ANS. PROPERTY CLASSIFICATION OF PROPERTIES What are the immovable properties enumerated by law? The following are immovable properties: a. Land, buildings, roads and constructions of all kinds adhered to the soil; b. Trees, plants, and growing fruits, while they are attached to the land or form an integral part of an immovable; c. Everything attached to an immovablein a fixed manner, in such a way that it cannot be separated therefrom without breaking the material or deterioration of the object; d. Statues, reliefs, paintings or other objects for use or ornamentation, placed in buildings or on lands by the owner of the immovable in such a manner that it reveals the intention to attach them permanently to the tenements; e. Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works; f. Animal houses, pigeon-houses, beehives, fish ponds or breeding places of similar nature, in case their owner has placed them or preserves them with the intention to have them permanently attached to the land, and forming a permanent part of it; the animals in these places are included; 253254 CIVIL LAW REVIEWER g. Fertilizer actually used on a piece of land; h. Mines, quarries, and slag dumps, while the matter thereof forms part of the bed, and waters either running or stagnant; i Docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast; and j. Contracts for public works, and servitudes and other real rights over immovable property. (Art. 415, NCC). What are the requisites in order that machinery may be considered an immovable property? They are: a. The machinery must have been placed by the owner or an agent of the same; b. An industry or works must be carried on in the building or land; c. The machinery must tend directly to meet the needs of the industry or works; d. The machinery must be essential and principal to the pursuance of the business of the owner, and not merely incidental. A and B entered into a contract of lease over a parcel of land or a building. The lessee placed a machinery for the use of his sawmill business on the land or buildings belonging to the lessor. How do you classify the machinery? Why? The machinery is a movable property since it was placed by the tenant, not by the owner. Immobilization by destination cannot be made by one who is not the owner of the land. (Davao Sawmills Co. vs. Castillo, 61 Phil. 709). Is there any exception to the rule stated in Davao Sawmills Co. vs. Castillo? Yes, when the tenant had promised to leave the machinery on the tenement at the end of the lease or when he actsANS. ANS. ANS. PROPERTY 255 Classification of Properties as an agent of the owner of the land. (Valdez vs. Central Altagracia, Inc., 225 U.S. 58). Is a building an immovable property? Why? Yes, it is obvious that in the enumeration of immovable properties in Art. 416, NCC, a building is mentioned independently of the land. By this, there is no other conclusion that a building is by itself an immovable property. (Lopez vs. Oroso, Jr., February 28, 1958). May a building be considered a personal property? Yes, if there is a stipulation as when it is used as security in the payment of an obligation where a chattel mortgage is executed over it. (Navarro vs. Pineda, 9 SCRA 681). It may also be considered personal if the building is being bought for purposes of demolishing the same. In this case, the materials resulting from the demolition are being bought. X built a barong-barong on a parcel of land belonging to him. Can the structure be classified as an immovable property? Why? No, because the structure must be more or less permanent in nature in order that it may be classified as an immovable property. If the same is a mere superimposition on the land, like the barong-barong, the same is not an immovable property. Aowns a house and lot. The house is made of concrete materials. A sold it to B for purposes of demolition. How do you classify the house? Why? It is movable or personal property. In Bicerra vs. Teneza, L- 16218, November 29, 1962, the Supreme Court said that a building sold to be demolished may be considered personal property because the true object of the sale would be the materials. X owns a lot with a building constructed thereon. Can he mortgage the building independently of the land? Explain. Yes. While a mortgage of a parcel of land necessarily includes the improvements thereon in the absence of a stipulation on256 ANS. CIVIL LAW REVIEWER the improvement thereon like a building, still, a building by itself may be mortgaged apart from the land on which it has been built. Such mortgage would still be a real estate mortgage for the building would still be considered immovable even if dealt with separately and apart from the land. (Leung Yee vs. Strong Machinery Co., 37 Phil. 644). A is the owner of a painting. He lent it to B who attached the same on the wall of his house to beautify it at its blessing with the obligation to return it within two (2) days after the house blessing. Is the painting immovable? Why? No, it is movable due to the lack of intent to attach it perma- nently. Manila Petroleum Co.owned and operated a petroleum operation facility off the coast of Manila. The facility was located on a floating platform made of wood and metal, upon which was permanently attached the heavy equipment for the petroleum operations and living quarters of the crew. The floating platform likewise contained a garden area, where trees, plants and flowers were planted. The platform was tethered to a ship, the MV 101, which was anchored to seabed. (a) Is the platform movable or immovable property? (b) Are the equipment and living quarters movable or immovable property? (c) Are the trees, plants and flowers immovable or movable property? Briefly give the reason for your answer. (a) The platform is immovable by destination. Article 415(a), NCC provides that docks and structures which, though floating, are intended by their nature and object remain at a fixed place on a river, lake or coast, are considered as immovable property. Thus, power barges are categorized as immovable property by destination, being the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industryANS. PROPERTY 257 Classification of Properties or work. (Fels Energy, Inc. vs. Province of Batangas, et al., 516 SCRA 186, February 16, 2007). (b) The equipment and living quarters of the crew are immovable property under Article 415(3), (the res vinta of Roman Law), which provides that “everything attached to an immovable in a fixed manner, in such a way that it cannot be separated therefrom without. breaking the material or deterioration of the object. Both the equipment and the living quarters are permanently attached to the platform which is also an immovable. This is especially so that they are intended to meet the needs of the business and industry of the corporation. (Fels Energy, Inc. vs. Province of Batangas, et al., supra.). (c) The trees, plants and flowers planted in the garden area of the platform are likewise immovable under Article 415(2) which classifies as an immovable “trees, plants and growing fruits, while they are attached to the land or form an integral part of an immovable. The garden form an integral part of an immovable, the petroleum operation facility. (Fels Energy, Inc. vs. Province of Batangas, et al., supra.). A portion of the town plaza of a municipality was leased to ABC Enterprises. Is the contract valid? Why? No, because it forms part of the properties for public use of provinces, cities, or municipalities. The town plaza is outside the commerce of men. (Villanueva vs. Castafieda, L-61311, September 21, 1987). What is the Regalian Doctrine? It is the doctrine which reserves to the State the full ownership of all natural resources or natural wealth that may be found in the bowels of the earth. May the Roponggi property in Japan be sold? Why? No, because the said property is a property of the State intended for public use or public service. (Art. 420, NCC; Laurel vs. Garcia, G.R. No. 92013, July 25, 1990).‘258 CIVIL LAW REVIEWER Is the doctrine of self-help in the law on property rec. ognized? If so, under what circumstance? Explain. Yes. When possession has already been lost, the owner must resort to judicial process for the recovery of property. This is clear from Article 536 of the Civil Code which states: “In no case may possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing, must invoke the aid of the competent court, if the holder should refuse to deliver the thing. (German Mgt. and Services, Inc. vs. CA, et al., G.R. Nos. 76216, 76217, September 14, 1989). A is the owner of a parcel of land consisting of ten hectares. What rights does A have on the same? A is also the owner of the surface and everything under it. He can make constructions, works, plantations, and excavations. (Art. 437, NCC). Is the right of A in the problem above absolute? Why? No, because it is subject to certain restrictions or limitations like servitudes, special laws, ordinances, requirements of aerial navigation, and the principles of human relations. (Art. 437, NCC). Does it mean that if the owner of the land is the owner of everything under it, he is the owner of the minerals found in the land? Why? No, because ownership of minerals is reserved in favor of the State even if the land is a private land. In fact, he has no right to extract the minerals without the permission of the State. (Atok-Big Wedge Mining Co. vs. CA, April 15, 1988). What is a hidden treasure? By hidden treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear. (Art. 439, NCC).ANS. PROPERTY 259 Accession Who owns a hidden treasure? Hidden treasure belongs to the owner of the land, building, or other property on which it is found. X found a hidden treasure inside the land of Y. How will the treasure be divided if X is a usufructuary of the land; lessee; farmer; laborer hired to look for it? Reason. If X is a usufructuary, or lessee, or farmer, he is entitled to 1/2 of the hidden treasure because they are considered as strangers to the land. Alf X is a laborer intended or hired to look for it, he is entitled to his wage or salary only. Suppose X in the problem above has an instrument to look for a hidden treasure, can he still be considered a finder by chance? Why? Yes. Spanish commentators on the Civil Code tend to tell us that “by chance” means there should be no purpose or intention to look for it. The better rule, however, is that “by chance” means “good luck,” whether there was a deliberate search or not for the treasure, but no prior agreement as to how it is to be divided. One who intentionally looks for it is embraced because if he does not ask for permission, he is a trespasser. ACCESSION X built a house on the land of Y in good faith. What are the rights of the parties? Explain. (a) The rights of the owner of the land are: 1. He can appropriate the house upon payment of indemnity. The phrase “upon payment of indemnity” means that X has the right to retain the house for as long as Y has not yet paid the indemnity; or260 CIVIL LAW REVIEWER 2. He has the right to sell the land to the builder in good faith. He can compel the builder to buy the land, unless the value of the land is considerably more than the value of the building. If so, then the builder must rent. (Art. 448, NCC). (b) The right of the builder is to ask for indemnity if the landowner opts to appropriate the house. (Art. 448, NCC). The reason for this is that the appropriation without compensation would amount to solutio indebiti, Anyway, X is in good faith. He likewise have the right of retention. Who has the right to make a choice? Why? The landowner can make a choice. The reason for the rule is based on the principle of accession that the accessory follows the principal and not the other way around. He must choose only one. (Ochoa vs. Apita, et al., G.R. No. 146259, September 13, 2007). s In the problem above, can Y file a suit for ejectment and pray for demolition upon knowing that X built his house on his land? Why? No, he has yet to make a choice. If he has not yet done so, he cannot ask for the ejectment of X. But if he opted to sell the land where the value of the same is not considerably more than the value of the house, and the builder does not pay the land, then X can be ejected. (Ignacio vs. Hilario, 76 Phil. 605). If he cannot pay, he should not be allowed to continue using the land. (Tayag vs. Yuseco, April 16, 1959). X owns a parcel of land. Y built a house on it. The land is worth P1M. The house is worth P300,000.00. Y is a builder in good faith. Can X compel Y to buy the land? Why? No, because the value of the land is considerably more than the value of the building. In this case, the remedy is a “forced lease.” (Art. 448, NCC).a ANS. PROPERTY 261 Accession If the landowner chooses to appropriate the building, can the builder ask the owner of the land to sell it instead? Why? No, because the option to appropriate the building or sell the land belongs to the landowner. The only right of the builder in good faith is the right to reimbursement, not to compel the owner of the land to sell. (Quemuel vs. Olaes, 1 SCRA 1159). The option is not to buy but to sell. The option is given to the landowner because his right is older; and because of the principle of accession, he is entitled to the thing attached to his land. (See also Sps. Benitez vs. CA, et al., 77 SCAD 793, 266 SCRA 242 [1997]). Explain the application of Article 448 of the Civil Code. By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one of whom has built some works, or sown or planted something. The building, sowing, or planting may have been made in good faith or in bad faith. The rule on good faith laid down in Article 526 of the Civil Code shall be applied in determining whether a builder, sower, or planter had acted in good faith. Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or donation. The Supreme Court, in Coleongco vs. Regalado and Mortilla, 92 Phil. 387 said: “Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the house on his own land before he sold said land to Coleongco. Article 361 applies only in cases where a person constructs a building on the land of another in good or in bad faith, as the case may be. It does not apply to a case where a person constructs a building on his own land, for then there can be no question as to good or bad faith on the part of the builder.”262 CIVIL LAW REVIEWER Where the true owner himself is the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant. The primary intent of Article 448 is to avoid a state of forced co-ownership and that the parties, including the two courts below, in the main agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for the improvements may be paid although they differ as to the basis of the indemnity. (Pecson vs. CA, et al., G.R. No. 115814, May 26, 1995). What amount should be paid toa builder in good faithif the owner of the land appropriates the improvement? Explain. It should be the value of the improvement at the time of payment. The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, it has been ruled in Rivera vs. Roman Catholic Archbishop of Manila, 40 Phil. 717, that the said provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich landowner of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the landowner who would otherwise be allowed to acquire a highly valued income yielding four-unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its finding as to the amount of reimbursement to be paid by the landowner. (Pecson vs. CA, et al., G.R. No, 115814, May 26, 1995, 61 SCAD 385). Pedro Pecson was the owner of a parcel of land with improvements thereon. He failed to pay his taxes, hence, the lot was sold at public auction by the City Treasurer, Quezon City, to a certain Mamerto Nepomuceno, who likewise sold it to the SpousesANS. PROPERTY 263 Accession Nuguid. Pecson questioned the sale, but a final and executory judgment was rendered declaring the _ buyers as the owners. The Spouses Nuguid moved for the delivery of possession of the lot and the improvements. It was granted with the condition that they should reimburse Pecson the value of the improvements. Is Pecson entitled to reimbursements? Why? Yes, he is entitled to reimbursement of the value of the improvement since the same was built when he was still the owner. When the Nuguids became the uncontested owners of the lot due to a judgment, the improvement was already existing. Hence, their rights are governed by Articles 448 and 546, NCC. Under 448, the landowner is given the optiop either to appropriate the improvement as his own upon payment of the proper amount of indemnity or to sell the land to the possessor in good faith. Relatedly, Article 546 provides that a builder in good faith is entitled to full reimbursement for all the necessary and useful expenses incurred; it also gives him right of retention until full reimbursement is made. Since the owners (Nuguids) opted to appropriate the improvement for themselves when they applied for a writ of execution despite knowledge that the auction sale did not include the apartment building, they could not benefit from the lot’s improvement, until they reimbursed the improver in full, based on the current market value of the property. (Sps. Nuguid vs. CA, et al., G.R. No. 151815, February 23, 2005). At the time the builder constructed his house on a parcel of land the same was still in the name of his parents. The construction was with the knowledge of his brothers, sisters and parents. After the parents died, they became co-owners. Is he a builder in good faith and discuss their rights. Yes, he is a builder in good faith. The owner of the land on which anything has been built, sown or planted in good faith shall have the right to appropriate as his own the building, planting or sowing, after payment to the builder, planter264 CIVIL LAW REVIEWER or sower of the necessary and useful expenses, and in the proper case, expenses for pure luxury or mere pleasure. The owner of the land may also oblige the builder, planter or sower to purchase and pay the price of the land. If the owner chooses to sell his land, the builder, planter or sower must purchase the land, otherwise the owner may remove the improvements thereon. The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. The right to choose between appropriating the improvement or selling the land on which the improvement stands to the builder, planter or sower, is given to the owner of the land. (Heirs of Marcelino Cabal vs. Sps. Lorenzo & Rosita Cabal, G.R. No. 153625, July 26, 2006 citing Ballatan vs. CA, 363 Phil. 408, 423 [1999]; Grana & Torralba vs. CA, 109 Phil. 260, 263 (1960); Acufia vs. Furukawa Plantation Co., 93 Phil. 957, 961 [1953]). May a lessee be a builder in good faith? Explain. No. In Frederico Geminiano, et al. vs. CA, et al., G.R. No. 120303, July 24, 1996, it was held that lessees are not builders in good faith. They came into possession of the lot by virtue of a contract of lease executed by petitioner’s mother in their favor. They are then estopped to deny their landlord’s title, or to assert a better title not only in themselves, but also in some third person while they remain in possession of the leased premises and until they surrender possession to the landlord. (Munar vs. CA, 56 SCAD 787, 230 SCRA 372). This estoppel applies even though the lessor had no title at the time. The relation of lessor and lessee was created and may be asserted not only by the original lessor, but also by those who succeed to his title. (49 Am. Jur. 122, 152; Feliciano vs. Sps. Zaldivar, G.R. No. 162593, September 26, 2006). Being mere lessees, they knew that their occupation of the premises would continue only for the life of the lease. Plainly, they cannot be considered as possessors nor builders in good faith. (Racaza vs. Susana Realty, Inc., 18 SCRA 1172; Vda. de Bacaling vs. Laguna, 54 SCRA 243; Santos vs. CA,ANS. PROPERTY 265 Accession 221 SCRA 42; Garbito vs. CA, G.R. No. 77976, November 24, 1988). When may the owner of the land remove the encroachment on his land? Why? Since removal is not one of the remedies bestowed upon him by law, it would be available only if and when he chooses to compel the petitioner to buy the land at a reasonable price but the latter fails to pay such price. (Citing Ignacio vs. Hilario, 76 Phil. 605 [1946]; Sarmiento vs. Agana, 129 SCRA 122, April 30, 1984). This has not taken place; hence, his options are limited to: (1) appropriating the encroaching portion of petitioner’s building after payment of proper indemnity, or (2) obliging the latter to buy the lot occupied by the structure. He cannot exercise a remedy of his own liking. (Tecnogas Phils. Mfg. Corp. vs. CA, et al., G.R. No. 108894, February 10, 1997, 79 SCAD 290). Rodolfo & Lily Rosales bought a parcel of land denominated as Lot No. 17. It was registered under their names. Miguel Castellfort likewise bought a parcel of land denominated as Lot No. 16 in the same place. Before Miguel constructed his house, the surveyor pointed to Lot No. 17 as the lot of Miguel. The Rosaleses filed a complaint to recover the lot, but Miguel contended that he was a builder in good faith. Is his contention correct? Explain. Yes, because he merely relied on the expertise of the land surveyor who was more equipped or experienced in the field of land surveying. Although under the Torrens system of land registration, Miguel is presumed to have knowledge of the metes and bounds of the property with which he is dealing, he however, considering that he is a layman not versed in the technical description of his property, cannot be faulted in his reliance on the survey plan that was delivered to him by the intervenor and the stone monuments that were placed in the encroached property. A builder in good faith is one who builds with the belief that the land he is building on is his, or that some title one ! ——266 CIVIL LAW REVIEWER has the right to build thereon, and is ignorant of any defect or flaw in his title. (Macasaet vs. Macasaet, 439 SCRA 625 [2004]). Since Miguel merely relied on the representation of the surveyor, he is in good faith. (Rosales, et al. vs. Castellfort, et al., G.R. No. 157044, October 5, 2005). Since Miguel is a builder in good faith, what are the rights of the parties, the landowner and the builder? Explain. The landowner can choose between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land, unless its value is considerably more than that of the structures, in which case the builder in good faith shall pay reasonable rent. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. (PNB vs. De Jesus, 411 SCRA 557 [2003]). The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land. (Rosales, et al. vs. Castellfort, et al., G.R. No. 157044, October 5, 2005 citing Technogas Phils. Mfg. Corp. vs. CA, 268 SCRA 5 [1997]). What is the reason for Article 448? Explain. Theraison d'etre for the law is that, where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise the option, because his right is older, and because, by theANS, PROPERTY 267 Accession principle of accession, he is entitled to the ownership of the accessory thing. (Rosales, et al. vs. Castellfort, et al., G.R. No. 157044, October 5, 2005 citing Depra vs. Dumlao, 136 SCRA 475 [1985]). In this case, on August 21, 1995, Rosales notified Miguel that he owned the lot where he constructed his house. If Rosales would appropriate his house, how much should he pay Miguel? Explain. He should pay only the value of the improvement of Miguel on the questioned property at the time good faith still existed or until August 21, 1995. This is so because Miguel was a possessor in good faith. Possession in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (Art. 528, NCC). The good faith ceases or is legally interrupted from the moment defects in the title are made known to the possessor, by extraneous evidence or by suit for recovery of the property by the true owner. (Rosales, e¢ al. vs. Castellfort, et al., G.R. No. 157044, October 5, 2005 citing Technogas Phils. Mfg. Corp. vs. CA, 268 SCRA 5; Ortiz vs. Rayanan, 92 SCRA 146 [1979]). Since Miguel was notified on August 21, 1995, he lost his status as a possessor in good faith, hence, payment of the improvement should be up to that date. If there is any improvement thereafter, there is no need for Rosales to pay, since Miguel was already in bad faith when he introduced the improvement. If the value of the land is considerably more than the value of the improvement, rent shall be paid. When shall it start and when shall it end? Explain. It shall start on August 21, 1995 until such time that the possession of the property is delivered to Rosales, subject to the reimbursement of expenses if Rosales opts to appropriate the improvement. Generally, Article 448 of the Civil Code provides that the payment of reasonable rent should be made only up to the date landowner serves notice of the option as provided by law upon the builders and the court a quo; that is, if such option is for the landowner to appropriate the encroachingCIVIL LAW REVIEWER structure. In such event, the landowner would have a right to retain the land on which they have built in good faith until they are reimbursed the expenses incurred by them. This is so because the right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or sown. However, considering that builders had ceased as build- ers in good faith at the time that the owner of improvement was notified of the landowner’s lawful title over the disputed property, the payment of reasonable rent should accordingly commence at that time since he can no longer avail of the rights provided under the law for builders in good faith. If the option chosen by petitioners is compulsory sale, however, the payment of rent should continue up to the actual transfer of ownership. (Rosales vs. Castellfort, e¢ al., supra.). What are the rights, if any, of a builder in bad faith? Asarule, he has noright. But, he is entitled to reimbursement for necessary expenses for the preservation of the land, not the value of the building. (Art. 452, NCC). The reason for this rule is, after all, the owner would have borne the same expenses of preservation of the land. What are the rights of the owner of the land in case there is a builder in bad faith? They are: 1. To appropriate the building without payment of indemnity plus damages. In this case, the builder is like a donor; 2. He can demand the demolition of the house plus damages; 3. He can compel the builder to buy the land even if the value is considerably more than the value of the building, plus damages. (Arts. 450 and 451, NCC). The choice can only be made by the owner. (Barstow Phils. Corp. vs. Republic, G.R. No. 133110, March 28, 2007).ANS. PROPERTY 269 Accession A, in bad faith, constructed a house on B’s land without his objection. After its completion, B wanted to have the house demolished together with damages, contending that A was in bad faith. Is B’s contention correct? Why? No, because there was mutual bad faith which resulted in good faith. The rights of the parties would then be governed by Art. 448. (Merchant vs. City of Manila, 11 Phil. 116; Mun. of Oas vs. Roa, 7 Phil. 20; Martinez vs. Baganus, 28 Phil. 500; Pershing Tan Queto vs. CA, February 27, 1987). A promised to donate a property to B, hence, B constructed his house thereon before the donation. Suppose the property was not donated to him, can B be considered a possessor in good faith? Explain. No, the mere promise to donate the property to B cannot convert him into a builder in good faith for at the time the improvement was built on the premises, such promise was not yet fulfilled. It was a mere expectancy of ownership that may or may not be realized. If at all, B is a mere possessor by tolerance. A person whose occupation of a realty is by sheer tolerance of its owners are not possessors in good faith, hence, not entitled to the value of the improvements built thereon. (Verona Pada-Kilario vs. CA, et al., G.R. No. 184329, January 19, 2000). Ina contract of lease over a parcel of land, there is a promise to sell. If the lessee improves the land, can he claim to be a builder in good faith on the basis of the promise to sell? Why? No. Even if the lessor promised to sell, it would not make the lessee possessor or builder in good faith so as to be covered by the provisions of Article 448 of the Civil Code. The latter cannot raise the mere expectancy of ownership of the lot because the alleged promise to sell was not fulfilled nor its existence even proven. The possession by petitioners of a parcel of land was merely tolerated. In fact, they were permitted to build a copra dryer on the land. When they were being evicted, they invoked Article 448, NCC, for their270 CIVIL LAW REVIEWER compensation. It was found out however that the dryer and the store they built were transferable. Is Article 448, NCC applicable? Why? No. To fall within the provision of the article (Art. 448), the construction must be of a permanent character, attached to the soil with an idea of perpetuity; but if it is of a transitory character or is transferable, there is no accession, and the builder must remove the construction. The proper remedy of the landowner is an action to eject the builder from the land. In fact, it was held that the action for recovery of possession. was the suitable solution to eject the petitioners from the premises. (Sps. Alviola vs. CA, et al., G.R. No. 117642, April 24, 1998, 98 SCAD 910). May a builder in good faith retain possession of the land and the building in case the landowner appropriates the building but has not yet paid its value? How about if the builder is a lessee? Why? Yes. The builder in good faith can retain possession of the land and the building if the landowner has not yet paid the value of the improvement. This is so because of his being a builder in good faith. If it is a lessee, then, the right of retention is not available because he is not a possessor in good faith. This is true even if he has not been reimbursed the equivalent. of one-half of the value of the improvements by the lessor who appropriated the improvement. (Maceda vs. CA, G.R. No, 83545, August 11, 1989; Eusebio vs. IAC, 144 SCRA 154; De Laureano vs. Adil, 72 SCRA 148). When X was still courting Y, he was the favorite of Y’s mother. He was even allowed to build a residential house on a lot in Parafiaque when X and Y were about to get married. A house was then constructed at a cost of P40,000.00. X later found out that the land did not belong to Y’s mother, but to Z, who sold it to S. S later sued X for ejectment, but he interposed the defense that he would vacate only if his expenses in constructing the house was refunded. S did not want to buy the house, she did not also want to sell the land. S merely wanted X to vacate. Was S correct? Why?PROPERTY an Accession No. The facts show that X was a builder in good faith, because as far as he knew, the land belonged to his future mother-in- law. Since he is a builder in good faith, he is entitled to retain possession of the land until his expenses for the construction of the house shall have been refunded. S has the option to buy the house or to sell the land, but she cannot refuse both. (Sarmiento vs. Agana, 129 SCRA 122). X and Y are co-owners of a parcel of land. They decided to partition the land, hence, a survey was conducted which resulted in the finding that the house of X encroached upon the portion awarded to Y. He asked that the portion be removed, but X contended that he is a builder in good faith, hence, he is entitled to reimbursement. Y contended that the right of reimbursement applies only if the improvement was introduced on the land of another. Is the contention correct? Why? No, because the rules regarding a builder in good faith may apply even when there was co-ownership. Under the rules, Y can appropriate the portion of X’s house that encroached upon his share, upon payment of indemnity to X; or he may oblige X to pay the price of the land encroached upon, provided that the value of the land is not considerably more than the value of the improvement. If the latter were the case, then, there would be a forced lease. (Art. 448, NCC; Del Ocampo vs. Abesia, 160 SCRA 379). Plaintiff and defendant purchased two (2) adjacent parcels of land from different vendors. Portions of the buildings and wall bought by plaintiff were occupying a portion of defendant’s land; hence, upon learning of the same, it offered to buy the land, but defendant sued the plaintiff in connection with the encroachment or occupation by plaintiffs building and wall of a portion of his land. 1) What law governs the rights of the parties? 2) Can the plaintiff insist on the removal of the improvement? Why?. 272 ANS. 3) 4) @ (2) CIVIL LAW REVIEWER Suppose the landowner opted to appropriate the improvement, but there is no transfer yet, what is the duty of the builder? Explain. What benefit does the builder acquire under Art. 448 of the Civil Code? Can he invoke such benefit? Explain. The provisions of Art. 448, NCC would govern the rights of the parties. In the earlier case of Depra vs. Dumlao, 136 SCRA 475, it was said that where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticality of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land or the sower to pay the proper rent. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing. (Tecnogas Phils. Mfg. Corp. vs. CA, et al., G.R. No. 108894, February 10, 1997, 79 SCAD 290, citing 3 Manresa 213; Bernardo vs. Bataclan, 37 0.G. 1382; Co Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Cabral vs. Ibafiez, 52 O.G. 217). No. The insistence of the plaintiff to remove the improvement is not one of the remedies bestowed upon him by law. It would be available only if and when he chooses to compel the petitioner to buy the land at a reasonable price but the latter fails to pay such price. (Ignacio vs. Hilario, 76 Phil. 605). This has not taken place. Hence, his options are limited to: (1) appropriating the encroaching portion of petitioner’s building after payment of proper indemnity, or (2) obliging the latter to buy the lot occupied by the structure. He cannot exercise the remedy of his own liking. (Tecnogas Phils. Mfg. Corp. vs. CA, et al., supra.; see also Grana and Torralba vs. CA, et al., 109 Phil. 260),ANS. PROPERTY 273 Accession (3) He must have to pay the rent of the land occupied by the building but only up to the date plaintiff served notice of its option to appropriate the encroaching structure. In such event, the defendant would have the right of retention which negates the obligation to pay the rent. (Grana and Torralba vs. CA, et al., supra.). The rent should, however, continue if the option chosen is compulsory sale, but only up to the actual transfer of ownership. (Tecnogas Phils. Mfg. Corp. vs. CA, et al., supra.). (4) The obvious benefit to the builder under Art. 448, NCC is that, instead of being outrightly ejected from the land, he can compel the landowner to make a choice between two (2) options: (1) to appropriate the building by paying the indemnity required by law; or (2) to sell the land to the builder. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land. (Tecnogas Phils. Mfg. Corp. vs. CA, et al., supra., citing Ignacio vs. Hilario, 76 Phil. 605; Sarmiento vs. Agana, 129 SCRA 122). The benefit aforementioned can be invoked by a buyer of a property where the structure encroached on the land belonging to another because he was not aware of the encroachment at the time of the sale. Furthermore, since it merely bought the property in question, it is deemed to have stepped into the shoes of the seller in regard to all the rights of ownership over the immovable sold, including the right to compel the other party to exercise either of the two options in Art. 448. (Tecnogas Phils. Mfg. Corp. vs. CA, et al., supra.). Between the builder in good faith and the owner of the land, who has the option to sell the land? Why? The option to sell belongs to the landowner. In Sps, Benitez us. CA, et al., G.R. No. 104828, January 16, 1997, 77 SCAD 798, it was said that the option is to sell, not to buy, and it is the landowner’s choice. Not even a declaration of the builder, planter, or sower’s bad faith shifts this option to him per Art. 450 of the Civil Code. This advantage in Article 448 is accorded the landowner because his right is older,274 CIVIL LAW REVIEWER and because by the principle of accession, he is entitled to the ownership of the accessory thing. (Depra vs. Dumlao, supra.). There can be no pre-emptive right to buy even as a compromise, as this prerogative belongs solely to the landowner. No compulsion can be legally forced on him. What requisites must be complied with in order that the owner of the land adjoining the bank of a river may become the owner of an accretion on the land? They are the following: 1. The deposit must be gradual or imperceptible or impervious; It must be caused by the current of a river; The current must be that of a river; The river must continue to exist; and a Pp oN The increase must be comparatively little. (Art. 457, NCC). Note: If the increase is through artificial means, the law does not apply. Accretion was formed as a result of the dumping of sawdust by the Sun Valley Lumber Co. consequent to its sawmill operations, somewhere at an area near Balacanas Creek and Cagayan River. The question was whether the land is private or public. Decide. It is part of the public domain. Article 457 of the Civil Code provides: “To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters.” In the earlier case of Meneses us. CA, 62 SCAD 660, 246 SCRA 374 (1995), it was ruled that accretion as a mode of acquiring property under Art. 457, NCC requires: 1. That the deposit of soil or sediment be gradual and imperceptible; 2. That it be the result of the action of the waters of the river; 3. That the land where accretion takes place is adjacent to the banks of rivers.ANS. PROPERTY 275 Accession These are called the rules on alluvion which if present in a case, give to the owners of lands adjoining the banks of rivers or streams any accretion gradually received from the effects of the current of waters. However, if the accretion was formed by the dumping of boulders, soil, and other filling materials on portions of the Balacanas Creek and the Cagayan River bounding their land, it cannot be claimed, that the accumulation of such boulders, soil and other filling materials was gradual and imperceptible, resulting from the action of the waters or the current of the Balacanas Creek and the Cagayan River. In Hilario vs. City of Manila, 19 SCRA 931 (1967), it was held that the word “current” indicates the participation of the body of water in the ebb and flow of waters due to high and low tide. The accretion was man-made or artificial. In Republic vs. CA, 132 SCRA 514, this Court ruled that the requirement that the deposit should be due to the effect of the current of the river is indispensable. This excludes from Art. 457 of the Civil Code all deposits caused by human intervention. Putting it differently, alluvion must be the exclusive work of nature. Thus, in Tiongco us. Director of Lands, et al., 16 C.A. Rep. 211, where the land was not formed solely by the natural effect of the water current of the river bordering said land but is also the consequence of the direct and deliberate intervention of man, it was deemed a man-made accretion and, as such, part of the public domain. (Vda. De Nazareno, et al. vs. CA, et al., G.R. No. 98405, June 26, 1996). Is it required for the riparian owner to perform an act of possession to become the owner of the alluvial deposit? Explain. No more. The law automatically vests the ownership of the alluvial deposit on the riparian owner. (Maximo Jagualing vs. CA, G.R. No. 94283, March 4, 1991). Why does the law vest automatically the ownership of the accretion to the riparian owner? ‘The reason for this rule is because if lands bordering on streams are exposed to floods and other damages due to the276 CIVIL LAW REVIEWER destructive force of the waters, and if by virtue of law they are subject to encumbrances and various kinds of easements, it is only just that such risks or dangers as may prejudice the owners thereof should in some way be compensated by the right of accretion.” (Agustin vs. IAC, G.R. Nos. 66075-76, July 5, 1990). If the riparian owner has 2 title to the land, does that cover the alluvial deposit? Why? No, because there is a specific technical description of the land. There must first be an independent application for registration of the land. (Grande vs. CA, June 30, 1962). May the alluvial deposits be lost by prescription in favor of another? Reason. Yes, because it is not covered by a Torrens title. It can be lost by prescription after 30 years. (Jagualing vs. CA, G.R. No. 94283, March 4, 1991). Gloria Ferrer filed a complaint to quiet title to real property against Mariano Balanag and Magdalena Domondon. She based her action on the fact that she is the owner of a parcel of land by virtue of accre- tion she being the owner of Lot 20, covered by TCT No. 3280. On the other hand, Balanag and Domondon claimed to be the owners on account of long occupa- tion and by virtue of Certificate of Title No, P-168 pur: suant to a Free Patent. The case was dismissed on the ground that the action was collateral attack on the Free Patent and the OCT under the name of the de- fendants. Who is the owner of the accretion, considering that a Patent was issued by the Director of Lands over the same in favor of the defendants? Why? The accretion belongs to Ferrer. Under the law, to the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters. (Article 457, NCC). Since Ferrer is the lawful owner of the land which adjoins the alluvial property, undoubtedly, she is the owner of the accretion. (Tuason vs.Q PROPERTY 277 Accession CA, 147 SCRA 37; Cureg vs. IAC, 177 SCRA 313; Ferrer vs. Bautista, 231 SCRA 257). What is the rationale behind the rule that the owner of the alluvial property is the owner of the accretion? ANS. The rationale for the rule is to provide some kind of compensation to the owners of the land continually exposed to the destructive force of water and subjected to various easements. (Agustin vs. IAC, 187 SCRA 218; Binalay vs. Manalo, 195 SCRA 374; Ferrer vs. Bautista, supra.). May the Director of Lands grant a free patent to one who has possessed the accretion even if he is not the owner of the alluvial property? Why? No. The Director has no authority to grant a free patent over the land since it is a private property and now subject to private ownership. Any title thus issued or conveyed by him would be null and void. (Tuason vs. CA, 147 SCRA 37). The nullity arises, not from fraud or deceit, but from the fact that the land is no longer under the jurisdiction of the Bureau of Lands, the latter’s authority being limited only to lands of public dominion and not those that are privately owned. (Agne vs. Director of Lands, 181 SCRA 793). They therefore, acquired no right or title over the property by virtue of the free patent since at the time it was issued, it was already a private property and not part of the disposable land of the public domain. (Ferrer vs. Bautista, supra‘). Has the title become incontrovertible since one (1) year has already lapsed since its issuance? Why? No, because it has always been void. Ordinarily, a title becomes incontrovertible one (1) year after it is issued pursuant to a public grant. The rule does not apply when such issuance is null and void. An action to declare the nullity of that void title does not prescribe. (Agne vs. Director of Lands). In fact, it is susceptible to direct, as well as to collateral attack. (Estoesta vs. CA, 179 SCRA 208; Ferrer vs. Bautista, supra.). It was contended that the action for reconveyance has already prescribed considering that the actioni | 278 ANS. Note: CIVIL LAW REVIEWER was brought after ten (10) years from the issuance of the title? Is the contention correct? Why? The contention is not correct. The 10-year prescriptive period is applicable to an action for reconveyance if, indeed, it is based on an implied or constructive trust. Article 1456, NCC, upon which constructive trust can be predicated, cannot be invoked, however, since the public grant and the title issued pursuant thereto that can create juridical relationship is a total nullity. Even assuming without admitting that a constructive trust did arise, the running of the prescriptive period is to be deemed interrupted when an action was filed in court. (Article 1155, NCC) or, when one is already pending. (Ferrer vs. Bautista, supra.). Can Domondon and Balauag contend that they have acquired the land by prescription? Why? No. Ownership and other real rights over immovable property are acquired by ordinary prescription thru possession for ten (10) years if the adverse possession is with a just title and the possession is in good faith. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty (30) years this time without need of title or of good faith. (Article 1134, NCC). The applicable period in this case is thirty (30) years. Even assuming that they were in adverse possession of the property from 1966 when the free patent was obtained or even at the inception of their alleged possession in 1954, that possession for purposes of acquisitive prescription was deemed interrupted upon receipt of summons (Article 1123, NCC) in 1965 and in 1976. The prescriptive period of prescription may not be held to commence anew during the pendency of the two cases that were filed. (Ferrer vs. Bautista, supra.). A sudden and forceful action like that of flooding is not the alluvial process contemplated by Article 457, NCC. (Binalay vs. Manalo, 195 SCRA 374). X bought the land of Y on installment basis payable in five (5) years. Suppose there is an alluvial deposit, who owns the same? Why?ANS. ANS. PROPERTY 79 ‘Accession X, because he need not completely pay the land. Equitable and beneficial title is enough. (Director of Lands vs. Rizal, December 29, 1950). The northeastern portion of the land of X is bounded by the Manila Bay. If there is an accretion formed, who owns the accretion? Why? ‘The accretion belongs to the State, because it is an accretion on a sea bank, Manila Bay being an inlet or an arm of the sea. Under Art. 4 of the Spanish Law of Waters of August 3, 1866: “Lands added to the shores by accretions and alluvial deposits caused by the action of the sea form part of the public domain. When they are no longer washed out by the waters of the sea and are not necessary for purposes of public utility, or for the establishment of special industries, or for the coast guard service, the Government shall declare them to be the property of the owners of the estates adjacent thereto and as increment thereof.” In the light of the affected vintage but still valid law, unequivocal is the public nature of the disputed land in this controversy, the same being an accretion on a sea bank which, for all legal purposes, is the foreshore of Manila Bay. ‘As part of the public domain, the herein disputed land is intended for the public and is reserved for public uses, it is not capable of being appropriated by any private person, except through express authorization granted in due form by a competent authority. Only the executive, and possibly, the legislative departments have the right and the power to make the declaration that the lands so gained by action of the sea is no longer necessary for purposes of public utility or for the cause of establishment of special industries or for coast guard services. (Heirs of Ermiliano Navarro vs. IAC, et al,, GR. No. 68166, February 12, 1997, 79 SCAD 351, citing Joveny Monteverde vs, Dir. of Lands, 93 Phil. 134). How about if the land adjoins the Laguna de Bay? ‘Who owns the accretion? It belongs to the owner of the land adjoining it because Laguna de Bay is a lake, the accretion on which belongs to280 CIVIL LAW REVIEWER the owner of the land contiguous thereto. (Heirs of Emiliano Navarro vs. IAG, et al., G.R. No. 68166, February 12, 1997, 79 SCAD 351, citing Gov't. of P-I. vs. Colegio de San Jose, 53 Phil. 423; Republic vs. CA, 131 SCRA 532; Republic vs, Alagad, 169 SCRA 455; Meneses vs. CA, G.R. No. 82220, July 14, 1995, 62 SCAD 660). What is a bay? It is an opening into the land where the water is shut in all sides except at the entrance; an inlet of the sea; distinct from a river, a bending or curbing of the shore of the sea or of a lake. (7 C.J. 1013-1014; Ignacio vs. Director of Lands, 108 Phil. 336; Heirs of Emiliano Navarro vs. IAC, G.R. No. 68166, February 12, 1997, 79 SCAD 351). Who owns a known portion of a parcel of land segregated from the land of another? How about a tree? (a) Whenever the current of a river, creek or torrent segregates from an estate on its bank a known portion of land and transfers it to another estate, the owner of the land to which the segregated portion belonged retains the ownership of it, provided, that he removes the same within two (2) years. (Art. 459, NCC). (b) Trees uprooted and carried away by the current of the waters belong to the owner of the land upon which they may be cast, if the owners do not claim them within six months. If such owners claim them, they shall pay the expenses incurred in gathering them or putting them ina safe place. (Art. 460, NCC). Who owns an abandoned river bed? How about an island formed on a river? (a) River beds which are abandoned through the natural change in the course of the waters ipso facto belong to the owners whose lands are occupied by the new course in proportion to the area lost. (Art. 461, NCC). (b) Ifthe river on which the island is formed is navigable, the island belongs to the State. (Art. 464, NCC).ANS. ANS, PROPERTY 281 Accession If the river is non-navigable, the island belongs to the riparian owner, nearer the island. If the said island is formed exactly at the middle of the river, it shall be divided longitudinally in halves between the two riparian owners. (Art. 465, NCC). Under Art. 461 of the Civil Code, a river bed aban- doned through natural changes ipso facto belongs to the owners of lands through which the new river tra- verses. Suppose the change was man-made, is the rule applicable? Why? Yes, even if the change was man-made, the rule in Art. 461 still applies. The Supreme Court in Baes, et al. us. CA, et al., G.R. No. 108065, July 6, 1993, 43 SCAD 384, said that if the riparian owner is entitled to compensation for the damage to or loss of his property due to natural causes, there is all the more reason to compensate him when the change in the course of the river is effected through artificial means. The loss to the petitioners of the land covered by the canal was the result of a deliberate act on the part of the government when it sought to improve the flow of the Tripa de Gallina creek. It is therefore obligated to compensate the owners for their loss. What is adjunction and give the kinds of adjunction? It is a process by virtue of which two movables belonging to the different owners are united in such a way that they form a single object. The kinds of adjunction are: (a) engraftment; (b) attachment; (c) weaving; (d) painting; (e) writing. What is mixture and state its kinds? Mixture is a combination or union of materials where the respective identities of the component elements are lost. ‘The kinds of mixture are: a) Commixtion which is a mixture of solids. b) Confusion which is a mixture of liquids,282 Q. CIVIL LAW REVIEWER State the rules on mixture. The rules in mixture may be stated this way: a) b) If mixture is caused by one owner in good faith, or by will of both owners, or by chance, or by common agent, co-ownership results. If mixture is made by one owner in bad faith, then he loses his material in favor of another and he is liable for damages. What is specification? Specification is the giving of a new form to another's material through application of labor where labor becomes the principal. State the rules in specification. The rules in specification can be stated in this manner: 1: If the worker is in good faith: a) he appropriates the new thing but he must indemnify the owner of the materials. If the material is more precious than the new thing, the owner of the material has the option: aa) toget the new thing but he has to pay for the work; or bb) demand indemnity for the material. If the worker is in bad faith, the owner of the material has the option: a) b) to appropriate the work without paying for the labor; or to demand indemnity for the materials with damages. The option to appropriate, however, does not apply if the value of the resultant work is more valuable for artistic or scientific reasons. State the distinctions among adjunction, specification and mixture.ANS. ANS. PROPERTY 283 Accession 1. Adjunction involves at least two things. Mixture involves at least two things. Specification may involve only one thing but the form is changed. 2. In adjunction and specification, accessory follows the principal. In mixture, co-ownership results. 3. In adjunction, the things joined retain their nature. In mixture, the things mixed or confused, retain or lose their respective nature. In specification, the new object retains or preserves the nature of the original object. What are the tests in determining which of two things is the principal and the accessory? The tests are: (1) intention; (2) value; (3) volume; and (4) merits. Under the test of intention, the rule is, that to which a thing is attached is the principal; and that which is attached to the thing is the accessory. Example: A ring and a diamond. Based on the test of intention, the ring is the principal and the diamond is the accessory, Under the test of value, that which is more valuable is the principal; that which is less valuable is the accessory. In the case of the ring, if the diamond is more valuable, the latter is the principal and the ring is the accessory. Under the test of volume, that which is bigger is the principal; that which is smaller is the accessory. Since the ring is bigger than the diamond, the ring is the principal and the diamond is the accessory. The test of merits is a combination of utility and volume.