CAGAYAN STATE UNIVERSITY

COLLEGE OF LAW
Tuguegarao City, Cagayan
Preliminary Examinations (Property)
October 20, 2021

1. David is the owner of Lot No. 14 with a total area of 1,000 sq. meters. Mike owns
the adjoining Lot No. 15 with an area of 300 sq. m. In 2010, Mike built his house on
his lot with his kitchen encroaching on an area of 30 sq. m. of David’s property.
When David discovered the encroachment, Mike was told to move back from his
encroachment. David then filed an action for unlawful detainer in the MTC against
Mike. The MTC found Mike to be a builder in good faith and ordered that a forced
lease be created on the 34 sq. m area between the parties. Is the decision of the
MTC ordering a forced lease between the parties correct? Explain? (10%)

No. The MTC is not correct.

As Mike is a builder in good faith in another’s land, Art 448 of the Civil Code governs.

Under said legal provision, David, as the lot owner, must exercise the option either to pay for the
encroaching part of Mike’s kitchen, or to sell the 30 sqm encroached lot to Mike

If David has chosen to sell the encroached lot to Mike but the value is considerably more than that of
the kitchen, only then can the court order a forced lease between the parties only

Hence, the MTC is premature in ordering the forced lease under Article 448.

2. What are immovables by (a) nature, by (b) incorporation, by (c) destination and by
(d) analogy? Give examples for each. (10%)

3. Norman constructed a building on his own lot for his paper-making business. He
introduced machineries inside the building, some of which were floor-mounted
while the others remained transferable from one location to another. Are the
floor-mounted and transferable machineries, real or personal properties? Explain.
(10%)

They are considered real properties because they are intended for the industry of Norman.

In Davao Sawmill vs Castillo, the Supreme Court said that machinery movable by nature
becomes immobilized when placed by the property owner.

1 | Page
As norman is the business owner, the machineries introduced by him, whether mounted or
transferrable, are considered immovable property by destination because it is principally used
for his paper-making business.

4. “A” is the owner of a parcel of land. He leased the land to “B” who constructed a
building on the land. During the existence of the lease, a third person “C”
discovered a wad of money in the ceiling of the building. Who owns the money?
Explain. (10%)

5. (a) Mike owns a land bordering a lagoon and because of an extraordinary flood, a
portion of the land was inundated. Has he lost said portion of land? Explain. (5%)

No. Under Article 458 of the Civil Code, Mike, as an owner of land that is beside a
lagoon does not acquire or lose land due to extraordinary flood.

(b) What if Mike’s land borders a sea and due to the natural action of the sea
water, a portion of his land was invaded and covered by sea water, has he lost this
portion of his land? Explain. (5%)

6. In good faith, Lyka made hollow blocks using gravel, sand and cement belonging to
Milo, Nyce and Oscar, respectively. The owners of the materials did not know that
Lyka used their materials in the manufacturing of the hollow blocks. Who will be
owner of the hollow blocks and what will be the rights and obligations of Lyka,
Milo, Nyce and Oscar, if any? Explain. (10%)

7. Distinguish forcible entry, unlawful detainer, accion publiciana, accion

8. . Rose, believing that she is the owner of a rice land that has a warehouse erected thereon,
incurred the following expenses: (a) payment of real property taxes, (b) repairs for the roof of
the warehouse damaged by typhoon Kiko, (c) installation of dryer for the “palay” harvested
and (d) rest house complete with amenities. It turned out the land is owned by Rico who was
not aware that his land was occupied by Rose. Rico now wants to claim the value of the palay
previously harvested by Rose and also claims ownership over the palay standing on the lot as
well as the dryer and rest house introduced by Rose. Rose on the other hand wants to be

2 | Page
 reimbursed for all her expenses and argues that she retains ownership over the palay already
harvested as well as those standing. Determine the rights and obligations of Rose and Rico.
10%.

Since Rose believed she owns the rice land, she is a sower and builder in good
faith. Thus, she has right to the palay and the rest house under Article 448. Also,
being possessor in good faith, she has the right to be indemnified to the payment
of real property tax and repairs for the warehouse roof as these are useful
expenses under Article 546. She has the right to compel Rico to exercise his
options under Article 448.

On the other hand, Rico cannot claim ownership over the palay without first
electing to buy the rest house that Rose built. When Rico chooses to buy the rest
house, Rose will be considered a possessor in bad faith. As such, she loses her right
to the palay. Only then can he claim the palay as his own. However, he cannot
claim ownership over the dryer as this is considered personal property and outside
the coverage of Article 448.

 However, the copra dryer and the store, as determined by the trial court and respondent court, are
transferable in nature. Thus, it would not fall within the coverage of Article 448.

9.

10. X purchased subdivision Lot No. 14. Instead of building on Lot No. 14, X in good
faith built a house worth 8million pesos on Lot No. 13, which is valued at 9million
pesos belonging to Z and without Z’s knowledge.
a. Who has the preferential right of consolidating ownership on both land and
building? Explain. (4%)

of consolidating
Under Article 448 of the Civil Code, the land owner has the preferential right
ownership on both land and building. He has the right to buy the building as his own.

b. May Z compel X to remove the house? Explain. (4%)

3 | Page
No. He can only compel X to remove the house after he elects the the option under
Article 448 to compel X to buy the encroached lot, and the latter fails to do so.

c. May Z compel X to buy the land? Explain. (4%)

Yes. Under Article 448, Z may compel X to buy the land,  provided that the value of the
land is not considerably more than the house

d. If X agrees to pay Z for the latter’s land, but fails to comply, may Z demand
removal of the house? Explain. (4%)

No. First, It must be shown that the value of the land is not more than the value of the
house.

e. Before a settlement is reached between X and X, may Z demand rental for his
land? Explain. (4%)
No. In such a situation, the parties must first agree on the terms of the lease
before Z can demand rental. If there is no agreement, the court will fix the term
of the lease.
-nothing follows-

4 | Page