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Philippine Real Estate Laws

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CONCEPT OF OWNERSHIP
Ownership is the independent right of a person to the exclusive enjoyment and control of a property including its disposition and recovery subject only to the restrictions established by law and rights of others.

RIGHTS INCLUDED IN OWNERSHIP
Fee simple consists of the so called “bundle of rights” which are inherent in or appurtenant to ownership, without any limitations or restrictions other than those imposed by law or contract. The bundle of rights include the following: 1) Right to possess 2)Right to use and enjoy 3) Right to the fruits 4) Right to dispose 5) Right to vindicate or recover

LIMITATIONS ON RIGHT OF OWNERSHIP
1) Those imposed in general 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, requirement of legitimate succession, zoning, building code, rent control, urban and agrarian reform, subdivision regulations, escheat.
3) Those imposed by the grantor of the property on the grantee by contract, such as donation, last will, or usufruct.
4) Those imposed by the owner himself, such as voluntary easement, lease, mortgage.

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 any 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
Hidden treasure belongs to the owner of the land, building, other property on which it is found. When the discovery is made on the property of another, or of the State or any of its subdivisions, and by chance, one-half of the treasure shall be allowed to the finder. If the finder is a trespasser, he shall not be entitled to any share of the treasure. If the things found be of interest to science or arts, the State may acquire them at their just price, which shall be divided in conformity with the rule above stated. Hidden treasure, for legal purpose, is understood to be any hidden unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear.

RIGHTS OF ACCESSION
1) In General – The ownership of property gives the right by accession to everything which is produced thereby, or which is incorporated or attached thereto, whether naturally or artificially.
2) With Respect to Produce of Property – To the Owner belongs the:
a) Natural fruits – the spontaneous product of the soil
b) Industrial fruits – those produced by land cultivation or labor
c) Civil fruits – the rental income of buildings and /or lands
3) With Respect to Immovable Property:
a) The owner of the land on which anything has been built, sown or planted in good faith shall have the right:
aa) To appropriate as his own the works, sowing or planting after payment of indemnity provided by law, or
bb) To oblige the builder or planter to pay the price of the land. However, the builder of planter cannot be obliged to pay for the land if its value is considerably more than that of the building or planting. In such case, he shall pay reasonable rent if the owner does not choose to appropriate the building after proper indemnity. The parties shall agree on the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
b) The owner of the land on which anything has been built, planted or sown
In bad faith may:
aa) Demand the demolition of the work or removal of the planting or sowing at the expense of the builder or planter, or
bb) compel the builder or planter to pay the price of the land and the sower, the proper rent. The landowner is also entitled to damages from the builder planter or sower.
cc) To the owners of land adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the water.
dd) Whenever a river, changing its course by natural causes, opens a new bed through a private estate, the new bed shall become a public dominion.

RIGHT TO OWN
1. General Rule – Only Filipino citizens and corporations at least 60% capital of which is owned by Filipinos are entitled to acquire and own land in the Philippines.
2. Exceptions 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 if the acquiree is a legal heir.
c) Purchase of not more than 40% interest in a condominium project
d) Purchase by former natural born Filipino citizens subject to limitations prescribed by B.P. 185 and R.A. 8179
3. A Filipina who marries an alien retains here Philippine citizenship (unless the law of her husband’s country makes her assume the citizenship of her husband because of such marriage) and can therefore acquire real estate in the Philippines.

ACQUISITION BY FORMER NATURAL BORN FILIPINO CITIZENS
1. Mode of acquisition is not limited to voluntary deeds (such as sale or donation) but includes involuntary deeds (such as foreclosure, execution or tax delinquency sale)
2. Maximum area that may be acquired:
a) For residential purpose – 1,000 square meters of urban or one hectare of rural land.
b) For business purpose – 5,000 square meters of urban land or 3 hectares of rural land.
Business purpose refers to the use of 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 the land but excluding the buying or selling thereof.

FOREIGN OWNERSHIP OF CONDOMINIUM UNIT
In the condominium concept of ownership, absolute ownership by a foreigner is allowed not to exceed forty percent interest in the project. The unit owner is the absolute owner of the space within the interior surface of his unit, but is only a co-owner of the exterior fašade of the unit.

RIGHTS OF A CONDOMINIUM UNIT OWNER
Absolute ownership of his unit
Co-ownership of land and common areas
Exclusive easement of the space of his unit
Non-exclusive easement to common areas for ingress or egress
Right to sell, lease, or mortgage his unit
Right to repair, paint, decorate the interior surface of his unit
Right to participate and vote in condominium corporation meetings

OBLIGATIONS OF A CONDOMINIUM UNIT OWNER
Pay the realty tax on his unit
Pay the insurance on his unit
Pay the shared monthly dues for maintenance of common areas/amenities/garbage disposal
Comply with use restrictions

MACEDA LAW (R.A. 6552) When the buyer is delinquent in his payment
Objective: To protect installment buyers of real estate against onerous and oppressive conditions.
Applicability – Applies to sale or financing of residential estate on installment payment covered by contract to sell and not sale with mortgage, but excluding industrial lots, commercial building, and sales to tenants under R.A. 3844.
Rights of buyer who has paid two years or more of installments: a) To pay, without additional interest, any installment due within the grace period which is equivalent to one month for every year of installment, provided that such right can only be availed of once every five years. b) To receive a thirty-day notarial notice of cancellation before his contract can be cancelled for delinquency. c) To receive the cash surrender value of his total payments before his contract can be cancelled due to delinquency. The refund is equivalent to fifty percent of total payments and, after the fifth year, an additional five percent per year of installment payment, but not to exceed ninety percent of total payments. d) To transfer or assign his right to the contract e) To register or annotate his contract on the title f) To pay, without additional interest, the full principal balance of the price before the term of the contract.

Rights of buyer who has paid less than two years of installment – The buyer has practically the same rights as a buyer who has paid two years or more of instalmments, except for the following differences:
a) The grace period to pay without additional interest on any installment due is fixed at sixty days
b) For cancellation of contract due to delinquency, the buyer is only entitled to receive a thirty-day notarial notice of cancellation but without right to receive the cash surrender value of his payments.

P.D. 957 When the developer fails to complete the development within the required period
The refund is 100% of total payments less penalty interest plus legal interest of money.

FUNDAMENTALS OF PROPERTY OWNERSHIP
By: Atty. R.B. Palacio Jr.

Cebu Real Estate