Q: What if there are ungathered natural or industrial fruits at the time good faith ceases?

A: The possessor shall share in the expenses of cultivation, net harvest, and charges in proportion to the time of possession. (Art 545, NCC) Q: What are the options of the owner in case there are pending fruits at the time good faith ceases? A: 1. To pay the possessor in good faith indemnity for his cultivation expenses and charges and his share in the net harvest; or 2. To allow him to finish the cultivation and gathering of the growing fruits. Q: What if the possessor refuses, for any reason, to finish the cultivation and gathering? A: He forfeits the right to be indemnified in any other manner. (Art. 545, par. 3, NCC)) RIGHT TO BE REIMBURSED NECESSARY AND USEFUL EXPENSES Q: What are necessary expenses? A: Expenses incurred to preserve the property, without which, said property will physically deteriorate or be lost. Q: Who is entitled to reimbursement for necessary expenses? A: Every possessor, whether the possessor is in good faith or bad faith. Note: However, only the possessor in good faith may retain the thing until he has been reimbursed. (Art. 546, Pineda Property, p. 279, 1999 ed) Q: Why is there no right of retention in case of bad faith? A: As punishment for his bad faith.

Note: Improvements be so incorporated to the principal thing that their separation must necessarily reduce the value of the thing not curable by ordinary repairs. Q: What are useful expenses? A: Those which increase the value or productivity of the property. Q: What are the rights of a possessor with regard to useful expenses? A: If in good faith: 1. Right to refund 2. Right of retention until paid 3. Right of removal, provided: a. without damage to the principal thing b. subject to the superior right of the prevailing party to keep the improvements by paying the expenses or the increase in value of the thing Note: If the possessor is in bad faith, he has no right. Q: Who has the right to be refunded for useful expenses? A: Only to the possessor in good faith with the same right of retention as in necessary expenses. (Art. 546) Note: Possessor in good faith need not pay rent during the period of retention. (Pineda Property, p. 280, 1999 ed) Q: What is the effect of voluntary surrender of property? A: It is a waiver of the possessors right of retention but his right to be refunded may still be enforced, unless he also waived the same. (Pineda Property, p. 282, 1999 ed) Q: May a possessor remove the useful improvements he introduced? A: Yes, but only by a possessor in good faith and only when no substantial damage or injury would be caused to the principal thing. (Art. 547) Note: However, this right of removal is only subordinate to the owners right to keep the improvements himself by paying the expenses incurred or the concomitant increase in the value of the property caused by the improvements. (Pineda Property, p. 283, 1999 ed)

Q: Is there right of removal? A: None, whether in good faith or bad faith. Reason: Necessary expenses affect the existence or substance of the property itself.

EXPENSES FOR PURE LUXURY Q: What are luxurious expenses? A: Expenses incurred for improvements introduced for pure luxury or mere pleasure. (Pineda Property, p. 281, 1999 ed) Q: Are luxurious expenses refundable? A: No, even if the possessor is in good faith. Note: But he may remove the luxurious improvements if the principal thing suffers no injury thereby, and if his successor in the possession does not prefer to refund the amount expended. (Art. 548) Q: What are the rights of the possessor with regard to expenses for pure luxury? A: Good Faith: Right of removal, provided: 1. without injury to principal thing; 2. successor in possession does not prefer to refund amount expended. Bad Faith: Same rights, but liable only for the value of the ornaments at the time he enters into possession, in case he prefers to retain What are other rights of possessor? gathered fruits Pending or ungathered fruits GOOD FAITH BAD FAITH Charged to owner Charged to owner Charged Charged to Production to expenses of possessor owner pending fruits Pro rata Charge to owner be reimbursed

A: With respect to Taxes and Charges

Gathered or severed fruits

Cultivation

expenses

Share pro rata possessor and On expenses, net ha capital charges On indemnity to posse fruits rata: (owners optio Charge a. money s b. allowing full culti Possessor is entitled to the Possessor must gathering of all fruit fruits return value of Improvements fruits no longer already No reimbursement existing received as well as value of fruits Liability for accidental loss or Liable if acting with which the owner intent or neglige deterioration or legitimate summons possessor Improvements due to time or Inure to the owne should be possessor nature entitled (does not apply toprotected possessor in Note: A possessor is regardless BF) of the manner of acquisition. of Possessor is not entitled to Possessor is

EFFECTS: POSSESSION IN BAD FAITH Q: When is a possessor in bad faith? A: When he is aware that there exists in his title or mode of acquisition any flaw which invalidates it. Note: Only personal knowledge of the flaw in ones title or mode of acquisition can make him a possessor in bad faith. Q: When is good or bad faith material or immaterial? A: It is important in connection with the 1. receipt of fruits, 2. indemnity for expenses, and 3. acquisition of ownership by prescription. It becomes immaterial when the right to recover is exercised. (Article 539, NCC) Q: What are the requisites to constitute possession whether in good faith or in bad faith? 1. Possessor has a title/mode of acquisition; 2. There is a flaw or defect in said title/mode; 3. The possessor is aware or unaware of the flaw or defect. Q: May mistake upon a doubtful questions or difficult question of law be the basis of possession in good faith? A: Yes. Mistake upon a doubtful or difficult questions of law (provided such ignorance is not gross and therefore inexcusable) may be a basis of good faith. It is true that ignorance of the law excuses no one but error in the application of the law, in the legal solutions arising from such application, and the interpretation of doubtful doctrine can still make a person ignorance of the law may be based on an error of fact. (Paras, p 463) Note: Mistake upon a doubtful or difficult question of law refers to the honest error in the application or interpretation of doubtful or conflicting legal provisions/doctrines, and not to the ignorance of the law. (Article 526, par. 3, NCC) Q When Dolorico died, his guardian Ortiz continued the cultivation and possession of the property, without filing any application to acquire title. In

the homestead application, Dolorico named Martin, as his heir and successor in interest. Martin later relinquished his rights in favor of Quirino his grandson and requested the Director of Lands to cancel the homestead application which was granted. Quirino filed his sales applications and the said property was awarded to him being the only bidder. Is Ortiz entitled to right of retention? A: Yes. A possessor in good faith has the right of retention of the property until he has been fully reimbursed for all the necessary and useful expenses made by him on the property. Its object is to guarantee the reimbursement for the expenses, such as those for the preservation of the property, or for the enhancement of its utility or productivity. It permits the actual possessor to remain in possession while he has not been reimbursed by the person who defeated him in the possession for those necessary expenses and useful improvements made by him on the thing possessed. (Ortiz v. Kayanan, G.R. No. L 32974, July 30, 1979) EFFECTS: Possession in the Concept of Owner Effects of Possession in Concept of an Owner a. Converted into ownership by the lapse of time necessary for prescription b. Possessor can bring all actions necessary to protect his possession, availing himself of any action which an owner can bring, except accion revindicatoria which is substituted by accion publiciana. c. He can ask for the inscription of possession in the registry of property d. Upon recovering possession from one who has unlawfully deprived him of it, he can demand fruits and damages e. He can do on the thing possessed everything that the law authorizes an owner to do; he can exercise the right of pre-emption and is entitled to the indemnity in case of appropriation. Article 541, Civil Code. A possessor in the concept of owner has in his favor the legal presumption that he possesses with

a just title and he cannot be obliged to show or prove it. Basis: Possession is presumed ownership, unless the contrary is proved. This presumption is prima facie and it prevails until contrary is proved. Just title that which is legally sufficient to transfer the ownership or the real right to which it relates. For the purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right. (Art. 1129) Exception Article 1131, Civil Code. For the purposes of prescription, just title must be proved; it is never presumed. Possessor may bring all actions necessary to protect his possession except revindicatoria May employ self help under Art. 429 Possessor may ask for inscription of such real right of possession in the registry of property Has right to the fruits and reimbursement of expenses (assuming he is possessor in good faith) Upon recovery of possession which has unlawfully deprived may demand fruits and damages. Generally, he can do on the things possessed everything that the law authorizes the owner to do until he is ousted by one who had a better right. Q: What is the rule when two or more persons claim possession over the same property? A: It depends. GR: Possession cannot be recognized in two different personalities XPN in case of co possession when there is no conflict. Q: What are the criteria in case there is a dispute of possession of 2 or more persons? A: Criteria in case of dispute: 1. Present/Actual possessor shall be preferred 2. If there are 2 possessors, the one longer in possession

3. If the Dates of possession are the same, the one with a title 4. If all of the above are Equal, the fact of possession shall be judicially determined, and in the meantime, the thing shall be placed in judicial deposit. (Article 538, NCC) LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLE Q: What is a lost thing? A: It is one previously under the lawful possession and control of a person but is now without any possessor. Note: It is not an abandoned property (Pineda Property, p. 503, 1999 ed) Q: What is the duty of a finder of a lost movable? A: Whoever finds a lost movable, which is not a treasure, must return it to its previous possessor. If the latter is unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. Note: The mayor in turn must publicly announce the finding of the property for two consecutive weeks. Q: When is public auction of the lost movable authorized? A: If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it shall be sold at public auction eight days after the publication. Q: May the lost movable be awarded to the finder? A: Yes. If the owner or previous possessor did not appear after 6 months from the publication, the thing found or its value or proceeds if there was a sale, shall be awarded to the finder. The finder , however, shall pay for the expenses incurred for the publication. (Art. 719, NCC) Q: What is the duty of the owner who appeared? A: 1. Give a reward to the finder equivalent to one tenth (1/10) of the sum or of the price of the thing found. (Art. 720, NCC) 2. Reimburse to the finder for the latters expenses incurred for the preservation of the thing. (Art. 546,NCC)

and expenses spent for the location of the owner

3. Reimburse the expenses for publication if there was a public auction sale. (Pineda Property, p. 505, 1999 ed)

Q: Using a falsified manager's check, Justine, as the buyer, was able to take delivery of a second hand car which she had just bought from United Car Sales. Inc. The sale was registered with the Land Transportation Office. A week later, the United Car Sales learned that the check had been dishonored, but by that time, Justine was nowhere to be seen. It turned out that Justine had sold the car to Jerico, the present possessor who knew nothing about the falsified check. In a suit filed by United Car Sales. Inc. against Jerico for recovery of the car, United Car Sales alleges it had been unlawfully deprived of its property through fraud and should, consequently, be allowed to recover it without having to reimburse the defendant for the price the latter had paid. Should the suit prosper? A: Yes, the suit should prosper because the criminal act of estafa should be deemed to come within the meaning of unlawful deprivation under Art. 559, Civil Code, as without it United Car Sales would not have parted with the possession of its car. (1998 Bar Question) Note: The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. (Art. 559, Civil Code) Q: What is the rule in case the seller of a thing has voidable title on the thing sold? A: Where the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title. (Art. 1506, NCC) Note: A possessor is protected regardless of the manner of acquisition. LOSS OF POSSESSION

Article 555, Civil Code. A possessor may lose his possession: 1. By the abandonment of the thing; 2. By an assignment made to another either by onerous or gratuitous title; 3. By the destruction or total loss of the thing, or because it goes out of commerce; 4. By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer than one year. But the real right of possession is not lost till after the lapse of ten years. 1. ABANDONMENT Abandonment involves a voluntary renunciation of all rights over a thing. It is the opposite occupation. It consists of the voluntary renunciation of all the rights which the person may have in a thing, with intent to lose such a thing. To be effective, it must be necessary that it be made by a possessor in the concept of an owner. It must be clearly appear that the spes recuperandi is gone and the animus revertendi is finally given up. Requisites: a. the abandoner must have been a possessor in the concept of owner (either an owner or mere possessor may respectively abandon either ownership or possession) b. the abandoner must have the capacity to renounce or to alienate ( for abandonment is the repudiation of property right) c. there must be physical relinquishment of the thing or object d. there must be no spes recuperandi (expectation to recover) and no more anumus revertendi ( intention to return or get back) (Paras, pp. 344 345)

2. ASSIGNMENT (EITHER ONEROUS OR GRATUITOUS Assignment complete transmission of the thing/right to another by any lawful manner. 3. DESTRUCTION OR TOTAL LOSS A thing is lost when it perishes or goes out of commerce, or disappears in such a way that its existence is unknown, or it cannot be recovered. (Art. 1189, Civil Code) Rules for Loss of Movables: Article 556, Civil Code. The possession of movables is not deemed lost so long as they remain under the control of the possessor, even though for the time being he may not know their whereabouts. Control judicial control or right, or that the thing remains in ones patrimony Article 560, Civil Code. Wild animals are possessed only while they are under one's control; domesticated or tamed animals are considered domestic or tame if they retain the habit of returning to the premises of the possessor. Kinds of Animals: 1. Wildthose which live naturally independent of man 2. Domesticatedthose which, being wild by nature, have become accustomed to recognize the authority of man. When they observe this custom, they are placed in the same category as domestic and when they lose it, they are considered as wild. 3. Domestic or Tamethose which are bornand reared ordinarily under the control and care of man; they are under the ownership of man, and do not become res nullius unless they are abandoned.

4. POSSESSION BY ANOTHER; if possession has lasted longer than one year; real right of possession not lost after 10 years - (Subject to Article 537) Article 537, Civil Code. Acts merely tolerated, and those executed clandestinely and without the knowledge of the possessor of a thing, or by violence, do not affect possession. Possession that is lost here refers only to possession as a fact (de facto), not the legal right of possession (de jure). It is the possession that the new possessor acquires. Real right of possession is lost only after 10 years. After one year, the actions for forcible entry and unlawful detainer can no longer be brought. But accion publiciana may still be instituted to recover possession de jure. Article 553, Civil Code. One who recovers possession shall not be obliged to pay for improvements which have ceased to exist at the time he takes possession of the thing. The improvements, having ceased to exist, the lawful possessor or owner cannot benefit from them; hence he should not pay for them. Necessary expenses are not considered improvements, and even if the object for which they were incurred no longer exists at the time of entry upon possession, the lawful possessor or owner has to pay for them. Article 557, Civil Code. The possession of immovables and of real rights is not deemed lost, or transferred for purposes of prescription to the prejudice

of third persons, except in accordance with the provisions of the Mortgage Law and the Land Registration laws. Third parties relying on the Registry of Property are privileged to consider the registered possessors or owners as still such in spite of loss. Article 558, Civil Code. Acts relating to possession, executed or agreed to by one who possesses a thing belonging to another as a mere holder to enjoy or keep it, in any character, do not bind or prejudice the owner, unless he gave said holder express authority to do such acts, or ratifies them subsequently. 5. RECOVERY OF THE THING BY THE LEGITIMATE OWNER Q: May the owner forcibly eject the possessor without court intervention? A: NO, the owner must resort to the courts (Bago vs. Garcia, No. 2587, January 8, 1906)