PROPERTY (Atty. Rachel Castro)

PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

PROPERTY 

A building is by itself an immovable property irrespective of whether or not said structure and the land on which it is adhered to belong to the same owner. Hence, a valid real estate mortgage can be constituted only on the building erected on the land belonging to another.

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Chattel mortgage on real property – Under certain conditions, a property may have a character different from that provided in Article 415 and 416 (enumerations of immovable and movable properties). The parties to a contract of chattel mortgage may, by agreement, treat as personal that which by nature would be real, i.e. building which by its nature is considered real property. Said chattel mortgage over a building is binding between the parties to said agreement since they are estopped from claiming otherwise. With respect to third persons, not parties to the contract, the building is considered immovable property.

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Machinery, receptacles, instruments, or implements – The machinery, etc. must be placed by the owner of the tenement or his agent to be considered as immovable property. Machinery is movable by nature and becomes immobilized only when placed on a plant by the owner of the property or plant, but not so when placed by a tenant, usufructuary, or a person having only a temporary right, unless such person acted as an agent of the owner. Thus, where a tenant places the machinery under the express provision of lease that it shall become part of the plant belonging to the owner upon the termination of the lease without compensation to the lessee, the tenant acts as an agent of the owner and the immobilization of the machinery takes place by reason of permanent destination to the machinery. But if the attachment or immobilization is for the use of the lessee which does not inure to the lessor at the end of the lease contract, then it remains personal property. For the machinery, etc. to be considered immovable property, said machinery, etc. must tend directly to meet the needs of the industry or works carried on in a building or on a piece land. The movable (machinery, etc.) must first be “essentially and principal elements of an industry or works without which, such industry or works would be unable to function or carry on the industrial purpose for which it was established.” Where the movables are merely incidental e.g. cash registers, typewriters found in hotels and restaurants are merely incidental for these businesses can continue or carry on their functions without these equipments and thus retain their nature as movable property. 

OWNERSHIP – Limitations on the right of ownership: 1. those imposed by the state in the exercise of the power of taxation, police power and power of eminent domain; 2. those imposed by law such as legal easement and the requirement of legitime succession; 3. those imposed by the grantor of the property on the grantee, either by contract e.g. donation, or by last will;

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PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

4. those imposed by the owner himself such as voluntary easement, mortgage, pledge and lease; and 5. those imposed by the Constitution e.g. prohibition of alienation in favor of aliens 

Article 441. to the owner belongs the natural, industrial and civil fruits. Thus all fruits belong to the owner of a thing. Exceptions; a person, other than the owner of a property, owns the fruits thereof: a.

b. c.

d.

e.

possession in good faith by another – the possessor in good faith is entitled to the fruits received before the possession is legally interrupted (Art. 544); usufruct – the usufructuary is entitled to all the fruits of the property in usufruct (Art. 566); lease of rural lands – the lessee is entitled to the fruits of the land together with the owner, getting the civil fruits in the form of rents paid by the lessee; (Art. 1680 and 1654); pledge – the pledge is entitled to receive the fruits, income, dividends, pr interests which the pledge earns or produces but with the obligation to compensate or set-off what he receives with those which are owing him. (Art. 2102);; antichresis – the creditor acquires the right to receive the fruits of an immovable of his debtor, but with the obligation to apply them, first, to the interest if owing, and then to the principal amount of the credit. (Art. 2132)

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When the fruits or crop have already been gathered or harvested when the owner recovers the possession, the possessor in bad faith shall return the fruits gathered but has the right to deduct the expenses of planting and harvesting. A possessor in bad faith or good faith is entitled to reimbursement for the necessary expenses of preservation of the land (Art. 452);

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The good faith or bad faith of the possessor is material where the fruits are still pending (ungathered) at the time he gave up his possession. A builder, planter or sower, in bad faith has no right of reimbursement for expenses, nor to the fruits. The owner gets the fruits without indemnity by the principle of accession continua. But the possessor in bad faith is entitled to reimbursement for the necessary expenses of preservation of the land.

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Art. 449. Builder, sower, or planter (BPS) in Bad faith – The BPS FORFEITS what he has built, planted or sown without any right to be paid indemnity therefore. He is, however, entitled to reimbursement for necessary expenses of preservation of the land incurred by him (Art. 452) but without the right of retention until reimbursement which is given to a possessor in good faith (Art. 546) - If the products have already been gathered (separated from the land) by the builder, planter or sower and they are ordered delivered to the owner of the land, the builder etc. should be reimbursed for the expenses incurred for the production, gathering and preservation of the fruits (Art. 443) if the crop is still standing or growing at the time the owner of the land recovers it, the planter in bad faith loses them without the right to any indemnity (Art. 449).

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Accretions affecting lands registered under the Torrens system: Page 2 of 8

PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

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In case of diminution of area – accretion are natural incidents to land bordering on running rivers or streams and are not affected by the registration law. Hence, registration does not protect the riparian owner against diminution of the area of his land through the gradual changes in the course of the adjoining stream. Accretions which the banks of rivers may gradually receive from the effect of the current becomes the property of the owners of the banks.

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In case of increase in area – although an alluvion is automatically owned by the riparian owner from the moment the soil deposit can be seen, it does not automatically become registered land, just because the land which receives such accretion is covered by a Torrens title, thereby making the alluvial property imprescriptible. Ownership of a piece of land is one thing and registration under the Torrens system of that ownership is another. So, alluvial deposit acquired by a riparian owner of registered land by accretion may be subjected to acquisition through prescription by a third person, by failure of the owner to register the said accretion within the prescribed period.

CO-OWNERSHIP 

Co-owners obligation to contribute to expenses: 1. Preservation of the thing co-owned – the expenses of preservation of the thing or right owned in common and the amount of taxes due thereon should be borne by ALL. A co-owner who advanced them has a right to demand reimbursement from the others in proportion to their respective interests in the co-ownership. These are NECESSARY EXPENSES 2. Useful expenses – even if the value of the community property is thereby increased, they are not covered, the purpose of co-ownership not being for profit, unless such expenses were incurred with the consent of the others. 3. Expenses for pure luxury or mere pleasure – are not also refundable not being for preservation. However, should any improvements be made to embellish the thing or right owned in common, the consent of the MAJORITY of the co-owners is required and all shall contribute. 4. Any alteration made on the right or thing owned in common needs the UNANIMOUS CONSENT of the co-owners and not a mere majority since acts of alteration is an act of ownership and not mere administration. Alteration is a change in the thing which involves a change from the state or essence in which the others believe it should remain, or withdrawal of the thing from the use to which they wish it to be intended; or any other transformation which prejudices the condition or substance of the thing or its enjoyment by the others.

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SALE MORTGAGE OF COMMON PROPERTY – each co-owner has the absolute right to freely dispose of his pro indiviso share and of the fruits and other benefits arising from that share but the transferee does not acquire any

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PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

specific or determinate physical portion of the whole, his right being limited to the portion which may be allotted to him upon the partition of the property. -

If a deed of sale appears to convey a definite or segregated portion of the property under co-ownership that is still undivided, does not make the sale a nullity per se. The sale is valid subject only to the condition that the interests acquired by the vendee must be limited to the part that may be assigned to the co-owner-vendor in the division upon the termination of the co-ownership.

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Even if the co-owner sells the whole property as his own, the sale is valid insofar as his ideal portion is concerned unless the sale is authorized by the other co-owners. Since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner will only transfer the rights of said co-owner to the buyer, and the buyer thus becomes a co-owner of the property.

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PARTITION – Article 494 grants the each co-owner the right to demand at any time partition of the thing owned in common, insofar as his share is concerned for “no co-owner shall be obliged to remain in the co-ownership.” The action to demand partition is imprescriptible or cannot be barred by laches absent a clear repudiation of the co-ownership by a co-owner clearly communicated to the other co-owners.

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EXCEPTION to the right to demand partition: 1.

2. 3.

4.

5.

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when the co-owners have agreed to keep the thing undivided for a certain period of time, not exceeding 10 years; which term may be extended provided each extension does not exceed 10 years. when the partition is prohibited by the donor or testator for a certain period not exceeding 20 years; when the partition is prohibited by law i.e. the community or conjugal property of the husband and wife; the family home; party walls and fences ; when partition would render the thing unserviceable for the use which it is intended. The co=ownership in this case may be terminated in accordance with Article 498. when another co-owner has possessed the property as exclusive owner and for a period sufficient to acquire it by prescription ( repudiation of the co-ownership having been successful)

REDEMPTION in co-ownership redounds to the benefit of all. Where a lot and improvement were mortgaged by the deceased parents, a coownership existed among the heirs during the period given by law to redeem the foreclosed property. Redemption by one heir during this period would inure to the benefit of all. But where the heir purchased the property from the mortgagee (to whom the property was sold at the foreclosure sale) after the redemption period had expired and after the mortgagee had consolidated its ownership and a new title was issued in his name, there was no longer any co-ownership to speak of. When the heirs allowed the one year period of redemption to expire without redeeming their parent’s former property and permitted the consolidation of ownership and the issuance of a new title, the co-ownership was extinguished.

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PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

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After partition, co-ownership ceases to exists; not right of legal redemption exists- Where the party seeking to redeem is the owner of a portion already determined and identifies, he cannot be considered a co-owner and, hence, he cannot redeem under Art. 1620 of the New Civil Code. Once the property is subdivided and distributed among the co-owners, the community is considered to have been terminated and there is no reason to sustain any right of legal redemption.

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Registration in the name of co-owner merely creates a trust – registration of land subject of co-ownership in the name of one co-owner is not repudiation of co-ownership for purposes of prescription. Article 494(5) provides that no prescription shall run in favour of a co-owner or co-heirs as long as he expressly or impliedly recognizes the co-ownership. The registration merely created a trust in favour of his co-owners.

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An oral partition among co-heirs is valid and does not fall under the Statute of Frauds – Oral partition is valid as there is no law that required partition among heirs to be in writing to be valid. The requirement that partition be put in a public document and registered has for its purpose the protection of creditors and at the same time the protection of the heirs themselves against tardy claims. Partition is not covered by the Statute of Frauds because partition is not a conveyance of property but simply a segregation and designation of the part of the property which belongs to the co-owners.

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Possession as a fact cannot be recognized at the same time in two different personalities except in the case of co-possession –(Art. 538) possession as a fact ma exist at the same time in two or more distinct personalities but, as a general rule, the law will recognized only one as the actual or real possessor. Thus the rule on preference of possession as follows: 1.

2.

3.

4.

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The present or actual possessor shall be preferred If X, through force and intimidation, ejected Y, actual possessor, from the land, Y will still be considered as the present possessor and will be preferred because X cannot be said to have acquired possession (Art. 536) if there are two possessors the longer in possession If both X and Y occupied a portion of a land both claiming ownership of the entire parcel of land but Y was first is taking possession, Y shall be preferred. If the dates of possession are the same, the possessor with a title i.e. right or document evidencing his right to support his possession; and If they possessed at the same time but X is a squatter while Y is a lessee, preference shall be in favor of Y. The lease contract with the owner is Y’s title. if all the above are equal, the fact of possession shall be judicially determined, and in the meantime, the thing shall be placed in judicial deposit (Arts. 2005-2009)

USUFRUCT – gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides (art. 562) 

Obligations of the usufructuary:

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PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

a. BEFORE the U. begins  to make an inventory of the property; and  to give security b. during the usufruct  to take care of the property  to replace with the young thereof animals that die or are lost in certain cases when the usufruct is constituted on flock or herd of livestock  to make ordinary repairs  to notify the owner of urgent extraordinary repairs  to permit works and improvements by the naked owner not prejudicial to the usufructuary  to pay annual taxes and charges of the FRUITS  to pay interest on CAPITAL paid by the naked owner  to pay debts when the usufruct is constituted on the whole of a patrimony  to secure the naked owner’s or court’s approval to collect credits in certain cases  to notify the owner of any prejudicial act committed by third persons ; and  to pay for court expenses and costs regarding the usufruct c. at the termination of the usufruct  to return the thing in usufruct to the naked owner unless there is a right of retention  to pay legal interest at the time that the usufruct lasts, on the amount spent by the owner for extraordinary repairs (Art. 594); and the proper interest on the sums paid as taxes by the owner (Art. 596); and  to indemnify the naked owner for any losses due to his negligence or of his transferees (Arts. 589-590) 

When no security is needed to be given by the usufurctuary: 1. 2. 3. 4. 5. 6.

the donor who has reserved the usufruct of the property donated; the parents who are the usufructuaries of their children’s property, except when the parents contract a second (or subsequent) marriage; when the naked owner renounces or waives his right to the inventory or security; where the title constituting the usufruct relieves the usufructuary from the obligation ; where the usufructuary asks that he be exempt from the obligation and no one will be injured thereby when the usufructuary is under obligation to give security but cannot afford to do so and no one is wiling to give security for them, the court on humane considerations (i.e. poor family badly in need of a house_ may allow the usufructuary to enjoy the property upon taking an oath –“by virtue of a promise under oath”- to take care of the property and retain it until the termination of the usufruct (Art. 612) I lieu of giving a security. NOTE: under this instance (no. 6) the usufructuary cannot alienate or lease the property for this means that he does not need it if he does alienate his right of usufruct. The oath is what is called “CAUCION JURATORIA”

III. MODES OF ACQUIRING OWNERSHIP Page 6 of 8

PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

A. DONATION o Kinds: 1. 2.

3.

4.

SIMPLE – or that cause of which is the pure liberality of the donor in consideration of the donee’s merits remunatory or compensatory – that which is given out of gratitude on account of the services rendered by the donee to the donor, provided they do not constitute a demandable debt. modal – that which imposes upon the donee a burden (e.g. services to be performed in the future) less than the value of the gift; onerous – that the value of which is considered the equivalent of the consideration for which it is given and is thus governed by the rules on obligations and contracts (Art. 733)

NOTE: Illegal or impossible conditions in SIMPLE and REMUNATORY donations shall be considered as not imposed. (Art. 727) In modal donations, a burden (which is necessarily future) less than the value of the gift is imposed upon the donee. If the burden is considered the equivalent of the thing or right given, then the donation is an onerous one. If the donation is onerous (or modal as to the onerous portion), the illegal or impossible condition will render the donation void. Being contractual in nature, the rule applicable would be Art. 1183 on obligations and contracts. 

REVOCATION OF DONATION – affects the whole donation and is allowed during the lifetime of the donor: 1. 2. 3.

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REDUCTION OF DONATION – this generally affects a portion only of the donation and is allowed during the lifetime of the donor or after his death: 1. 2. 3. 4.

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birth, appearance, or adoption of a child of the donor subsequent to the donation; non-fulfillment of a resolutory condition imposed by the donor (Art. 765) Ingratitude of the donee (Art. 765)

failure of the donor to reserve sufficient means for support of himself or his dependent relatives (Art. 750) failure of the donor to reserve sufficient property to pay off his existing debts (Art. 759) Inofficiousness; the donation exceeds that which the donor can give by will (Arts. 752, 771); and birth, appearance, or adoption of a child of the donor (Art. 760)

Who may ask for reduction? Only those who at the time of the donor’s death have a right to the legitime and their heirs and successors in interest may ask for the reduction of inofficious donations. They cannot renounce their right during the lifetime of the donor. (Art. 771)

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PROPERTY UC-BAR OPS 2011 Atty. Rachel Tenefrancia-Castro

Donees, devisees and legatees who are not entitled to the legitime and the creditors of the deceased can neither ask for the reduction nor avail themselves thereof (Art. 772)

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