Dear Attorney:

I humbly write to request your guidance regarding a parcel of land that I recently donated to a close acquaintance. In the Deed of Donation, I failed to mention certain improvements constructed on the land—specifically, several fixtures and small structures that I built before the transfer of ownership was completed. Now, I am concerned about how these improvements are legally treated, given that the Deed of Donation did not expressly provide for them. Does the principle of “accessory follows the principal” apply, thereby granting ownership of these improvements to the donee, or do I retain some legal interest in them due to their omission in the Deed of Donation?

I appreciate any clarity you can offer on how the law treats these unmentioned improvements in a donation scenario. Many thanks in advance for your guidance, and I look forward to your counsel.

Sincerely,
A Property Owner Seeking Clarity

[LEGAL ARTICLE ON PHILIPPINE LAW]

Introduction
In the Philippines, property law is governed largely by the provisions of the Civil Code of the Philippines (Republic Act No. 386), as amended. Donations, in particular, are covered by Articles 725 to 773 of the Civil Code. Among the issues that often arise in donations is the question of whether the donor’s failure to mention certain improvements in the Deed of Donation affects ownership rights over those unmentioned improvements. This article comprehensively analyzes the legal principles surrounding the treatment of improvements on donated property, the doctrine of “accessory follows the principal,” and related legal concepts under Philippine law.
Definition and Nature of Donations
Under Philippine law, a donation is defined in Article 725 of the Civil Code as “an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it.” The essential elements of a donation are:
Donative intent (animus donandi),
Delivery of the donated thing or transfer of rights, and
Acceptance by the donee.

The donor’s intention to gratuitously transfer ownership must be clear, and the donee must expressly or impliedly accept such donation. In real property donations, the law requires certain formalities, including a public instrument and, if the value of the donation exceeds a certain threshold, the acceptance must be expressed in the same public instrument or another public instrument notified to the donor in a formal manner.

Scope and Coverage of the Donated Property
When one donates real property, it is generally presumed that all the essential parts integral to the piece of land are included, unless the donor expressly excludes them. The donation may, however, be limited or qualified, such that specific portions of the land, certain fixtures, or improvements thereon are not included if so stipulated in the Deed of Donation.

In practice, problems arise when the Deed of Donation is silent about improvements: Are these improvements automatically transferred to the donee, or does the donor retain legal rights over them?

Principle of Accessory Follows the Principal (Accession)
A cardinal doctrine in property law is encapsulated by the maxim “accessory follows the principal.” This means that anything which is an accession or accessory to a thing is considered to be included in the ownership of the principal thing. Philippine law recognizes this principle under Articles 440 and 445 of the Civil Code, which discuss the concept of accession in general.

Article 440, Civil Code: “The ownership of a thing is understood to include that of all its accessories and accessories intended for its use or preservation.”
Article 445, Civil Code: “Whatever is built, planted or sown on the land of another and the improvements or repairs made thereon belong to the owner of the land, subject to the provisions of the following articles.”

From these provisions, the Civil Code’s property framework places importance on the land as the principal thing. Whatever is built, planted, or attached thereon is generally deemed part of such real property.

Accession in Immovable Property
Improvement of real property often triggers the law of accession. The right of accession confers upon the owner of the principal thing (in this case, the land) a right to all that is produced by that thing, or which is incorporated or attached thereto, either naturally or artificially.

5.1 Types of Accession
- Accession Discreta – This deals with the fruits or yields of the property, such as natural fruits (crops, plants), industrial fruits (produce from cultivation), or civil fruits (rentals, dividends).
- Accession Continua – This concerns structures or improvements made upon real property, such as buildings, constructions, or installations made either by the owner of the land or by another person.

As soon as a building or structure becomes integral to the immovable property, it is typically deemed part of the land. Consequently, if one donates the land without distinguishing or reserving such improvements, those improvements are presumed to form part of the property transferred to the donee, absent any special stipulation.

Implications of Donor’s Silence
When the Deed of Donation is silent regarding existing improvements, the default legal presumption—under the principle of accession—is that the donee acquires the land together with the attached improvements. This presumption flows from the maxim “accessory follows the principal.”

6.1 Exceptions
A donor might be able to overcome this presumption if they can prove that the improvements are legally separable or removable without causing material damage to the property, or if there was a mutual understanding that these improvements were not intended to form part of the donation. However, such exceptions typically require explicit clauses in the Deed of Donation or, at the very least, evidence of an agreement or intention to exclude said improvements from the donated property.

Ownership and Title Over Improvements
Under normal circumstances, once the donation is perfected and the instrument is registered (in the case of real property), the donee’s ownership extends to all integral parts of the land, including permanent improvements. The principle of immovable property law is that improvements are merged with the land—forming one single immovable asset—absent any stipulation otherwise.

7.1 Fixtures vs. Movable Improvements
Distinguishing between fixtures and movable items is crucial. Fixtures are generally regarded as those items attached or affixed to the property in such a way that removing them would cause injury to or alteration of the property itself. Examples include built-in cabinets or integrated structures. Movable improvements, on the other hand, are things that can be detached without substantial damage to the land or the object itself—like furniture, machinery not bolted to the floors, or equipment that simply rests on the ground.

Should the donor wish to retain ownership of movable property found on the donated land, it is advisable to clarify their nature as personal property and to articulate the intention to exclude them from the scope of the donation.

Contractual Stipulations in the Deed of Donation
To avoid ambiguity, donors should include explicit stipulations regarding improvements in the Deed of Donation. Here are some advisable contractual provisions:
Identification of Improvements – Enumerate any structures, buildings, or other permanent enhancements existing on the land.
Retention or Exclusion – If the donor wishes to retain certain improvements, the Deed of Donation should clearly exclude them. This might include specifying that the donor has the right to remove such improvements within a certain period or that these improvements shall remain the donor’s property.
Valuation of Improvements – In some cases, the donor may wish to place a monetary value on existing improvements. Doing so clarifies whether the value of those improvements is part of the donor’s taxable donation.

Where no special stipulation exists, the strong presumption is that the donation covers both the land and all integral improvements thereon.

Legal Effects of Omitting Improvements
If a donor omits mention of improvements in the Deed of Donation, there are several possible legal outcomes:
Automatic Inclusion – Pursuant to the principle of accession, the improvements become part of the donation.
Amendment or Reformation of the Deed – If the donor’s omission was due to mistake or oversight, the donor and donee may agree to reform the Deed of Donation to clarify their rights. This requires mutual consent and can be subjected to the formalities of notarial acknowledgment and registration.
Potential Dispute – If the donor insists that the improvements were never intended for donation, a dispute might arise. The donor would then have to overcome the legal presumption favoring the donee’s ownership.
Requisite Formalities for Donations of Real Property
Under Article 748 of the Civil Code, donations of real property must be made in a public instrument (i.e., a notarized deed). The acceptance by the donee must be made in the same instrument or in another public document. Failure to comply with these formal requirements renders the donation null and void. If improvements were mistakenly omitted, an addendum or a supplemental deed may be executed, provided the donation is still valid and the parties agree to correct or modify it.
Taxes and Documentation
When donating property, donors and donees are required to pay the donor’s tax, based on current Bureau of Internal Revenue (BIR) regulations. The valuation of the donated land and any recognized improvements may figure into the computation of donor’s tax. Thus, if improvements were included but not explicitly stated, the BIR could still assess the donation based on an overall fair market value of the property at the time of the donation.

The donee, upon acceptance, needs to handle any documentary stamp taxes. Should the donor fail to explicitly mention improvements, the BIR may presume the donation encompassed the entire property, improvements included, subjecting the parties to corresponding taxes.

Good Faith vs. Bad Faith in Improvements
Although typically invoked in contexts of builders in good faith, Articles 448 to 450 of the Civil Code discuss rights and obligations related to building, planting, or sowing on the land of another. While less commonly associated with donations, the principle can arise if there was a misunderstanding about improvements:

If the donor in good faith constructed or planted on the land without intending to cede these improvements, but the Deed of Donation inadvertently included them, the donee typically acquires ownership. The remedy would be for the donor to present evidence of an agreement or reservation to exclude said improvements.
If the donor acted in bad faith or tried to surreptitiously claim improvements after the fact, the donee could rely on the principle of accession to assert full ownership.

Case Law Interpretations
Philippine jurisprudence consistently reinforces the doctrine that buildings, structures, or improvements become part of the immovable property unless clearly reserved by the transferor. Although many Supreme Court decisions highlight boundary disputes or conflicts involving builders in good faith, the logic is consistent: The land’s owner typically has the strongest rights over anything attached to the land, absent contrary stipulations.
Practical Measures and Legal Advice
For donors and donees alike, the best approach is to be absolutely meticulous in documenting any structures, improvements, or fixtures on donated property. Unnecessary conflicts can be avoided by ensuring the Deed of Donation explicitly addresses:
Nature of the Donation – Whether it is a donation inter vivos (taking effect during the donor’s lifetime) or mortis causa (taking effect upon the donor’s death) can affect the property’s disposition.
Identification of Property – Provide a clear technical description of the land with reference to improvements and fixtures.
Exclusions or Reservations – Clearly specify which improvements, if any, are reserved for the donor’s benefit or are not included in the donation.
Timelines – If the donor intends to remove certain improvements, the donation document should establish deadlines or conditions.
Remedies for Mistakes or Oversight
If the donor and donee discover post-signing that improvements were not addressed, they can:

Execute a Clarificatory Agreement – A supplemental agreement, duly notarized and registered, can rectify or clarify the parties’ intent.
Petition for Reformation – If there was mutual mistake or error, either party may seek the court’s help to reform the Deed of Donation to reflect the true agreement, as permitted under Articles 1359 to 1369 of the Civil Code.
Negotiate a Compromise – Amicable settlement is highly encouraged. The donor might reimburse the donee for any taxes paid for improvements or, alternatively, the donee might allow the donor to remove specific improvements.

Legal Effects of Subsequent Improvements by the Donee
After a property is donated, any improvements introduced by the donee belong to the donee, who is now the owner of the land. The donor no longer has any right to such improvements, unless there was an arrangement allowing for reversion of ownership under certain conditions.
Illustrative Hypothetical Scenario
A hypothetical scenario helps elucidate the principle: Suppose a donor constructed a gazebo and a perimeter fence on a vacant lot. The donor subsequently executed a Deed of Donation in favor of a family member but did not mention the gazebo or fence. In the event of a dispute, the donee is entitled to ownership not just of the land but also of the gazebo and fence, as these are regarded as permanent fixtures—accessory improvements that legally follow the principal property. Unless the donor can show a written agreement or a reservation clause that those improvements would remain the donor’s property, the principle of accession supports the donee’s claim.
Conclusion
In Philippine jurisprudence and statutory law, the principle of “accessory follows the principal” (accession) strongly supports the interpretation that any permanent improvements on real property form an integral part thereof. Once a piece of land is donated, the donor effectively relinquishes ownership of said improvements, absent any explicit reservation or stipulation to the contrary in the Deed of Donation.

Thus, if a Deed of Donation fails to mention improvements, the default presumption is that these improvements pass to the donee. From a practical standpoint, donors who wish to retain any right or interest in the improvements must clearly reserve them in writing and ensure compliance with the legal formalities required for donations of real property.

Nonetheless, if omission of improvements in the Deed was inadvertent or a product of oversight, there are legal measures available. The parties can execute a supplemental document, reformation of the contract may be sought, or they can reach a mutual compromise to rectify the omission. Yet, in the absence of such corrective measures, the donee generally prevails by operation of law and by virtue of the principle of accession.

Key Takeaways:

Always be explicit – Donors and donees must meticulously list improvements if they wish to retain or exclude them.
Formal requirements – Remember that donations of real property require a public instrument and acceptance.
Accessory follows the principal – Unless expressly excluded, improvements are considered part of the donated property.
Remedies exist – If there was a genuine mistake, legal recourse includes clarificatory agreements, reformation of instruments, or compromise.

By observing these guidelines, parties can safeguard their rights and minimize future disputes regarding donated property in the Philippines.