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PROPERTY Rights of Accession

PROPERTY Rights of Accession

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Published by saintkarri
Consolidated digests and Tolentino notes
Consolidated digests and Tolentino notes

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Published by: saintkarri on Dec 31, 2009
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Professor E. LabitagPage
Chapter III: Right of Accession28 July 2009
Art 440 The ownership of property gives the right by accession to everything which is producedthereby, or which is incorporated or attached thereto, either naturally or artificially.
Definition of Accession
 TOLENTINO: Right by virtue of which the owner of a thing becomes the owner of everythingthat the thing may produce or which may be inseparably united or incorporated thereto, eithernaturally or principally.
 JBL REYES: Extension of ownership over a thing to whatever is incorporated thereto naturallyor artificially (without or with labor of man)
Incorporation means a stable union or adherence, not mere juxtaposition
Accession is one of the bundle of rights of ownership and is
a mode of acquiringproperty
It does not depend upon a new title
A.General Principles of Accession
Applicable to both
accession discreta
accession continua
Accessory follows the principal
(accesio cedit principal)
Owner of the principal acquires or extends his ownership over the accessory
Art 437 Owner of a parcel of land is the
owner of its surface and of everything under it 
Art 446 Owner of a parcel of land is the
owner of its surface and of everything under it 
a.No one shall be unjustly enriched at the expense of another
Applicable to
accession continua
Whatever is built, planted or sown on the land of another and the improvement or repairsmade thereon, belong to the owner of the land, subject to the provisions of the followingarticles (Art 445)b.All works, sowing, planting are presumed made by owner and at his expense, unlesscontrary is proved
Accessory incorporated to principal such that it cannot be separated without injury to workconstructed or destruction to plantings, construction or works (Art 447)d.Bad faith involves liability for damages and other dire consequencese.Bad faith of one party neutralizes bad faith of the other
Art 453 If there was BF, not only on the part of the person who BPS, but also on the part of owner, rights of one and the other shall be the same as though both had acted in good faith.
Applicable to
accession discreta
Ownership of fruits – to owner of principal thing belongs the natural, industrial and civilfruits (Art 441 )EXCEPTIONS:
Possession in good faith (to the possessor)
In usufruct (to the usufructuary)
In lease (to the lessee)
In antichresis (to the creditor)
B.Obligations of receiver of fruits to pay expenses by 3rd persons in production,gathering and preservation
Art 443 He who receives the fruits has the obligation to pay the expenses made by a third personin their production, gathering and preservation.1
Consolidated by Karichi Santostutubi
C.Kinds of Accession
 Accession Discreta
(Fruits)Art 440 The ownership of property gives the right by accession to everything which is
 produced thereby 
Extension of the right of ownership to the products of a thing
Based on principles of justice : It is only just that the owner of a thing should also ownwhatever it produces, unless there is some special reason for a contrary solution
GENERAL RULE: Fruits go to the owner of the principal, unless otherwise provided bylaw or contract
EXCEPTIONS: possession in good faith, usufruct, lease, antichresisArt 441 To the owner belongs:
Natural fruits
Art 442 the spontaneous products of the soil and the young and other products of animals
 Those products of the soil in whose generation human labor does not intervene (e.g.wild herbs in the mountains dedicated to pasturage)a.Industrial
Art 442 are those produced by lands of any kind through cultivation or labor
Fruits that implies some kind of cultivation or labor (e.g. zacate grass fed to horses)
Products of the soil as a result of human labora.Civil
Art 442 are the rents of buildings, the price of leases of lands and other property andthe amount of perpetual or life annuities or other similar income
Periodical (reiterable) increase of incorporeal property due to operation of law (rents,annuities)
Rents of land, buildings, and certain kinds of incomes obtained from the land orbuilding itself 
(1950; Ozaeta)
In his will, the deceased Emil Maurice Bachrach named his wife (Mary McDonald Bachrach) as usufructuaryof the remainder of his estate. The will further provided that upon the death of Mary McDonald Bachrach,one-half of all his estate shall be divided among his legal heirs, to the exclusion of his brothers.
 The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge Mining Co., Inc.,received from the latter 54,000 shares representing 50% stock dividend on the said 108,000 shares.
 June 10, 1948, Mary (the widow), as usufructuary or life tenant of the estate, petitioned the lower court toauthorize the Peoples Bank and Trust Company (the administrator of the estate of E. M. Bachrach) totransfer to her the said 54,000 shares of stock dividend. She claimed that said dividend, although paid outin the form of stock, is fruit or income and therefore belonged to her as usufructuary or life tenant.
Sophie Seifert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the ground that thestock dividend in question was not income but formed part of the capital and therefore belonged not to theusufructuary but to the remainderman
 The lower court granted Mary’s petition and overruled S&E’s objection. Seifer and Elianoff appealed.
Whether the stock dividend can be considered as a fruit/income (which belongs to the usufructuary) orpart of the capital (part of the corpus of the estate which will be delivered together with the rest of the futureestate to the remainderman)?
HELD: The stock dividend is a form of income.
 The SC cited Hite vs. Hite wherein the Court of Appeals of Kentucky, held that "where a dividend, although declared in stock, is based upon the earnings of the company, itis in reality, whether called by one name or another, the income of the capital invested in it. In the present case;the 108,000 shares of stock are part of the property in usufruct. The 54,000 shares of stock dividend are civilfruits of the original investment.
Camille Maranan
3 According to my legal dictionary, a remainder is a future estate and a remainderman is the inchoatepossessor of that future estate
Also, two US rulings figured in this case:
1. Massachusetts rule = stock dividend is not an income but merely represents an addition to theinvestment capital
 The Massachusetts rule regards cash dividends, however large, as income, and stockdividends, however made, as capital. It holds that a stock dividend is not in any true sense any dividend at allsince it involves no division or severance from the corporate assets of the subject of the dividend.
This rulesupports Seifert and Elianoff’s contention that a stock dividend is not an income (unlike a cashdividend), but merely represents an addition to the invested capital.2. The Pennsylvania rule
declares that all earnings of the corporation made prior to the death of the testator-stockholder belong to the corpus of the estate, and that
all earnings, when declared as dividends inwhatever form, made during the lifetime of the usufructuary or life tenant are income and belong tothe usufructuary or life tenant.
This rule supports Mary Bachrach's contention.According to our SC,
the Pennsylvania rule is more in accord with Philippine statutory laws than theMassachusetts rule since under section 16 of the Corporation Law, no corporation may make or declare anydividend except from the surplus profits arising from its business. Any dividend, therefore, whether cash or stock,represents surplus profits. Therefore, the stock dividend, as part of the income of the usufruct, should betransferred to Mary since Article 471 of the Civil Code (now Art. 566)provides that the usufructuary shall beentitled to receive all the natural, industrial, and civil fruits of the property in usufruct.
In My Understanding:
The widow is saying that the stock dividend should be transferred to her account sincethis form part of the income of the estate and since she is the usufructuary, she has the right over such income.On the other hand, the legal heirs/ remainderman (or men) are contending that the stock dividend is part of thecapital and should be delivered to them (together with the rest of the estate upon Mary’s death). The court held that stock dividends form part of the income and therefore, should be delivered to the usufructuary (the widow).
Order affirmed.
(1931; Romualdez)
Bachrach Motor Co., Inc.
Talisay-Silay Milling Co. et al.
Philippine National Bank
22 Dec 1923, Talisay-Silay was indebted to PNB. To secure the loan, Talisay induced its planters one of whomwas Mariano Lacson Ledesma to mortgage their land. The central, to compensate the planters for mortgagingtheir property,
undertook to credit the owners of the plantation… every year with a sum equal to 2% of thedebt secured accdg to the yearly balance
. The payment to be made as soon as the central was freed of itsdebts
Mariano sold his land to Cesar Ledesma for P7500
Bachrach on the other hand was a creditor of Mariano Ledesma. When Mariano could no longer pay Bachrach,it went after Talisay (original complaint), praying for the delivery of P13850 Talisay owed to Mariano as bonusstated in the first paragraph, or any instrument of credit. It also prayed for accounting of whatever the centralowed to Mariano by way of bonus, dividend, etc., as well as the nullification of the sale made to CesarLedesma
PNB filed third party claim alleging a preferential right over Mariano’s credit owed by Talisay
as part of thecivil fruits of the land mortgaged 
to the bank. BAchrach contested this
 Talisay prayed for the absolution of 7500 of the credit as it belonged to Cesar Ledesma as buyer in good faith.All parties later agreed to respect Cesar’s credit and absolved him from the complaint and ordered delivery tohim of P7500
 Trial court ruled in favor of Bachrach, awarding it P11,076.02 of Mariano’s bonus from Talisay. Hence thisappeal
W/N the bonus was a civil fruit which formed part of the mortgaged land – NO
Held and Ratio:
NO. Art 355 of the old Civil Code (Art 442 of the current Civil Code) considers three things ascivil fruits: rents of buildings, proceeds from leases of lands, and income from perpetual of life annuities or othersimilar sources of revenue. The bonus in question was neither rent of a building nor land. For it to come under the coverage of income, it must be obtained from the land. In this case however,
[the] bonus bears no immediate but only aremote and accidental relation to the lan
. The central granted it as compensation for the risk that thelandowners entered in mortgaging their lands. If the bonus was an income of any kind, it comes from theassumption of risk, and not from the land itself. Thus, it is distinct and independent from the property referred toin the mortgage to the bank.
Judgment affirmed
Doms Obiastutubi

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