PAREB–QCRB : Real Estate Manual 2013

01.1 FUNDAMENTALS OF PROPERTY OWNERSHIP

CONCEPT OF PROPERTY OWNERSHIP

Property – may be real estate (land, buildings..) or real property (includes real estate as
well as intangible properties). Property is also classified as “tangible” (land, buildings,
cars, etc.) or “intangible” (patent, contract, franchise, shares of stocks, etc.)

Ownership – Rights included in Ownership: Fee simple – the highest form of ownership
– consists of the so-called “bundle of rights,” which incudes:
4 Right to possess;
4 Right to use and enjoy;
4 Right to the fruits : fruits of ownership:
5. natural fruits - spontaneous products of soil;
6. civil fruits – rental income
7. industrial fruits –produced by cultivation or labor.
6. Right to dispose (sell, donate, assign, exchange);
1. Right to recover(titled property with squatters);
• Right to exclude others (putting up a concrete wall)

Real Estate – refers to land and improvements thereon. “Estate” means the degree of an
owner’s interest in land.

BASIC TYPES OF ESTATES:

• Freehold – ownership is backed by title; includes
1. “Fee simple” – absolute unrestricted estate in perpetuity;
2. “Fee tail” – designed to pass title to heirs;
3. “Life estate” – ownership only as long as grantee is alive.
• Less than Freehold – limited possession;
• “Estate for years” – a lease (99 years max under Civil Code);
• “Tenancy” – leases or rentals; period may be specified or if not, the lessor may
terminate at will.

KINDS OF OWNERSHIP
• Sole ownership – benefits and property interest are undivided; “whole
property interest.”
• Co-ownership – benefits are presented in proportion to the co-owners.
1. Article 484 of Civil Code states:
• There is co-ownership whenever the ownership of an undivided thing or right
belongs to different persons.

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• There is no co-ownership when the different portions owned by different

people are already concretely determined, even if this is not yet technically
described.

2. Article 1612, 1889, 1515 of the New Civil Code:

I) Right of repurchase, pre-emption or redemption.
1. The right to repurchase applies only to the extent of shares owned.

3. Article 1623 of the Civil Code:

2. The right of legal pre-emption or redemption shall not be exercised except within 30
days from the notice in writing by the prospective vendor. The Deed of Sale shall not
be recorded in the Registry of Property, unless accompanied by an affidavit of the
vendor that he has given written notice thereof to all possible redemptioners.

4. Article 493 of the Civil Code:

• A co-owner may sell his right over an undivided portion, cannot sell those of
others

• Condominium ownership – combination of sole and co-ownership

o Sole ownership – refers to condominium unit susceptible to independent
use.
o Co-ownership - in condominium project, unit owners are co-owners on
land and common areas of the building – these are non-alienable areas of
the condominium project.

Ownership of land – includes ownership of portions beneath the surface and above the
surface, subject to servitudes, special laws, or contract.

SURFACE, SUBSURFACE AND AIR RIGHT

Land, in its legal signification, extends from the surface downwards to the center of the
earth and extends upwards indefinitely to the skies.

The surface and subsurface of rights of an owner entitle him to construct thereon any
works or make ant plantations and excavations without detriment to servitudes and
special laws.

Air right is the right of an owner to use and control the air space over his land subject to
the requirements of aerial navigation, laws, or contract.

RIGHT TO HIDDEN TREASURE – defined as any hidden or unknown deposit of

money, jewelry, precious objects whose lawful ownership is not shown.
▪ Hidden treasurer belongs to the land owner.

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▪ When the discovery is made on the property of another, the finder of

hidden treasure (not the land owner) is entitled to 50% unless he is a
trespasser, he shall not be entitled to any share of the treasure. ;
▪ The State may acquire at a just price those of interest to science or arts;

RIGHT OF ASSESSION– means land owner also owns everything produced,

incorporated, or attached thereon.

Rules affecting land owners adjoining rivers: they will own soil deposited as accretion;
but do not own land left dry or will not lose land inundated by flood water. River beds
that have dried up can be acquired by those whose own lands are occupied by the new
bed in proportion to are lost. Land owners adjoining the old bed may acquire the same.
When a river opens a new bed by natural action, the bed shall become a public
dominion.

LEGAL RESTRICTIONS OF OWNERSHIP:

Zoning laws, subdivision regulations, building code, Eminent domain, Escheat,
Taxation

1. Power of Eminent Domain – power to take private property for public use upon just
compensation;
2. Escheat – reversion of property to the State due to intestate death of an owner with
no heir.
3. Police Power of the State
o Taxation – power of the State to impose and collect tax and other charges
on the real estate.
o Zoning laws – regulations of the LGU governing land use

4. Voluntary or contractual restrictions:

a) Lease Contract – temporary surrender of the rights to possess, use and enjoy to
lessee or renter.
b) Right of Way Easement – given to an owner of an adjoining land to pass or have
access;
o Servient estate – the property owner giving the right of way
o Dominant estate – the entity enjoying the right of way
c) usufruct – transfer to another person of the right to enjoy the fruits of the
property
d) Use Restrictions – restrictions imposed as part of the contract to sell.

Documents of Ownership

Title – a generic word which means “proof of ownership;” includes the “muniments” of
ownership such as tax declaration, realty tax payments, deed of sale, and the
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Original Certificate of Title or the Transfer Certificate of Title. Philippine

titling system is based on the Torrens system developed in Australia.

Quieting of title – means an action brought to court to remove a cloud or question as to

ownership of property; a plaintiff must have documents but need not to be in
possession to bring this action.

Modes of Acquiring Title

1 Private transfer: by sale, assignment, donation or exchange.
2. Succession: acquisition of ownership from an owner who has died.
3. Public grants: acquisition of alienable agricultural land.
1) Free patents and homestead patents given by DENR
2) Emancipation patents (now CLOA – Certificate of Land Ownership) – originally
established by PD 27, continued by RA 6657 (CARP 1988) and various extensions:
3) Reclamation – under Public Estates Authority; government still owns reclaimed
land but may pay reclaimers in terms of portions of the land reclaimed.
4) Adverse possession or prescription – applies to alienable agricultural land,
continuously occupied by a citizen;
a) Ordinary prescription – 10 years possession in good faith, with just title
(muniments);
b) Extraordinary prescription – 30 years continuous possession (bad faith)
5) Accretion due to alluvium, changes in the natural riverbed.
a. Accretion – the process of adding land
b. Alluvium – added land by the process of accretion
c. Accession – right of the owner to things added to the land whether naturally
(say trees and plants) and artificially (say building or fixtures)
d. Riparian owner – owner of land adjoining rivers; belongs the alluvial deposits
caused by accretion

4. Involuntary Events:
Expropriation (eminent domain), execution by the sheriff to satisfy judgment,
foreclosure of mortgaged property.

5. Descent or devise
▪ Descent – hereditary succession without will of the deceased
▪ Devise – even a stranger may acquire if disposition has been made by the
testator through a will subject to the probate of the court.
▪ Legitimate – the property set aside by the court or by law to compulsory heirs.
The deceased may have free portion if there is a will; without a will, there is
no free portion.
▪ Illegitimate child is a compulsory heir and gets ½ of the share of the legitimate
heir, as a general rule, in case there is no will.

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▪ Succession is a mode of acquisition or transferring property through:

• The death of the owner of the property
o By will (testamentary succession – with a will)
o By operation of law (legal) or intestate succession (without a
will)

▪ Decedent is the general term applied to the person whose property is

transmitted through succession
▪ Devises and legatees (legacy is given) are persons to whom gifts of real and
personal property are respectively given by virtue of a will.
▪ Will is an act whereby a person is permitted to control to a certain degree the
disposition of his estate to take effect after his death (free portion).
▪ Codicil – a supplement or addition to a will, made after the execution of the
will
▪ Testator – the person living a will

▪ Died testate – died with a will

▪ Died intestate - died without leaving a will

▪ Legitimate – testator’s property that he cannot dispose of because the law has
reserved it for certain heirs who are, therefore, called compulsory heir. (Art
886 CC).
▪ All illegitimate child is a compulsory heir.
▪ A compulsory heir may, in consequence of disinheritance, be deprived of his
legitimate, for causes expressly stated by law. It can only be affected through
a will wherein the legal cause shall be specified. (Art. 919 CC)
▪ A legally adopted child has the same right and share in the same manner as a
legitimate child.
▪ In default (sa kawalan ng) of legitimate children and descendants of the
deceased, his/her parents and ascendants shall inherit from him/her.
▪ In the absence of legitimate descendants or ascendants, the illegitimate
children shall succeed to the entire estate of the deceased.

PROPERTY RIGHTS UNDER PHILIPPINE LAW

1 General Rule - Only Filipino citizens and corporations at least sixty percent of the
capital of which is owned by Filipinos are entitled to acquire and own land in the
Philippines.

1987 Constitution:
Article IV, Section 1. The following are citizens of the Philippines:

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➢ Those who are citizens of the Philippines at the time of the adoption of this
Constitution;
➢ Those whose fathers or mothers are citizens of the Philippines;
➢ Those born before January 17, 1973, of Filipino mothers, who elect Philippine
citizenship upon reaching the age of majority; and
➢ Those who are naturalized in accordance with law.

Article IV, Section 2. Natural-born citizens are those who are citizens of the Philippines
from birth without having to perform any act to acquire or perfect their Philippine
citizenship. Those who elect Philippine citizenship in accordance with paragraph (3),
Section 1 hereof shall be deemed natural-born citizens.
Filipino citizens can acquire-

i. Alienable lands of the public domain – own up to 12 hectares; lease up to 500

hectares;

What is “land of the public domain?” – Public domain is classified as agricultural, forest
(or timber), mineral and national parks. Only agricultural is alienable. Modes of
acquiring title to alienable lands of the public domain – by sale, homestead patent, sales
patent, free patent or through uninterrupted possession for a period of time under a
claim of title.

ii. Private real estate property – no limitation.

Former natural born Filipino citizens may acquire land

(Section 7, Article XII of 1987 Constitution) subject to special laws:

➢ BP 185: for residential purpose – 1,000 sqm urban or 1 hectare rural;

➢ RA 7042 as amended by RA 8179 - for business purpose – 5,000 sqm urban or 3
hectares rural.

Former Filipinos can regain citizenship under RA 9225: Dual Citizenship Law of 2003 –
natural born citizens of the Philippines who were naturalized as citizens of another
country may re-acquire Philippine citizenship by swearing allegiance to the Philippine.

2. Foreigners – cannot acquire real property in the Philippines except by -

a) Hereditary succession;
b) Acquisition of real property under the 1935 Philippine Constitution;
c) Purchase of not more than 40% of the units in a condominium project in the
Philippines.

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Foreigners can lease land 25 years renewable 25; or if an investor, 50 years renewable
25.

RIGHTS AND RESTRICTIONS OF PRIVATE CORPORATION:

Private Corporations or associations organized under the laws of the Philippines with
60% capital owned by Filipinos are entitled to acquire and own private lands but not in
excess of 1,024 ha. If leasing, not to exceed 2,000 ha. They may hold alienable
agricultural lands of the public domain only by lease for a period not to exceed 25 years
renewable for not more than 25 years and not to exceed 1,000 hectares.

Deeds – a written instrument used to transfer ownership of land and/or improvements.

Deeds must have:
1) Grantor and grantee;
2) Word of conveyance;
3) Signature of grantor and at least 2 witnesses;
4) Notarization

Basic requisites for the validity of contracts to buy/sell real property –

o Consent of the contracting parties;
o Object certain which is the subject matter of the contract;
o Cause or consideration of the obligation which is established.

Contract is void if consent from –

1.) un-emancipated minor or those persons below 18 years old; or
2.) insane or demented person or deaf-mutes who do not know how to write; (Art. 1327,
New Civil Code).
If consent is given through mistake, violence, intimidation, undue influence or fraud,
the contract will be voidable or valid until annulled (Art. 1330 NCC).

OBLIGATIONS OF PROPERTY OWNER IN THE PHILIPPINES:

1. Pay annual Real Property Tax (RPT) and Special Education Fund Tax (SEFT);
2. Comply with the Building Code on its requirements;
3. Observe Subdivision Regulations in case of subdivision lot;
4. Comply with zoning regulations of the LGU;
5. Comply with Philippine laws on Eminent Domain, Escheat, Easement of Right of
Way, taxation, etc..
6. In case of condominium, unit owners are obliged to –
o Pay RPT and SEFT on his unit; Share in RPT and SEFT on common area and land;
o Get insurance on the unit; Share in the payment of insurance premium on the
common areas;
o Comply with use restrictions; pay condominium and association dues and
assessments.

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PROPERTY RELATIONS BETWEEN SPOUSES (E.O. 209, Family Code, July 6, 1987)
1. Types of relationships: Absolute Community, Absolute Separation, Conjugal
Partnership of Gains. Before marriage, spouses may choose from three (3) types of
relationships by signing a public instrument (pre-nup) to be registered in the local
civil registry. If none is made, Absolute Community governs:

2. Definition:
1) Absolute Community – co-ownership of all properties acquired before and during
marriage, except for “exclusive properties” which are: those acquired by
gratuitous title during marriage, properties for personal use (except jewelry), and
properties acquired before marriage by a spouse with legitimate descendants by
a former marriage.
2) Absolute Separation – ownership of all properties acquired before or during
marriage are separate.
3) Conjugal Partnership of Gains – only those properties acquired during marriage
are conjugal; those acquired before marriage are still separate; those acquired
during marriage by gratuitous title, by redemption, barter or exchange with one’s
exclusive property or purchased with exclusive money are also separate.

3. Special Notes:
• Gambling loses not chargeable to community property; winnings are part of
it.
• Spouses jointly administer community property, but in disagreement
husbands decide.
• Termination of conjugal partnership: death, judicial decree of separation,
marriage annulment
• Causes for judicial separation of property: judicially declared absentee,
sentence to jail long-term, abandonment, separation at least one year, abuse of
power.
• Living-in couples: co-ownership rules prevail if both have a capacity to
marry; if not, only the property they acquired while living together are
common.

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