Property Ownership and its Modifications

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CIVIL LAW: PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS

A. Property

I. Definition of Property

Under the Civil Code of the Philippines, property refers to all things that are or may be the object of appropriation. Property is classified based on ownership, use, and characteristics, as described below.

II. Classification of Property

  1. According to Ownership:
    • Public Property:
      • Owned by the State or its political subdivisions.
      • For public use (e.g., roads, bridges, plazas).
      • For government service (e.g., government buildings, military installations).
    • Private Property:
      • Owned by private individuals or entities.
      • Includes personal and real property not designated for public use.
  2. According to Nature:
    • Real Property (Immovable):
      • Defined under Article 415 of the Civil Code.
      • Includes land, buildings, roads, trees, and other immovable structures attached to the land.
    • Personal Property (Movable):
      • Defined under Article 416.
      • Includes all things that can be transported from one place to another without altering their substance.
  3. According to Purpose:
    • Consumable Property:
      • Goods that are consumed or extinguished upon use (e.g., food, fuel).
    • Non-Consumable Property:
      • Goods that can be used repeatedly without being consumed (e.g., furniture, tools).
  4. According to Susceptibility of Appropriation:
    • Common Property:
      • Things owned by all, such as air, the high seas, and sunlight.
    • Res Nullius:
      • Things that have no owner but can be appropriated, such as wild animals or abandoned property.

III. Ownership (Articles 427–440, Civil Code)

  1. Definition and Attributes:
    • Ownership is the right to enjoy, dispose, and exclude others from property.
    • It includes the right to the fruits and accessories of the property (Article 428).
  2. Limitations on Ownership:
    • Must respect the rights of others (Article 429).
    • Subject to laws, such as zoning laws, taxation, and public welfare regulations.
  3. Modes of Acquiring Ownership:
    • Original Modes:
      • Occupation.
      • Intellectual creation.
    • Derivative Modes:
      • Through contracts, succession, donation, prescription, and accession.
  4. Rights and Obligations:
    • The owner has the right to recover property from any unlawful possessor (Article 428).
    • Must use property responsibly and prevent damage to others.

IV. Modifications of Ownership

  1. Co-ownership (Articles 484–501):
    • Arises when ownership is shared by two or more persons.
    • Each co-owner holds an undivided interest in the property.
    • Partition may be demanded unless prohibited by agreement or law.
  2. Usufruct (Articles 562–612):
    • The right to enjoy the use and fruits of property owned by another.
    • Usufructuary must preserve the property and return it upon termination of the usufruct.
  3. Easements (Articles 613–651):
    • Encumbrances imposed on a property for the benefit of another (e.g., right of way).
    • Created by law, contract, or prescription.
  4. Lease (Articles 1642–1676):
    • Temporary use of property by another under agreed conditions.
    • Lessors retain ownership but transfer possession and use.
  5. Trusts:
    • Legal arrangement wherein ownership is separated from benefit.
    • Governed by special laws.

V. Public Property (Articles 420–425)

  1. Definition and Scope:
    • Public property is for public use or service and cannot generally be alienated.
  2. Disposition and Use:
    • State property can only be alienated under conditions provided by law (e.g., public bidding).
    • Property of public dominion cannot be acquired through prescription.
  3. Reclassification of Public Property:
    • Public property may become patrimonial if explicitly declared by the government (Article 422).

VI. Private Property

  1. Acquisition:
    • Through modes such as sale, donation, inheritance, or prescription.
  2. Loss of Ownership:
    • By abandonment, prescription, or destruction of the property.
  3. Protection of Rights:
    • Remedies include replevin, action for damages, and recovery of possession.

VII. Accession (Articles 440–465)

  1. Definition:
    • Accession refers to the right of the owner to all that is produced by, incorporated, or attached to their property.
  2. Types:
    • Accession Discreta: Refers to natural or industrial fruits.
    • Accession Continua: Refers to improvements or additions to immovable property (e.g., buildings, plants).
  3. Rules:
    • Ownership of improvements belongs to the owner of the principal property unless otherwise agreed upon.

VIII. Possession (Articles 523–561)

  1. Definition:
    • Possession is the holding or control of property with the intention of ownership.
  2. Kinds:
    • In Good Faith: Belief in lawful ownership.
    • In Bad Faith: Awareness of lack of ownership.
  3. Acquisition and Loss:
    • Possession may be acquired by material holding or intention.
    • Lost through abandonment, destruction, or transfer to another.
  4. Legal Effects:
    • Possessors in good faith are entitled to fruits and improvements.
    • Possessors in bad faith must return the property and pay damages.

IX. Prescription (Articles 1106–1155)

  1. Definition:
    • Prescription is a mode of acquiring or losing property through the passage of time.
  2. Kinds:
    • Acquisitive Prescription:
      • Ordinary: Possession in good faith and with just title for ten years.
      • Extraordinary: Continuous possession for 30 years.
    • Extinctive Prescription:
      • Bars claims to property after the lapse of the statutory period.
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Wildy & Sons Ltd — The World's Legal Bookshop Search Results for isbn: '9781847033550'

Interpretation of contracts is the legal process of determining the true intent of parties when terms are ambiguous or disputed, prioritizing evident intention over literal words. Key kinds of interpretation include literal (plain meaning), contextual (reading as a whole), intentional (giving effect to intent), and contra proferentem.
Key Kinds and Rules of Contract Interpretation
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Willful Disobedience - Labor Law PH

Entitlement to rights, benefits, or legal standing requires meeting specific, often codified, requisites. These vary based on the context, such as labor law, civil law, or legal standing to sue.
General Requisites for Entitlement (Legal Context)
  • Legal Standing (Locus Standi): To be entitled to sue or seek relief, a person must have a personal, direct stake in the outcome, having sustained or being in imminent danger of sustaining a direct injury.
  • Valid Claim or Right: The person must show they are about to be denied a specific right or privilege to which they are lawfully entitled.
Specific Examples of Entitlement Requisites
  • Labor Benefits (Non-diminution): To be entitled to a benefit that cannot be reduced by an employer, it must be founded on policy, ripened into a long-term practice, be consistent/deliberate, and not be due to an error in law.
  • Rest Day/Holiday Pay: An employee is entitled to additional compensation for work on a Sunday only if it is their established rest day.
  • Government Program (e.g., NHA Grant): Entitlement to land titles requires complying with contractual conditions, such as full payment of installments and personal use of the land.
  • Naturalization (Philippine Citizenship): Entitlement to reduced residency requirements (5 years instead of 10) requires specific qualifications, such as holding office, establishing a new industry, or marrying a Filipino citizen.
  • Valid Waiver: Entitlement to a right is waived only if the person possesses the right, has the capacity to dispose of it, and the waiver is clear, unequivocal, and not contrary to law or public policy.
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A practitioner-oriented overview based on the Local Government Code of 1991 (LGC) and leading jurisprudence

1. Statutory Framework

Source Key Provisions
Constitution (Art. X, §5) LGUs may create their own sources of revenue.
LGC 1991 (R.A. 7160), Book II, Title II §§197-283 govern the levy, collection, and enforcement of local taxes, including RPT.
Implementing Rules & Regulations (IRR) of the LGC Part IV, Rule XXX
Supreme Court cases FELS Energy v. Province of Batangas (G.R. F-729), City of Makati v. Tagaytay Highlands (G.R. 222263, 2021) etc., interpret LGU powers and taxpayer defenses.

2. When and How the Tax Becomes Due

Event Timing Notes
Accrual 1 January every year (LGC §232) Tax attaches to the land, building, and machinery that exist on that date.
Basic tax & SEF tax Payable on or before 31 January or in four equal quarterly installments (31 Mar, 30 Jun, 30 Sep) (§250) Some provinces/cities adopt incentives for advance payment.
Special levies (e.g., idle land, benefit assessments) Billed and collected together with the basic tax unless an ordinance fixes another schedule.

3. Administrative Penalties for Late or Non-Payment

  1. Interest (LGC §255)
    • 2 % of the unpaid amount per month of delay.
    • Capped at 36 months (i.e., maximum 72 %).
    • Interest runs separately for each installment.
  2. Tax Delinquency (§256)
    • Occurs the day immediately after a quarterly due date lapses.
    • Entire year’s balance may be declared delinquent once any installment is missed.
  3. Notice of Delinquency (§258)
    • Local treasurer must:
      • Post at the main LGU building and in the barangay, and
      • Publish once a week for two consecutive weeks in a newspaper of general circulation.
    • Notice must state the date of auction sale (not less than 30 days after posting).
  4. Warrant of Levy (§260)
    • May be issued 30 days after delinquency.
    • Annotated on the title at the Registry of Deeds; constitutes a statutory lien that is superior to mortgages and other encumbrances (except constitutional tax-exemptions).
  5. Advertisement and Public Auction (§§261-263)
    • Sale advertised for 30 days.
    • Highest bidder wins; if no bidder, LGU may purchase the property ipso jure (§264).
    • A Certificate of Sale is issued and annotated on the title.
  6. Redemption Period (§262)
    • Owner or any interested party may redeem within one (1) year from the date of sale by paying:
      • The delinquent tax,
      • Interest up to the date of sale, plus
      • Interest on the purchase price at up to 2 % per month.
    • Upon redemption, the certificate of sale is cancelled and a certificate of redemption is issued.
  7. Final Deed Conveying Title (§263)
    • If not redeemed within one year, the treasurer executes a Final Deed to the Purchaser, free from the lien of taxes and earlier encumbrances.
    • The owner forfeits all rights to the property except a share in any surplus of the sale proceeds (rare, since taxes and costs usually consume the price).
  8. Possessory Rights & Ejectment
    • The purchaser may take possession after the redemption period.
    • Courts have upheld ejectment suits anchored on a final deed executed under §263.

4. Ancillary Civil and Commercial Consequences

Consequence Practical Effect
Blocking of Land Registration Transactions Registry of Deeds requires a Real-Property Tax Clearance Certificate for transfers, mortgages, subdivision/consolidation plans, and issuance of condominium CCTs.
Cloud on Title / Lower Market Value The levy and certificate of sale are annotated, discouraging buyers and lenders.
Difficulty Renewing Business Permits Cities and municipalities require RPT clearance for an establishment’s annual business-permit renewal.
Ineligibility for Government Incentives Some BOI/PEZA or tourism incentives require proof of local-tax compliance.
Impact on Estate Settlement Heirs cannot obtain an electronic Certificate Authorizing Registration (e-CAR) from the BIR without RPT clearance.

5. Criminal Liability?

Non-payment per se is a civil breach, not a criminal offense.

  • However, §274 punishes local officials who fail to perform collection duties.
  • Tax evasion under the NIRC does not apply to local taxes.
  • A taxpayer who knowingly falsifies documents to secure a tax clearance may incur liability under the Revised Penal Code (falsification/estafa).

6. Taxpayer Remedies and Mitigating Measures

Remedy Statutory Basis Key Points
Installment/Partial Payments §250 Interest computed only on the unpaid portion.
Protest (Before payment) §252 Must be filed within 30 days from notice of assessment; decision due 60 days; appealable to the LBAA.
Appeal to LBAA, CBAA, CTA, SC §§226-231 Can question legality of assessment, but not the collection procedure once tax is delinquent.
Amnesty/Condonation §276; special laws (e.g., R.A. 11213, the 2019 estate-tax amnesty) Sangguniang Panlalawigan/Panglungsod may condone interest in cases of calamity, crop failure, or special public interest.
Compromise/Abatement Similar to BIR compromise; LGU may accept partial settlement subject to sanggunian approval.
Judicial Injunction Rare; courts generally require payment under protest before entertaining suits (tax-collection is the lifeblood of government doctrine).

7. Enforcement Hierarchy vis-à-vis Personal Property

For local business taxes and fees the treasurer may distrain personal property before levying realty (§175).
For RPT, levy on realty is the primary—and exclusive—administrative remedy. Personal property cannot be distrained to satisfy RPT.

8. Priority of Liens

  1. National Taxes (e.g., estate or donor’s tax)
  2. Real-Property Tax Lien – “superior to all liens, charges, or encumbrances” (§257)
  3. Mortgage Liens / Usufruct / Easements
  4. Subsequent Attachments / Judgments

Thus, a mortgagee’s foreclosure sale is subordinate to prior RPT liens; the buyer at foreclosure must settle delinquent RPT or risk levy.

9. Special Rules for Special Classes of Property

Property Notes on Enforcement
Government-owned but patrimonial property Subject to levy; doctrine in City of Lapu-Lapu v. PEA (2017).
Tax-exempt entities (charities, non-stock / non-profit schools) Exempt from basic RPT but the SEF and other special levies may still apply (C.B. Garayblas v. SSS, 2016).
Machinery May be a separate subject of levy; if machinery is removed or dismantled, the tax lien follows the parts unless paid (IRR Rule IV).

10. Effect of LGU Non-Compliance with Due-Process Steps

Failure to strictly comply with §258 posting + publication or §260 warrant formalities voids the levy and subsequent sale (Heirs of Malate v. Gamboa, G.R. 181409, 2013).

  • Nonetheless, the underlying tax remains due; the treasurer may re-levy within the 5-year prescriptive period (§270) or 10 years if fraud is involved.

11. Prescription

Action Period Interruption
Assessment/Collection by LGU 5 years from date tax became due; fraud/falsity extends to 10 years (§270). Running is tolled by: (a) service of warrant, (b) taxpayer request for reinvestigation, (c) any court action.
Refund by Taxpayer 2 years from date of payment (§253).

12. Comparative Glance at Condonation Programs (Past Decade)

Year Issuing Authority Coverage Highlights
2013 R.A. 10158 Abolished RPT on machineries of independent power producers (IPPs) in energy privatization; national govt assumes liability.
2022 Various LGUs post-Typhoon Odette Provincial boards (Bohol, Southern Leyte, etc.) condoned surcharges and interest for affected barangays.
2023 Quezon City Ord. SP-3180 100 % condonation of interest for delinquencies paid in full within the amnesty window.

13. Practical Tips for Owners, Buyers, and Lenders

  1. Always secure an updated “Statement of Account” (SOA) from the city/municipal treasurer before closing any real-estate deal.
  2. Pay in January if cash flow allows—many cities grant a 10 %-20 % discount for advance/full-year payment.
  3. Monitor quarterly dues using the LGU’s online portal or mobile pay apps (GCash, PayMaya) now accepted in most highly urbanized cities.
  4. For developers, allocate sufficient escrow for RPT during the project’s pre-selling phase; unpaid RPT can derail subdivision/condo registration.
  5. For lenders, routinely check Tax Declaration and Real-Property Tax Clearance before loan releases and during annual credit review.
  6. If already delinquent, explore LGU settlement plans or amnesties—interest condonation can save up to 72 % of the outstanding balance.

14. Key Take-Aways

  • The RPT lien is automatic, paramount, and difficult to defeat; ignoring it can literally cost you land.
  • Interest alone can double the liability in three years.
  • Due-process defects can nullify the levy but not the tax—the LGU can start the process anew.
  • Redemption is a strict one-year period; after that, title and possession pass irrevocably.
  • Awareness of local amnesty ordinances and timely installment payments are the taxpayer’s best defenses.

Disclaimer: This article synthesizes statutory text, administrative regulations, and Supreme Court decisions current to 26 April 2025. It is not a substitute for formal legal advice. Always confirm any LGU-specific ordinance or amnesty in force at the time of inquiry.

 

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DAR Negros distributes Yusay land to Bago farmers despite resistance

Lands awarded under Philippine agrarian reform programs (RA 6657, PD 27) generally cannot be sold, transferred, or conveyed for ten (10) years from the date of award. Exceptions include transfers through hereditary succession (to heirs), or to the government, Land Bank of the Philippines (LBP), or other qualified beneficiaries. 
Key Aspects of Transferability
  • 10-Year Restriction (RA 6657): During this period, land acquired under a Certificate of Land Ownership Award (CLOA) cannot be transferred, with violations rendering the transaction void.
  • Exceptions to the 10-Year Rule:
    • Hereditary Succession: Ownership passes to legal heirs upon the death of the beneficiary.
    • Government/LBP: Land may be transferred to the government or Land Bank.
    • Qualified Beneficiaries: Transfer allowed to other beneficiaries authorized by the Department of Agrarian Reform (DAR).
  • Unpaid Land (PD 27): If the land has not been fully paid for by the beneficiary, rights may only be transferred with prior approval from the DAR.
  • Post-10 Year Period: After 10 years, transfer is generally allowed, but may still require DAR clearance or be subject to restrictions on the maximum landholding size (5 hectares).
  • Validity of Transfers: Any transfer made in violation of these rules is null and void, and the land can be forfeited. 
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Steps in Acquiring Land – KCJ LAW OFFICE

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