas offered to buy from Uy that particular portion of Uy’s land occupied
of First Instance and of Appeals opined that the respondents’ suit by portions of its buildings and wall. Uy, however, refused the offer. Technogas
to recover the property was an exercise of their right to choose filed an action in court to compel Uy to sell the portions of Uy’s land occupied
to appropriate the improvements and pay the indemnity fixed by by its buildings and wall. In resolving the respective rights and obligations of
law. The respondents acquiesced in this view, since they did not the parties, the Supreme Court held —
ask for a modification of the judgment, and allowed it to become What then is the applicable provision in this case which
final. Consequently, they can no longer insist on selecting another private respondent may invoke as his remedy: Article 448 or
alternative; nor can they be heard now to urge that the value of the Article 450 of the Civil Code?
indemnity, set at P3,500.00, is exorbitant, for the same reason that
the judgment fixing that amount is no longer subject to alteration. In view of the good faith of both petitioner (Technogas)
and private respondent (Uy), their rights and obligations are to be
governed by Art. 448. The essential fairness of this codal provision
[47.3.2] Landowner Cannot Refuse To Exercise Either
has been pointed out by Mme. Justice Ameurfina Melencio-
Option
Herrera, citing Manresa and applicable precedents, in the case of
Even as the option lies with the landowner, the grant to him, nev- Depra v. Dumlao (136 SCRA 475, 483 [1985]) to wit:
ertheless, is preclusive.263 He must choose one.264 Hence, the landowner
“Where the builder, planter or sower has acted in good faith,
cannot refuse to exercise either option and compel instead the owner of
a conflict of rights arises between the owners, and it becomes
the building or improvement to remove it from the land.265 The remedy necessary to protect the owner of the improvements without causing
injustice to the owner of the land. In view of the impracticality of
263
Rosales v. Castelltort, 472 SCRA 144 citing PNB v. De Jesus, 411 SCRA 557, 560 creating a state of forced co-ownership, the law has provided a just
(2003).
264
PNB v. De Jesus, supra.
265 266
Id., Technogas Philippines Manufacturing Corp. v. CA, 268 SCRA 5, 17 (1997), citing Technogas Philippines Manufacturing Corp. v. CA, supra.
267
Ignacio v. Hilario, 76 Phil. 605 (1946) and Sarmiento v. Agana, 129 SCRA 122 (1984). PNB v. De Jesus, supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 213 214 PROPERTY
OWNERSHIP
Right of Accession General Provisions

solution by giving the owner of the land the option to acquire the structure. In such event, petitioner would have a right of retention
improvements after payment of the proper indemnity, or to oblige which negates the obligation to pay rent. The rent should however
the builder or planter to pay for the land and the sower to pay the continue if the option chosen is compulsory sale, but only up to the
proper rent. It is the owner of the land who is authorized to exercise actual transfer of ownership.
the option, because his right is older, and because, by the principle The award of attorney’s fees by respondent Court against
of accession, he is entitled to the ownership of the accessory thing. petitioner is unwarranted since the action appears to have been
(3 Manresa 213; Bernardo v. Bataclan, 37 Off. Gaz. 1382; Co Tao filed in good faith. Besides, there should be no penalty on the right
v. Chan Chico, G.R. No. 49167, April 30, 1949; Article applied; to litigate.
see Cabral, et al. v. Ibañez [S.C.] 52 Off. Gaz. 217; Marfori v.
Velasco, [CA] 52 Off. Gaz. 2050).” WHEREFORE, premises considered, the petition is hereby
GRANTED and the assailed Decision and the Amended Decision
The private respondent’s insistence on the removal of the are REVERSED and SET ASIDE. In accordance with the case of
encroaching structures as the proper remedy, which respondent Depra v. Dumlao, this case is REMANDED to the Regional Trial
Court sustained in its assailed Decisions, is thus legally flawed. Court of Pasay City, Branch 117, for further proceedings consistent
This is not one of the remedies bestowed upon him by law. It would with Articles 448 and 546 of the Civil Code, as follows:
be available only if and when he chooses to compel the petitioner
to buy the land at a reasonable price but the latter fails to pay such The trial court shall determine:
price. (Ignacio v. Hilario, supra.) This has not taken place. Hence, a) the present fair price of private respondent’s 520
his options are limited to: (1) appropriating the encroaching square meter area of land;
portion of petitioner’s building after payment of proper indemnity,
b) the increase in value (“plus value”) which the
or (2) obliging the latter to buy the lot occupied by the structure.
said area of 520 square meters may have acquired by reason
He cannot exercise a remedy of his own liking.
of the existence of the portion of the building on the area;
Neither is petitioner’s prayer that private respondent be
c) the fair market value of the encroaching portion
ordered to sell the land the proper remedy. While that was dubbed
of the building; and
as the “more workable solution” in Grana and Torralba v. The
Court of Appeals, et al. (109 Phil. 260, 264 [1960]), it was not d) whether the value of said area of land is
the relief granted in that case as the landowners were directed to considerably more than the fair market value of the portion
exercise “within 30 days from this decision their option to either of the building thereon.
buy the portion of the petitioners’ house on their land or sell to said 2. After said amounts shall have been determined by
petitioners the portion of their land on which it stand.” Moreover, competent evidence, the regional trial court shall render judgment
in Grana and Torralba, the area involved was only 87 square as follows:
meters while this case involves 520 square meters. In line with the
case of Depra v. Dumlao, this case will have to be remanded to the a) The private respondent shall be granted a period
trial court for further proceedings to fully implement the mandate of fifteen (15) days within which to exercise his option under
of Art. 448. It is a rule of procedure for the Supreme Court to strive the law (Article 448, Civil Code), whether to appropriate the
to settle the entire controversy in a single proceeding leaving no portion of the building as his own by paying to petitioner its
root or branch to bear the seeds of future litigation. fair market value, or to oblige petitioner to pay the price of
said area. The amounts to be respectively paid by petitioner
Petitioner, however, must also pay the rent for the property and private respondent, in accordance with the option thus
occupied by its building as prescribed by respondent Court from exercised by written notice of the other party and to the
October 4, 1979, but only up to the date private respondent serves court, shall be paid by the obligor within fifteen (15) days
notice of its option upon petitioner and the trial court; that is, if from such notice of the option by tendering the amount to
such option is for private respondent to appropriate the encroaching the trial court in favor of the party entitled to receive it;

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 215 216 PROPERTY


OWNERSHIP
Right of Accession General Provisions

b) If private respondent exercises the option to d) The periods to be fixed by the trial court in its
oblige petitioner to pay the price of the land but the latter decision shall be non-extendible, and upon failure of the
rejects such purchase because, as found by the trial court, party obliged to tender to the trial court the amount due to the
the value of the land is considerably more than that of the obligee, the party entitled to such payment shall be entitled
portion of the building, petitioner shall give written notice to an order of execution for the enforcement of payment of
of such rejection to private respondent and to the trial court the amount due and for compliance with such other acts as
within fifteen (15) days from notice of private respondent’s maybe required by the prestation due the obligee.”
option to sell the land. In that event, the parties shall be given
a period of fifteen (15) days from such notice of rejection PNB v. De Jesus
within which to agree upon the terms of the lease, and give 411 SCRA 557 (2003)
the trial court formal written notice of the agreement and its
provisos. If no agreement is reached by the parties, the trial Petitioner Philippine National Bank disputes the decision handed down
court, within fifteen (15) days from and after the termination by the Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No.
of the said period fixed for negotiation, shall then fix the 56001, entitled “Generoso De Jesus, represented by his Attorney-in-Fact,
terms of the lease provided that the monthly rental to be Christian De Jesus, versus Philippine National Bank.” The assailed decision
fixed by the Court shall not be less than Two thousand pesos has affirmed the judgment rendered by the Regional Trial Court, Branch
(P2,000.00) per month, payable within the first five (5) days 44, of Mamburao, Occidental Mindoro, declaring respondent Generoso de
of each calendar month. The period for the forced lease shall Jesus as being the true and lawful owner of the 124-square-meter portion
not be more than two (2) years, counted from the finality of the land covered by Transfer Certificate of Title (TCT) No. T-17197 and
of the judgment, considering the long period of time since ordering petitioner bank to vacate the premises, to deliver possession thereof
1970 that petitioner has occupied the subject area. The rental to respondent, and to remove the improvement thereon.
thus fixed shall be increased by ten percent (10%) for the
It would appear that on 10 June 1995, respondent filed a complaint against
second year of the forced lease. Petitioner shall not make
petitioner before the Regional Trial Court of Occidental Mindoro for recovery
any further constructions or improvements on the building.
of ownership and possession, with damages, over the questioned property. In
Upon expiration of the two-year period, or upon default by
his complaint, respondent stated that he had acquired a parcel of land situated in
petitioner in the payment of rentals for two (2) consecutive
Mamburao, Occidental Mindoro, with an area of 1,144 square meters covered
months, private respondent shall be entitled to terminate the
by TCT No. T-17197, and that on 26 March 1993, he had caused a verification
forced lease, to recover his land, and to have the portion of
survey of the property and discovered that the northern portion of the lot was
the building removed by petitioner or at latter’s expense. The
being encroached upon by a building of petitioner to the extent of 124 square
rentals herein provided shall be tendered by petitioner to the
meters. Despite two letters of demand sent by respondent, petitioner failed and
trial court for payment to private respondent, and such tender
shall constitute evidence of whether or not compliance was refused to vacate the area.
made within the period fixed by the said court. Petitioner, in its answer, asserted that when it acquired the lot and
c) In any event, petitioner shall pay private respon- the building sometime in 1981 from then Mayor Bienvenido Ignacio, the
dent an amount computed at Two thousand pesos (P2,000.00) encroachment already was in existence and to remedy the situation, Mayor
per month as reasonable compensation for the occupancy of Ignacio offered to sell the area in question (which then also belonged to
private respondent’s land for the period counted from Octo- Ignacio) to petitioner at P100.00 per square meter which offer the latter claimed
ber 4, 1979, up to the date private respondent serves notice to have accepted. The sale, however, did not materialize when, without the
of its option to appropriate the encroaching structures; other- knowledge and consent of petitioner, Mayor Ignacio later mortgaged the lot to
wise up to the actual transfer of ownership to petitioner or, in the Development Bank of the Philippines.
case a forced lease has to be imposed, up to the commence- The trial court decided the case in favor of respondent declaring him to
ment date of the forced lease referred to in the preceding be the rightful owner of the disputed 124-square-meter portion of the lot and
paragraph;
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 217 218 PROPERTY
OWNERSHIP
Right of Accession General Provisions

ordering petitioner to surrender possession of the property to respondent and to “Article 450. The owner of the land on which anything has
cause, at its expense, the removal of any improvement thereon. 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
The Court of Appeals, on appeal, sustained the trial court but it ordered
to replace things in their former condition at the expense of the
to be deleted the award to respondent of attorney’s fees, as well as moral and
person who built, planted or sowed; or he may compel the builder
exemplary damages, and litigation expenses.
or planter to pay the price of the land, and the sower the proper
Petitioner went to this Court, via a petition for review, after the appellate rent.”
court had denied the bank’s motion for reconsideration, here now contending
A builder in good faith can, under the foregoing provisions, compel the
that —
landowner to make a choice between appropriating the building by paying
“1. THE COURT OF APPEALS GRAVELY ERRED IN the proper indemnity or obliging the builder to pay the price of the land. The
LAW IN ADJUDGING PNB A BUILDER IN BAD FAITH OVER choice belongs to the owner of the land, a rule that accords with the principle
THE ENCROACHED PROPERTY IN QUESTION; of accession, i.e., that the accessory follows the principal and not the other
way around. Even as the option lies with the landowner, the grant to him,
“2. THE COURT OF APPEALS GRAVELY ERRED IN nevertheless, is preclusive. He much choose one. He cannot, for instance,
LAW IN NOT APPLYING IN FAVOR OF PNB THE PROVISION compel the owner of the building to instead remove it from the land. In order,
OF ARTICLE 448 OF THE CIVIL CODE AND THE RULING however, that the builder can invoke that accruing benefit and enjoy his
IN TECNOGAS PHILIPPINES MANUFACTURING CORP. V. corresponding right to demand that a choice be made by the landowner, he
COURT OF APPEALS, G.R. No. 108894, February 10, 1997, 268 should be able to prove good faith on his part.
SCRA 7.”
Good faith, here understood, is an intangible and abstract quality with
The Regional Trial Court and the Court of Appeals have both rejected no technical meaning or statutory definition, and it encompasses, among other
the idea that petitioner can be considered a builder in good faith. In the context things, an honest belief, the absence of malice and the absence of design to
that such term is used in particular reference to Article 448, et seq., of the Civil defraud or to seek an unconscionable advantage. An individual’s personal
Code, a builder in good faith is one who, not being the owner of the land, good faith is a concept of his own mind and, therefore, may not conclusively
builds on that land believing himself to be its owner and unaware of any defect be determined by his protestations alone. It implies honesty of intention, and
in his title or mode of acquisition. freedom from knowledge of circumstances which ought to put the holder
The various provisions of the Civil Code, pertinent to the subject, read: upon inquiry. The essence of good faith lies in an honest belief in the validity
of one’s right, ignorance of a superior claim, and absence of intention to
“Article 448. The owner of the land on which anything has overreach another. Applied to possession, one is considered in good faith if he
been built, sown, or planted in good faith, shall have the right to is not aware that there exists in his title or mode of acquisition any flaw which
appropriate as his own the works, sowing or planting, after payment invalidates it.
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 Given the findings of both the trial court and the appellate court, it should
who sowed, the proper rent. However, the builder or planter cannot be evident enough that petitioner would fall much too short from its claim of
be obliged to buy the land if its value is considerably more than good faith. Evidently, petitioner was quite aware, and indeed advised, prior to
that of the building or trees. In such a case, he shall pay reasonable its acquisition of the land and building from Ignacio that a part of the building
rent, if the owner of the land does not choose to appropriate the sold to it stood on the land not covered by the land conveyed to it.
building or trees after proper indemnity. The parties shall agree Equally significant is the fact that the building, constructed on the land
upon the terms of the lease and in case of disagreement, the court by Ignacio, has in actuality been part of the property transferred to petitioner.
shall fix the terms thereof.” Article 448, of the Civil Code refers to a piece of land whose ownership is
“Article 449. He who builds, plants, or sows in bad faith on claimed by two or more parties, one of whom has built some works (or sown or
the land of another, loses what is built, planted or sown without planted something) and not to a case where the owner of the land is the builder,
right to indemnity.” sower, or planter who then later loses ownership of the land by sale or otherwise

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 219 220 PROPERTY


OWNERSHIP
Right of Accession General Provisions

for, elsewise stated, “where the true owner himself is the builder of works on pay the “present value” of the house, a useful improvement, in the case
his own land, the issue of good faith or bad faith is entirely irrelevant.” of De Guzman v. Dela Fuente.272
In fine, petitioner is not in a valid position to invoke the provisions of In Pecson v. Court of Appeals,273 the Supreme Court categorically
Article 448 of the Civil Code. The Court commiserates with petitioner in held that “it is the current market value of the improvements which
its present predicament; upon the other hand, respondent, too, is entitled to
should be made the basis of reimbursement.” The Court explained —
his rights under the law, particularly after having long been deprived of the
enjoyment of his property. Nevertheless, the Court expresses hope that the The objective of Article 546 of the Civil Code is to
parties will still be able to come up with an arrangement that can be mutually administer justice between the parties involved. In this
suitable and acceptable to them.
regard, this Court had long ago stated in Rivera v. Roman
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. Catholic Archbishop of Manila (40 Phil. 717 [1920]) that the
56001 is AFFIRMED. No costs. said provision was formulated in trying to adjust the rights
SO ORDERED. of the owner and possessor in good faith of a piece of land,
to administer complete justice to both of them in such a way
as neither one nor the other may enrich himself of that which
[47.4] Option to Appropriate
does not belong to him. Guided by this precept, it is therefore
[47.4.1] What Indemnity Consists Of the current market value of the improvements which should
be made the basis of reimbursement. A contrary ruling would
If the landowner chooses to acquire the building, he must pay
unjustly enrich the private respondents who would otherwise
the builder the indemnities provided for in Articles 546 and 548 of the
be allowed to acquire a highly valued income-yielding four
New Civil Code.268 In short, the landowner must pay the necessary and
unit apartment building for a measly amount. Consequently,
useful expenses, and in the proper case, expenses for pure luxury or
the parties should therefore be allowed to adduce evidence
mere pleasure.269
on the present market value of the apartment building upon
[47.4.2] Basis of Indemnity which the trial court should base its finding as to the amount
of reimbursement to be paid by the landowner.274
What shall be the basis of the indemnity to be paid by the landowner?
In Javier v. Concepcion, Jr.,270 the Supreme Court pegged the value of [47.4.3] Pending Reimbursement, Builder Has Right of
the useful improvements consisting of various fruits, bamboos, a house Retention
and camarin made of strong materials based on the market value of the
In addition to the right of the builder in good faith to be paid
said improvements. In Sarmiento v. Agana,271 despite the finding that
the value of his improvement, Article 546 of the New Civil Code
the useful improvement, a residential house, was built in 1967 at a cost
gives him the corollary right of retention of the property until he is
of between Eight thousand pesos (P8,000.00) to Ten thousand pesos
indemnified by the owner of the land.275 The builder in good faith may
(P10,000.00), the landowner was ordered to reimburse the builder in the
not, therefore, be required to pay rentals.276 This is so because the right
amount of Forty thousand pesos (P40,000.00), the value of the house to retain the improvements while the corresponding indemnity is not
at the time of the trial. In the same way, the landowner was required to

272
55 Phil. 501 (1930).
268 273
Art. 448, Civil Code. Supra, at p. 416.
269 274
Ballatan v. CA, supra, at p. 46. At p. 416.
270 275
94 SCRA 212 (1979). Filipinas Colleges, Inc. v. Garcia Timbang, et al., 106 Phil. 247, 253 (1959).
271 276
Supra. Miranda v. Fadullon, 97 Phil. 801, 806 (1955).
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 221 222 PROPERTY
OWNERSHIP
Right of Accession General Provisions

paid implies the tenancy or possession in fact of the land on which it is [47.4.4] Time of Transfer of Ownership
built, planted or sown.277 However, Article 448 of the New Civil Code, In Bataclan v. CFI,285 the Supreme Court ruled that the ownership
in relation to Article 546, which provides for full reimbursement of of the building does not pass to the landowner until after the payments
useful improvements and retention of the premises until reimbursement mentioned under Articles 546 and 548 has been given to the builder.
is made, applies only to a possessor in good faith, i.e., one who builds
on a land in the belief that he is the owner thereof. It does not apply to [47.5] Option To Sell the Land
a mere lessee, otherwise, it would always be in his power to “improve”
[47.5.1] Option To Compel Builder or Planter To Buy the
his landlord out of the latter’s property.278 Land
While the law aims to concentrate in one person the ownership of If the landowner elected to compel the builder or planter to pay
the land and the improvements thereon in view of the impracticability the price of the land, then said builder or planter must do so, unless the
of creating a state of forced co-ownership, it guards against unjust value of land is considerably more than that of the building or trees,
enrichment insofar as the good faith builder’s improvements are in which case, the builder or planter must pay reasonable rent if the
concerned.279 The right of retention is considered as one of the measures landowner does not choose to appropriate the building or trees.286 If
devised by the law for the protection of builders in good faith.280 Its object the parties cannot come to terms over the conditions of the lease, the
is to guarantee full and prompt reimbursement as it permits the actual courts must fix the terms thereof.287 Note that this option is available
possessor to remain in possession while he has not been reimbursed (by only against the builder or planter because with respect to the sower,
the person who defeated him in the case for possession of the property) the landowner can only compel him to pay the proper rent,288 in case the
for those necessary expenses and useful improvements made by him landowner does not choose to appropriate the crops.
on the things possessed.281 Accordingly, a builder in good faith cannot
be compelled to pay rentals during the period of retention282 nor be [47.5.2] Remedy If Builder or Planter Refuses To Pay
disturbed in his possession by ordering him to vacate. In addition, the
owner of the land is prohibited from offsetting or compensating the In the event the builder or the planter refuses to pay the price of
necessary and useful expenses with the fruits received by the builder- the land (on the assumption that said price is not considerably more than
possessor in good faith.283 Otherwise, the security provided by law the value of the building or trees), will the landowner automatically
would be impaired. This is so because the right to the expenses and the become the owner of the improvements without paying any indemnity?
right to the fruits both pertain to the possessor, making compensation This question was answered in the negative by the Supreme Court in
juridically impossible; and one cannot be used to reduce the other.284 the case of Filipinas Colleges, Inc. v. Garcia Timbang, et al.,289 where
the Court held —
“x x x. There is nothing in the language of these two
articles, 448 and 546, which would justify the conclusion of
appellants that, upon the failure of the builder to pay the value
277
of the land, when such is demanded by the landowner, the
Pecson v. CA, supra, at p. 416.
278
Chua v. CA, 301 SCRA 356, 364 (1999).
latter becomes automatically the owner of the improvement
279
Nuguid v. CA, 452 SCRA 243, 252 (2005), citing Ortiz v. Kayanan, 92 SCRA 146, 159
(1979).
280 285
Id. 61 Phil. 428.
281 286
Id. Art. 448, Civil Code.
282 287
Id., citing San Diego v. Hon. Montesa, 6 SCRA 208, 210 (1962). Ibid.
283 288
Id. Art. 448, Civil Code.
284 289
Id. 106 Phil. 247 (1959).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 223 224 PROPERTY


OWNERSHIP
Right of Accession General Provisions

under Article 445. The case of Bernardo v. Bataclan, 66 Phil. the building or trees and the builder or planter fails to pay such price,
590 cited by appellants is no authority for this conclusion. the parties may agree to assume the relation of lessor and lessee — but
Although it is true it was declared therein that in the event they must do so voluntarily.
of the failure of the builder to pay the land, after the owner
Should the parties do not agree to leave things as they are and to
thereof has chosen this alternative, the builder’s right of
assume the relation of lessor and lessee, another remedy is suggested
retention provided in Article 546 is lost, nevertheless there
in the case of Ignacio v. Hilario, supra, wherein the Court held that the
was nothing said that as a consequence thereof, the builder
owner of the land is entitled to have the improvement removed when
loses entirely all rights over his own building. x x x”290
after having chosen to sell his land to the other party, i.e., the builder
What then is the recourse or remedy left to the parties in such in good faith, fails to pay for the same.295 In this situation, the builder’s
eventuality where the builder fails to pay the value of the land? While right of retention provided in Article 546 is lost.296
the Code is silent on this point, guidance may be derived from the A further remedy is indicated in the case of Bernardo v. Bataclan,
decisions of the Supreme Court in the cases of Miranda v. Fadullon,291 supra, where the Court approved the sale of the land and improvement
Ignacio v. Hilario,292 and Bernardo v. Bataclan.293 in a public auction applying the proceeds thereof first to the payment of
In Miranda v. Fadullon, supra, the Court suggested — the value of the land and the excess, if any, was ordered to be delivered
to the owner of the house in payment thereof.297
“xxx A builder in good faith may not be required to
pay rentals. He has a right to retain the land on which he [47.5.3] Basis in Determining Price of the Land
has built in good faith until he is reimbursed the expenses In Ballatan v. Court of Appeals,298 it was ruled that in the event the
incurred by him. Possibly he might be required to pay rental landowner elects to sell the land to the builder in good faith, the price
only when the owner of the land chooses not to appropriate must be fixed at the prevailing market value at the time of payment. In
the improvement and requires the builder in good faith to the event of the failure of the builder to pay the land, after the owner
pay for the land, but that the builder is unwilling or unable thereof has chosen this alternative, the builder’s right of retention
to buy the land, and then they decide to leave things as they provided in Article 546 is also lost.299
are and assume the relation of lessor and lessee, and should
they disagree as to the amount of the rental then they can go
to the court to fix that amount. xxx.”294 Ballatan v. CA
304 SCRA 37 (1999)
Note, however, that in this situation a “forced lease” may not be
In this case, the parties are owners of adjacent lots — lots 24, 25, 26
resorted to since such remedy is available only in situations where the and 27. Lot 24 is co-owned by Eden Ballatan and spouses Betty Martinez and
landowner cannot oblige the builder or planter to pay the price of the Chong Chy Ling. Lots 25 and 26 are owned by Gonzalo Go, Sr. while lot 27 is
land because its value is considerably more than that of the building or owned by Li Ching Yao. Li Ching Yao built his house on his lot before any of
trees. But if the landowner can compel the builder or planter to pay the the parties did. He constructed his house in 1982. Li Ching Yao was not aware
price of the land because its value is not considerably more than that of that when he built his house a portion thereof encroached on Go’s adjoining

290 295
At p. 253. See Filipinas Colleges, Inc. v. Garcia Timbang, et al., at p. 254.
291 296
97 Phil. 801 (1955). See Bernardo v. Bataclan, supra.
292 297
76 Phil. 605 (1946). See Filipinas Colleges, Inc. v. Garcia Timbang, et al., at p. 254.
293 298
66 Phil. 590. 304 SCRA 37 (1999).
294 299
At p. 806, cited in Filipinas Colleges, Inc. v. Garcia Timbang, et al., at pp. 253-254. Bernardo v. Bataclan, supra.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 225 226 PROPERTY
OWNERSHIP
Right of Accession General Provisions

land. In 1983, the son of Gonzalo Go, Winston, constructed his house on lot [47.5.4] Rule If Only a Portion of the Land Has Been
no. 25. At the time of construction, Winston was not aware that he encroached Encroached
on a portion of land owned by Ballatan and the spouses Betty Martinez and
Chong Chy Ling. In 1985, Ballatan constructed her house on lot 24. During Article 448 has been applied to improvements or portions of
the construction, she noticed that Go encroached on her property. Since then, improvements built by mistaken belief on land belonging to the
the parties had been aware of the encroachments on each other’s properties. adjoining owner.300
Apparently, it was the erroneous survey of the geodetic engineer commissioned
by the subdivision developer that caused these discrepancies. In determining § 48. Landowner In Good Faith; Builder In Bad Faith
the rights of the parties, the Supreme Court applied Article 448 of the Civil [48.1] Concept of Bad Faith
Code since all the parties had acted in good faith. The Court ruled —
If good faith consists in the belief of the builder that the land he is
“xxx petitioners (Ballatan and the spouses Betty Martinez and building on is his and his ignorance of any defect or flaw in his title,301 a
Chong Chy Ling), as owners of Lot No. 24, may choose to purchase
fortiori, the builder, planter or sower (who is at the same time the owner
the improvement made by respondents Go on their land, or sell to
of the materials) is deemed to have acted in bad faith if he knows that
respondents Go the subject portion. If buying the improvement is
impractical as it may render the Go’s house useless, then petitioners the land is not his, or if he has knowledge of any flaw or defect in his
may sell to respondents Go that portion of Lot No. 24 on which title or mode of acquisition of the land.
their improvement stands. If the Go’s are unwilling or unable to
buy the lot, then they must vacate the land and, until they vacate, [48.2] Legal Consequences; Alternative Rights of the Landowner
they must pay rent to petitioners. Petitioners, however, cannot If the landowner has acted in good faith, i.e., he was not aware
compel respondents Go to buy the land if its value is considerably that something was being built, planted or sown on his land and he
more than the portion of their house constructed thereon. If the
learned about only after it was done, and the builder, planter or sower
value of the land is much more than the Go’s improvement, then
respondents Go must pay reasonable rent. If they do not agree on
(who is at the same time the owner of the materials) has acted in bad
the terms of the lease, then they must go to court to fix the same. faith, the landowner can exercise any of the following three rights and/
or remedies under Articles 449, 450 and 451:
In the event that petitioners elect to sell to respondents
Go the subject portion of their lot, the price must be fixed at the [48.2.1] Right to Appropriate
prevailing market value at the time of payment. The Court of
Appeals erred in fixing the price at the time of taking, which is He can appropriate what has been built, planted or sown on his
the time the improvements were built on the land. The time of land in bad faith without any obligation to pay indemnity because
taking is determinative of just compensation in expropriation Article 449 of the New Civil Code provides that “he who builds, plants
proceedings. The instant case is not for expropriation. It is not a or sows in bad faith on the land of another, loses what is built, planted
taking by the State of private property for a public purpose upon or sown without right to indemnity.” And in addition to this right of
payment of just compensation. This is a case of an owner who has “confiscation” of the improvements, he can also demand damages from
been paying real estate taxes on his land but has been deprived of the builder, planter or sower in bad faith pursuant to Article 451.
the use of a portion of this land for years. It is but fair and just to
fix compensation at the time of payment. With respect to the fruits, it must be understood that the landowner
Article 448 and the same conditions above-stated also
can appropriate them without paying indemnity if said fruits are still
apply to respondents Go as owners and possessors of their land
and respondent Li Ching Yao as builder of the improvement that
300
Ballatan v. CA, supra; Technogas Philippines Manufacturing Corp. v. CA, supra; Depra
encroached on thirty-seven (37) square meters of respondents Go’s
v. Dumlao, supra; and Grana and Torralba v. CA, 109 Phil. 260 (1960).
land. 301
Pleasantville Development Corp. v. CA, supra., at p. 18.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 227 228 PROPERTY


OWNERSHIP
Right of Accession General Provisions

ungathered (pending) at the time of recovery of possession of the land, Leonardo Santos’ house having been built and reconstructed
for if said fruits have already been separated from the land, the principle (after March, 1962) into a bigger one after his predecessors-in-
of accesion continua no longer applies. Instead, Article 443 of the New interests, his parents, had been summoned in 1959 in Civil Case
Civil Code will apply, in which case, the planter or sower (in bad faith) No. 217-R, he must be deemed a builder in bad faith. As builder
in bad faith he lost the improvement made by him consisting of
can be compelled to deliver to the landowner in good faith the fruits he
the reconstructed house to the owners of the land without right
has gathered, or their value, minus the expenses incurred by the former to indemnity, pursuant to Article 449 of the Civil Code, which
in their production, gathering and preservation. provides:
[48.2.2] Right of Remotion xxx xxx xxx
The Allanigue brothers and sisters therefore became owners
The second right or remedy of the landowner is to exercise the
of the improvements consisting of the house built in bad faith
right of remotion pursuant to Article 450, i.e., he can demand that what by Leonardo Santos if they choose to appropriate the accession.
has been built, planted or sown in bad faith on his land be removed or (Articles 445 and 449, Civil Code) However, said owners could
demolished and that the land be restored to its original condition — all choose instead the demolition of the improvement or building at
at the expense of the builder, planter or sower — plus damages suffered the expense of the builder, pursuant to Article 450 of the Civil
by the landowner pursuant to Article 451. Code which in part, provides:
xxx xxx xxx
Santos v. Mojica It is of record in Civil Case No. 217-R that the owners of the
26 SCRA 703 (1969) land chose to have the house or improvement demolished pursuant
to their motion for demolition which was granted by respondent
In this case, eleven brothers and sisters, all surnamed Allanigue, brought
Judge Mojica on December 9, 1965.”
an action against their sister, Lorenzana Allanigue, her husband, Simeon
Santos, Maria San Agustin and Felicidad San Agustin for partition of a 360-
[48.2.3] Right To Compel Payment of the Price of the Land
square meter lot and for the annulment of certain conveyances involving the
same. After the spouses Simeon and Lorenzana Santos were summons, their The third possible right of the landowner is to compel the builder
son (Leonardo Santos) built and reconstructed his house into a bigger one. or planter to pay the price of the land, and the sower the proper rent,
The plaintiffs eventually won the case. When the judgment became final and pursuant to Article 450, plus damages under Article 451. There being
executory, a writ of execution was issued ordering the defendants to vacate the no exception provided in the law, it is submitted that the landowner
lot and deliver the same to the plaintiffs. Leonardo refused to vacate. May his
can exercise this right even if the value of the land is considerably
house be demolished? The Supreme Court ruled —
more than that of the building or trees. But then again, this remedy is
“1. Petitioner Leonardo Santos is bound by the judgment available against the builder and planter only. With respect to the sower,
in Civil Case No. 217-R because he is a successor-in-interest of his the landowner may only compel him to pay the proper rent.
parents, Simeon Santos and Lorenzana Allanigue, defendants in
Civil Case No. 217-R, and his right, if any, is claimed under them. [48.3] Limited Rights of Builder, Planter or Sower in Bad Faith
Hence, the judgment in said civil case binds not only Simeon Santos
and Lorenzana Allanigue but also their son, Leonardo Santos, who The foregoing rights of the landowner are alternative, i.e., he
is their successor-in-interest and who claims under them. The fact can exercise only one of them as his option. But in all cases, “the
that the sale to Leonardo Santos from his parents was registered, is builder, planter or sower in bad faith is entitled to reimbursement for
of no moment because, as pointed out, he is bound by the judgment the necessary expenses of preservation of the land,”302 otherwise the
against them.
302
Art. 452, Civil Code.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 229 230 PROPERTY
OWNERSHIP
Right of Accession General Provisions

landowner would be enriching himself at the expense of the former. A on his part.307 Thus, when one in possession of property of another erects
builder in bad faith has no right, however, to be indemnified for useful buildings and makes other improvements thereon in bad faith, but with
improvements.303 Neither has he any right to remove them.304 The right knowledge of the owner who does not object, the case must be treated
given a possessor in bad faith to remove improvements applies only as if both parties had acted in good faith.308
to improvements for pure luxury or mere pleasure, provided the thing
suffers no injury thereby and the lawful possessor does not prefer to § 50. Landowner In Bad Faith; Builder In Good Faith
retain them by paying the value they have at the time he enters into Article 454 of the New Civil Code provides: “When the landowner
possession.305 acted in bad faith and the builder, planter or sower proceeded in
In Lumungo v. Usman,306 it was ruled that a planter in bad faith is good faith, the provisions of Art. 447 shall apply.” As a consequence,
not entitled to be reimbursed for the value of the coconut trees planted whatever has been discussed under Article 447 shall likewise apply in
by him as said coconut trees are improvements, not “necessary expenses this situation.
of preservation.” Article 447 governs the case of building, planting or sowing on
one’s own land with materials of another either in good faith or in bad
§ 49. Both Acted In Bad Faith
faith. The reason why said article applies may be explained as follows:
[49.1] Rules That Will Govern If Both Parties Acted In Bad Faith that if the landowner knew that something was being built, planted or
One basic principle of accesion continua is that the bad faith sown on his land by another and he did not interpose any objection
of one person neutralizes the bad faith of another and both should be thereto, it is as if he was the one building, planting or sowing in bad
considered as having acted in good faith. This principle is embodied faith on his own land with materials belonging to another, using the
in the first paragraph of Article 453 of the New Civil Code, which owner of the materials as his worker. As a consequence, and pursuant
provides: to the provisions of Article 447, the owner of the materials (who is at
the same time the builder, planter or sower in this case) acquires two
“Art. 453. If there was bad faith, not only on the part alternative rights, namely: (1) to demand the value of his materials, plus
of the person who built, planted or sowed on the land of damages; or (2) to demand the return of his materials in any event, plus
another, but also on the part of the owner of such land, the damages.
rights of one and the other shall be the same as though both
had acted in good faith.”
Art. 455. If the materials, plants or seeds belong to a third person
Therefore, Article 448 of the New Civil Code governs this situation who has not acted in bad faith, the owner of the land shall answer sub-
such that whatever has been discussed therein shall likewise apply in sidiarily for their value and only in the event that the one who made use of
them has no property with which to pay.
this situation.
This provision shall not apply if the owner makes use of the rights
[49.2] Bad Faith of the Landowner 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
It is understood that there is bad faith on the part of the landowner landowner the value of the materials and labor. (365a)
whenever the act was done with his knowledge and without opposition Art. 456. In the cases regulated in the preceding articles, good faith
does not necessarily exclude negligence, which gives right to damages
under Article 2176. (n)
303
Sabido v. CA, 165 SCRA 498 (1988).
304
MWSS v. CA, 143 SCRA 623 (1986).
305 307
Ibid., citing Art. 549, Civil Code. Art. 453, 2nd par., Civil Code.
306 308
25 SCRA 255, 261 (1968). Municipality of Oas v. Roa, 7 Phil. 20.

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 231 232 PROPERTY


OWNERSHIP
Right of Accession General Provisions

§ 51. Building on Another’s Land Using Another’s Materials [51.2.3] Rights of the Builder, Planter or Sower
[51.1] Situation Contemplated in Art. 455 The rights of the builder, planter or sower shall be determined
Article 455 of the New Civil Code contemplates of a situation depending on his good faith or bad faith.
where the builder, planter or sower has built, planted or sown on (a) If he acted in good faith. — If he acted in good faith in that he
another’s land using materials belonging to another person. In such thought honestly that both the land and the materials belonged to him,
a situation, there are actually three persons whose good faith or bad he may claim from the landowner a reasonable compensation for his
faith must all be taken into account, namely: (1) the landowner; (2) the labor. This is based on the principle that no person should be unjustly
builder, planter or sower; and (3) the owner of the materials. enriched at the expense of another.
To simplify the resolution of this “controversial” situation, Article (b) If he acted in bad faith. — If he acted in bad faith in that he
455 offers to settle first the right of the owner of the materials whose knew that the materials he was using belonged to somebody else or that
only interest, of course, is the recovery of the value of his materials. he had no right to the land, then he is not entitled to anything. He may
Such recovery, however, shall depend on whether he acted in good faith instead be made to pay damages to the landowner.
or in bad faith.
[51.3] If the Owner of the Materials Acted In Good Faith
[51.2] If the Owner of the Materials Acted In Bad Faith
[51.3.1] He Must Be Reimbursed For the Value of His
[51.2.1] He Loses His Materials Without Indemnity Materials
If the owner of the materials acted in bad faith, he loses his If the owner of the materials acted in good faith, in that he did
materials without any right whatsoever. This is so because if he knew not know that his materials were used by another, the law says that
that his materials were being used by another but did not object thereto, he is entitled to recover the value of his materials. This is expressly
it is as if he was the one who built, planted or sowed with his materials recognized in Article 455 of the New Civil Code.
in bad faith on the land of another. The builder, planter or sower would
be considered merely an agent of the owner of the materials. Therefore, [51.3.2] Builder, Planter or Sower Is Primarily Liable
the provisions of Article 449 of the Civil Code will apply by analogy, in The builder, planter or sower is primarily liable to make such
which case, he loses what he has built, planted or sown without right to payment to the owner of the materials310 — without damages if he
indemnity. He is even liable for damages.309 The only exception to this (builder, planter or sower) acted in good faith — and with damages if
rule is if all the parties acted in bad faith because then their rights would he acted in bad faith. If such payment is made by the builder, planter
be governed as if they were in good faith. or sower, he becomes the owner of the materials and the case would
be the same as the second “controversial case” discussed in supra §§
[51.2.2] Rights of the Landowner
46-50 — that of building, planting or sowing with one’s own materials
If the owner of the materials acted in bad faith, the landowner on the land of another. Hence, to determine the rights and obligations
can claim what has been built, planted or sown on his land without any of the builder, planter or sower and the landowner against each other,
obligation to indemnify the owner of the materials. This is in pursuance we will again apply the rules in the following four situations: (1) if
to the principles stated in Articles 449 and 445 of the Civil Code. both the landowner and the builder, planter or sower acted in good faith
(Art. 448); (2) if the landowner acted in good faith and the builder,
planter or sower acted in bad faith (Arts. 449, 450 and 451); (3) if both

309 310
Art. 451, NCC. Art. 455, NCC.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 233 234 PROPERTY
OWNERSHIP
Right of Accession General Provisions

parties acted in bad faith (Art. 448, in relation to Art. 453); and (4) if the Art. 458. The owners of estates adjoining ponds or lagoons do not
landowner acted in bad faith and the builder, planter or sower acted in acquire the land left dry by the natural decrease of the waters, or lose that
inundated by them in extraordinary floods. (367)
good faith (Art. 447, in relation to Art. 454).

[51.3.3] Subsidiary Liability of the Landowner §53. Alluvion


The landowner is subsidiarily liable for the payment of the value [53.1] Definition
of the materials.311 This subsidiary liability, however, of the owner of Alluvium or alluvion has been defined as the gradual and imper-
the land is only available if the following conditions are met: (1) in ceptible addition to the banks of rivers314 or as the increment which
case of insolvency of the builder, planter or sower; and (2) the owner of lands abutting rivers gradually receive as a result of the current of the
the land appropriates the building, planting or sowing.312 A fortiori, the waters.315 Alluvium is the soil deposited on the estate fronting the river
owner of the land is not liable to the owner of the materials if the former bank, while accretion is the process whereby the soil is deposited.316
chooses to order the demolition of the construction or the removal of
the building, planting or sowing which he has the right to do in case [53.2] Riparian Owners Distinguished From Littoral Owners
the builder, planter or sower acted in bad faith.313 If the landowner pays The owner of the estate fronting the river bank is called the
for the value of the materials, he becomes the owner thereof. In such a riparian owner. Riparian owners are, strictly speaking, distinct from
situation, he may demand damages from the builder, planter or sower littoral owners, the latter being owners of lands bordering the shore of
if the latter acted in bad faith, or pay the builder, planter or sower a the sea or lakes or other tidal waters.317
reasonable compensation for his labor if the latter acted in good faith.
[53.3] Rule on Alluvion
B. NATURAL ACCESSION The rule on alluvion is embodied in Article 457 of the New Civil
§ 52. Natural Accession Code which states that “to the owners of lands adjoining the banks
of rivers belong the accretion which they gradually receive from the
[52.1] Four Forms effects of the current of the waters.”
As discussed in supra §40.2, there are four forms of natural The riparian land, or the land adjoining the bank of the river is the
accession: principal and the alluvial deposits accumulated gradually along such
(1) Alluvion; riparian land constitute the accessory. The alluvium, by mandate of
Article 457 of the New Civil Code, is automatically owned by the ripar-
(2) Avulsion;
ian owner from the moment the soil deposit can be seen.318 The same
(3) Natural change of course of river; and rule applies even if the riparian land was bought under installment plan,
(4) Formation of island. in which case, the benefits of accretion belong to the purchaser even
when said accretion took place before the last installment was paid.319
Art. 457. To the owners of lands adjoining the banks of rivers belong
the accretion which they gradually receive from the effects of the current 314
3 Manresa, 6th ed., 235.
of the waters. (366) 315
2 Castan, 8th ed., 218.
316
Heirs of Emiliano Navarro v. IAC, 268 SCRA 74, 85 (1997).
317
Id., at p. 85, citing Santulan v. The Executive Secretary, 80 SCRA 548, 556 (1977).
311 318
Art. 455, NCC. Id., at pp. 85-86.
312 319
Id. Assistant Executive Secretary for Legal Affairs of the Office of the President v. CA, 169
313
Id. SCRA 27 (1989).

PROPERTY, OWNERSHIP, AND ITS MODIFICATION 235 236 PROPERTY


OWNERSHIP
Right of Accession General Provisions

The reason behind the law giving the riparian owner the right must be the exclusive work of nature.325 Hence, the riparian owner does
to any land or alluvion deposited by a river is to compensate him for not acquire the additions to his land caused by special works expressly
the danger of loss that he suffers because of the location of his land.320 intended or designed to bring about accretion.326 Thus, in Tiongco v.
If estates bordering on rivers are exposed to floods and other evils Director of Lands, et al.,327 where the land was not formed solely by the
produced by the destructive force of the waters and if by virtue of lawful natural effect of the water current of the river bordering said land but is
provisions, said estates are subject to encumbrances and various kinds also the consequence of the direct and deliberate intervention of man,
of easements, it is proper that the risk or danger which may prejudice it was deemed a man-made accretion and, as such, part of the public
the owners thereof should be compensated by the right of accretion.321 domain.328

[53.4] Requisites of Alluvion Vda. de Nazareno v. CA


257 SCRA 598 (1996)
Accretion as a mode of acquiring property under Article 457
requires the concurrence of the following requisites: (1) that the In this case, Antonio Nazareno, the predecessor-in-interest of
accumulation of soil or sediment be gradual and imperceptible; (2) that Desamparado Vda. De Nazareno, caused the approval by the Bureau of Lands
it be the result of the action of the waters of the river; and (3) that the of the survey plan designated as Plan Csd-106-00571 with a view to perfecting
land where the accretion takes place is adjacent to the banks of the his title over the accretion area being claimed by him. The accretion was formed
by the dumping of boulders, soil and other filling materials on portions of the
river.322 These are called the rules on alluvion which if present in a case,
Balacanas Creek and the Cagayan River bounding Nazareno’s land. Before
give to the owners of lands adjoining the banks of rivers or streams
the approved survey plan could be released to Nazareno, it was protested by
any accretion gradually received from the effects of the currents of his lessees. Acting upon such protest, the Regional Director of the Bureau of
waters.323 Lands ordered the amendment of the survey plan by segregating therefrom
the areas occupied by the lessees. Thereafter, the Director of Lands ordered
[53.4.1] First Requisite Nazareno to vacate the portions adjudicated to the lessees. Upon the death of
A sudden and forceful action like that of flooding is hardly the Antonio, Vda. De Nazareno went to court to question the action taken by the
alluvial process contemplated under Article 457 of the New Civil Code. Bureau of Lands. The resolution of this case hinges on the question of whether
or not the subject land is public land. Vda. De Nazareno claims that the subject
It is the slow and hardly perceptible accumulation of soil deposits
land is private land being an accretion on Antonio Nazareno’s titled property,
that the law grants to the riparian owner.324 This is what distinguishes applying Article 457 of the Civil Code. The Supreme Court HELD: Since the
alluvion from avulsion. In alluvion, the deposit of soil is gradual and subject land was the direct result of the dumping of sawdust by the Sun Valley
imperceptible; whereas in avulsion, it is sudden and abrupt. Lumber Co., the accretion was man-made, hence, Art. 457 does not apply.
Ergo, the subject land is part of the public domain.
[53.4.2] Second Requisite
The requirement that the deposit should be due to the effect of the Republic v. CA
current of the river is indispensable. This excludes from Article 457 of 132 SCRA 514 (1984)
the New Civil Code all deposits caused by human intervention. Alluvion In this case, the Tancincos were the registered owners of a parcel of
land bordering on the Meycauayan and Bocaue rivers. In 1973, they filed an
320
Republic v. CA, 132 SCRA 514 (1984). application for the registration of three lots adjacent to their fishpond property.
321
Id.
322
Heirs of Emiliano Navarro v. IAC, supra., at p. 85; Vda. De Nazareno v. CA, 257 SCRA
325
589 (1996); Meneses v. CA, 246 SCRA 374 (1995); Reynante v. CA, 207 SCRA 794 (1992); Bina- Republic v. CA, 132 SCRA 514, 520 (1984).
326
lay v. Manalo, 195 SCRA 374 (1991). Id.
323 327
Vda. De Nazareno v. CA, supra., at p. 597. 16 C.A. Rep. 211.
324 328
Binalay v. Manalo, supra., at p. 386. Cited in Vda. De Nazareno v. CA, supra., at pp. 598-599.
PROPERTY, OWNERSHIP, AND ITS MODIFICATION 237 238 PROPERTY