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PROPERTY

Black’s Law Dictionary provides that property is the rightful dominion

over external objects; ownership; the unrestricted and exclusive right to a thing;

the right to dispose of the substance of a thing in every legal way, to possess it, to

use it, and to exclude every one else from interfering with it. (Mackeld. Rom.

Law, § 265). Property is the highest right a man can have to anything; being

used for that right which one has to lands or tenements, goods or chattels, which

noway depends on another man’s courtesy. (Jackson ex dem. Pearson v. Honsel,

17 Johns, 281, 283.) A right imparting to the owner a power of indefinite user,

capable of being transmitted to universal successors by way of descent, and

imparting to the owner the power of disposition, from himself and his successors

per universitatem, and from all other persons who have a spes sucocasionis under

any existing concession or disposition, in favor of such person or series of persons

as he may choose, with the like capacities and powers as he had himself, and

under such conditions as the municipal or particular law allows to be annexed to

the dispositions of private persons. (Aust. Jur. Campbell’s Ed. § 1103.) The right

of property is that sole and despotic dominion which one man claims and

exercises over the external things of the world, in total exclusion of the right of

any other individual in the universe. It consists in the free use, enjoyment, and

disposal of all a person’s acquisitions, without any control or diminution save

only by the laws of the land. (1 Bl. Comm. 138; 2 Bl. Comm. 2, 15.) The word is
commonly used to denote any external object over which the right of property is

exercised. In this sense it is a very wide term, and includes every class of

acquisitions which a man can own or have an interest in.1

In the Philippines, most of our notable authorities in the field of civil law,

defines property in the economic concept, meaning a mass of things useful to

human activity and which are necessary to life, for which reason they may be

organized and distributed in one way or another, but, always for the good of the

main. In order that a thing may be considered as property the following are

considered: Utility meaning the capacity to satisfy human wants;

Individuality/Substantivity that is the autonomous or separate existence

(materials composing a thing are not thing in themselves); and Appropriability

or susceptibility to appropriation.2

Laws governing property and property transactions in the

Philippines include practically all the laws of the land. These are embodied in our

Constitution, the Civil Code, our Tax Code, Commercial and Mercantile laws,

Criminal laws, Labor laws, the Political and International laws, and even the

Rules of Court (i.e. enforcement of real and personal rights, etc…). Property is

viewed in the economic sense as this spring from every man’s right to life. In

other words, since almost all human endeavors would ultimately relate to

property or property rights. Thus, laws of the land (not only in the Philippines

but all over the world), in one way or another, revolve on the concept of property.

In the Philippines we look at property as a concept whereby all things

which are or may be the object of appropriation are considered either immovable

1
Blackslawdictionaryonline.com/blacks-law-dictionary-read-online/, Black’s Law Dictionary, p. 733.
2
http://www.scribd.com/doc/24634702/PROPERTY-Reviewer

2
or real property and movable or personal property (Art. 414, Civil Code). Why is

it merely a concept? This is because our laws merely regulate the enjoyment of

the fruits of nature. By way of example: Occupation - Privilege to hunt and fish

regulated by special law (Art 715, ibid).

Is the human body a property: During lifetime the Rule is: it is NOT a

property. Hence, cannot be appropriated. EXCEPTION: within the limits

prescribed by law. R.A.7719 promotes voluntary blood donation; service

contracts (e.g. modeling). After death the rule is: still, NOT a property by reason

of public policy. Personality of a man demands respect even after death.

EXCEPTION: within the limits prescribed by law. R.A 349 legalizes permission of

use human organs or any portion of the human body for medical, surgical, or

scientific purposes under certain conditions; R.A 7170 authorizes the legacy or

donation of human organs after death or for transplant as well as the

advancement of research, medical and dental education and therapy.

Under the Civil Code (CC), Article 415 enumerates the immovable

properties and Articles 416 to 417, the movable properties. By the enumerations

on Art. 415, immovable property may thus be classified as 1.) Nature (trees and

plants, land); 2.) Incorporation (buildings); 3.) Destination or purpose

(machinery placed by owner on tenement for direct use of industry or works to be

carried on therein); and 4.) Analogy (like the right of usufruct, public works,

servitudes).

The importance of classification of property into immovable and movable

does not lie from the fact of mobility or non-mobility, but from the fact that

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different provisions of the law govern the acquisition, possession, disposition,

loss, and registration of immovables and movables.3

In the case of Mindanao Bus. Co. vs. City Assessor (G.R. No. L-17870

September 29, 1962), to be considered as real property by destination, the

machinery etc. must be: essential and principal elements of the industry; and the

industry must be carried out in a building or piece of land. On the other hand,

the following are considered personal property as enumerated by Art. 416 and

417 - The right to recover stolen property and promissory notes as these involve

movables or demandable sums; Even if the sole property of the corporation is

real property, a share in such corporation is personal property. In fact, all shares

in all juridical persons are considered personal. The property right of shares of

stock can only be enforced or exercised where the corporation is organized or has

its place of business; Money is always personal property. Money is not

merchandise when in domestic circulation, it becomes merchandise when it is

exported or taken out of domestic circulation; For purposes of the Chattel

Mortgage Law, ungathered products have the nature of personal property and

may be attached and executed upon. (Sibal v. Valdez, 50 Phil. 512); Electricity

may be appropriated; it can be the object of theft. (US v. Carlos, 21 Phil. 543).

Parties to a contract may by agreement treat as personal property that

which by nature would be real property. (Standard Oil Company v. Jaramillo, 44

Phil. 631).

Sale of real property in the CM Registry cannot bind third persons in good

faith. (Leung Yee v. Strong Machinery, 37 Phil. 644).

3
Paras, L. Edgardo, Civil Code of the Philippines Annotated Vol. II, 16th Edition 2008, p. 5.

4
A building may be validly mortgaged separately from the land upon which

it is built. (Prudential Bank v. Judge Panis, GR 50008, Aug. 31, 1988).

A stipulation in the lease agreement to treat the real property as personal

is binding upon the parties. The parties are estopped from claiming otherwise.

(Serg’s Products v. PCI Leasing, G.R. No. 137705, Aug. 22, 2000, 338 SCRA 499,

504).

Steel electric towers are personal property provided they can be removed

without substantial breakage or deterioration. (Board of Assessment Appeals v.

Meralco, 10 SCRA 68).

HELD: The towers are personal property. They are not

buildings adhered to the soil; they are not attached to an

immovable in a fixed manner and they can be separated without

substantial damage or deterioration and they are not machineries

intended for works on the land.

Property in relation to the person to whom it belongs is either of public

dominion or of private ownership. (Art. 419, Civil Code). Public dominion is the

ownership by the State in that the State has control and administration or

ownership (by the public) in general. Three kinds of property of public

dominion: 1) For public use – roads, canals for use by everyone; 2) For public

service – government buildings and vehicles for use by authorized persons; and

3) For the development of national wealth – natural resources. (Art. 420, Civil

Code). All other property of the State, which is not of the character stated in the

preceding article, is patrimonial property. (Art. 421, Civil Code). Property of

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public dominion, when no longer intended for public use or for public service,

shall form part of the patrimonial property of the State. (Art. 422, Civil Code)

Properties of public dominion are outside the commerce of man, and

cannot be leased, donated, sold, or be the object of any contract (Mun. of Cavite v.

Rojas, 30 Phil. 602), except insofar as they may be the object of repairs or

improvements and other incidental things of similar character. They cannot be

acquired by prescription; no matter how long the possession of the properties has

been, “there can be no prescription against the State regarding property of the

public domain.” (Palanca v. Commonwealth, 40 O.G. 6th S, No. 10, p. 148;

Meneses v. Commonwealth, 69 Phil. 505). “Property of the State or any of its

subdivisions not patrimonial in character shall not be the object of prescription.”

(Art. 1113). Even a city or a municipality cannot acquire them by prescription as

against the State. (City of Manila v. Ins. Gov’t., 10 Phil. 327). They cannot be

registered under the Land Registration Law and be the subject of a Torrens Title;

if erroneously included in a Torrens Title, the land involved remains property of

the public domain. (Palanca v. Commonwealth, 69 Phil. 449; Bishop of Calbayog

v. Director of Lands, L-23481, June 29, 1972, 45 SCRA 418). They, as well as

their usufruct, cannot be levied upon by execution, nor can they be attached.

(Tufexis v. Olaguera, 32 Phil. 654; Tan Toco v. Mun. Council of Iloilo, 49 Phil.

52). In general, they can be used by everybody. They m,ay either be real or

personal property, for it will be noted that the law makes no distinction.4

Canals constructed by private persons within private lands are of private

ownership. (Santos v. Moreno, GR L-15829, Dec. 4, 1967). Conversion of a

property’s character from public to patrimonial requires a formal declaration of

4
Ibid, p. 47-48.

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abandonment of the public character. Even if the property were patrimonial,

there could be no sale as there is no law authorizing the same. (Laurel v. Garcia,

G.R. No. 92013 July 25, 1990). Public plazas and streets are of public character

and may not be leased out by the municipality. (Municipality of Cavite v. Rojas,

30 Phil. 602). Property owned by the State which is not intended for public use

or public service is patrimonial. There is no reimbursement if lessee derived

substantial benefit from the use of said property. (Sanchez v. Mun. of Asingan,

GR L-17635, Mar. 30, 1963).

The property of provinces, cities, and municipalities is divided into

property for public use and patrimonial property. (Art. 423, ibid). Property for

public use, in the provinces, cities, and municipalities, consist of the provincial

roads, city streets, municipal streets, the squares, fountains, public waters,

promenades, and public works for public service paid for by said provinces, cities,

or municipalities. All other property possessed by any of them is patrimonial and

shall be governed by this Code, without prejudice to the provisions of special

laws. (Art. 424, ibid). Where now do properties for public service and properties

for the development of national wealth fall? Public service – depends on who

pays for the service. If paid for by the political subdivision, public; if for profit,

patrimonial. National wealth – still property for public use under the regalian

doctrine.

Property of a political subdivision is public only if it is devoted to public

use. Examples of property for public use being streets, promenades, fountains,

etc. (City of Cebu v. NAWASA, G.R. No. 12892, April 20, 1960). Under the Law

of Municipal Corporations, it is enough that the property be devoted for

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governmental purposes for it to be classified as public. (Province of Zamboanga

v. City of Zamboanga, GR L-24440, Mar. 28, 1968).

The character of the property depends on the use to which it is devoted.

The problem is which applies, Civil Code or Law of Municipal Corporations?

Under the CC, a property is public if it is for the free and

indiscriminate use of everyone. Under municipal law, it is sufficient

that the property be devoted to governmental purposes. In this

case, applying the CC, the properties are not for public use but

merely for public service. However, Municipal law applies because

the controversy is more municipal than civil and the properties are

needed for the performance of governmental functions. The LMC

provides that a property is public if it is devoted to public use. If the

CC classification is used, consequences are dire (acquisition

through adverse possession). Also the LMC is a special law. The CC

itself provides that its provisions apply without prejudice to special

laws.

The buildings on the lots are also public because accessory follows the

principal. How do we resolve then what determines character?

1. Salas v. Jarencio (GR L-29788, Aug. 30, 1972): How the

property was purchased - public/private funds; or

2. Civil code: What use the property is devoted to - free and

indiscriminate use of everyone or otherwise; or

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3. LMC: Property is public if it is exclusively devoted to public

service.

Public properties are exempt from execution because of their necessity for

governmental functions. (Viuda de Tan Toco v. Municipal Council of Iloilo, 49

Phil. 52). A town plaza loses its public character when the town ceases using it as

such and subjects it to patrimonial use. (Municipality of Oas v. Roa, 7 Phil. 20).

Property of private ownership, besides the patrimonial property of the

State, provinces, cities, and municipalities, consists of all property belonging to

private persons, either individually or collectively (Art. 425, ibid). The Code

recognizes the rights to private property by private individuals (individually or by

co-ownership), by corporations, partnerships, or other juridical persons/entities

allowed by law to possess and acquired properties.

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PROPERTY TRANSACTION

OWNERSHIP

After discussing the concept of property, we will now look into the

different transactions involving properties. Transactions may involve

acquisition, possession, disposition, loss, or registration of properties and the

mechanism for each of which varies and differs depending on the type of property

involved. These transactions can be dealt with by persons (natural or juridical)

exercising ownership over the property or those persons having interest over the

property subject of such transactions. It is but essential therefore to understand

the concept of ownership before we can determine under what terms and

conditions properties would be subject of transactions as provided for by law.

Article 427 of the Civil Code provides that ownership may be exercised over

things or rights. Ownership is the independent (stands by itself and gives you the

right to control the property) and general (possession, enjoyment, disposition,

and recovery) right of a person to control a thing particularly in his possession,

enjoyment, disposition, and recovery, subject to no restrictions except those

imposed by the state or private persons, without prejudice to the provisions of the

law.5 What are these rights? By virtue of Article 428 (of the Civil Code) the

owner has the following rights:

1. Right to Enjoy – This includes the right to possess, that right to

hold a thing or to enjoy it subject to control of ones own will; the

right to use, that right to exclude any person, as a rule, from the

enjoyment and disposal thereof (Art. 429, CC - reasonable force

5
Ibid, p. 81.

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may be used to prevent or repel physical invasion); and the right

to the fruits.

2. Right to Dispose – The right to consume, destroy, or even abuse;

and the right to encumber or alienate the property.

3. Right to Recover – without force by legal means as provided for

by law. The owner has also a right of action against the holder

and possessor of the thing in order to recover it.

However, the enjoyment of the rights of an owner are likewise restricted

by law (Art. 19, CC must be considered in the exercise of a right.) Thus the Civil

Code on Arts. 430 to 434, to name a few, provide the related restrictions, as well

as other special laws (i.e. Remedial laws on the procedure of recovery.)

Ownership is likewise limited by the State or the laws of the State by the exercise

of police power, power of taxation, and power of eminent domain.

Police power is a limitation on the right of ownership in the sense that

property may be interfered with, even destroyed, if the welfare of the community

so demands it. Sec. 2238 of the Revised Administrative Code requires that an

ordinance enacted by a municipality under the “general welfare clause” should be

to “provide for the health and safety, promote the prosperity, improve the morals,

peace, good order, comfort, and convenience of the municipality and the

inhabitants thereof, and for the protection of property therein.” (Pampanga Bus

Co., Inc., et.al. v. Mun. of Tarlac, GR L-15759, Dec. 30, 1961). Exercise of police

power has been used in the abatement of nuisance, whether public or private,

whether nuisance per se or nuisance per accidens (Iloilo cold Storage Co. v.

Council of Iloilo, 24 Phil. 417); to declare by ordinance, market stalls held by

aliens, as vacant, so that Filipino applicants, may be preferred (Chua Lao, et. al. v.

11
Raymundo, et.al., GR L-12662, aug. 18, 1958); to enact the Social Security Law

(Roman Catholic Archbishop of Manila v. Social Security Comm., GR L-15045,

Jan. 20, 1961) and to implement the Comprehensive Agrarian Reform Law

(CARP) (Roxas and Co., Inc., v CA, 117 SCAD 589, 321 SCRA 106).

Taxation is the inherent power of the State to raise income or revenue to

defray necessary governmental expenses for a public. Thus, thru taxation, the

cost of governing is apportioned among those who in some measure are

privileged to enjoy benefits and must consequently bear the burdens of

government. Indeed, it has been said that of all the powers of government, the

power of taxation is the strongest for it involves “the power to destroy.”6

Eminent domain, or the superior right of the State to own certain

properties under certain conditions, is a limitation on the right of ownership, and

may be exercised even over private properties of cities and municipalities, and

even over lands registered with a Torrens Title. According to Cooley, it is the

right of the State to acquire private property for public use upon payment of just

compensation (Cooley’s Constitutional Limitations, 8th Ed., p. 110). Inherently

possessed by the national legislature, the power of eminent domain may be

validly delegated to local governments, other public entities and public utilities

(Moday v CA, 79 SCAD 816, 1997). Eminent domain or expropriation is based on

the need for human progress and community welfare or development. The power

of eminent domain is inseparable from sovereignty, or upon any government

exercising sovereigns or quasi-sovereignty powers (Visayan Refining Co. v Camus

and Paredes, 40 Phil. 550).7

6
Ibid, p. 141.
7
Ibid, pp. 152-153.

12
Co-owner is that state where an undivided thing or right belongs to two or

more persons (Art. 484, CC). It is the “the right of common dominion which two

or more persons have in a spiritual (or ideal) part of a thing which is not

physically divided.”8 A co-ownership is not a juridical person, nor is it granted

any form of juridical personality. Thus, it cannot sue in court. Co-owners may, of

course, litigate in their individual capacities (Smith v Lopez, 5 Phil. 78). Co-

ownership is governed by contracts, special provisions (party walls, party ditches;

the co-ownership of earnings by a man and a woman whose marriage is void, or

who is living together without benefit of marriage – Art. 144; special laws:

Republic Act No. 4726 “An Act To Define Condominium, Establish Requirements

For Its Creation, And Govern Its Incidents” June 18, 1966; Presidential Decree

No. 957 “Regulating The Sale Of Subdivision Lots And Condominiums, Providing

Penalties For Violations Thereof” July 12, 1976, etc…), and provision of the Title

on Co-ownership (commixtion, confusion, hidden treasure, etc…).

Under the Civil Code, Title IV Some Special Properties, it provided for the

ownership of water, minerals, trademarks and trade names. Art. 502 (CC)

enumerated bodies of water which are of public dominion while Art. 503

enumerate those which are of private ownership. However, under Sec. 2, Art. XII

of 1987 Constitution, provides that “water…belong to the State.” How will we

reconcile now the two laws? It must be borne in mind that a law remains

constitutional until declared otherwise by the competent court. It is believed

therefore that to be constitutional, this should apply only to existing water rights

prior to the Constitution (Memorandum of the Code Commission). Water rising

on private lands are private waters, until they go to lands of public dominion, in

which case they become public waters but waste water of private establishments

8
Ibid, p. 314.

13
are not public waters (Art. 502 (8) and (9) respectively, CC). Under the New

Water Code (PD 1067 A Decree Instituting A Water Code, Thereby Revising And

Consolidating The Laws Governing The Ownership, Appropriation, Utilization,

Exploitation, Development, Conservation And Protection Of Water Resources,

December 31, 1976), there are no private waters.

Art. 519 of the Civil Code provide, “mining claims and rights and other

matters concerning minerals and mineral lands are governed by special laws.”

Minerals are defined as inorganic elements or substances found in nature

whether in a gaseous, liquid, or solidified stage (excluding the soil, ordinary

earth, sand, stone and gravel). Those where there are minerals sufficient in

quality and quantity to justify expenses for their extraction are called mineral

lands. Under the Constitution (Sec. 2, Art. XII), the mineral resources of the

country shall not be alienated; that all minerals belong to the State, whether they

are contained in public or private land; and that no license, concession or lease

for the exploitation, and development shall be granted for a period exceeding 25

years, renewable for another 25 Years (RA 81 of Oct. 29, 1946 “An Act To Aid The

Mining Industry By Providing For The Waiver Of, And/Or Extension Of The

Period Within Which To Perform, Accomplish Or Comply With Any Term,

Condition, Or Stipulation Required Of Locators, Holders, Lessees, Or Operators

Of Mining Claims Or Concessions, And Of Water Rights And Timber Concessions

Connected With The Mining Industry, And The Condonation Of Mining, Specific

And Real Estate Taxes, Under Certain Terms And Conditions”). Other Related

Laws Include Commonwealth Act 137 or The Mining Law (11/7/36), RA 4388 “An

Act Amending Sections Twenty-Four, Thirty-Three, Thirty-Four, Thirty-Seven,

Forty-Seven, Sixty-One, Sixty-Two, Sixty-Eight, Seventy-Three, Seventy-Six,

Paragraph (A), Eighty-One, Eighty-Nine, And Ninety-One Of Commonwealth Act

14
Numbered One Hundred Thirty-Seven, Otherwise Known As The Mining Act, As

Amended, Act 2719 or The Coal Act, RA 387 or The Petroleum Act Of 1949, Act

2932 for oil and gas, RA 7103 Aug. 8, 1991 "Iron And Steel Industry Act" An Act

To Strengthen The Iron And Steel Industry And Promote Philippine

Industrialization And For Other Purposes; RA 7076 of June 27, 1991 “An Act

Creating A People's Small-Scale Mining Program And For Other Purposes; RA

7942 Of The Mining Act Of 1995, etc…).

Trademark is a name or symbol of goods made or manufactured while

trade name is the name or symbol of store, business, or occupation designating

the identifying or distinguishing an enterprise. Under Article 521 (CC), “The

goodwill of a business is property, and may be transferred together with the right

to use the name under which the business is conducted.”

“THE RIGHT TO OWN”

As a general rule, only Filipino citizens and/or partnerships or

corporations, at least 60% of the capital of which is owned by Filipinos are

entitled to acquire land in the Philippines. As exception to the general rule, alien

acquisition of real estate in the Philippines is allowed in the following cases:

a. Acquisition before the 1935 Constitution;

b Acquisition thru hereditary succession (legal heir).

This simply means that when the non-Filipino is

married to a Filipino citizen and the spouse dies, the non-

Filipino as the natural heir will become the legal owner of the

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property. The same is true for the children. Every natural

child (legitimate or illegitimate) can inherit the property of

his/her Filipino father/mother even if he/she does not have

any Filipino citizenship.

c. Purchase of not more than 40% interest in a condominium

project; and

d. Purchase by a former natural-born Filipino citizen subject to

the limitations prescribed by Law (Batas Pambansa 185 and R.A.

8179).

A Filipino who married an alien retains her Philippine citizenship (unless

by her act or omission, she is deemed to have renounced her Philippine

citizenship) and may therefore acquire real estate in the Philippines.

Foreshore land is that part of the land which is between high and low

water and left dry by the flux and reflux of the tides. It is a strip of land that lies

between the high and low water marks and is alternatively wet and dry according

to the flow of the tide (Republic v. Imperial, Jr., 103 SCAD 380, 303 SCRA 127,

1999). The shoreline of the whole Philippines belongs to the government. When

you buy a piece of beachfront lot you have to obtain a “Foreshore Lease” from the

government which shall afford you possession and control of the beach from the

High Tide – to the Low Tide mark as lessee thereof. This law was promulgated to

prevent squatters living on beaches within the Philippines, and to protect the

environment. No development is allowed on any beach closer than 30 m to the

high tide mark.

16
With the recent lifting of the moratorium on the disposition and granting

of any title, concession, permit or lease on all small islands nationwide by virtue

of Administrative Order No. 2003-06 of the Department of Environment and

Natural Resources, certain islands that are tax declared can now be titled for as

long as they are classified as alienable and disposable. However, certain types of

land may never be titled.

“ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZEN”

Mode of acquisition is not limited to voluntary deeds (such as sale or

donation) but includes involuntary deeds (such as tax sale, foreclosure sale, or

execution sale). Maximum area that may be allowed is as follows:

a. For residential purpose - 1,000 square meters of urban land

or one (1) hectare of rural land (BP 185);

b. For business or other purpose - 5,000 square meters of

urban land or three hectares of rural land.

"Business or other purpose" refers to the use of the land primarily, directly

and actually in the conduct of business or commercial activities in the broad

areas of agriculture, industry and services, including the lease of land, but

excluding the buying or selling thereof."

In case of married couple, one or both of them may avail of the privilege,

provided that the total acquisition shall not exceed the maximum area allowed.

17
A transferee of residential land under BP 185 may still avail of the privilege

granted under RA 8179. A transferee who already owns urban or rural land for

residential purpose, may acquire additional urban or rural land for residential

purpose which, when added to that already owned by him shall not exceed the

maximum area allowed by law. The same privilege applies to a transferee who

already owns urban or rural land for business purposes. A transferee may not

acquire more than two urban or two rural lands which should be located in

different cities or municipalities. A transferee who has already acquired urban

land for residential purpose shall be disqualified to acquire rural land for

residential purpose and vice versa. The same rule applies to a transferee of land

for business purpose.

“DUAL CITIZENS”

Dual citizenship means having two citizenships and passports from two

different countries. Dual citizenship allows the citizenship holder full rights of

possession of Philippine real property. This is a new law and it is still unclear as

to the procedures involved to implement it. Dual citizenship is now available to

former Filipino citizens born in the Philippines, who have immigrated to another

country and obtained citizenship of that country.

“FOREIGN OWNERSHIP AS A PHILIPPINE CORPORATION”

Foreign nationals or corporations may completely own a condominium or

townhouse. To take ownership of a private land, residential house and lot, and

commercial building and lot, foreign nationals or corporations should form a

Philippine corporation. The corporation is to be 40% foreign-owned (maximum)

18
and 60% Filipino-owned (minimum), and with at least five [5] incorporators.

Upon incorporation, a main bank account should be tied to it. A foreign national

may be the sole person in the bank account, allowing him/her total control over

the funds derived from the corporation and the income or sale of the asset or

property.

“FOREIGN LEASING OF PHILIPPINE REAL ESTATE PROPERTY”

A foreign national and or corporation may enter into a lease agreement

with Filipino landowners for an initial period of up to 50 years and renewable for

another 25 years.

“PUBLIC WATERS AND WATERS OF PRIVATE OWNERSHIP”

The use of public waters, if acquired by administrative concession, is

governed by the terms of the concession. While if acquired by prescription for 10

years, the extent of the rights and obligations of the use shall be governed by the

manner and form in which the waters have been used.

The concession for the use of waters should not jeopardize vested rights

(Sideco v. Sarena, 41 Phil. 80; Art. 505 CC). The right to make use of public

waters is extinguished by the lapse of the concession and by non-use for 5 years

(Art. 506, CC).

Under Art. 507 (CC), waters leaving the a piece of land (privately owned)

belong to the public, unless they enter a private estate instead, in which case, said

estate will have their use until they finally leave said private estate (Sansano v.

19
Castro, 40 O.G. 15, p.227). Once the waters leave the land, their use shall be

governed by the Special Law of Waters and the Irrigation Law. (For subterranean

waters please see Arts. 512 to 514 of the Civil Code).

“MINERALS”

Minerals even if found on private lands are still owned by the State (Secs. 2

and 4, RA 7942). This is true even if the land has the Torrens Title. This is

because the ownership of mines, from their very nature, should not depend upon

the ownership of the soil. RA 7942, in line with Art. XII, Sec. 2 of the

Constitution, contains provisions for government management, mineral

agreements, financial or technical assistance agreement, small scale mining,

safety and environmental protection, settlement of conflicts, organizational and

institutional arrangements, and penal provisions.

“TRADEMARKS AND TRADE NAMES”

Registration of both is a necessity for purposes of protection against

infringement or unfair competition. Likewise, in the registration, it must be

determined whether the same is registrable or not (as in the case of generic

names or symbols). The law governing trademarks, trade names and other

intellectual properties is RA 8293 or the “Intellectual Property Code of the

Philippines (June 6, 1997). (Art. 522, CC).

20
POSSESSION

Possession is the holding of a thing or the enjoyment of a right. (Art. 523,

CC) The requisites or elements of possession are: there must be a holding or

control (occupancy, or taking or apprehension) of a thing or a right (it may be

actual or constructive); there must be deliberate intention to possess (animus

possidendi); and the possession must be by virtue of one’s own right (maybe

because he is the owner or because of a right derived from the owner). Classes of

possession are in one’s own name or in that of another (Art. 524); in the concept

of owner and in the concept of holder (Art. 525); and in good faith (bona fide) or

in bad faith (mala fide).9 A possessor in good faith is one who is not aware that

there exists in his TITLE or MODE of acquisition any flaw which invalidates it

(DBP v. CA, 316 SCRA 650). While a possessor in bad faith is one who is not in

good faith, hence, if circumstances exist that require a prudent man to

investigate, he will be in bad faith if he does not investigate. A person, just

because he is in bad faith, does not necessarily makes his successor-in-interest

also in bad faith. A child or heir may even be presumed in good faith,

notwithstanding the father’s bad faith (Sotto v. Enage, 43 O.G. 5057). Article 527

(CC) provides for the presumption of good faith and the burden of proof being

with the one who alleges bad faith on the part of the possessor. Existence of bad

faith may begin either from the receipt of judicial summons (Tacas v. Tobon, 53

Phil. 356) or even before such time as when a letter is received from the true

owner asking the possessor to stop planting on the land because somebody else

owns it (Ortiz v. Fuentebella, 27 Phil. 537).

9
Ibid, p. 450-451.

21
ACQUISITION AND RECOVERY OF POSSESSION

Possession is acquired by material occupation of a thing or the exercise of

a right; by subjection to our will; and by constructive possession or proper acts

and legal formalities (such as succession, donation, execution of public

instruments; or thru possession by a sheriff by virtue of a court order).

Possession cannot be acquired thru force or intimidation (as long as there is a

possessor who objects thereto. However, if at first there was objection but later

on such objection ceases, the possession begun by force or intimidation may be

acquired. Objection maybe made by suit of forcible entry within a year from the

dispossession, otherwise, the possession de facto is lost.); thru mere tolerance

(permission; not including mere inaction or mere failure to bring an action); and

thru clandestine, secret possession (or possession without knowledge – for this

would be possession by stealth, and not open or public). (Arts. 536 and 537, CC).

Under the old law, the Code of Civil Procedure, prescription was possible

even if entry into the premises was effected thru violence, for the law said “in

whatever way such occupancy may have commenced or continued.” (Sec. 41, Act

190, Civil Code). However, under the new Civil Code, “possession (for

prescription) has to be in the concept of an owner, public, peaceful and

uninterrupted.” (Art. 1118). The reason for “peaceful” is that “violence or

downright usurpation must be condemned.” (Report of the Code Commission, p.

129).

The reasons for the requirement of legal means for restoration of

possession are:10

10
Ibid, p. 510.

22
1. To prevent spoliation or a disregard of public order (Roxas v.

Mijares, 9 Phil. 520);

2. To prevent deprivation of property without due process of law; and

3. To prevent a person from taking the law into his own hands (Yuson

v. Guzman, 42 Phil. 22).

Thus:

1. The owner should go to court, and not eject the unlawful possessor

by force. (Bago v. Garcia, 5 Phil. 524).

2. A tenant illegally forced out by the owner-landlord may institute an

action for forcible entry even if he had not been paying rent regularly.

(Mun. of Moncada v. Cajuigan, 21 Phil. 184).

3. The proper actions are forcible entry or unlawful detainer

(summary action or accion interdictal), injunction (to prevent further acts

of dispossession). However, injunction is generally not the proper remedy

to recover possession, particularly when there are conflicting claims of

ownership. An accion reivin-dicatoria would be better. (Cirila Emilia v.

Epifanio Bado, GR L-23685, Apr. 25, 1968). A final judgment in an

unlawful detainer case may be executed even if there is still pending an

accion reivindicatoria, for the two actions can co-exist. (Alejandro c. CFI of

Bulacan, 40 O.G. [9S] 13, p. 128). A mere trespasser, even if ejected, has

no right to institute an action of forcible entry (Schrivinn v. Perkins, 78

Atl. 19).

23
BY WHOM POSSESSION BE ACQUIRED (ART 532, CC):11

By same person - elements of personal acquisition:

 Capacity to acquire possession

 Intention to possess

Possibility of acquiring possession - by his legal representatives, requisites:

 By his agent

 By any person without any power whatsoever but subject to

ratification, without prejudice to the proper case of

negotiorum gestio. (Arts. 2144, 4129, 2150, CC).

 Qualifiedly, minors and incapacitated persons (Art. 535, CC).

11
http://www.scribd.com/doc/24634702/PROPERTY-Reviewer

24
ENTITLEMENT

 Entitlement to fruits – possessor in good faith/bad faith (Arts. 544 and

549, CC).

 Reimbursement for expenses – possessor in good faith/bad faith.

 Liability for loss or deterioration of property by possessor in bad faith

(Arts. 552 and 553, CC).)

 Possession of movable acquired in good faith (in concept of owner) is

equivalent to title (Art 559, CC). (Possessor has actual title which is

defeasible only by true owner.) One who has lost a movable or has been

unlawfully deprived thereof may recover it but without

reimbursement, EXCEPT: If possessor acquired it at a public sale.

 Possessor may bring all actions necessary to protect his possession except

accion reivindicatoria.

 May employ self-help under Art 429, CC.

 Possessor may ask for inscription of such real right of possession in the

Registry of Property.

 Of enjoyment of possession in the same character in which

possession was acquired until contrary is proved (Art. 529, CC).

 Of non-interruption of possession in favor of present possessor who

proves possession at a previous time until the contrary is proved

(Arts. 554, 1120, 1121, 1122, 1123, 1124, CC).

 Of continuous possession or non-interruption of possession of which he

was wrongfully deprived for all purposes favorable to him. (Art 561,

CC)

 Other presumptions with respect to specific properties of property rights.

25
 Of extension of possession of real property to all movables contained

therein so long as it is not shown that they should be excluded (Art. 426,

CC).

 Non-interruption of possession of hereditary property (Arts. 533, 1078,

CC).

 Of just title in favor of possessor in concept of owner (Arts. 541 and 1141,

CC).

POSSESSION MAY BE LOST BY

 Abandonment

 Assignment, either onerous or gratuitous

 Destruction or total loss of thing or it goes out of commerce

 Possession by another; if possession has lasted longer than one year; real

right of possession not lost until after 10 years (subject to Art. 537, CC - on

acts merely tolerated, etc).

26
USUFRUCT

Usufruct is the right to enjoy the property of another, with the obligation

of preserving its form and substance, unless the title constituting it or the law

provides otherwise (Art. 562, CC). It is a real right, of a temporary nature, which

authorizes its holder to enjoy all the benefits which result from the normal

enjoyment (or exploitation) of another’s property, with the obligation to return,

at the designated time, either the same thing, or in special cases, its equivalent.

(Eleizegue v. Manila Lawn Tennis Club, 2 Phil. 309). The rights of action

available to usufructuary (the person entitled to the usufruct) are action to

protect the usufruct itself and action to protect the exercise of the usufruct.

The rules governing a usufruct are first, the agreement of the parties or the

title giving the usufruct (thus, by agreement, the usufructuary may be allowed to

alienate the very thing held in usufruct although generally, this alienation is not

allowed by the codal provision). Second, in case of deficiency, the Civil Code

applies. In case of conflict between the rights granted a usufructuary by virtue of

a will, and codal provisions, the former, unless repugnant to the mandatory

provisions of the Civil Code, should prevail (Fabie v. Gutierrez David, 75 Phil.

536). Articles 570, 577, 578, 582, 598, 600, and 591 of the Civil Code speak of

other special usufructs.

The usufructuary has the right to make useful improvements as well as

luxurious improvements (for mere pleasure) but he must not alter the form or

substance of the property held in usufruct and he is not entitled to a refund

otherwise he might improve the naked owner out of his property. But he may

either remove the improvements if no substantial damage to the property in

27
usufruct is caused or set off (compensate) the improvements against damages for

which he may be liable. (Arts. 579 and 580, CC).

Improvements made by a usufructuary belong to him, and may therefore

be registered, not independently, but in the registration proceedings of the land

held in usufruct. The purpose of the registration is to protect him against third

persons, for while he cannot obtain a refund thereof, still he may remove them or

set them against damages chargeable to him. Thus, if the property is sold to an

innocent purchaser for value, the right to remove the useful improvements since

not registered can not be enforced against said third person (Mella v. Bismanos,

45 O.G. 2099). In case of succession, if the naked owner bequeathes (if personal

property) or devises (if real property) to another thru a will, the legatee or devisee

should respect the usufruct. (Art. 934 last par., CC). If there be partition, the

usufructuary continues to have the usufruct of the part allotted to the co-owner

concerned (Art. 582, CC). If the co-owners make a partition, without the

intervention of the usufructuary, this is all right, and the partition binds said

usufructuary. Necessarily however, the naked owner must also respect the

usufruct. (Pichay v. Querol, 11 Phil. 386). The usufructuary has the obligation to

make an inventory before the usufruct, take due care of the property during the

usufruct, and to return and indemnify in the proper cases, after the usufruct (Art.

583, CC). The giving of security is to insure faithful compliance of the duties of

the usufructuary (whether required during or at the end of the usufruct – like the

duty to return). The effect of failure to give security, unless exempted, on the

rights of the naked owner is that, he may deliver the property to the usufructuary

or the naked owner may choose retention of the property as administrator

(usufructuary gets the net proceeds, minus administration expenses, the amount

of which is fixed by mutual agreements or by courts), or the naked owner may

28
demand receivership or administration (by another) of the real property, sale of

movable, conversion or deposit of credit instruments, or investment of cash or

profits. On the other hand, the effects of said failure on the rights of the

usufructuary are that the usufructuary cannot possess the property till he gives

the security; cannot administer the property, hence, he cannot execute a lease

therefrom; he cannot collect credits that have matured, nor invest them unless

the Court or the naked owner consents; but the usufructuary can alienate his

right to the usufruct (since failure to give the security did not extinguish the

usufruct). The grantee may of course possess, the moment he gives security.

The usufructuary is liabile for the acts of the substitute (fault, negligence,

or even willful deceit). Thus, while the substitute answers to the usufructuary,

the usufructuary answers to the naked owner. Even when there is sub-

usufructuary, it is still the usufructuary who answers to the naked owner for

ordinary repairs, taxes on the fruits, etc…12

Extraordinary repairs shall be at the expense of the owner and the

usufructuary is obliged to notify the owner when the need for such repairs is

urgent (Art. 593, CC). The reason for this is because the property is that of the

owner and not of the usufructuary. However, the naked owner can demand from

the usufructuary the legal interest on the amount for the duration of the usufruct

since the usufructuary has really been benefited, otherwise, the thing may not

properly be used. (Art. 594, CC).

Since a usufruct is a real right, the usufruct (as distinguished from the

property itself) may be mortgaged, not by the naked owner, but by the

usufructuary. In such a case, it is the usufructuary who should pay his own debt.

12
Ibid, p. 612.

29
It is likewise believed that although Art. 600 speaks only of a mortgaged

immovable, it can also apply, by analogy, to a pledged movable, provided that the

movable is in the usufructuary’s possession, since in the law of pledge, it is

essential that “the thing pledged be placed in the possession of the creditor, or a

third person by common agreement (Art. 2093, CC). Expenses, costs and

liabilities in suits brought with regard to the usufruct shall be borne by the

usufructuary in case he has lost the case (Art. 602, CC). The defense of the naked

ownership is naturally chargeable to the naked owner.

By the provision of Art 603 of the Civil Code, usufruct may be extinguished

by death of usufructuary (EXCEPTION: unless a contrary intention clearly

appeals); expiration of period or fulfillment of resolutory condition imposed on

usufruct by person constituting the usufruct (time may elapse before a third

person attains a certain age, even if the latter dies before period expires – unless

granted only in consideration of his existence (Art 606, CC); merger of rights of

usufruct and naked ownership in one person; renunciation of usufruct

(limitations; must be express; if made in fraud of creditors, waiver may be

rescinded by them through action under Art 1381); extinction or loss of property

(if destroyed property is insured before the termination of the usufruct under Art

608 – par. 1> when insurance premium paid by owner and usufructuary: a.

if owner rebuilds, usufruct subsists on new building and b. if owner does not

rebuild, interest upon insurance proceeds paid to usufructuary; par. 2> when the

insurance taken by owner only because usufructuary refuses: a. owner entitled

to insurance money (no interest paid to usufructuary) b. if he does not rebuild,

usufruct continues over remaining land and/or owner may pay interest on value

of both (Art. 607, CC) and c. if owner rebuilds, usufruct does not continue on new

building, but owner must pay interest on value on land and old materials; when

30
insurance taken by usufructuary only depends on value of usufructuary’s

insurable interest (not provided for in the Civil Code): a. insurance proceeds to

usufructuary b. no obligation to rebuild c. usufruct continues on the land and d.

owner does not share in insurance proceeds); if destroyed property is not insured

(Art. 607, CC) - if building forms part of an immovable under usufruct; if owner

does not rebuild, usufruct continues over the land and materials; if owner

rebuilds, usufructuary must allow owner to occupy the land and to make use of

materials, but value of both land and materials; termination of right of person

constituting the usufruct; prescription (Cases covered: a. If third party acquires

ownership of thing or property in usufruct; b. Right of ownership lost through

prescription; c. Right of usufruct not began within prescriptive period; and d. If

there is a tacit abandonment or non-user of thing held in usufruct for required

period).

What do not cause extinguishment of usufruct? a. Expropriation of thing

in usufruct (Art. 609, CC); b. Bad use of thing in usufruct (Art. 810, CC) - Owner’s

right; and c. Usufruct over a building (Arts. 607 & 608, CC).

31
EASEMENTS OR SERVITUDES

It is an encumbrance imposed upon an immovable for the benefit of a

community or one or more persons (personal easements) or for the benefit of

another immovable belonging to a different owner (real or predial easement).

(Arts. 613 & 614, CC) Acknowledgment of an easement is an admission that the

property belongs to another (Bogo-Medellin Milling Co., Inc. v. CA, 407 SCRA

518, 2003).

The destruction of a dam preventing the supply of water to a land owned

by another is held not proper in the appreciation of the law on easements and

servitudes (Relova v. Lavarez, 9 Phil. 149). Injunction will not prosper in

easement for the benefit of the community. The owner can close, if he wants to,

but he cannot, as long as it is open, discriminate against, one person, and still

allow others to cross the private road (North Negros Sugar Co. v. Hidalgo, 63

Phil. 664). An opening or window in one’s wall (which does not extend over

another’s property) can be the basis of a negative easement of light and view (not

positive) for here, the neighboring owner may later on be prevented from

obstructing the light and view by the construction of an overshadowing building

on his own land, a thing he can lawfully construct were it not for the existence of

the easement. (Cortes v. Yu Tibo, 2 Phil. 24). The use of a footpath or road may

be apparent but it is not a continuous easement because its use is at intervals and

depends upon the acts of man. A right of way is not acquirable by prescription.

(Abellana, Sr. v. CA, 208 SCRA 316, 1992). A right-of-way is an interest in the

land, any agreement creating it should be drawn and executed with the same

formalities as a deed to a real estate, and ordinarily must be in writing.

32
(Ressureccion Obra v. Sps. Victoriano & Myrna Badua, et. al., GR 149125, Aug. 9,

2003).

The modes of acquiring easement are provided for by the Civil Code under

Arts. 620 – 624 on compulsory easements and Arts. 669-673 provides for

easement of light and view.

The Court in Republic vs. Sps. Libunao, et. al. (G.R. No. 166553 July 30,

2009) resolved the matter on payment of just compensation of the market value

of the properties traversed by the transmission lines in lieu of payment merely for

an easement fee the acquisition of such an easement falls within the purview of

the power of eminent domain. An easement of a right of way transmits no rights

except the easement itself, and the owner of the property retains full ownership of

the property. The acquisition of such easement is, nevertheless, not gratis.

Considering the nature and the effect of the installation of power lines, the

limitations on the use of the land for an indefinite period would deprive the

owner of the normal use of the property. For this reason, the latter is entitled to

payment of a just compensation, which must be neither more nor less than the

monetary equivalent of the land.

Both from the text of Article 649 of the Civil Code and the perspective of

elementary common sense, the dominant estate cannot be the servient estate at

the same time. One of the characteristics of an easement is that it can be imposed

only on the property of another, never on one’s own property. An easement can

exist only when the servient and the dominant estates belong to different owners.

(Borbajo vs. Hidden View Homeowners, Inc., G.R. No. 152440 January 31,

2005).

33
The easement rights under Section 75 of Rep. Act No. 7942 as well as the

various rights to CAMC under its FTAA are no different from the deprivation of

proprietary rights is considered as taking. Section 75 of the law in question reads:

Easement Rights. - When mining areas are so situated that for

purposes of more convenient mining operations it is necessary to

build, construct or install on the mining areas or lands owned,

occupied or leased by other persons, such infrastructure as roads,

railroads, mills, waste dump sites, tailing ponds, warehouses,

staging or storage areas and port facilities, tramways, runways,

airports, electric transmission, telephone or telegraph lines, dams

and their normal flood and catchment areas, sites for water wells,

ditches, canals, new river beds, pipelines, flumes, cuts, shafts,

tunnels, or mills, the contractor, upon payment of just

compensation, shall be entitled to enter and occupy said mining

areas or lands.

The entry referred to in Section 76 (RA 7942) is not just a simple right-of-

way which is ordinarily allowed under the provisions of the Civil Code. Here, the

holders of mining rights enter private lands for purposes of conducting mining

activities such as exploration, extraction and processing of minerals. Mining right

holders build mine infrastructure, dig mine shafts and connecting tunnels,

prepare tailing ponds, storage areas and vehicle depots, install their machinery,

equipment and sewer systems. On top of this, under Section 75, easement rights

are accorded to them where they may build warehouses, port facilities, electric

transmission, railroads and other infrastructures necessary for mining

operations. All these will definitely oust the owners or occupants of the affected

34
areas the beneficial ownership of their lands. Without a doubt, taking occurs once

mining operations commence.

The original and exclusive jurisdiction of the courts to decide

determination of just compensation remains intact despite the preliminary

determination made by the administrative agency. (Didipio Earth-Savers' Multi-

Purpose Association, Inc. Et Al. Vs. Elisea Gozun, Et Al., G.R. No. 157882 March

30, 2006.)

MODES OF EXTINGUISHMENT OF EASEMENTS (ART 631, CC)

Easements are extinguished by:

1. Merger in the same person of the ownership of the dominant and

servient estates. Must be absolute, perfect and definite, not merely

temporary.

2. Non-user for 10 years

Computation of the period:

2.1 Discontinuous easements – counted from the day they ceased

to be used.

2.2 Continuous easements – counted from the day an act adverse

to the exercise took place. (The use by a co-owner of the

dominant estate bars prescription with respect to the others.

Art 633, CC. Servitudes not yet exercised cannot be

extinguished by non-use.)

3. Extinguishment by impossibility of use.

35
4. Expiration of the term or fulfillment of resolutory condition.

5. Renunciation of the owner of dominant estate. [Must be specific, clear,

express (distinguished from non-user).]

6. Redemption agreed upon between the owners.

Other causes not mentioned in Art. 631

1.1. Annulment or rescission of the title constituting the easement.

1.2. Termination of the right of grantor.

1.3. Abandonment of the servient estate.

1.4. Eminent domain.

1.5. Special cause for extinction of legal easement of rights of way; if

right of way no longer necessary.

LAW GOVERNING LEGAL EASEMENTS

1. For public easements: Special laws and regulations relating thereto:

1. PD 1067 – Water Code

2. PD 705 – Forestry Reform Code

2. Provisions of Chapter 2, Title VII, Book II of CC (Legal Easements); and

3. By agreement of the interested parties whenever the law does not prohibit it

and no injury is suffered by a 3rd person.

36
PROPERTY TRANSACTIONS IN RELATION TO ACQUISITION OF

OWNERSHIP

Original mode of acquiring ownership is one which produce the

acquisition of ownership independent of any pre-existing right of another person,

hence free from any burdens or encumbrances, such as occupation, intellectual

creation. While derivative modes are based on a right previously held by another

person and therefore, subject to the same characteristics, powers, burden etc as

when held by previous owner – Law - e.g. Registration under Act 496, estoppel of

title (Art 1434), Marriage under ACP, hidden treasure, accession (Art. 445),

change in river’s course (Art. 461), accession continua over movables (Arts. 466,

6681, 1456, and 120), donation, succession, prescription, and tradition

(REQUISITES: (1) Pre-existence of right in estate of grantor, (2) Just cause or

title for the transmission, (3) Intention (of both grantor and grantee), (4)

Capacity (to transmit and to acquire), and (5) An act giving it outward form,

physically, symbolically or legally. LEGAL MAXIM: “Non nudis pactis, sed

traditione, dominia rerum transferentur” (Not by mere agreement, but by

delivery, is ownership transferred.)

Occupation: Privilege to hunt and fish regulated by special law (Art 715);

Occupation of a swarm of bees or domesticated animals (Arts. 716 and 560);

Pigeons and fish (Art. 717); Hidden treasure (Arts. 718, 438, and 439); Lost

movables (Arts. 719 and 720).

Intellectual creation: Intellectual Property Code (RA 8293).]

37
Donation

Donation is a bilateral contract creating unilateral obligations on donor’s

part. Its requisites are consent and capacity of the parties, animus donandi

(causa), delivery of the thing donated, and must conform to the form as

prescribed by law. (NOTE: There must be impoverishment (in fact) of donor’s

patrimony and enrichment on part of donee.)

Donations may be classified as to its taking effect, cause or consideration

and effectivity of extinguishment. As to its taking effect, donations are inter vivos

(Arts. 729, 730 and 731, CC); mortis causa (Art. 728, CC); and propter nuptias

(Arts. 82 and 87, FC). As to cause or consideration, donations are simple,

remuneratory, onerous (imposes a burden inferior to the value of property

donated), improper (burden equal in value to property donated), sub-modo or

modal (imposes a prestation upon donee as to how property donated will be

applied, Art. 882 of CC), and mixed donations (negotium mixtum cum donatione

e.g. sale for price lower than value of property). As to effectivity or

extinguishment, donations may be pure, conditional (Arts. 730 and 731, CC) -

effect of an impossible condition: with a term.

The importance of classification is by reason of form, governing rules, and

the possibility or impossibility of conditions (Arts. 727 & 1183, CC). Donation

mortis causa is where no title or ownership is conveyed before donor’s death.

Before the death of the donor, transfer is revocable and that transfer is void if

donor survives donee. The distinction between donation mortis causa and

donation inter vivos lies in the time of transfer of ownership (even if transfer of

38
property donated may be subject to a condition or a term). This classification is

important for purposes of validity and revocation of the donation.

Articles 735, 737, 738, 741, and 742 of the Civil Code enumerates those

who may not give or receive donations. While Articles 736, 739, 740, 743, 744,

1027, and 1032 of the Civil Code enumerates those who may give or receive

donations. The donation must be accepted by the donee personally or through an

authorized person with a special power for the purpose, or with a general and

sufficient power, otherwise the donation shall be void and persons who accept

donations in representation of others who may not do so by themselves, shall be

obliged to make the notification and notation of which Article 749 of the Civil

Code speaks (Art. 745and 747 respectively of the CC). Acceptance of donations

must be made during the lifetime of the donor and of the donee (Art. 746, CC).

Donations must likewise conform to the form provided for by law (personal

property – Art. 748; real property – Art. 749, CC. Note: Rules in Art 748 and Art

749 not applicable to onerous donations, modal donations, mortis causa

donations, and donations propter nuptias). All present property, or part thereof,

of donor may be donated, provided: he reserves in full ownership or usufruct,

sufficient means for support of himself and all relatives entitled to be supported

(by the donor) at the time of acceptance (Art. 750, CC); that no person may give

or receive, by way of donation, more than he may give or receive by will (Art. 752,

CC); also reserves property sufficient to pay donor’s debts contracted before

donation, otherwise, donation is in fraud of creditors (Arts. 759 and 1387, CC). If

donation exceeds the disposable or free portion of his estate, donation is

inofficious (subject to collation). EXCEPT: 1. donations provided for in

marriage settlements between future spouses – not more than 1/5 of

present property (Art. 84 FC and Art. 130 CC) AND 2. donations propter nuptias

39
by an ascendant consisting of jewelry, furniture or clothing not to exceed 1/10

of disposable portion (Art. 1070, CC). What may not be donated is future

property (Art. 751 - Anything which donor cannot dispose of at the time of

donation). EXCEPTION: Marriage settlements of future spouses only in event of

death to extent laid down in CC re: testamentary succession under Art 84, FC and

Art 130 CC.

EFFECT OF DONATION

In general, donation results in an effective transfer of title over the

property from the donor to the donee. In donations of immovable property, the

law requires for its validity that it should be contained in a public document,

specifying therein the property donated and the value of the charges which the

donee must satisfy. The Civil Code provides, however, that "titles of ownership,

or other rights over immovable property, which are not duly inscribed or

annotated in the Registry of Property (now Registry of Land Titles and Deeds)

shall not prejudice third persons." It is enough, between the parties to a donation

of an immovable property, that the donation be made in a public document but,

in order to bind third persons, the donation must be registered in the registry of

Property (Registry of Land Titles and Deeds). (Shopper’s Paradise Realty V

Roque (2004) G.R. No. 148775).

Other pertinent provisions on effects of donation are those provided for

under Articles 727, 753, to 758, 131, and 1183 of the Civil Code. Donations may be

revoked or reduced. Revocation is the act by which a person having authority or

by operation of law, calls back or annuls a gift, or benefit, which had been

bestowed upon another (total) while reduction is a mere deduction against the

40
property donation (partial). Causes of reduction or revocation is the

inofficiousness of donation (Arts. 752, 771, 773, 911, and 912, CC). Articles 760

and 772 provides for who may ask for revocation and/or reduction; Art. 773

provides for the manner of reduction if disposable portion is not sufficient to

cover 2 or more donation.

Other pertinent provisions in the Civil Code on donation: Art. 765

Ingratitude as a ground for revocation; Art. 766 to 767 Effects of revocation in

Art. 765; Art. 769 on Prescription of action to revoke; and Art. 770 on

Transmissibility of action.

In the case of CJ Yulo and Sons vs. Roman Catholic Bishop of San Pablo,

Inc. (G.R. No. 133705. March 31, 2005), the Court of Appeals sustained the trial

court’s finding that the donation is an onerous one since the donee was burdened

with the establishment on the donated property of a home for the aged and the

infirm. It likewise agreed with the trial court that there were violations of the

terms and conditions of the deed of donation when the donee thrice leased a

portion of the property without the prior written consent of the donor. Likewise

upheld by the appellate court is the ruling of the trial court that the prescriptive

period of the donor’s right to revoke the donation is ten (10) years based on

Article 1144 of the Civil Code, instead of four (4) years per Article 764 of the same

Code, and therefore the action for revocation filed by the petitioner is not barred

by prescription.

Although Art. 764 provides that the donation shall be revoked “at the

instance of the donor” when the donee fails to comply with any of the conditions

which the former imposed on the latter, the Supreme Court held in the case of

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Ongsiako vs. Ongsiako (GR L-7510, Mar. 30, 1957), that the donor may not

revoke a donation by his own unilateral act, even if the donee should have broken

any of the conditions imposed by the donation. A court action is essential, if the

donee refuses to return the property voluntarily.

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LEASE

The general characteristics of every lease are temporary duration, onerous,

and price is fixed according to contract duration. There several kinds of leases:

Lease of things – movables and immovables; Lease of work or contract of labor

(Arts. 1700 – 1712, CC); Lease of services (Household service and contract for a

piece of work) under Arts. 1713 – 1731, ibid; and Lease of services of common

carriers (Arts. 1732 – 1763, ibid). Consumable things cannot be the subject

matter of lease, exception is that provided under Art. 1645, CC. The essential

purpose of lease is to transmit the use and enjoyment of a thing, thus it is

consensual, onerous, has a price fixed in relation to period of use or enjoyment,

and it is temporary. Lease as distinguished from sale, usufruct and commodatum

may be viewed in light of the period – it cannot be perpetual that is not more

than 99 years (definite period) and for indefinite period governing laws are Art.

1682 CC for rural land, Art. 1687 CC for urban land. Lease may be the subject of

assignment (Art. 1649, CC) and sub-lease (Art. 1650, CC). Obligations of sub-

lessee to lessor are provided by Art. 1651 CC, for rents Art. 1652 CC; rights and

obligations of lessor and lessee are those provided under Arts. 1654 and 1661, Art.

1657, 1662 – 1663, 1665, 1667 to 1668. Right of lessee to suspend payment of

rentals are under Art. 1658 and its right to ask for rescission are those under Arts.

1659 – 1660. The lessor is not obliged to answer for mere act of trespass by a 3rd

person as provided by Art. 1664. The grounds for ejectment of lessee by lessor

are those under Art. 1673. Special provisions for leases of rural lands – Arts.

1680 – 1685; Special provisions for leases of urban lands – Arts. 1686 – 1688.

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OTHER SPECIAL LAWS ON RENT

RA 9161 “An Act Establishing Reforms In The Regulation Of Rentals Of Certain

Residential Units, Providing The Mechanisms Therefor And For Other Purposes”

(December 22, 2001)

RA 9341 “An Act Establishing Reforms In The Regulation Of Rent Of Certain

Residential Units, Providing The Mechanisms Therefor And For Other Purposes”

(Rent Control Act of 2005)

RA 9653 – Rent Control Act of 2009

Affected Properties - The Rent Control Act of 2009 covers any

residential unit with a monthly rental rate of one to 10,000

pesos in the National Capital Region in and around the capital

city of Manila as well as in other highly urbanized cities. In

other areas, it covers rental properties with rents between one

and 5,000 pesos per month. A property will cease to be covered

by the act if a tenant enters into a rent-to-own agreement with

the owner.13

13
Rent Control Laws of the Philippines/ eHow.com http://www.ehow.com/about_6398636_rent-control-laws-
philippines.html#ixzz1G74KFlDI

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