Rights of Accession

8/11/2019 Rights of Accession

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PROPERTYProfessor E. Labitag Page 1of 7Chapter III: Right of Accession 28 July 2009

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III. RIGHTS OF ACCESSION1

A. Concept

Art 440 The ownership of property gives the right by accession to everything which is produced thereby, or which is

incorporated or attached thereto, either naturally or artificially.

Definition of Accession

TOLENTINO: Right by virtue of which the owner of a thing becomes the owner of everything that the thing may

produce or which may be inseparably united or incorporated thereto, either naturally or principally.

JBL REYES: Extension of ownership over a thing to whatever is incorporated thereto naturally or art ificially (without or

with labor of man)

o Incorporation means a stable union or adherence, not mere juxtaposition

o Accession is one of the bundle of rights of ownership and is nota mode of acquiring property

o It does not depend upon a new title

B. General Principles of Accession

1.

Applicable to both accession discretaand accession continuaa. 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

b.

No one shall be unjustly enriched at the expense of another

2. Applicable to accession continua alone

a. Whatever is built, planted or sown on the land of another and the improvement or repairs made thereon, belong

to the owner of the land, subject to the provisions of the following articles (Art 445)

b. All works, sowing, planting are presumed made by owner and at his expense, unless contrary is proved

c. Accessory incorporated to principal such that it cannot be separated without injury to work constructed or

destruction to plantings, construction or works (Art 447)d.

Bad faith involves liability for damages and other dire consequences

e. 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.

3. Applicable to accession discretaalone

a.

Ownership of fruitsto owner of principal thing belongs the natural, industrial and civil fruits (Art 441 )

EXCEPTIONS:

i. Possession in good faith (to the possessor)

ii. In usufruct (to the usufructuary)

iii. In lease (to the lessee)

iv. In antichresis (to the creditor)

C.

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 person in their production,

gathering and preservation.

D. Kinds of Accession

1. Accession Discreta (Fruits)

Art 440 The ownership of property gives the right by accession to everything which isproduced thereby

1Consolidated by Karichi Santos


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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 own whatever 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 by law or contract

EXCEPTIONS: possession in good faith, usufruct, lease, antichresis

Art 441 To the owner belongs:

a.

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)

b. 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 labor

c. Civil

Art 442 are the rents of buildings, the price of leases of lands and other property and the amount of

perpetual or life annuities or other similar income

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 or building itself

BACHRACH v SEIFERT(1950; Ozaeta)2

o In his will, the deceased Emil Maurice Bachrach named his wife (Mary McDonald Bachrach) as usufructuary of

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.

o 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.

o June 10, 1948, Mary (the widow), as usufructuary or life tenant of the estate, petitioned the lower court to

authorize the Peoples Bank and Trust Company (the administrator of the estate of E. M. Bachrach) to transfer to

her the said 54,000 shares of stock dividend. She claimed that said dividend, although paid out in the form of

stock, is fruit or income and therefore belonged to her as usufructuary or life tenant.

o Sophie Seifert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the ground that the stock

dividend in question was not income but formed part of the capital and therefore belonged not to the

usufructuary but to the remainderman3.o The lower court granted Marys petition and overruled S&Es objection. Seifer and Elianoff appealed.

ISSUE:Whether the stock dividend can be considered as a fruit/income (which belongs to the usufructuary) or part of

the capital (part of the corpus of the estate which will be delivered together with the rest of the future estate 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, it is 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 civil fruits of the original

investment.

Also, two US rulings figured in this case:

1. Massachusetts rule = stock dividend is not an income but merely represents an addition to the investment capital

The Massachusetts rule regards cash dividends, however large, as income, and stock dividends, however made, as

capital. It holds that a stock dividend is not in any true sense any dividend at all since it involves no division or

severance from the corporate assets of the subject of the dividend. This rule supports Seifert and Elianoffs contention

that a stock dividend is not an income (unlike a cash dividend), but merely represents an addition to the invested

capital.

2Camille Maranan3According to my legal dictionary, a remainder is a future estate and a remainderman is the inchoate possessor of that future

estate


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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 in whatever form,

made during the lifetime of the usufructuary or life tenant are income and belong to the 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 the Massachusetts rule

since under section 16 of the Corporation Law, no corporation may make or declare any dividend 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 be transferred to Mary since Article 471 of

the Civil Code (now Art. 566)provides that the usufructuary shall be entitled to receive all the natural, industrial, andcivil fruits of the property in usufruct.

In My Understanding:The widow is saying that the stock dividend should be transferred to her account since this 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 the capital and

should be delivered to them (together with the rest of the estate upon Marys death). The court held that stock

dividends form part of the income and therefore, should be delivered to the usufructuary (the widow).

DISPOSITIVE: Order affirmed.

BACHRACH v TALISAY SILAY (1931; Romualdez)4

Plaintiff-appellee:Bachrach Motor Co., Inc.

Defendants-appellees:Talisay-Silay Milling Co. et al.

Intervenor-appellant:Philippine National Bank

Facts:

22 Dec 1923, Talisay-Silay was indebted to PNB. To secure the loan, Talisay induced its planters one of whom was

Mariano Lacson Ledesma to mortgage their land. The central, to compensate the planters for mortgaging their

property, undertook to credit the owners of the plantation every year with a sum equal to 2% of the debt

secured accdg to the yearly balance. The payment to be made as soon as the central was freed of its debts

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 bonus stated

in the first paragraph, or any instrument of credit. It also prayed for accounting of whatever the central owed to

Mariano by way of bonus, dividend, etc., as well as the nullification of the sale made to Cesar Ledesma

PNB filed third party claim alleging a preferential right over Marianos credit owed by Talisay as part of the civil

fruits of the land mortgagedto 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 Cesars credit and absolved him from the complaint and ordered delivery to him of

P7500

Trial court ruled in favor of Bachrach, awarding it P11,076.02 of Marianos bonus from Talisay. Hence this appeal

Issues:W/N the bonus was a civil fruit which formed part of the mortgaged landNO

Held and Ratio:NO. Art 355 of the old Civil Code (Art 442 of the current Civil Code) considers three things as civil fruits:

rents of buildings, proceeds from leases of lands, and income from perpetual of life annuities or other similar 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 a remote and

accidental relation to the land. The central granted it as compensation for the risk that the landowners entered in

mortgaging their lands. If the bonus was an income of any kind, it comes from the assumption of risk, and not from the

land itself. Thus, it is distinct and independent from the property referred to in the mortgage to the bank.

Disposition:Judgment affirmed

2.

Accession Continua

Art 440 The ownership of property gives the right by accession to everything which isproduced thereby

Acquisition of ownership over a thing incorporated to that which belongs to the owner

May refer to immovables(alluvion, force of river, change of river bed, formation of islands and BPS) or to

movables(conjunction/adjunction, specification, commixtion, confusion)

Based on necessity and utility: It being more practical that the owner of the principal thing should own the

new things instead of a co-ownership being established.

4Doms Obias


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a. Over Immovables

1) Artificial or IndustrialBPS

ii.

Owner is BPS using materials of another (Art 447)

Good faith

Bad faith

iii.

BPS on anothers land using own materials BPS in good faith

BPS in bad faith

- OPTIONS OPEN TO OWNER OF LAND:

1. To acquire building, planting and sowing

2.

To sell BP and to lease land S

-

RIGHTS OF BPS IN BAD FAITH

1. Landowner in BF but BPS in good faith

2. BPS builds, plants, sows on anothers land with materials owned by 3

rdperson

Art 456: Good faith does not exclude negligence

BERNARDO v BATACLAN (1938; Laurel)5

FACTS: Plaintiff Vicente Bernardo acquired a parcel of land from Pastor Samonte thru a contract of sale. Thereafter,

Bernardo instituted a case against said vendor to secure possession of the land. Bernardo was able to obtain a

favorable decision from the court. The plaintiff found the defendant herein, Catalino Bataclan, in the said premises. It

appears that he has been authorized by former owners, as far back as 1922, to clear the land and make

improvements thereon. Thus, plaintiff instituted a case against Bataclan in the Court of First Instance of Cavite. In this

case, plaintiff was declared the owner of the land but the defendant was held to be a possessor in good faith,

entitled to reimbursement in the total sum of P1,642, for work done and improvements made. Both parties appealed

the decision.

The court thereafter made some modifications by allowing the defendant to recover compensation

amounting to P2,212 and by reducing the price at which the plaintiff could require the defendant to purchase the

land in question from P300 down to P200 per hectare. Plaintiff was likewise given 30 days from the date when the

decision became final to exercise his option, either to sell the land to the defendant or to buy the improvements from

him. On January 9, 1934, the plaintiff conveyed to the court his desire "to require the defendant to pay him the value

of the land at the rate of P200 per hectare or a total price of P18,000 for the whole tract of land." The defendantindicated that he was unable to pay the landand, on January 24, 1934, an order was issued giving the plaintiff 30

days within which to pay the defendant the sum of P2,212.

Subsequently, on April 24, 1934, the court below, at the instance of the plaintiff and without objection on the

part of the defendant, ordered the sale of the land in question at public auction. The land was sold on April 5, 1935 to

Toribio Teodoro for P8,000.

ISSUE: WON DEFENDANT BATACLAN IS STILL ENTITLED TO RECOVER THE COURT MANDATED COMPENSATION ARISING

FROM THE SALE OF THE PROPERTY TO TORIBIO

HELD: NO. The defendant avers that he is a possessor in good faith and that the amount of P2,212 to which he is

entitled has not yet been paid to him.Defendant further claims that he has a right to retain the land in accordance

with the provisions of article 453 of the Civil Code. While the said argument is legally tenable, the same must perforce

be denied because defendant Bataclan has lost his right of retention as he failed to pay for the land. The law, as we

have already said, requires no more than that the owner of the land should choose between indemnifying the ownerof the improvements or requiring the latter to pay for the land.

IGNACIO v HILARIO (1946; Moran)6

Facts:Elias Hilario and his wife Dionisia Dres filed a complaint against Damian, Francisco and Luis Ignacio concerning

the ownership of a parcel of land, partly rice-land and partly residential. After the trial of the case, the lower court

under Judge Alfonso Felix, rendered judgment holding Hilario and Dres as the legal owners of the whole property but

conceding to the Ignacios the ownership of the houses and granaries built by them on the residential portion with the

rights of a possessor in good faith, in accordance with article 361 of the Civil Code.

5Phoebe Hidalgo6Obet Bunagan


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ORTIZ v KAYANAN (1979; Antonio)10

Facts: Homestead Application Lot belonged to Dolorico II, Ortizs ward located in Barrio Cabuluan, Calauag, Quezoni.

Dolorico II named as successor and heir his uncle Dolorico, then died.

All this time Ortiz was in possession and cultivation of the property.

Dolorico relinquished rights over property in favour of Comintan and Zamora.

Court found Ortiz to be in good faith, but held the public bidding to be valid. If petitioner was not found to be

the winner, Comintan and Zamora are to reimburse him for P13,632. Ortiz is to retain possession until the

amount is paid.

CA affirmed RTC

Respondent Judge discovered that after the decision of the lower courts, Ortiz collected tolls on portions of

the land even if he had not introduced any improvements on said portions estimated to amount to P25,000.

Petitioner contends that he is entitled to the fruits of the property while the P13,632 has yet to be paid, this

being considered as civil fruits.

Issue: WON petitioner is entitled to fruits while Comintan and Zamora have yet to pay the indemnity due petitioner.

Decision: NO.

Before possession is legally interrupted, possessor in good faith is entitled to fruits. This right ceases upon

defects being known. This is known as a right to retention, for the creditor to obtain payment of a debt.

Also we must consider that tolls were collected from portions with no improvements of petitioner, therefore he

really has no right to said fruits.

GEMINIANO v CA ()11

PLEASANTVILLE DEVT CORP v CA()12

FACTS

Edith Robillo purchased a parcel of land, Lot 9, from Pleasantville Devt Corporation in Pleasantville

Subdivision, Bacolod City. Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot 9 was

vacant.

Upon completing all payments and securing a TCT in his name, Jardinico discovered that improvements had

been introduced on Lot 9 by Wilson Kee, who had taken possession thereof.

It appears that Kee bought on installment Lot 8from CT Torres Enterprises Inc (CTTEI), the real estate agent of

Pleasantville.

Under the Contract to Sell, Kee could and did possess the lot even before the completion of payments.

Zenaida Octaviano, CTTEIs employee, was the one who mistakenly pointed out Lot 9 (instead of Lot 8) to

Kees wife. Thereafter, Kee built his residence, a store, an auto repair shop, and other improvements on the

lot.

Jardinico confronted Kee after discovering that the latter was occupying Lot 9. Kee refused to vacate, hence

Jardinico filed an ejectment suit with damages.

RTC: Kee is a builder in bad faith. Assuming arguendo that Kee was acting in good faith, he was nonetheless guilty

of unlawfully usurping the possessory right of Jardinico over Lot 9 from the time he was served with notice to

vacate said lot, and was thus liable for rental.

CA: Kee was a builder in good faith, as he was unaware of the mix-up when he began construction of the

improvements. The erroneous delivery was due to the fault of CTTEI and thus imputable to Pleasantville, the

principal.

ISSUE: W/N Kee is a builder in good faith? YES

HELD/RATIO:

The roots of the controversy can be traced in the errors committed by CTTEI when it pointed the wrong lot to Kee.

Good faith consists in the belief of the builder that the land he is building on is his and he is ignorant of any defector flaw in his title. And as good faith is presumed, Pleasantville has the burden of proving bad faith on the part of

Kee.

At the time he built the improvements on Lot 9, Kee believed that the said lot was the one he bought. He was not

aware that the lot delivered to him was not Lot 8. Pleasantville failed to prove otherwise.

Violation of the Contract of Sale on Installment may not be the basis to negate the presumption that Kee was a

builder in good faith. Such violations have no bearing whatsoever on whether Kee was a builder in good faith,

that is, on his state of mind at the time he built the improvements on Lot 9. These alleged violations may give rise

10Mark Yam11Krissy Conti12Nessa Abad


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to petitioners cause of action against Kee under the said contract (contractual breach) but may not be bases to

negate the presumption that Kee was a builder in good faith.

FELICES v IRIOLE ()13

Sorry I cant find the caseonline

SPOUSES NUQUID v CA (1993;)14

SPOUSES NUQUID v CA (2005;)15FACTS:

Pedro Pecson owned a commercial lot in Kamias and built a four-door two-storey apartment building. He failed

to pay realty taxes, so the LOT was sold at public auction to Mamerto Nepomuceno, and later to the Sps. Juan

and Erlinda Nuguid.

Case 1: Pecson challenged the validity of the auction sale.SC: Sps. Nuguid owned the lot, while Pecson still owned

the building (May 5, 1993).

Case 2: Nuguids sought delivery of possession of the lot and apartment building, i.e., they want to acquire the

building.SC (Nov. 15, 1993):

1. Art. 448, NCC: Case is apposite as when the landowner is the BPS who then later loses ownership through sale;

2.

Current market value of the building should be the basis of the indemnity;

3. Pecson entitled to retain ownership of the building and the income therefrom;

4.

CA erred in upholding TCs determination of indemnity (P53,000.00 construction cost) and in also ordering

Pecson to account for rent.

5. Remanded to TC for determination of CMV.

Case 3 (Case at bar): CMV = P400,000. Pecson already received P300,000 from Sps. Nuguid; balance of P100,000 paid

thereafter. TC directed Sps. Nuguid to also pay P1.34 million for rentals from Nov. 1993 to Dec. 1997 (@ P28K/mo.) Thus,

petition.

ISSUE:W/N the spouses should pay rent collected during period of Pecsons dispossession of the building? YES.

HELD:

Pecson is a builder in good faith. Nuguid is the landowner.

Art. 448, NCC entitles landowner (Nuguid) to either appropriate the building upon payment of indemnity or sell

the land. Nuguid sought appropriation.

Art. 546, NCC entitles the BPS to full reimbursement for all the necessary and useful expenses, and the right of

retention until full reimbursement is made.

However, until the payment of indemnity is full, the BPS (Pecson) has a RIGHT of RETENTION (which includes the

right to the expenses and the right to the fruits) as a builder in good faith. Thus, he cannot be compelled to pay

rentals during the period of retention nor be disturbed in his possession by ordering him to vacate. The landowner

is prohibited from offsetting or compensating the necessary and useful expenses with the fruits received by the

BPS in good faith.

DISPOSITIVE: TC decision reinstated.

1)

iBecause Prof. Labitag remembers cases by location

13Chi Santos14Jessa Alvarez15Rory Lambino

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Rights of Accession