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AUSL Bar Operations 2017 Civil Law

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Property

1. Art. 415 - Real Property by Destination. Machinery and equipment are realty because they are intended for use of a
company and may be subject of Real Estate Mortgage (REM).

Q: Corporation X's land and building are subject to REM, but the REM is silent as to the machinery and equipment found
therein. Are they deemed part of the REM?

A: Yes, under the Civil Code, REM includes the improvements on the land or the building. Machinery and equipment are
considered as improvements. Hence, they are deemed part of the REM. (Star Two Inc. v Paper City Corp., 06 March
2013)

Atty. Riguera Property Bar Lecture

2. Art. 415 When a building is not deemed part of a transaction covering the land.

Q: The father of the Poe siblings, Fernando Poe Sr., was the president of Ermita Business College (EBC). EBC obtained a
loan with Phabebe Leasing Company by mortgaging two parcels of land owned by Fernando. During the subsistence of
the mortgage, EBCs board of directors agreed to a 15-year lease of a portion of the property to the Poe children who
subsequently built a residential house thereon. EBC failed to pay its obligation, so Phabebe Leasing Company foreclosed
the mortgage. Phabebe Leasing Company won as the highest bidder in the public auction. It assigned the credit of EBC to
Pasay International Bank. Upon EBCs failure to redeem the lands, Pasay International Bank consolidated its ownership
over the same and sold them to Tonton Galang. Tonton Galang sold the lands to his daughter Maan Galang whose
husband, Dr. Ginhawa, is the president of Coastal Marine Universal Foundation (Coastal). Coastal is now leasing the
lands. The Poe children brought suits against Midway for Ownership, Recovery of Possession, and Damages over the
residential building which they built on the lands.

Is a building deemed included in the sale of a land over which it is built?

A: No, because a building by itself is a real or immovable property distinct from the land on which it is constructed and
therefore can be a separate subject of contracts. The sale between Maan Galang and Tonton Galang is confined only to
the two parcels of land and excluded the residential building owned by the Poe siblings. It is beyond question that
Tonton, and subsequently, Maan, could not have acquired a right greater than what their predecessors-in-interest EBC
and Pasay International Bank have. (Midway Marine and Technological Foundation vs. Castro, G.R. No. 189061, 06
August 2014)

Atty. Rabuya Property Civil Law Review 1 Syllabus


Property BarOps Team Facts and Ruling taken directly from Midway Marine and Technological Foundation vs. Castro

3. Art. 416 Business is a Personal Property. A business is susceptible of appropriation and is not included in the list
expressly provided by law as immovable property.
Q: Corporation X offers telecommunications service to the public upon a franchise granted by the Government. It filed an
Information against A for theft for routing phone calls using its telecommunications facilities without being charged. A
filed a Motion to Quash on the ground that the object of the crime of theft is personal property and telecommunications
service is not a personal property because it is not appropriable. Is this defense meritorious?
A: No, there is a difference between the telecommunications service and the business of providing telecommunications
service. Although Corporation X merely facilitates telecommunications by encoding and transmitting phone calls, it is
authorized to offer the same as a business by virtue of a franchise. A business or enterprise or interest in either is
considered a personal property. (Luis v Abrogar, 13 January 2009) Since a business is a personal property, it may be the
object of theft.

Atty. Rabuya Property Bar Lecture and Civil Law Review 1 Syllabus

4. P.D. 1216 Open Space. An open space is an area reserved exclusively for parks, playgrounds, recreational uses,
schools, roads, places of worship, hospitals, health centers, barangay centers, and other similar facilities and amenities.
An open space is a property of the public domain.

Q: Subdivision Y has a lot on which a water tank and a water pump are located. They are for the common use of all its
residents. B, the owner of Subdivision Y, sold the lot to C. May C own the lot?
A: No, the lot is considered an open space because it falls within the term "other similar facilities and amenities". By the
principle of ejus dem generis, the lot contains facilities which are for the benefit of the community. (Liwag v Happy Glen
Loop Homeowners' Association, 04 July 2012)

Property Team 2017


Medienne Isabelle M. Castillon
Jerwin C. Aguinaldo
Atty. Riguera Property Bar Lecture

5. Chavez v PEA Doctrine - Reclaimed Lands.


Q: May a property standing on a reclaimed land be subject to public auction?
A: No. In Chavez v Public Estates Authority, the Court declared that reclaimed lands are lands of public dominion and
cannot, without Congressional fiat, be subject of a sale, public or private. (Philippine Fisheries Development Authority vs.
CA, G.R. 150301, 02 October 2007)
Atty. Rabuya Property Civil Law Review 1 Syllabus

6. Art. 419 and Heirs of Malabanan v. Republic of the Philippines Ownership of Lands. Lands are either of
public dominion or private ownership.
Q: Classify lands based on ownership and cite legal basis.

A: According to the Civil Code, land, which is an immovable property, may be classified as either of public dominion or of
private ownership. Land is considered of public dominion if it either: (a) is intended for public use; or (b) belongs to the
State, without being for public use, and is intended for some public service or for the development of the national wealth.
Land belonging to the State that is not of such character, or although of such character but no longer intended for public
use or for public service forms part of the patrimonial property of the State. Land that is other than part of the
patrimonial property of the State, provinces, cities and municipalities is of private ownership if it belongs to a private
individual. (Heirs of Mario Malabanan vs. Republic of the Philippines, 704 SCRA 561, September 03, 2013)

Bersamin Case as discussed by Atty. Rabuya (c/o CLEAR)

7. P.D. 1529 Property Registration Decree. There are two modes of registering lands in favor of private persons.

Q: Distinguish registration under Sec. 14(1) of the Property Registration Decree from registration under Sec. 14(2) of the
same law.

A: Section 14(1) mandates registration on the basis of possession, while Section 14(2) entitles registration on the basis of
prescription. Registration under Section 14(1) is extended under the aegis of the Property Registration Decree and the
Public Land Act while registration under Section 14(2) is made available both by the Property Registration Decree and the
Civil Code.

In other words, registration under Section 14(1) of P.D. No. 1529 is based on possession and occupation of the alienable
and disposable land of the public domain since June 12, 1945 or earlier, without regard to whether the land was
susceptible to private ownership at that time. The applicant needs only to show that the land had already been declared
alienable and disposable at any time prior to the filing of the application for registration.

On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on acquisitive prescription and must
comply with the law on prescription as provided by the Civil Code. In that regard, only the patrimonial property of the
State may be acquired by prescription pursuant to the Civil Code. For acquisitive prescription to set in, therefore, the land
being possessed and occupied must already be classified or declared as patrimonial property of the State. Otherwise, no
length of possession would vest any right in the possessor if the property has remained land of the public dominion.
Malabanan stresses that even if the land is later converted to patrimonial property of the State, Possession of it prior to
such conversion will not be counted to meet the requisites of acquisitive prescription. Thus, registration under Section
14(2) of P.D. No. 1529 requires that the land had already been converted to patrimonial property of the State at the
onset of the period of possession required by the law on prescription. [Republic vs. Zurbaran Realty and Development
Corporation, 719 SCRA 601, March 24, 2014]

Bersamin Case as discussed by Atty. Rabuya (c/o CLEAR)

8. P.D. 1529 Property Registration Decree. Registration by judicial confirmation of imperfect title is in Section 14
Paragraph 1.

Q: What are the requisites for registration under Sec. 14(1) of the Property Registration Decree?

A: An application for registration under Section14(1) of P.D. No. 1529 must establish the following requisites, namely: (a)
the land is alienable and disposable property of the public domain; (b) the applicant and its predecessors in interest have
been in open, continuous, exclusive and notorious possession and occupation of the land under a bona fide claim of
ownership; and (c) the applicant and its predecessors-in-interest have possessed and occupied the land since June 12,
1945, or earlier. [Republic vs. Zurbaran Realty and Development Corporation, 719 SCRA 601, March 24, 2014]

Q: Is it necessary under Sec. 14(1) of the Property Registration Decree that the land must have already been declared
alienable and disposable as of June 12, 1945?

Property Team 2017


Medienne Isabelle M. Castillon
Jerwin C. Aguinaldo
A: NO. The Court has clarified in Malabanan that under Section14(1), it is not necessary that the land must have been
declared alienable and disposable as of June 12, 1945, or earlier, because the law simply requires the property sought to
be registered to be alienable and disposable at the time the application for registration of title is filed. The Court has
explained that a contrary interpretation would absurdly limit the application of the provision "to the point of virtual
inutility." [Republic vs. Zurbaran Realty and Development Corporation, 719 SCRA 601, March 24, 2014; Heirs of Mario
Malabanan v. Republic, 704 SCRA 561, September 3, 2013; Heirs of Mario Malabanan v. Republic, 587 SCRA 172, April
29, 2009]

If the mode is judicial confirmation of imperfect title under Section 48(b) of the Public Land Act, the agricultural land
subject of the application needs only to be classified as alienable and disposable as of the time of the application,
provided the applicants possession and occupation of the land dated back to June 12, 1945, or earlier. Thereby, a
conclusive presumption that the applicant has performed all the conditions essential to a government grant arises, and
the applicant becomes the owner of the land by virtue of an imperfect or incomplete title. By legal fiction, the land has
already ceased to be part of the public domain and has become private property. [Heirs of Mario Malabanan v. Republic,
704 SCRA 561, September 3, 2013]

Bersamin Case as discussed by Atty. Rabuya (c/o CLEAR)

9. P.D. 1529 Property Registration Decree. Registration by possession is in Section 14 Paragraph 2.

Q: What are the requisites for registration under Sec. 14(2) of the Property Registration Decree?

A: An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore, establish the following
requisites, to wit: (a) the land is an alienable and disposable, and patrimonial property of the public domain; (b) the
applicant and its predecessors-in-interest have been in possession of the land for at least 10 years, in good faith and with
just title, or for at least 30 years, regardless of good faith or just title; and (c) the land had already been converted to or
declared as patrimonial property of the State at the beginning of the said 10-year or 30-year period of possession. In
other words, an application for original registration of land of the public domain under Section 14(2) of Presidential
Decree (PD) No. 1529 must show not only that the land has previously been declared alienable and disposable, but also
that the land has been declared patrimonial property of the State at the onset of the 30-year or 10-year period of
possession and occupation required under the law on acquisitive prescription. [Republic vs. Zurbaran Realty and
Development Corporation, 719 SCRA 601, March 24, 2014]

Bersamin Case as discussed by Atty. Rabuya (c/o CLEAR)

10. P.D. 1529 and Heirs of Malabanan v. Republic of the Philippines Property Registration Decree. Asong
Salonga filed an application for land registration covering a parcel of land in Tondo, Manila. Asong alleged that he and his
predecessor-in-interest Pepeng Agimat had been in open, notorious and continuous adverse and peaceful possession of
the property for more than thirty years. Further, he presented a relative of Pepeng Agimat as witness who testified that
the property was originally a portion of the land of one Ben Tambling which was divided among his four children, among
which is Pepeng Agimat, upon his death. A certification from the Community Environment & Natural Resources Office,
Department of Environment and Natural Resources (CENRO-DENR) shows that the property was verified to be within the
Alienable or Disposable land on 15 March 1982. Further, a Tax Declaration dating back to 1948 was produced as
evidence.

Q: Are the heirs of Asong Salonga qualified to apply for registration of the subject propertys title by open, continuous,
exclusive, and notorious possession of an alienable and disposable land of public domain under a bona fide claim of
ownership since June 12, 1945?

A: No. Section 14.1 of P.D. No. 1529 mandates registration on the basis of possession. It is extended under the aegis of
P.D. No. 1529 and the Public Land Act. The period of possession is contemplated herein, based on Section 48 (b) of the
Public Land Act without regard to the Civil Code. It is clear that the evidence of the heirs is insufficient to establish that
Mario has acquired over the subject property under Section 48 (b) of the Public Land Act. There is no substantive
evidence to establish that Asong or the predecessors-in-interest have been in possession of the property since 12 June
1945 or earlier. The earliest that they can date back their possession according to their own evidence was the tax
declaration pertaining to year 1948. Thus, they cannot avail themselves of registration under Section 14.1 of P.D. No.
1529.

Q: Are the heirs of Asong Salonga qualified to apply for registration of the subject propertys title by acquiring ownership
of private lands by prescription under the provision of Property Registration Decree?

A: No. Section 14.2 of P.D. No. 1529 entitles registration on the basis of prescription. It is made available both by P.D.
No. 1529 and the Civil Code. The thirty-year period is based on Article 1137 of the Civil Code under the principle of
extraordinary prescription. While the subject property was declared as alienable or disposable in 1982, there is no
competent evidence that it is no longer intended for public use, service, or for the development of the national wealth,

Property Team 2017


Medienne Isabelle M. Castillon
Jerwin C. Aguinaldo
conformably with Article 422 of the Civil Code. The classification of the subject property as alienable and disposable land
of the public domain does not change its status as a property of the public dominion under Article 420 (2) of the Civil
Code. Thus, it is insusceptible to acquisition by prescription.

Property BarOps Team Facts and Ruling taken directly from Heirs of Malabanan versus Republic of the Philippines

11. Arts. 448 and Art. 546 Builder in Good Faith.

Q: Define a builder in good faith under Property Law.

A: A builder in good faith is one who is unaware of any flaw in his title to the land at the time he builds on it. Articles 448
and 546 of the New Civil Code allow full reimbursement of useful improvements and retention of the premises until
reimbursement is made. These rights apply only to a possessor in good faith or one who builds on land in the belief that
he is the owner thereof. (Cheng vs. Sps. Donni, G.R. No. 167017, 22 June 2009)

Atty. Rabuya Property Civil Law Review 1 Syllabus

12. Art. 448 versus Art. 1678 Builder in Good Faith versus Lessee in Good Faith. A lessee is neither a builder in
good faith nor a builder in bad faith, hence the things he built are not subject to Arts. 448 or 449 of the Civil Code but
Art. 1678.

Q: A lessee introduced useful improvements on the property of his lessor. What remedies are he entitled to upon the
termination of the lease contract?

A: Under Art. 1678, if the lessee makes, in good faith, useful improvements which are suitable to the use for which the
lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the
lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse
said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He
shall not, however, cause any more impairment upon the property leased than is necessary.

Atty. Riguera Property Bar Lecture

13. Art. 448 Builder in Good Faith is entitled to indemnification or acquisition. Art. 448 affords the builder in good
faith either the right to be indemnified for the thing built/improvements/plants on the encroached property or the right to
acquire ownership over the encroached property. The choice shall be made by the owner of the encroached property.
The builder in good faith may only accept or reject the offer.

Q: What shall be the value of the land if the owner elects to sell the encroached property?

A: The fair market value of the land is to be reckoned at the time that the landowner elected the choice, NOT at the time
that the property was purchased by the owner (Roxas v Our Lady's Foundation, 06 March 2013)

Q: May the landowner sell the improvement to the sower?

A: No, the landowner only has the right to sell to the builder/planter in good faith. Sale of the same to a sower might
create a forced lease.

Atty. Riguera Property Bar Lecture

14. Art. 457 Riparian Owner. To the owner of lands adjoining banks of rivers belongs the accretion which they gradually
receive from the effects of the current of the waters since they have the risk of erosion.

Q: Which bodies of water does the Rule of Accretion apply to?

A: Accretion applies to adjoining rivers, streams, lakes, and creeks.

Atty. Riguera Property Bar Lecture

15. Spanish Law of Waters. Accretion in seashores belongs to the State.

Q: The soil from the beneath the river was gradually deposited on foreshore land due to natural movement of two rivers.
Do the riparian owners have a claim over the resulting accretion?

A: No, the accretion even if it resulted from the action of the two rivers was deposited not on a river bank but on
foreshore land, hence it belongs to the State pursuant to Article 4 of the Spanish Law of Waters (Estate of Navarro v IAC)

Property Team 2017


Medienne Isabelle M. Castillon
Jerwin C. Aguinaldo
Q: A river has two forks the east fork is always under water while the west fork is only under water for only three
months but dry for the rest of the year. May the riparian owner claim ownership by accretion over the west fork?

A: No. The natural bed of a river or creek is the ground covered by water during its highest floods (Art. 70, Spanish Law).
The west fork of the river although under water for only three months of a year is still considered part of the river.
(Binalay v Manalo, 195 SCRA 374)

Atty. Riguera Property Bar Lecture

16. Quieting of Title, when not applicable

Principle: Quieting of title is not the proper remedy for a simple boundary dispute but accion interdictal or
accion publiciana. However, it is appropriate if the technical descriptions of the adjoining titles overlap. (De
Aviles v CA, 21 November 1995)

Principle: The remedy of the landowner whose land has been wrongfully or erroneously registered in
anothers name is an Action for Reconveyance based on implied trust under Art. 1456 of the Civil Code which
must be brought within ten years from the issuance of the Torrens title over the property. (Manangan v Delos
Reyes, 10 June 1999)

Atty. Riguera Property Bar Lecture

17. Co-Ownership, frequently asked principles

Whenever the ownership of an undivided thing or right belongs to different persons, each co-owner shall be the
absolute owner of his ideal share and may sell or encumber it, except in instances covered by Art. 147 of the
Family Code where neither party can dispose without the consent of the other property that is acquired during
cohabitation and owned in common, until after the termination of their cohabitation.

Even just one of the co-owners by himself can bring an action for the recovery of the co-owned property even
though an action for revival of judgment because the revival would result in such recovery (Clidoro v
Jalmanzar, 09 July 2014).

None of the co-owners shall, without the consent of the others, make alterations in the thing owned in common
even though benefits for all would result therefrom. However, if the withholding of the consent by one or more
of the co-owners is clearly prejudicial to the common interest, the courts may afford adequate relief.

An action for partition is imprescriptible Each owner may demand at any time the partition of the thing owned
in common insofar as his share is concerned.

Atty. Riguera Property Bar Lecture

18. Art. 546 Necessary and Useful Expenses

Q: Distinguish necessary and useful expenses.

A: Necessary Expenses are those which are refunded to every possessor but only possessor in good faith has right of
retention to. Whereas, Useful Expenses are those which are refunded to a possessor in good faith with the same right of
retention but over which the winning possessor has the option of reimbursing the amount or paying the increase in value.

Atty. Riguera Property Bar Lecture

19. Possession in Good Faith. A possessor of a movable in good faith holds a defeasible title. However, one who has lost
or has been unalwfully deprived of a movable may recover it even from a possessor in good faith. If bought at a public
sale, an owner cannot recover unless he reimburses the purchase price.
Q: What are the exceptions to the rule that a possessor of a movable in good faith holds a defeasible title?
A: The exceptions are the following: (MVPNM)
Art. 1505 Purchases made in a Merchants store, fairs, or markets

Property Team 2017


Medienne Isabelle M. Castillon
Jerwin C. Aguinaldo
Art. 1506 A sellers Voidable title that is not annulled judicially at the time of the delivery of the object to
the buyer
Art. 1132 - Prescription
Art. 1518 and Section 57 of the Negotiable Instruments Law Purchaser in good faith of a Negotiable
Instrument
US v Sotelo, 28 Phil 47 Money
Atty. Riguera Property Bar Lecture

20. Art. 562 Usufruct. Right to Usufruct refers to the right of a person to enjoy the property of another (naked owner)
with the obligation of preserving its form and substance, and to be entitled to all the natural, industrial, and civil fruits of
the property in usufruct.
Q: A landowner filed an ejectment case against a usufruct of the land. The usufruct refused to leave and demanded for
restitution. During pendency of the case, the usufruct died. The heirs of the usufructuary substituted him. May the heirs
be entitled to the restitution aspect of the ejectment case?
A: No, because the death of the usufructuary in an ejectment case renders the restitution aspect of the judgment moot
and academic. Heirs of usufructuary are not entitled to restitution but they are entitled to reasonable compensation for
use and occupation of premises. (River-Calingasan v Rivera, 17 April 2013)
Exception: If a provision where death of the latter does not extinguish the usufruct appears clearly in an
agreement between the owner and the usufructuary, the heirs may continue enjoying the rights of the
usufruct, as in when a usufructuary entered into the agreement to pay for the education of his heirs. This
arrangement shall end until the purpose for the contrary provision is fulfilled, as in when the payment to the
education of the heirs has been completely defrayed.
Atty. Riguera Property Bar Lecture

21. Arts. 613-615 Easements. An easement is a real right on anothers property, corporeal and immovable, whereby the
owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for
the benefit of another person or tenement. Easements may be continuous or discontinuous, apparent or non-apparent.
(Heirs of Limense vs. Vda. De Ramos G.R. No. 152319, 28 October 2009)

Atty. Rabuya Property Civil Law Review 1 Syllabus

22. Art. 622 Acquisition of Easements. Continuous non-apparent easements and discontinuous ones whether apparent
or not may be acquired only by virtue of a title.

Q: A fisherman had been traversing a shortcut to the sea using the small passageway owned by Hotel X since time
immemorial. Hotel X closed the passageway. The fisherman argued that he has right over the passageway since he had
been using the same for several years without any opposition from Hotel X.
A: No, because easement of right of way is a discontinuous easement and therefore can be acquired by title and not by
prescription. (Costabella Corporation v CA, 193 SCRA 333)
Atty. Riguera Property Bar Lecture

23. Art. 709 Registration of Real Property. The titles of ownership or of other rights over immovable property, which
are not duly inscribed or annotated in the Registry of Property shall not prejudice third persons.
Q: A registered owner of a land did not participate in an expropriation proceeding involving his land and executed a
manifestation of non-ownership instead. Further, he declared that the land is owned by his co-defendant in the
expropriation proceeding whose land is adjacent to his. Are the non-participation and manifestation sufficient to convey
ownership of real property?
A: No, because the law imposes certain legal requirements in order for a conveyance of real property to be valid. In order
for the reconveyance of real property to be valid, the conveyance must be embodied in a public document and registered
in the office of the Register of Deeds where the property is situated. (Republic vs. Rural Bank of Kabacan Inc., G.R. No.
185124, 25 January 2012)
Atty. Rabuya Property Civil Law Review 1 Syllabus

Property Team 2017


Medienne Isabelle M. Castillon
Jerwin C. Aguinaldo

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