GN Civil Law 2014 PDF

CIVIL LAW
2014 GOLDEN NOTES

UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
MANILA
The UST GOLDEN NOTES is the annual student-edited bar review
material of the University of Santo Tomas, Faculty of Civil Law,
thoroughly reviewed by notable and distinct professors in the
field. Communications regarding the NOTES should be
addressed to the Academics Committee of the Team: Bar-Ops.
ADDRESS: Academics Committee

Team Bar-Ops
Faculty of Civil Law
University of Santo Tomas
Espaa, Manila 1008
TEL. NO.: (02) 731-4027

(02) 4061611 loc. 8578
Academics Committee
Faculty of Civil Law
University of Santo Tomas
Espaa, Manila 1008
All Rights Reserved by the Academics Committee of the Faculty of Civil Law of the
Pontifical and Royal University of Santo Tomas, the Catholic University of the
Philippines.
2014 Edition
No portion of this material may be copied or reproduced in books, pamphlets,

outlines or notes, whether printed, mimeographed, typewritten, copied in different
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No.__________
Printed in the Philippines, August 2014.

ACADEMIC YEAR 2014-2015
CIVIL LAW STUDENT COUNCIL

VICTOR LORENZO L. VILLANUEVA PRESIDENT
GLORIA ANASTASHA T. LASAM VICE PRESIDENT INTERNAL
JOHN ROBIN G. RAMOS TREASURER
RAE GENEVIEVE L. ACOSTA AUDITOR
RAFAEL LORENZ S. SANTOS CHIEF-OF-STAFF
TEAM: BAR-OPS
VANESSA ANNE VIRAY CHAIRPERSON
ERIKA PINEDA HEAD, DOCUMENTATIONS & BAR REQUIREMENTS
JOHN LESTER TAN ASST. HEAD, DOCUMENTATIONS & BAR REQUIREMENTS
HAZEL NAVAREZ HEAD, HOTEL ACCOMODATIONS COMMITTEE
HANNAH QUIAMBAO ASST. HEAD, HOTEL ACCOMMODATIONS COMMITTEE
JULIA THERESE MAGARRO ASST. HEAD, HOTEL ACCOMMODATIONS COMMITTEE
RAFAEL LORENZ SANTOS HEAD, FINANCE COMMITTEE
DEXTER SUYAT ASST. HEAD, FINANCE COMMMITTEE
AL MAYO PAGLINAWAN HEAD, LOGISTICS COMMITTEE
ALBERTO VERNON VELASCO ASST. HEAD, LOGISTICS COMMITTEE
KEVIN TIMOTHY PILE ASST. HEAD, LOGISTICS COMMITTEE
MAXIMILLAN JEAN PEROLA HEAD, PUBLIC RELATIONS
PATRICIA LACUESTA ASST. HEAD, PUBLIC RELATIONS
REINALD VILLARAZA ASST. HEAD, PUBLIC RELATIONS
ATTY. AL CONRAD B. ESPALDON

ADVISER
ACADEMICS COMMITTEE
MARY GRACE L. JAVIER
JAMES BRYAN V. ESTELEYDES EXECUTIVE COMMITTEE
MA. SALVE AURE M. CARILLO
WILLIAM RUSSEL S. MALANG SECRETARY GENERAL
KAREN T. ELNAS ADMINISTRATION AND FINANCE

RAFAEL LORENZ S. SANTOS LAYOUT AND DESIGN
VICTOR LORENZO L. VILLANUEVA
CIVIL LAW COMMITTEE

JAMES BRYAN V. ESTELEYDES CIVIL LAW COMMITTEE HEAD
ROSELA N. ARCILLAS OVER-ALL ASSISTANT HEAD / LEASE AND COMPROMISE
MARK JOSEPH B. ABELARDO OVER-ALL ASSISTANT HEAD / SUCCESSION
PATRICIA ANNE G. LAGGUI PERSONS AND FAMILY RELATIONS
MARIA CARMELA C. YUMUL PROPERTY
RAFAEL LORENZ S. SANTOS OBLIGATIONS AND CONTRACTS
MA. SALVE AURE M. CARILLO SALES
REX CRIS N. ANGELES LAND, TITLES AND DEEDS
CHARMAINE J. PANLAQUE PARTNERSHIP
MA. ANGELA L. HERNAL AGENCY
JENNIFFER JO P. MUNSAYAC CREDIT TRANSACTIONS
MAXIMILLAN JEAN PEROLA CREDIT TRANSACTIONS
STEPHEN REY A. JACOBO MEMBER
KHEMLE JANE VISCA-MARTINO MEMBER
JHO LLAMAS MEMBER
JOICE ANN CATAMIO MEMBER
ATTY. CARLA E. SANTAMARIA-SEA

ATTY. ALDEN FRANCIS C. GONZALES
ATTY. JESUSA LAPUZ-GAUDIANO
ADVISERS
FACULTY OF CIVIL LAW
ACADEMIC OFFICIALS
ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAO, O.P.

DEAN REGENT
ATTY. ARTHUR B. CAPILI

FACULTY SECRETARY
ATTY. ELGIN MICHAEL C. PEREZ

LEGAL COUNSEL
UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC
JUDGE PHILIP A. AGUINALDO

SWDB COORDINATOR
LENY G. GADANIA, R.G.C.

GUIDANCE COUNSELOR
COVERAGE
CIVIL LAW
2014 BAR EXAMINATIONS
I. Effect and Application of Laws (Civil Code) 5

Include: Conflict of Laws (Private International Law) 6
II. Human Relations (Arts. 19-22, Civil Code) 8
Exclude: Independent civil actions and prejudicial questions which will be covered by the examinations in
Remedial Law
PERSONS
I. Persons and Personality (Civil Code) 11

II. Marriage (Family Code) 13
Exclude: Muslim Code (P.D. 1083)
Exclude: Duties of a Civil Registrar under Articles 12-19, 23-25 (Family Code)
Exclude: A.M. No. 02-11-10-SC, Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages; R.A. No. 6955, entitled An Act to Declare Unlawful the Practice of Matching
Filipino Women for Marriage to Foreign Nationals on a Mail Order Basis and Other Similar Practices x x
x; R.A. No. 9208 or the Anti-Trafficking in Persons Act of 2003
III. Legal Separation (Family Code) 27
Exclude:A.M. No. 02-11-11-SC, or the Rule on Legal Separation
IV. Rights and Obligations Between Husband and Wife (Family Code) 33
Exclude:R.A. No. 7192 or the Women in Development and Nation Building Act; R.A. No. 8187, or the
Paternity Leave Act of 1996; R.A. No. 9710, or The Magna Carta of Women.
V. Property Relations of the Spouses (Family Code) 33
VI. The Family 44
VII. Paternity and Filiation (Family Code) 47
VIII. Adoption 53
A. Domestic Adoption Act of 1998 (R.A. No. 8552) 53
Exclude:
1. Rule on Adoption (A.M. No. 02-6-02-SC )
2. R.A. No. 9523, entitled An Act Requiring Certification of the Department of Social Welfare and
Development to Declare a Child Legally Available for Adoption as a Prerequisite for Adoption
Proceedings x x x.
B. Inter-Country Adoption Act of 1995 55
Exclude:Articles 183-188, 191-193 (Family Code)
IX. Support (Family Code) 56
X. Parental Authority (Family Code) 59
Exclude:
1. Rule on Guardianship of Minors (A.M. No. 03-02-05-SC)
2. Rules on Custody of Minors and Writ of Habeas Corpus in Relation to Custody of Minors (A.M. No. 03-
04-04-SC)
3. Solo Parents' Welfare Act of 2000 (R.A. No. 8972)
4. The Early Childhood Care and Development Act (R.A. No. 8980)
Exclude:R.A. No. 9231, entitled An Act Providing for the Elimination of the Worst Forms of Child Labor and
Affording Stronger Protection for the Working Child x x x, which will be covered under Labor Law
Include:Child Abuse Law (R.A. No. 7610)
XI. Emancipation (Arts. 234 and 236, Family Code, as amended by R.A. No. 6809) 63
XII. Summary Judicial Proceedings in Family Law Cases 64
XIII. Retroactivity of the Family Code (Art. 256) 64
Exclude:Arts. 254-255, 257 (Family Code)
XIV. Funerals (Arts. 305-310, Family Code) 64
Exclude:Care and Education of Children (Arts. 356-363, Civil Code)
XV. Use of Surnames 65
Arts. 364-369, 369-380, Civil Code
XVI. Absence (Art. 43, Civil Code; Art. 41 Family Code) 68
XVII. Civil Registrar 70
Exclude:Act No. 375 and the Implementing Rules and Regulations of R.A. No. 9048
PROPERTY
I. Characteristics 73
II. Classification 73
III. Ownership 77
IV. Accession 80
V. Quieting of Title to or Interest in and Removal or
Prevention of Cloud over Title to or Interest in RealProperty 91
VI. Co-ownership 92
VII. Possession 99
VIII. Usufruct 104
IX. Easements 108
X. Nuisance 115
XI. Modes of Acquiring Ownership 116
PRESCRIPTION
I. Definition 123
II. No prescription applicable 126
III. Prescription or limitation of actions 126
OBLIGATIONS
I. Definition 127
II. Elements of an Obligation 127
III. Different Kinds of Prestations 127
IV. Classification of Obligations 127
V. Sources of Obligations 129
VI. Nature and Effect of Obligations 133
VII. Kinds of Civil Obligations 145
VIII. Joint and Solidary Obligation 146
IX. Extinguishment of Obligations 149
CONTRACTS
I. Essential Requisites 163
II. Kinds of Contracts 168
III. Formality 168
IV. Defective Contracts 170
V. Effect of Contracts 177
SALES
I. Definition and Essential Requisites of a Contract of Sale 178

II. Parties to a Contract of Sale 182
III. Subject Matter 184
IV. Obligations of the Seller to Transfer Ownership 192
V. Price
VI. Formation of Contract of Sale 188
VII. Transfer of Ownership 192
VIII. Risk of Loss 197
IX. Documents of Title 197
X. Remedies of an Unpaid Seller 200
XI. Performance of Contract 198
XII. Warranties 201
XIII. Breach of Contract
XIV. Extinguishment of the Sale 204
XV. The Subdivision and Condominium Buyers' Protective Decree (P.D. 957) 208
XVI. The Condominium Act (R.A. No. 4726) 211
Exclude: Electronic Commerce Act of 2000 (R.A. No. 8792); Public Land Law, Retail Trade and Liberalization
Act, Bulk Sales Law (Act No. 3952)
SUCCESSION
I. General Provisions 217
II. Testamentary Succession 220
III. Legal or Intestate Succession 248
IV. Provisions Common to Testate and Intestate Succession 253
Exclude: Executors and administrators (Arts. 1058-1060, Civil Code), which will be covered under Remedial
Law
PARTNERSHIP
I. Contract of Partnership 257
II. Rights and Obligations of Partnership
III. Rights and Obligations of Partners Among Themselves 266
IV. Obligations of Partnership/Partners to Third Persons 269
V. Dissolution 271
VI. Limited Partnership 276
AGENCY
I. Definition of Agency 279
II. Powers 282
III. Express vs. Implied Agency 284
IV. Agency by Estoppel 284
V. General vs. Special Agency 285
VI. Agency Couched in General Terms 285
VII. Agency Requiring Special Power of Attorney 286
VIII. Agency by Operation of Law 286
IX. Rights and Obligations of Principal 286
X. Irrevocable Agency 287
XI. Modes of Extinguishment 287
COMPROMISE
I. Definition 290
II. Void Compromise 290
III. Effect 290
CREDIT TRANSACTIONS
I. Loan 291
II. Deposit 299
III. Guaranty and Suretyship 303
IV. Pledge 310
V. Real Mortgage 315
Include: Act 3135, as amended by R.A. No. 4118
VI. Antichresis 320
VII. Chattel Mortgage 321
Include: Act 1508
VIII. Quasi-Contracts 322
IX. Concurrence and Preference of Credits 324
LEASE
I. Lease of Things 336
II. Lease of Work or Services 338
III. Lease of Rural and Urban Lands 339
IV. Rights and Obligations of Lessor and Lessee
V. Special Rules for Lease of Rural/Urban Lands
VI. Household Service (Exclude, for inclusion in Labor Law)
VII. Contract of Labor (Exclude, for inclusion in Labor Law)
VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)
LAND TITLES AND DEEDS

I. Torrens System 342
II. Regalian Doctrine 347
III. Citizenship Requirement 348
IV. Original Registration 349
V. Subsequent Registration 372
VI. Non-registrable Properties 373
VII. Dealings with Unregistered Lands 374
Exclude:
1. History of land laws
2. Remedies sufficiently covered under Remedial Law
3. Registration of judgments, orders and partitions
4. Assurance fund
5. Registration of patents
6. Administrative structure of the Register of Deeds
7. Consultas
TORTS
I. Principles 375
II. Classification of Torts 375
III. The Tortfeasor 375
IV. Act of Omission and its Modalities 376
V. Proximate Cause 381
VI. Legal Injury 393
VII. Intentional Torts 394
VIII. Negligence
IX. Special Liability in Particular Activities
X. Strict Liability 386
DAMAGES
I. General Considerations 387
II. Actual and Compensatory Damages 398
III. Moral Damages 391
IV. Nominal Damages 392
V. Temperate or Moderate Damages 392
VI. Liquidated Damages 392
VII. Exemplary or Corrective Damages 392
VIII. Damages in Case of Death 393
IX. Graduation of Damages 393
X. Miscellaneous Rules 403
IMPORTANT NOTES:
1. This listing of covered topics is not intended and should not be used by the law schools as a course outline. This
was drawn up for the limited purpose of ensuring that Bar candidates are guided on the coverage of the 2014 Bar
Examinations.
2. All Supreme Court decisions - pertinent to a given Bar subject and its listed topics, and promulgated up to March
31, 2014 - are examinable materials within the coverage of the 2014 Bar Examinations.
DISCLAIMER
THE RISK OF USE, MISUSE OR NON-

USE OF THIS BAR REVIEW MATERIAL
SHALL BE BORNE BY THE USER/
NON-USER.
PRELIMINARY MATTERS
PRELIMINARY MATTERS 3. Letters of Instruction issued by administrative supervisors on

internal rules and guidelines
EFFECT AND APPLICATION OF LAWS 4. Interpretative regulations regulating only the personnel of
administrative agency
Law
XPNs to the XPNs: Administrative rules and regulations that
In its jural and concrete sense, law means a rule of conduct require publication:
formulated and made obligatory by legitimate power of the state
(Diaz, Statutory Construction, p. 1). 1. The purpose of which is to implement or enforce existing
laws pursuant to a valid delegation;
Effectivity of laws 2. Penal in nature;
3. It diminishes existing rights of certain individuals
Effectivity of a law will depend on whether or not it has provided a
NOTE: Circulars of issued by the monetary board are required to be
specific date for its effectivity:
published if they are meant not merely to fill in details of the Central Bank
1. If date is specified Upon the lapse of the said period Act which that body is suppose to enforce. As a rule, circulars which
following its complete publication and not before prescribe a penalty of their violations should be published before coming
2. If no date is specified 15-day period, which may either be on into effect. However, circulars which are mere statements of a general
the 15th or on the 16th day depending on the language used policy as to how the law should be construed do not need publication in the
by the Congress in fixing the effectivity date of the statute Official Gazette for their publication.
(Rabuya, 2009).
Where to publish
a. 15th day - If the law declares that it shall become
effective 15 days after its publication 1. Official Gazette
b. 16th day - If the law declares that it shall be effective 2. Newspaper of general circulation in the Philippines
after 15 days following its publication
Newspaper of general circulation
3. If law provides for immediate effectivity or upon approval
Effective only after its complete publication and not For a newspaper to be considered in general circulation:
immediately after signing by the President 1. It must be published within the courts jurisdiction
4. If law is voluminious Reckoning shall begin from the release 2. It must be published at regular intervals for disseminating
of the last of the series local news and general information
3. It has a bona fide subscription list of paying subscribers
NOTE: Publication is indispensable in every case, but the legislature may in 4. It is not devoted to the interest or published for the
its discretion provide that the usual fifteen-day period shall be shortened or entertainment of a particular class, profession, trade, calling,
extended (Umali v. Estanislao, G.R. No. 104037, May 29, 1992; Taada v. race or religious denomination (Alvarez v. People, G.R. No.
Tuvera, G.R. No. L-63915, December 29, 1986).
192591, June 29, 2011)
Unless it is otherwise provided provision on effectivity of laws
Q: Honasan questions the authority and jurisdiction of the DOJ
The clause "unless it is otherwise provided" refers to the date of panel of prosecutors to conduct a preliminary investigation and
effectivity and not to the requirement of publication itself, which to eventually file charges against him, claiming that since he is a
cannot, in any event be omitted. This clause does not mean that senator with a salary grade of 31, it is the Office of the
the legislator may make the law effective immediately upon Ombudsman, not the DOJ, which has authority and jurisdiction to
approval, or on any other date without its previous publication. conduct the preliminary investigation. DOJ claims that it has
concurrent jurisdiction, invoking an OMB-DOJ Joint Circular which
Publication requirement outlines the authority and responsibilities among prosecutors of
the DOJ and the Office of the Ombudsman in the conduct of
Publication must be in full or it is no publication at all since its preliminary investigations. Honasan counters that said circular is
purpose is to inform the public of the contents of the law. The ineffective as it was never published. Is OMB-DOJ Circular No. 95-
mere mention of the number of the presidential decree, the title of 001 ineffective because it was not published?
such decree, its whereabouts, the supposed date of effectivity, and
in a mere supplement of the Official Gazette cannot satisfy the A:No. OMB-DOJ Circular No. 95-001 is merely an internal circular
publication requirement. This is not even substantial compliance between the two offices which outlines the authority and
(Taada v. Tuvera, G.R. No. L-63915, December 29, 1986). responsibilities among prosecutors of the DOJ and of the Office of
the Ombudsman in the conduct of preliminary investigations. It
Indispensability of publication does not contain any penal provision nor prescribe a mandatory
act or prohibit any under pain of penalty. Further, it does not
GR: All laws are required to be published in full. regulate the conduct of persons or the public, in general. As such
therefore, it need not be published (Honasan, II v. The Panel of
NOTE: The reason for this rule is that the basic constitutional requirement of Investigating Prosecutors of the Department of Justice, G.R. No.
due process must be satisfied (Rabuya, Civil Law Reviewer Vol. 1). Without 159747, Jun. 15, 2004).
such notice and publication, there would be no basis for the application of
the maxim ignoratia legis non excusat (Rabuya, Persons and Family Q: The Sangguniang Bayan of Hagonoy, Bulacan enacted an
Relations, 2009). ordinance which increased the stall rentals of the market vendors
in Hagonoy. Art. 3 of the said ordinance provided that it shall take
XPNs:
effect upon approval. The ordinance was posted from November
4 to 25, 1996. In the last week of November 1997, petitioners
1. Municipal Ordinances (governed by the Local Government
were personally given copies and were informed that it shall be
Code)
enforced on January 1998. The petitioners contended that the
2. Rules and regulations which are internal in nature

1 FACULTY OF CIVIL LAW
CIVIL LAW
subject ordinance was not published as required by law. Did the Mistake of fact v. Mistake of law
ordinance comply with the rule of publication?
A:Yes. An ordinance which increased the stall rentals of the market BASIS MISTAKE OF FACT MISTAKE OF LAW
vendors has complied with the publication requirement when the Want of knowledge of Want of knowledge or
same was posted in 3 conspicuous places since there was no some fact or facts acquaintance with the
newspaper of local circulation in the municipality which is in Want of constituting or relating laws of the land
accordance with Sec. 188 of the LGC (Hagonoy v. Municipality, G.R. knowledge to the subject matter insofar as they apply
No. 137621 February 6, 2002). pertains to on hand. to the act, relation,
duty, or matter under
NOTE: Sec. 188 of the LGC provides that within ten (10) days after their consideration.
approval, certified true copies of all provincial, city, and municipal tax
When some facts Occurs when a person
ordinances or revenue measures shall be published in full for three (3)
consecutive days in a newspaper of local circulation: Provided, however,
which really exist are having full knowledge
That in provinces, cities and municipalities where there are no newspapers Nature of unknown or some fact of the facts come to
of local circulation, the same may be posted in at least two (2) conspicuous Mistake is supposed to exist an erroneous
and publicly accessible places. which really does not conclusion as to its
exist. legal effects
IGNORANCE OF THE LAW Good faith is an Not excusable, even if
Defense
excuse in good faith
Presumption of knowledge of laws
Q: Eduardo was married to Ruby. He then met Tina and proposed
GR: Everyone is conclusively presumed to know the law. Hence, marriage, assuring her that he was single. They got married and
ignorance of the law excuses no one from compliance therewith lived together. Tina, upon learning that Eduardo had been
(Art. 3). previously married, charged Eduardo for bigamy for which he was
convicted. Eduardo testified that he declared he was single
NOTE:The conclusive presumption that every person knows the law because he believed in good faith that his first wife was already
presupposes that the law has been published (Rabuya, Civil Law Reviewer dead, having not heard from her for 20 years, and that he did not
Vol. 1).
know that he had to go to court to seek for the nullification of his
first marriage before marrying Tina. Is Eduardo liable for the
XPNs:
crime of bigamy?
a. Mistake upon a doubtful or difficult question of law may be
the basis of good faith (Art. 526 [3], NCC)
A:Yes. Eduardo is presumed to have acted with malice or evil
b. Art. 2155: Payment by reason of a mistake in the construction
intent when he married Tina. As a general rule, mistake of fact or
or application of a doubtful or difficult question of law may
good faith of the accused is a valid defense in a prosecution for a
come within the scope of the preceding article.
felony by dolo; such defense negates malice or criminal intent.
c. Art. 1344: In order that fraud may make a contract voidable,
However, ignorance of the law is not an excuse because everyone
it should be serious and should not have been employed by
is presumed to know the law. It was the burden of Eduardo to
both contracting parties.
prove that when he married Tina, he was of the well-grounded
belief that his first wife was already dead. He should have adduced
Incidental fraud only obliges the person employing it to pay
in evidence a decision of a competent court declaring the
damages.
presumptive death of his first wife as required by Art. 349 of the
RPC, in relation to Art. 41 of the FC. Such judicial declaration
Laws covered
constitutes proof that Eduardo acted in good faith, and would
negate criminal intent on his part when he married the private
The laws referred to under Art. 3 of the NCC are those of the
complainant (Manuel v. People, G.R. No. 165842, November 29,
Philippine Laws and it applies to all kinds of domestic laws,
2005).
whether civil or penal, substantive or remedial. However, the
article is limited to mandatory and prohibitory laws. It does not
Q: Complainants who were connected with the Daily Informer (a
include those which are merely permissive (Rabuya, 2006).
widely circulated newspaper in Western Visayas) were charged
before the MTC by Judge Pamonag of the crime of libel.
Non-applicability to foreign laws
Respondent judge conducted a preliminary investigation and
thereafter issued warrants for the arrest of the complainants.
There is no presumption of knowledge of foreign laws. It must be
Complainants filed an administrative case against the judge for
alleged and proved as a matter of fact; otherwise, the doctrine of
gross ignorance of the law. They contended that the judge neither
processual presumption will apply.
has authority to conduct a preliminary investigation nor to issue
warrants for their arrest. The judge said that it was his first libel
NOTE: Ignorance of a foreign law is a mistake of fact.
case and that he issued the warrants in good faith. Is the
respondent guilty of gross ignorance of the law?
Doctrine of Processual Presumption
A:Yes. Judges are expected more than just cursory acquaintance
Foreign law is a matter of fact which must be proven with
with statutes and procedural rules. They must know the law and
evidence. If the foreign law is not properly alleged and proved, the
apply them properly in good faith. The provisions of Art. 360 of the
presumption is that it is the same as our own law (Estate of Suntay
RPC on the persons authorized to conduct preliminary investigation
v. Suntay, G.R. No. 132524. December 29, 1998). Therefore, the
in libel cases is so elementary. Not to know it constitutes gross
party who claims the applicability of a foreign law has the burden
ignorance of the law (Miaque v. Judge Pamonag, A.M. No. MTJ-02-
of proof.
1412. March 28, 2003).
Q: Cheong Boo, a native of China died intestate in Zamboanga. He

left a property worth P100,000. The estate of the deceased was
claimed on one hand by Gee, who alleged that he was a

2014 GOLDEN NOTES 2
PRELIMINARY MATTERS
legitimate child by a marriage contracted by Boo with Tan Dit in MANDATORY OR PROHIBITORY LAWS
China in 1895. The estate was claimed, on the other hand, by
Mora Adong who alleged that she had been lawfully married to Mandatory law
Boo in 1896. Gee introduced in evidence a document in Chinese
stating the marriage ceremony that took place in Amoy, China. Is A law or a provision in a statute is said to be mandatory when
the document presented by Gee sufficient enough to prove the disobedience to it, or want of exact compliance with it, will make
Chinese marriage of Cheong Boo and Tan Dit? the act done under the statute absolutely void (Blacks Law
Dictionary, 2009).
A: The Supreme Courtheld that the the document is not sufficient
to prove the Chinese marriage between Cheong Boo and Tan Dit. Prohibitory law
Gee only presented a document in Chinese satting the alleged
marriage ceremony but there is no competent testimony as to A law or a provision in a statute is said to be prohibitory when it
what the laws of China in the Province of Amoy concerning forbids a certain action (Blacks Law Dictionary, 2009).
marriage were in 1895. Therefore, there is lacking proof so clear,
strong and unequivocal as to produce a moral conviction of the Permissive law
existence of the alleged prior Chinese marriage.
A law or a provision in a statute is said to be permissive or
Ignorance of a foreign law is not ignorance of the law but of fact directory when it allows certain acts but does not command them
because such foreign law must be first alleged and proved as a (Blacks Law Dictionary, 2009).
matter of fact, there being no judicial notice of said foreign law.
The Chinese marriage was not adequately proved (Estate of Boo v. Violation of Mandatory or Prohibitory Laws
Gee, G.R. No. 18081, March 3, 1922).
GR: Acts executed against the provisions of mandatory or
RETROACTIVITY OF LAWS prohibitory laws are void (Art. 5, NCC)
Retroactive law XPNs: Where the law:

1. Makes the act valid but punishes the violator. e.g. Marriage
A legislative act that looks backward or contemplates the past, solemnized by a person not authorized to do so;
affecting acts or facts that existed before the act come into effect 2. Itself authorizes its validity;
(Blacks Law Dictionary, 2009). 3. Makes the act merely voidable;
4. Declares the nullity of an act but recognizes its effects as
Retroactive effect of laws
legally existing, e.g. Child born after the annulment of
marriage is considered legitimate.
GR: Laws shall have no retroactive effect (lex prospicit, non
respicit).
WAIVER OF RIGHTS
XPNs: (TIN CREEP)
Waiver
1. Tax laws
2. Interpretative statutes
It is the intentional or voluntary relinquishment of a known right or
3. Laws creating New substantive rights
such conduct as warrants an inference of relinquishment of such
4. Curative statutes
right.
5. Remedial/procedural
6. Emergency laws NOTE: Waivers can be express or implied, however, it cannot be presumed.
7. when Expressly provided It must be clearly and convincingly shown, either by express stipulation or
8. Penal laws favorable to the accused provided, accused is not acts admitting no other reasonable explanation.
a habitual criminal
Right
XPNs to the XPNs: If the application of the retroactive law:
1. Impairs obligation of contracts, It is a legally enforceable claim of one person against another, that
2. Is in the nature of ex post facto law or a bill of attainder, the other shall do a given act, or shall not do a given act (Pineda,
3. Divests vested rights, or Persons, p. 23).
4. Is constitutionally forbidden (Blacks Law Dictionary, 2009)
Kinds of rights
NOTE: In case of doubt, laws apply prospectively.
1. Natural Rights Those which grow out of the nature of man
Non-retroactivity of laws vis--vis judicial decisions and depend upon personality. e.g. right to life, liberty,
privacy, and good reputation
Judicial decisions have no retroactive effects. When a doctrine of 2. Political Rights Consist in the power to participate, directly
the Supreme Court is overruled and a different view is adopted, or indirectly, in the establishment or administration of
the new doctrine should be applied prospectively and should not government. e.g. right of suffrage, right to hold public office,
apply to parties who had relied on the old doctrine and acted on right of petition
the faith thereon (Rabuya, 2009). 3. Civil Rights Those that pertain to a person by virtue of his
citizenship in a state or community. e.g. property rights,
Retroactivity clause of Family Code marriage, equal protection of laws, freedom of contract, trial
by jury (Pineda, 2009).
Family Code contains retroactive clause. Art. 256 of the Family a. Rights of personality or human rights;
Code provides that the Code shall have retroactive effect insofar as b. Family rights; and
it does not prejudice or impair vested or acquired rights in c. Patrimonial rights:
accordance with the NCC or other laws. i. Real rights

CIVIL LAW
ii. Personal rights (Rabuya, 2009) Rule on repeal of repealing laws
Unwaivable rights It depends upon how the old law is repealed by the repealing law:
1. Right to live and right to future support 1. If it is expressly repealed and repealing law is repealed: the
2. Right to personality and family rights old law is not revived.
2. If it is impliedlyrepealed and repealing law is repealed: the
Waiver of rights old law is revived.
GR: Rights can be waived. Conflict between general and special laws
XPNs: If the general law was enacted prior to the special law, the latter is
considered the exception to the general law.
1. If waiver is:
a. Contrary to law, public order, public policy, morals or If the general law was enacted after the special law, the special law
good customs. remains unless:
b. Prejudicial to a third person with a right recognized by
law. 1. There is an express declaration
2. If the right is: 2. There is a clear, necessary and irreconcilable conflict
a. A natural right, such as right to life. 3. The subsequent general law covers the whole subject and is
b. Inchoate, such as future inheritance. clearly intended to replace the special law on the matter
(Rabuya, Persons and Family Relations).
Requisites of a valid waiver
Revival of repealed law
1. Waiving party must actually have the right he is renouncing
2. He must have full capacity to make the waiver Revival depends on the manner how 1st law was repealed:
3. Waiver must be clear and unequivocal 1. If the 1st law is repealed by implication by the 2nd law and the
4. Waiver must not be contrary to law, public order, public 2nd law is repealed by the 3rd law; the 1st law is revived unless
morals, etc. otherwise provided.
5. When formalities are required, they must be complied with 2. If the 1st law is expressly repealed by the 2nd law and the 2nd
law is repealed by the 3rd law, the 1st law is not revived unless
REPEAL OF LAWS expressly provided so.
Repeal of law Self-lapsing laws
Abrogation of an existing law by legislative act (Blacks Law Laws that provide for their limited application (i.e. House Rental
Dictionary, 2009). Law, Annual Appropriations Act, Import Control Law).
Ways of repealing laws JUDICIAL DECISIONS
1. Express - If the law expressly provides for such Judicial decisions

2. Implied If the provisions of the subsequent law are
incompatible or inconsistent with those of the previous law, Judicial decisions are evidence of what the laws mean.
provided, it is impossible to reconcile the two laws.
The judicial decisions form part of the law of the land as of the date
Requisites of implied repeal
of the enactment of said law. This is so because the Supreme
1. The laws cover the same subject matter; and Courts interpretation merely establishes the contemporaneous
2. The latter is repugnant to the earlier (Rabuya, Persons and legislative intent that the construed law purports to carry into
Family Relations) effect.
NOTE: When a doctrine is overruled and a different view is adopted, the new
NOTE: Implied repeals are not to be favored because they rest only on the
doctrine should be applied prospectively and should not prejudice parties
presumption that because the old and the new laws are incompatible with
who relied on the old doctrine.
each other, there is an intention to repeal the old (Rabuya, Persons and
Family Relations).
The application or interpretation placed by the SC upon a law is part of the
law as of the date of its enactment since the Courts application or
Instances of implied repeal
interpretation merely establishes the contemporaneous legislative intent
that the construed law purports to carry into effect (Floresca v. Philex
1. When the provisions in the two acts on the same subject Mining., G.R. 30642).
matter are irreconcilably contradictory, in which case, the
later act, to the extent of the conflict, constitutes an implied Doctrine of Stare Decisis
repeal of earlier one; and
2. When the later act covers the whole subject of the earlier It is adherence to judicial precedents. Once a question of law has
one and is clearly intended as a substitute; thus it will operate been examined and decided, it should be deemed settled and
to repeal the earlier law (Carmelita Lledo v. Atty. Cesar V. closed to further argument.
Lledo, A.M. No. P-95-1167, February 9, 2010).
NOTE: This doctrine, however, is not inflexible, so that when in the light of
changing conditions, a rule has ceased to be beneficial to the society, courts
may depart from it.

2014 GOLDEN NOTES 4
PRELIMINARY MATTERS
DUTY TO RENDER JUDGMENT c. Insufficient
Rendering of judgment by reason of silence of law NOTE: Provided said customs are not contrary to law, public morals, etc.
No judge or court shall decline to render judgment by reason of the Non-applicability of customs in criminal cases
silence, obscurity or insufficiency of the law (Art. 9, NCC).
In criminal cases, customs cannot be applied because nullum
NOTE: This duty, however, is not a license for courts to engage in judicial crimen nulla poena sine lege (There is neither crime nor
legislation. The duty of the courts is to apply or interpret the law, not to punishment, without a law).
make or amend it.
LEGAL PERIODS
Guidelines on rendition of decisions under Art. 9
Computation of period
1. When there is no law exactly applicable to the point in
controversy, the custom of the place shall be applied and in 1. Year 12 calendar months (CIR v. Primetown Property Group,
default thereof, the general principles of law. Inc., 531 SCRA 436)
2. Decisions of foreign courts 2. Month 30 days, unless designated by their name, in which
3. Opinions of known authors and professors case, they shall be computed according to the number of
4. Applicable rules of Statutory Construction days which they respectively have.
5. Principles formulated in analogous cases 3. Day 24 hours
4. Night time from sunset to sunrise
PRESUMPTION AND APPLICABILITY OF CUSTOM 5. Week 7 successive days regardless of which day it would
start
Presumption in the interpretation of laws 6. Calendar week Sunday to Saturday
In case there is doubt in the interpretation or application of laws,it NOTE: In computation of period, the first day shall be excluded, and the last
is presumed that the lawmaking body intended right and justice to day included.
prevail (Art. 10, NCC).
Q: On September 3, 1965, two criminal cases for violation of the
In case of silence, obscurity or insufficicency of the law with copyright law were filed against Soccoro Ramos which was
respect to a particular controversy allegedly commited on or about July to September 3, 1963.
Soccorro interposed prescription as her defense against the two
If the law is silent, or is obscure or insufficient with respect to a criminal case filed since the copyright law provides that the any
particular controversy, the judge shall apply the custom of the violation against the said law prescribe in 2 years from the time
place, and in default thereof, the general principles of law and the cause of action arose and by the time the informations were
justice. filed, in September 3, 1965, it already prescribed since the year
1964 is a leap year and the two-year period under the NCC has
Customs lapsed. Has the crime prescribed?
Customs are rules of conduct, legally binding and obligatory, A:Yes. With the approval of the NCC we have reverted to the
formed by repetition of acts uniformly observed as a social rule. provisions of the Spanish Civil Code in accordance with which a
month is to be considered as the regular 30-month and not the
Necessity of proving customs solar or civil month with the particularity that, whereas the Spanish
Civil Code merely mentioned 'months, days or nights,' ours has
GR: Customsmust be proved as a fact, according to the rules on added thereto the term 'years' and explicitly ordains in Art. 13 that
evidence (Art. 12, NCC). it shall be understood that years are of three hundred sixty-five
days (People v. Ramos GR L-25265, May 9, 1978, Ramos v. Ramos
XPN: Courts may take judicial notice of a custom if there is already GR L-25644, May 9, 1978).
a decision rendered by the same court recognizing the custom.
However, when the year in question is a leap year, the 365 day rule
Requisites before such custom could be considered a source of is not followed because February 28 and 29 of a leap year should
right be counted as separate days in computing periods of prescription
(NAMARCO v. Tuazon, GR No L-29131, August 27, 1969).
1. Plurality of acts
2. Uniformity of acts If the last day falls on a Sunday or a legal holiday
3. General practice by the great mass of the people of the
country or community If the act to be performed within the period is:
4. Continued practice for a long period of time
5. General conviction that the practice is the proper rule of 1. Prescribed or allowed by:
conduct a. the Rules of Court
b. an order of the court; or
6. Conformity with law, morals or public policy (1 Tolentino. Civil
c. any other applicable statute
Code, p. 39; 1 Manresa 82).
The last day will automatically be the next working day.
Application of customs in civil cases
2. From a contractual relationship The act will still become
In civil cases, customs may be applied by the courts in cases where
due despite the fact that the last day falls on a Sunday or a
the applicable law is: SOI
legal holiday.
a. Silent
b. Obscure

CIVIL LAW
CONFLICT OF LAWS shall be governed by the laws of the country in which they
are executed
Application of laws
XPNs: Philippine law shall apply in the following cases even
1. Penal laws though performed abroad:
GR:Territoriality rule - Penal laws and laws of public security a. Acts are executed before the diplomatic or consular
and safety shall be obligatory upon all who live or sojourn in officials of the Philippines.
the Philippine territory (Art. 14, NCC) b. Prohibitory laws concerning persons, their acts or
property, and those which have for their object public
XPNs: Philippine penal laws will not apply by virtue of: order, public policy and good customs (Art. 17, NCC).
a. Treaty stipulations Q: The second clause of the will of Joseph, a Turkish citizen and a
b. Principles of Public International Law resident of the Philippines, states that: xxx, it is my wish that
c. Laws of Preferential Application. e.g. Ambassadors, the distribution of my property and everything in connection with
Ministers this, my will, be made and disposed of in accordance with the
d. International agencies enjoying diplomatic immunity laws in force in the Philippine Islands, requesting all of my
relatives to respect this wish, otherwise, I annul and cancel
NOTE: Consul is not entitled to the privileges and immunities of beforehand whatever disposition found in this will favorable to
ambassadors or ministers. the person or persons who fail to comply with this request.
2. Status laws Is the clause above-quoted valid?
GR:Nationality rule - Laws relating to: A:No, it is void. The second clause of the will regarding the law
a. Family rights and duties which shall govern it and the condition imposed, is null and void,
b. Statusandcondition being contrary to law. Art. 792 of the Civil Code provides that
c. Legal capacity of personsare binding upon citizens of Impossible conditions and those contrary to law or good morals
the Philippines even though living abroad (Art. 15, NCC) shall be considered as not imposed and shall not prejudice the heir
or legatee in any manner whatsoever, even should the testator
XPNs: otherwise provide.
a. In case of divorce obtained validly by an alien pursuant
to the rules that governs his country, the Filipino spouse Said clause is contrary to law because it expressly ignores the
shall be considered also as divorced (Van Dorn v. testator's national law when, according to Art. 16 of the NCC, such
Romillo, Jr., 139 SCRA 139, 1985). national law of the testator is the one to govern his testamentary
b. Domiciliary rule applies to stateless persons dispositions. Said condition then is considered unwritten, hence
the institution of legatees is unconditional and consequently valid
NOTE: The basis for determining the personal law of an individual is and effective.
either the Domiciliary Rule (Domicile) or Nationality Rule (Citizenship)
Conflict of Laws Doctrines
3. Real statutes Laws on Property
1. Renvoi Doctrine(referring back) Renvoi takes place when
GR:Lex Rei Sitae Real property as well as personal property the conflicts rule of the forum makes a reference to a foreign
is subject to the law of the country where it is situated (Art. law, but the foreign law is found to contain a conflict rule that
16, NCC). returns or refers the matter back to the law of the forum
(Remission).
XPNS: 2. Transmissiontheory Provides that when the conflicts rule of
a. Succession as to order of succession, amount of the forum makes a reference to a foreign law, but the foreign
successional rights and intrinsic validity of the law is found to contain a conflict rule that refers it to a third
testamentary provisions - governed by national law (in country, the law of the third country shall apply.
Philippines) not lex situs 3. Doctrine of Processual Presumption The foreign law,
b. Contracts involving real property but do not deal with whenever applicable, should be proved by the proponent
title or real rights over the property, the issue being the thereof, otherwise, such law shall be presumed to be exactly
contractual rights and liabilities of parties - governed by the same as the law of the forum.
the proper law of the contract (lex loci voluntatis or lex 4. Doctrine of Operative Facts Acts done pursuant to a law
loci intentionis) which was subsequently declared unconstitutional remain
c. In contracts where real property is given as security by valid, but not when the acts are done after the declaration of
way of mortgage to secure a principle contract (i.e. unconstitutionality.
loan) - loan is governed by the proper law of the
contract while the mortgage is governed by the lex situs Q: Edward is a citizen of California domiciled in the Philippines.
d. While the validity of the transfer of land must be After he executed his will, he went back to America and stayed
determined by the lex situs, the validity of the contract there. During the post mortem probate of the will, Helen, his
to transfer is determined by the proper law of the illegitimate natural child, opposed it on the ground of preterition.
contract She claims that under Art. 16 par. 2 of the Civil Code, in case of
succession, the national law of the deceased - the civil code of
4. Law governing extrinsic validity of contracts, wills and public California - should govern., which provides that if a Californian
instruments not domiciled in California dies, the law of his domicile must
govern. Lucy, on the otherhand, counters that under the same
GR:Lex loci celebrationis (Art. 17, NCC) forms and provision, the national law of the deceased should apply. Which
solemnities of contracts, wills and other public instruments law should be applied Philippine law or Californian Law?

2014 GOLDEN NOTES 6
PRELIMINARY MATTERS
citizenship
A:Philippine law should be applied. Where the testator (Edward)
was a citizen of California, and domiciled in the Philippines, the Personal relations: Art. 80 of
amount of successional rights should be governed by his national the Family Code provides that
law, that is, Californian law. However, the conflict of law rules of the national law of the wife or
California provides that in cases of citizens who are residents of Philippine law would govern
another country, the law of the country of domicile should apply, the spouses personal relations
hence, Philippine law on legitimes should be applied. This is so (rule was intended to protect
because California law itself refers the case back to the Philippines. the Filipino wife)
The Philippine court has no other alternative but to accept the
referring back, for to do otherwise, might result again in its Effects of change of nationalities of the spouses governing law
referring back to the Philippines, which would give rise to a sort of
an international football (Aznar v. Garcia, G.R. No.L-16749. 1. If the spouses have the same nationality but they acquire a
January 31, 1963). new nationality by their common act their new national law
will govern their personal relations
Effect of laws, judgments promulgated or conventions agreed 2. If the husband alone changes his nationality after the
upon in a foreign country on Philippine prohibitive laws marriage The law of the last common nationality of the
spouses would govern
GR: Prohibitive laws concerning persons, their acts, or property 3. If the spouses retain their different nationalities after the
and laws which have for their object public order, public policy or marriage National law of both spouses should govern
good customs are not rendered ineffective by laws, judgments
promulgated or conventions agreed upon in foreign country. Rules in determining the domicile of a person
XPN: Art. 26 par. 2 of the Family Code (FC), on mixed marriages If the child is legitimate His domicile of origin is that of
where the foreigner obtained a divorce decree abroad and was his parents at the time of his
thereby capacitated to remarry. birth
NOTE: In this case, even though divorce is not recognized in the Philippines If parents are separated, the
as a mode of terminating marriage, still the marriage is terminated by virtue
domicile of the custodial
of a judgment of divorce and issuance of a divorce decree by a foreign court.
parent
If the child is illegitimate His domicile of origin is that of
Law that governs the validity of marriage in case of mixed
the mother at the time of his
marriages
birth
If the child is legitimated The domicile of his father at
Marriage between a Filipino If the marriage is valid under
the time of his birth controls
and foreigner ABROAD the law of one of the spouses
while void under the law of the If the child is adopted The domicile of origin is the
other, the validity of the domicile of his real parents at
marriage should be upheld, the time of his birth, NOT the
unless the marriage is domicile of the adopters
universally incestuous or highly If a foundling The domicile of origin is the
immoral (the same rule as to country where it was found
foreigners who get married
abroad) RULES DETERMINING ONES CONSTRUCTIVE DOMICILE
Marriage between a Filipino The national law of the Filipino
and a foreigner in the Philippine law should be MINORS
PHILIPPINES followed otherwise the 1. If legitimate, the domicile of both parents
countrys public policy would
be violated In case of disagreement, that of the father, unless there is a
judicial order to the contrary
Law that governs the personal relations of the spouses
2. If illegitimate, the domicile of the mother
GR: The personal relations of the spouses are governed by the
national law of the husband 3. In case of absence or death of either parent, the domicile of
the present parent.
Alien woman who marries a Ipso facto becomes a Filipino
Filipino husband citizen if she does not suffer Even in case of remarriage of the surviving parent, still
under any disqualification for his/her domicile determines the constructive domicile of the
naturalization as a Filipino minor child
citizen
4. If the child is adopted, the domicile of choice of the adopter
Personal relations: national is the childs constructive domicile
law of the husband shall
govern (GR) INSANES, IDIOTS, IMBECILES
A Filipina who marries an Constitution provides that she The law assigns their domicile to them:
alien husband shall retain her Philippine
citizenship, unless by her act or 1. If they are below the age of majority, the rules on minors
omission, she is deemed, under apply to them
our law, to have renounced her

CIVIL LAW
2. If they are of age and have guardians, they follow the NOTE: Agency to intentionis
domicile of choice of their guardians alienate or
encumber real
3. If they are of age and have no guardians, their constructive property is
domicile is their domicile of choice before they became governed by lex
insane situs
Lex loci Personal Lex loci
MARRIED WOMEN celebrationis law of the voluntatis
If the marriage is valid 1. The constructive domicile parties
of the wife is the domicile Contract of Liability for loss, destruction, deterioration
of both spouses, unless the transportation or of goods in transit: law of destination of
law allows the wife to have carriage goods (Art. 1753, NCC)
a separate domicile for (render services)
valid and compelling If COGSA applies, limitation on liability
reasons applies, unless the shipper declares value of
2. If there is legal separation goods and inserts such declaration in the
between the spouses, the bill of lading
wife can have her own
domicile of choice
3. If there is a separation de Contract for air transportation
facto, the wife can also (Warsaw Convention)
have a separate domicile
1. The liability of the airline in case of death,
If the marriage is voidable Apply the same rules when the injury to passengers, or loss or damage to
marriage is valid. However, cargo is governed by Warsaw Convention
after annulment, the wife can
freely select her own domicile 2. If there was malice, gross negligence, or
of choice bad faith, or improper discrimination,
If the marriage is void The wife can have a domicile carrier is liable for damages beyond those
separate from the husband limited by Warsaw Convention
OTHER PERSONS
Convict or prisoner His domicile is the one he had NOTE: If contracts involve encumbrances of property, real or personal, apply
lex situs. If personal contracts, law on contracts will apply.
possessed prior to his
incarceration
HUMAN RELATIONS
Soldiers Their domicile is their domicile
before their enlistment
Abuse of right
Public officials or employees Their domicile is the one they
abroad (diplomats, etc) had before they were assigned A right, though by itself legal because recognized or granted by law
elsewhere, unless they as such, may become the source of some illegality. When a right is
voluntarily adopt their place of exercised in a manner which does not conform to the norms
employment as their enshrined in Art. 19 and results in damage to another, a legal
permanent residence wrong is thereby committed for which the wrongdoer must be held
responsible.
Law that governs the validity of contracts
This principle is based upon the famous maxim summum jus
Extrinsic Capacity of Intrinsic summa injuria (the abuse of a right is the greatest possible wrong)
validity parties validity (Arlegui v. CA, G.R. No. 126437, March 6, 2002).
Barter, sale, Lex situs Lex situs Lex situs
donation Rationale:The exercise of a right ends when the right disappears,
Lease of property: Lex situs Lex situs Lex situs and it disappears when it is abused, especially to the prejudice of
creates real rights others. The mask of a right without the spirit of justice which gives
Lease of property: Lex loci Personal Lex it life is repugnant to the modern concept of social law. It cannot
does not create celebrationis law of the voluntatis or be said that a person exercises a right when he unnecessarily
real rights parties lex loci prejudices another or offends morals or good customs (Pineda,
intentionis 2009).
Pledge, chattel Lex situs Lex situs Lex situs
mortgage, real Elements of abuse of right
estate mortgage,
antichresis 1. There is a legal right or duty;
Contract of loan: Lex loci Personal Lex loci 2. Such duty is exercised in bad faith;
mutuum celebrationis law of the voluntatis or 3. It is for the sole intent of prejudicing or injuring another.
parties lex loci
intentionis Principle of Damnum Absque Injuria
Contract of loan: Lex situs Lex situs Lex situs
commodatum Under this principle which literally means damage without injury,
Lease of service, Lex loci Personal Lex loci one who merely exercises ones rights does no actionable injury
agency, guaranty, celebrationis law of voluntatis or and cannot be held liable for damages. This is premised on the
suretyship parties lex loci

2014 GOLDEN NOTES 8
PRELIMINARY MATTERS
valid exercise of a right (Amonoy v. Guitierrez, 351 SCRA 731, Breach of promise to marry
2001).
GR: A breach of promise to marryper se is not an actionable wrong.
NOTE: Injury is the illegal invasion of a legal right; damage is the loss, hurt, or There is no provision in the NCC authorizing an action for breach of
harm which results from the injury; and damages are the recompense or promise to marry.
compensation awarded for the damage suffered. There can be damage
without injury in those instances in which the loss or harm was not the result
of a violation of a legal duty. In such cases, the consequences must be borne
XPN: When the act is not a mere breach of promise to marry but
by the injured person alone (Panteleon v. American Express, G.R. No. constitutes one where damages pursuant to Art. 21 of the NCC
174269, August 25, 2010). may be recovered, such as:
Article 19, 20 and 21 in the enforcement and sanctions of abuse 1. Where the woman is a victim of moral seduction (Gashem
of right Shookat Baksh v. CA, G.R. No. 97336, February 19, 1993).
2. Where one formally sets a wedding and go through and
While Art. 19 lays down the rule of conduct for the government of spend for all the preparations and publicity, only to walk out
human relations, it does not provide a remedy. Generally, an action of it when the matrimony was about to be solemnized
for damages under either Art. 20 or Art. 21 would be proper. Art. (Wassmer v. Velez, G.R. No. L-20089, December 26, 1964).
21 deals with acts contra bonus mores or contrary to good morals
and presupposes loss or injury, material or otherwise, which one Q: Maria met Ayatollah, an Iranian medical student, at the
may suffer as a result of such violation. Under Arts. 19 and 21, the restaurant where she worked. A few days after, Ayatollah
act must be intentional (Rabuya, 2006). courted and proposed to marry Maria. The latter accepted his
love on the condition that they would get married. When the
Furthermore, Article 20speaks of the general sanction for all other couple visited Maria's parents, Ayatollah was allowed to sleep
provisions of law which do not especially provide for their own with Maria during the few days of their stay. The couple
sanction. Article 21 on the other hand, speaks of act which is legal continued to live together in an apartment, but Ayatollah's
but is contrary to morals, good custom, public order or public attitude towards Maria changed. He maltreated her and when
policy and is done with intent to injure. Maria became pregnant, Ayatollah gave her medicine to abort
the fetus. Despite the abuses, Maria continued to live with
Sanction for abuse of right under Article 20 of the NCC Ayatollah and kept reminding him of his promise to marry her.
However, Ayatollah told her that he could not do so because he
Generally, laws provide for their own sanctions and methods of was already married to a girl in Bacolod City. Maria left and filed a
enforcement thereof. Article 20 applies only in cases where the law complaint for damages against Ayatollah for the alleged violation
does not provide for its own sanctions. Said article provides for a of their agreement to get married. May damages be recovered for
general sanction indemnification for damages (Pineda, 2009). a breach of promise to marry on the basis of Art. 21 of the NCC?
In view of the general sanction provided for under Art. 20, a person A:YES. A breach of promise to marry per se is not an actionable
however does not have an absolute right to be indemnified, it is wrong. But where a man's promise to marry is the proximate cause
essential that some right of his be impaired. Without such, he is of the acceptance of his love by a woman and his representation to
not entitled to indemnification (Pineda, 2009). fulfill that promise thereafter becomes the proximate cause of the
giving of herself unto him in a sexual congress, proof that the
Sanctions for abuse of right under Article 21 of the NCC promise was only a deceptive device to inveigle her to obtain her
consent to the sexual act, could justify the award of damages
Any person who willfully causes loss or injury to another in a pursuant to Art. 21, not because of such promise to marry but
manner that is contrary to morals, good customs or public policy because of the fraud and deceit behind it and the willful injury to
shall compensate the latter for the damage(Art. 21, NCC). It fills her honor and reputation which followed thereafter. It is essential,
countless gaps in the statutes, which leave so many victims of however, that such injury should have been committed in a
moral wrongs helpless, even though they suffered material and manner contrary to morals, good customs or public policy. In the
moral damages (Tolentino, p. 70). instant case, Ayatollah's fraudulent and deceptive protestations of
love for and promise to marry Maria that made her surrender her
Elements of an action under Art. 21, NCC virtue and womanhood to him and to live with him on the honest
and sincere belief that he would keep said promise. In short, Maria
1. There is an act which is legal; surrendered her virginity, the cherished possession of every single
2. Such act is contrary to morals, good customs, public order or Filipina, not because of lust but because of moral seduction
policy; (Gashem Shookat Baksh v. CA, G.R. No. 97336, February 19, 1993).
3. It is done with intent to injure.
Q: Soledad a high school teacher used to go around together with
Civil liability for moral negligence Francisco who was almost ten (10) years younger than her.
Eventually, intimacy developed between them after Soledad
There is no civil liability for moral negligence. A person is required became an underwriter in Cebu. One evening, they had sexual
to act with prudence towards others, but not with charity; the law intercourse in Francisco's cabin on board M/V Escao, to which
imposes diligence and not altruism. Hence, the failure to make he was then attached as apprentice pilot. After a few months,
sacrifices or egoism does not constitute a source of liability Soledad advised Francisco that she was pregnant, whereupon he
(Tolentino, p. 69). promised to marry her. Later their child was born. However,
subsequently, Francisco married another woman. Soledad filed a
Illustration: A person who fails to render assistance to a drowning complaint for moral damages for alleged breach of promise to
person or to the victim of an accident, cannot be held liable for marry. May moral damages be recovered for breach of promise to
damages (3 Colin & Capitant 826). marry?
NOTE: Every person who, contrary to law, wilfully or negligently causes A:No. It is the clear and manifest intent of our law making body not
damage to another shall indemnify the latter for the same (Art. 20, NCC). to sanction actions for breach of promise to marry. Moreover,

CIVIL LAW
Francisco is not morally guilty of seduction, not only because he is
approximately 10 years younger than the complainant who
around 36 years of age, and as highly enlightened as a former high
school teacher and a life insurance agent are supposed to be
when she became intimate with him, than a mere apprentice pilot,
but, also, because, the court of first instance found that,
complainant "surrendered herself" to Francisco because,
"overwhelmed by her love" for him, she "wanted to bind" "by
having a fruit of their engagement even before they had the
benefit of clergy (Hermosisima v. CA, G.R. No. L-14628, September
30, 1960).
NOTE: To constitute seduction there must be some sufficient promise or

inducement and the woman must yield because of the promise or other
inducement. If she consents merely from carnal lust and the intercourse is
from mutual desire, there is no seduction.
Accion in rem verso
It is an action for recovery of what has been paid or delivered

without just cause or legal ground. Under Art. 22 of the NCC, if a
person acquires or comes into possession of something at the
expense of another without just or legal ground through an act or
of performance by another or any other means has the obligation
to return the same.
Accion in rem versocan only be availed of if there is no other

remedy to enforce it based on contract, quasi-contract, crime or
quasi-delict.
Requisites
1. The defendant has been enriched;

2. The plaintiff has suffered a loss;
3. The enrichment of the defendant is without just or legal
ground; and
4. The plaintiff has no other action based on contract, quasi-
contract, crime or quasi-delict.
Accion in rem verso v. Solutio Debiti
Mistake is an essential element in solutio indebiti. In accion in rem

verso, it is not necessary that there should have been mistake in
the payment (Rabuya, 2006).
Liability without fault or negligence
The NCC recognizes liability without fault or negligence, even when

the event producing loss to others may be accidental or fortuitous,
so long as another person is benefited through such event or act
(Art. 23, NCC).

2014 GOLDEN NOTES 10
PERSONS AND FAMILY RELATIONS
PERSONS AND FAMILY RELATIONS Circumstances that modify or limit capacity to act
1. Insanity
Person v. Personality
2. Prodigality
3. Age
Aperson is every physical or moral, real or juridical and legal being
4. Imbecility
susceptible of rights and obligations or being the subject of legal
5. Deaf-Mute
relations. Personality, on the other hand, is the aptitude to be the
6. Family Relations
subject, active or passive, of juridical relations. One is a person,
7. Alienage
while one has personality (Rabuya, 2006).
8. Trusteeship
9. Penalty
Kinds of persons
10. Insolvency
11. Absence
1. Natural Human beings and have physical existence
2. Juridical Artificial persons and product of legal fiction NOTE: Prodigality per se doesnt automatically modify or restrict a persons
capacity to act. There must be a declaration thereof and be placed under
Juridical capacity v. Capacity to act guardianship under the Rules on Special Proceeding.
BIRTH
JURIDICAL
BASIS CAPACITY TO ACT
CAPACITY
Determination of personality
Fitness to be the
Power to do acts with
Definition subject of legal
legal effect The Civil Code provides that birth determines personality, but the
relations
conceived child shall be considered born for all purposes that are
Inherent (co-exists Through the favorable to it, provided it is born later with the conditions
Acquisition with the natural fulfillment of specific
specified in Art. 41 (Art. 40, NCC). This provision has been
person) legal activities
superseded by Art. 5 of P.D. No. 603 (The Child and Youth Welfare
Only through Through death and Code), which declares that the civil personality of the child shall
Loss
death other causes commence from the time of his conception, for all purposes
In relation to the Can exist without Cannot exist w/o favorable to him, subject to the requirements of Art. 41 of the NCC.
other capacity to act juridical capacity
Art. 38 (restriction) Acquisition of personality through birth
Art. 39 (modification/
Limitation None
limitation), GR: Actual/Permanent Personality Personality begins at birth, not
among others at conception.
Status XPN: Presumptive/Temporary The law considers the conceived

child as born (Conceptus pro natohabetur)
The status of a person is the legal condition or class to which one
belongs in a society (1 del Viso 32, 2 Sanchez Roman 110). NOTE: For there to be presumptive personality, the foetus must be born
later in accordance with law and the purpose for which such personality is
Civil personality given must be beneficial to the child.
It is merely the external manifestation of either juridical capacity or Born later in accordance with law
capacity to act. Consequently, it may be defined as the aptitude of
being the subject of rights and obligations (2 Sanchez Roman 114- A foetus with an intra-uterine life of:
147). 1. Less than 7 months Must survive for at least 24 hours after
its completedelivery from the maternal womb
RESTRICTIONS ON CAPACITY TO ACT 2. At least 7 months If born alive, it shall be considered born
even if it dies within 24 hours after complete delivery.
Restrictions on capacity to act (MIdI-PC [Art. 38, NCC])
NOTE: Complete delivery means the cutting of the umbilical cord.
1. Minority - State of a person who is under the age of legal
majority which is eighteen years of age Provisional personality of a conceived child
2. Insanity State of a person whose mental faculties are
diseased A conceived child, although as yet unborn, has a limited and
3. Deaf-mute Lacking sense of hearing and the inability to provisional personality. Its personality is essentially limited because
speak it is only for purposes favorable to the child. Its personality is
provisional because it depends upon the child being born alive
NOTE: Only deaf-mutes who do not know how to write are declared later under certain conditions.
by law incapable of giving consent.
4. Imbecility State of a person who while advanced in age has Rights of the conceived child
the mental capacity comparable to that of a child between
Since a conceived child has a provisional personality even while
two and seven years of age
inside the mothers womb, it is entitled to the following rights:
5. Prodigality A spendthrift or squanderer
6. Civil Interdiction An accessory penalty imposed upon an
accused who is sentenced to a principal penalty not lower a. Right to support
b. To receive donations
than reclusion temporal.
c. To be acknowledged (Rabuya, 2009)
NOTE: They do not exempt the incapacitated person from certain
obligations.

CIVIL LAW
Right to be acknowledged of their deaths. The estate of Willy endowed with juridical
personality stands in place and stead of Willy, as beneficiary.
A conceived child has the right to be acknowledged even if it is still
conceived.It is a universal rule of jurisprudence that a child, upon COMPARISON OF ART. 43 AND RULE 131
being conceived, becomes a bearer of legal rights and is capable of
being dealt with as a living person. The fact that it is yet unborn is SURVIVORSHIP RULE UNDER THE NCC
no impediment to the acquisition of rights provided it be born later
in accordance with law (De Jesus v. Syquia, G.R. No. L-39110, Survivorship rule under the NCC
November 28, 1933).
If there is doubt as to who died first between 2 or more persons
DEATH who are called to succeed each other, as to which of them died
first:
Civil personality ceases depending upon the classification of 1. Burden of Proof: Whoever alleges the death of one prior to
persons the other has the burden of proving such claim.
2. Absent such proof: Presumption is they all died at the same
1. Natural persons by death time. There shall be no transmission of successional rights
2. Juridical persons by termination of existence (Rule 131, Sec. 3 [kk], Rules of Court).
Effect of death on civil personality Conditions in the application of the survivorship rule
Death extinguishes civil personality. However, the rights and It applies when the following conditions are present:
obligations of the deceased are not necessarily extinguished by his 1. The parties are heirs to one another
death (Pineda, 2009). 2. There is no proof as to who died first
3. There is doubt as to who died first
Rules to apply in case there is doubt as to who died first
Presumption under the survivorship rule
It depends on whether the parties are called to succeed each
other. The presumption under the survivorship rule is that there is
simultaneity of deaths. When two or more persons who are called
1. If successional rights are involved Art. 43 of the NCC: to succeed each other die, they shall be presumed to have died at
Survivorship Rule, and Rule 131, Sec. 3(kk): Presumption of the same time.
simultaneous deaths between persons called to succeed each
other, apply. PRESUMPTION ON SURVIVORSHIP UNDER THE RULES OF COURT
2. If no successional rights are involved Rule 131, Sec. 3 (jj) of
the Rules of Court applies. (Presumption of survivorship) Requisites for the presumption on survivorship under the Rules of
Court
NOTE: Both are to be applied only in the absence of facts.
1. There are two or more persons;
Q: Jaime, who is 65, and his son, Willy, who is 25, died in a plane 2. They perish in the same calamity;
crash. There is no proof as to who died first. Jaimes only 3. It is not shown who died first; and
surviving heir is his wife, Julia, who is also Willys mother. Willys 4. There are no particular circumstances from which it can be
surviving heirs are his mother, Julia, and his wife, Wilma. inferred that one died ahead of the other.
In the settlement of Jaimes estate, can Wilma successfully claim The presumption under the survivorship rule under the Rules of
that her late husband, Willy, had a hereditary share since he was Court is that the survivorship shall be determined from the
much younger than his father and therefore, should be presumed probabilities resulting from the strength and age of the sexes
to have survived longer? according to the following rules:
A:No, Wilma cannot successfully claim that Willy had a hereditary Age/Sex of decedents at the time of
share in his fathers estate. Who presumed to
death
have survived
Decedent A Decedent B
Under Art. 43 of the NCC, two persons who are called to succeed Under 15 Under 15 Older
each other are presumed to have died at the same time, in the
Above 60 Above 60 Younger
absence of proof as to which of them died first. This presumption
Under 15 Above 60 Under 15 (younger)
of simultaneous death applies in cases involving the question of
Different sexes
succession as between the two who died, who in this case, are
Above 15 BUT Above 15 BUT male
mutual heirs, being father and son.
under 60 under 60 Same sex
Older
Q: Suppose, Jaime had a life insurance policy with his wife Julia,
and his son, Willy, as the beneficiaries. Can Wilma successfully Under 15 OR over
Between 15 and 60 Between 15 and 60
claim that one-half of the proceeds should belong to Willys 60
estate? (1998 Bar Question)
NOTE: The statutory rules in the determination of sequence of death do not
absolutely apply in a case where indirect and/or inferential evidence
A: YES, Wilma can invoke the presumption of survivorship and surrounding the circumstances of the deaths exists. Where there are facts,
claim that one-half of the proceeds should belong to Willys estate, known or knowable, from which a rational conclusion can be made, the
under Rule 131, Sec.3 (jj), par. 5, Rules of Court, as the dispute does presumption does not step in, and the rule of preponderance of evidence
not involve succession. controls. It is the "particular circumstances from which survivorship can be
inferred" that are required to be certain as tested by the rules of evidence
Under this presumption, the person between the ages of 15 and 60 (Joaquin v. Navarro, G.R. No. L-5426, May 29, 1953).
is deemed to have survived one whose age was over 60 at the time

Q: At the age of 18, Marian found out that she was pregnant. She Capacity of a Juridical Person
insured her own life and named her unborn child as her sole
beneficiary. When she was already due to give birth, she and her A juridical person can acquire and possess property of all kinds as
boyfriend Pietro, the father of her unborn child, were kidnapped well as incur obligations and bring civil or criminal actions, provided
in a resort in Bataan. The military gave chase and after one week, that they are in conformity with the laws and regulations of their
they were found in abandoned hut in Cavite. Marian and Pietro organization (Art. 46, NCC).
were hacked with bolos. Marian and the baby she delivered were
both found dead, with the babys umbilical cord already cut. DOMICILE AND RESIDENCE OF PERSON
Pietro survived.
a. Can Marians baby be the beneficiary of the insurance taken Residence v. Domicile
on the life of the mother?
b. Between Marian and the baby, who is presumed to have Residence is a place of abode, whether permanent or temporary.
died ahead? Domicile denotes a fixed permanent place to which, when absent,
c. Will Prieto, as surviving biological father of the baby, be one has the intention of returning.
entitled to claim the proceeds of the life insurance on the
life of Marian? (2008 Bar Question) Domicile of natural persons
A: The place of habitual residence is the domicile of a natural person

a) An unborn child may be designated as the beneficiary in the for the exercise of civil rights and fulfilment of civil obligations.
insurance policy of the mother. An unborn child shall be
considered a person for purposes favorable to it provided it is Domicile of juridical persons
born later in accordance with the NCC. There is no doubt that
the designation of the unborn child as a beneficiary is 1. The place fixed by the law creating or recognizing the juridical
favorable to the child. person;
2. In the absence thereof, the place where their legal
b) If the baby was not alive when completely delivered from the representation is established or where they exercise their
mothers womb, it was not born as a person, then the principal functions.
question of whom between two persons survived will not be
an issue. The baby had an intra-uterine life of more than 7 MARRIAGE
months, thus, it would be considered born if it was alive at
the time of its complete delivery from the mothers womb. Marriage is a special contract of permanent union between a man
We can gather from the facts that the baby was completely and a woman entered into in accordance with law for the
delivered. But whether or not it was alive has to be proven by establishment of conjugal and family life. It is the foundation of the
evidence. family and an inviolable social institution whose nature,
consequences, and incidents are governed by law and not subject
If the baby was alive when completely delivered from the to stipulation, except that marriage settlements may fix the
mothers womb, then it was born as a person and the property relations during the marriage within the limits provided
question of who survived as between the baby and the by the Family Code (Art. 1, FC).
mother shall be resolved by the provisions of the Rules of
Court on survivorship. This is because the question has NATURE OF MARRIAGE
nothing to do with succession. Obviously, the resolution of
the question is needed just for the implementation of an Marriage as an inviolable social institution
insurance contract. Under Rule 13, Sec. 3, (jj), (5) as between
the baby who was under 15 years old and Marian who was 18 It means that,marriage is an institution in which the community is
years old, Marian is presumed to have survived. deeply interested. The State has surrounded it with safeguards to
maintain its purity, continuity and permanence. The security and
In both cases, therefore, the baby never acquired any right stability of the State are largely dependent on it. It is in the interest
under the insurance policy. The proceeds of the insurance will and duty of each member of the community to prevent the
then go to the estate of Marian. bringing about of a condition that would shake its foundation and
lead to its destruction. The incidents of the status are governed by
c) Since the baby did not acquire any right under the insurance law, not by will of the parties (Beso v. Daguman, A.M. No. MTJ-99-
contract, there is nothing for Prieto to inherit. 1211, January 28, 2000 [citing Jimenez v. Republic, G.R. No. L-
12790, August 31,1960]).
JURIDICAL PERSONS
Marriage v. ordinary contract
Kinds of Juridical Persons
ORDINARY
BASIS MARRIAGE
The following are the different kinds of Juridical Persons: CONTRACT
1. The State and its political subdivisions; Special contract Merely a contract
2. Other corporations, institutions and entities for public
interest or purpose, created by law; their personality begins Nature Sui Generis contract
as soon as they have been constituted according to law; Social institution
3. Corporations, partnerships and associations for private Governing Law Law on marriage Law on contracts
interest or purpose to which the law grants a juridical GR: Not subject to The parties are free
personality, separate and distinct from that of each stipulation to stipulate subject
shareholder, partner or member (Art. 44, NCC) Right of the parties to certain
to stipulate XPN: Property limitations
relations in
marriage

CIVIL LAW
settlements Other requirements needed for the validity of such marriage
depending upon the age of the contracting party
Legal capacity is Minors may
required contract thru their AGE ADDITIONAL REQUIREMENTS
Capacity to parents or Parental consent and Marriage
contract guardians or in 18 to 21 years old
counseling
some instances, by
themselves Parental advice and Marriage
Contracting parties Contracting parties 22 to 25 years old
counseling
Gender must only be two may be two or more
requirement persons of opposite persons regardless NOTE: Absence of the additional requirement of parental consent does not
sexes of sex make the marriage void but only voidable.
Dissolved only by
death or Can be dissolved by FORMAL REQUISITES
Dissolution by
annulment, never mutual agreement
agreement
by mutual among others. Formal Requisites of Marriage (CAL)
agreement
1. Marriage Ceremony
Evidence of Marriage 2. Authority of the solemnizing officer
3. Valid marriage License (Art. 3, FC)
The best documentary evidence of a marriage is the marriage
contract. Although a marriage contract is considered primary EFFECT OF ABSENCE OF REQUISITES
evidence of marriage, the failure to present it is not, however,
proof that no marriage took place, as other evidence may be Effect in the status of marriage
presented to prove marriage (Balogbog v. CA, G.R No. 83598,
March 7, 1997). The following may be presented as proof of Status of Marriage in case of:
marriage: (a) testimony of a witness to the matrimony (b) the 1. Absence of any of the essential requisites - Void ab initio (Art.
couples public and open cohabitation as husband and wife after 4, FC)
the alleged wedlock (c) the birth and baptismal certificate of 2. Absence of any of the formal requisites -
children born during such wedlock and (d) the mention of such
nuptial in subsequent documents (Sarmiento v. CA, G.R. No. 96740, GR: Void ab initio(Art. 4, FC)
March 25, 1999 citing Trinidad v. CA).
XPNs:Valid even in the absence of formal requisite:
REQUISITES FOR A VALID MARRIAGE a. Marriages exempt from license requirement
b. Either or both parties believed in good faith that the
ESSENTIAL REQUISITES solemnizing officer had the proper authority (Art. 35 [2],
FC)
Essential Requisites of Marriage
3. Defect in essential requisites - Voidable
1. Legal capacity of the contracting parties who must be a male
and a female; 4. Irregularity in formal requisites - Valid, but the party
2. Consent freely given in the presence of the solemnizing responsible for such irregularity shall be civilly, criminally or
officer (Art. 2, FC). administratively liable.
Legal capacity of the parties to marry (ASL) MARRIAGE CEREMONY
1. Age at least 18 years Valid marriage ceremony

2. Sex between male and female
3. Lack of legal impediment to marry That which takes place with the:
1. Personal appearance of the contracting parties before the
NOTE: The impediments which may affect legal capacity are those solemnizing officer;
mentioned in Articles 37 and 38 of the Code. Thus, the contracting parties 2. Their personal declaration that they shall take each other as
are not legally capacitated to marry each other husband and wife; and
3. In the presence of not less than 2 witnesses of legal age.
Reckoning of attainment of minimum age requirement
NOTE: No particular form of ceremony or religious rite is required by law
The attainment of the required minimum age for marriage should (Art. 6, FC).
be reckoned, not on the date of filing of the application for
issuance of a marriage license, but on the date of the marriage. Validity of marriage by proxy
Pursuant to Article 6 of the same Code, parties contract marriage
on the date of the solemnization of the marriage, i.e., when they Validity of marriage by proxy depends on the place of celebration
appear personally before the solemnizing officer and declare in the of marriage:
presence of not less than two witnesses of legal age that they take
each other as husband and wife (Rabuya, 2009). 1. If performed in the Philippines No, it is not allowed, hence
the marriage is void.
NOTE: Philippine laws prohibit marriages by proxy. Since the marriage

is performed in the Philippines, Philippine laws shall apply following
the principle of lex loci celebrationis.

2. If performed abroad Whether it is allowed or not depends Authorized venues of marriage
upon the law of the place where the marriage was celebrated
(lex loci celebrationis). GR: Must be solemnized publicly within the jurisdiction of the
authority of the solemnizing officer:
NOTE: As to marriages between Filipinos - all marriages solemnized a. Chambers of the judge or in open court
outside the Philippines, in accordance with the laws enforced in said b. Church, chapel or temple
country where they are solemnized, and valid there as such, shall also c. Office of the consul-general, consul or vice-consul
be valid here in the country, except those prohibited under Art. 35 (1),
(2), (4), (5), (6), 36, 37 and 38 (Art. 26, FC).
XPNs:
SOLEMNIZING AUTHORITY 1. Marriage at the point of death
2. Marriage in remote places
Persons authorized to solemnize marriage 3. Marriage at a house or place designated by the parties with
the written request to the solemnizing officer to that effect.
The following are the persons authorized to solemnize marriage
NOTE: This provision is only directory, not mandatory. The requirement that
depending upon the circumstances:
the marriage be solemnized in a particular venue or a public place is not an
essential requisite for the validity of the marriage.
1. Under ordinary circumstances:
a. Incumbent judiciary member Provided, within the Validity of a marriage solemnized by a judge outside of his
courts (his) jurisdiction jurisdiction
b. Priest, rabbi, imam or minister of any church/religious
sect duly authorized Provided at least one of the The marriage solemnized by a judge outside of his jurisdiction is
parties belongs to such church or religious sect. valid. Under Art. 3 of the FC, one of the formal requisites of
c. Consul general, consul or vice-consul Provided both marriage is the "authority of the solemnizing officer." Under Art. 7,
parties are Filipinos and marriage takes place abroad. marriage may be solemnized by, among others, "any incumbent
d. Mayors (Arts. 444 and 445 of LGC) including Acting member of the judiciary within the court's jurisdiction." Art. 8,
Mayor which is a directory provision, refers only to the venue of the
marriage ceremony and does not alter or qualify the authority of
NOTE: From the time of the effectivity of the Family Code on
August 3, 1988 up to the time of the effectivity of the Local
the solemnizing officer as provided in the preceding
Government Code on January 1, 1992, mayors do not have the provision. Non-compliance herewith will not invalidate the
authority to solemnize marriage marriage (Navarro v. Domagtoy, A.M. No. MTJ-96-1088. July 19,
1996).
2. Marriages in articulo mortis:
a. Ship captain or airplane chief provided the marriage is NOTE: In case of a marriage solemnized by a mayor outside of his territorial
jurisdiction, LGC is silent on the matter, hence the abovementioned case
performed:
may be applied by analogy.
i. During voyage, even during stopovers
ii. Between passengers or crew members
Exception to the rule requiring authority of the solemnizing
b. Military commander of a unit who is a commissioned
officer
officer provided the marriage is performed:
i. In absence of chaplain;
The exception to the rule requiring authority of the solemnizing
ii. Within zone of military operation;
officer is whenmarriages contracted with either or both parties
iii. Between members of the armed forces or civilians
believing in good faith that the solemnizing officer had the
authority to do so (Art. 35 [2], FC).
Duty of the solemnizing officer in a marriage in articulo mortis
MARRIAGE LICENSE
The solemnizing officer in a marriage in articulo mortis after
solemnizing such marriage shall state in an affidavit executed
Purpose of a valid marriage license
before the local civil registrar or any other person legally
authorized to administer oaths, that the marriage was performed
A marriage license is required in order to notify the public that two
in articulo mortis and that he took the necessary steps to ascertain
persons are about to be united in matrimony and that anyone who
the ages and relationship of the contracting parties and the
is aware or has knowledge of any impediment to the union of the
absence of a legal impediment to the marriage (Art. 29, FC).
two shall make it known to the local civil registrar.
Failure to execute an affidavit by solemnizing officer no effect on
The requirement and issuance of marriage license is the States
validity of marriage
demonstration of its involvement and participation in every
marriage (Rabuya, 2009).
The failure of the solemnizing officer to execute an affidavit that he
solemnized the marriage in articulo mortis will have no effect as to
Validity of marriage license
the validity of marriage. The marriage will still be valid. The law
permits marriages in articulo mortis without marriage license but it
The license shall be valid in any part of the Philippines for a period
requires the solemnizing officer to make an affidavit and file it.
of 120 days from the date of issue, and shall be deemed
automatically cancelled at the expiration of said period if the
However, such affidavit is not an essential or formal requisite of
contracting parties have not made use of it (Art. 20, FC).
marriage, the same with a Marriage Contract. The signing of the
marriage contract and the affidavit is only required for the purpose NOTE: If the parties contracted marriage after the lapse of 120 days from the
of evidencing the act, not a requisite of marriage. It is the issuance of the marriage license, such marriage shall be considered void for
obligation of the solemnizing officer. It does not affect the validity lack of marriage license.
of marriage (De Loria v. Felix, G.R. No. L-9005, Jun. 20, 1958).

CIVIL LAW
Effect of lack of parental advice when required to file not affect the validity of the marriage (Garcia v. Recio, G.R. 138322,
October 2, 2001).
In case a party who is required by law to obtain parental advice or
undergo marriage counselling fails to do so, the issuance of EXCEPTIONS TO MARRIAGE LICENSE REQUIREMENT
marriage license is suspended for 3 months from the completion of
publication of the application. Marriages exempt from the license requirement (MARCO)
Validity of the marriage celebrated during the suspension of the 1. Marriages among Muslims or members of ethnic cultural
issuance of marriage license communities Provided they are solemnized in accordance
with their customs, rites or practices (Art. 33, FC).
The status of the marriage if the parties get married within the said 2. Marriages in Articulo mortis
3-month period depends: a. In case either or both of the contracting parties are at
1. If the parties did not obtain a marriage license the marriage the point of death (Art. 27, FC)
shall be void for lack of marriage license. b. Solemnized by a ship captain or airplane pilot (Art. 31,
2. If the parties were able to obtain a marriage license the FC)
marriage shall be valid without prejudice to the actions that c. Within zones of military operation (Art. 32, FC).
may be taken against the guilty party. 3. Marriages in Remote places (Art. 28, FC).
Persons authorized to issues the marriage license NOTE: Remote Place - no means of transportation to enable the
party to personally appear before the local civil registrar.
The marriage license is issued by the local civil registrar of the city
or municipality where either contracting party habitually resides 4. Marriages between parties Cohabiting for at least 5 years
(Art. 9, FC). (Art. 34, FC)
5. Marriages solemnized Outside the Philippines where no
NOTE: Obtaining a marriage license in a place other than where either party marriage license is required by the country where it was
habitually resides is a mere irregularity. solemnized
Requirement in the application for marriage license Requisites for the 5-year cohabitation as an exception to the
marriage license requirement
Each of the contracting parties is required to file a sworn
application for the issuance of marriage license, specifying the The requisites are: (5D PAS)
following: 1. Living together as husband and wife at least 5 years before
the marriage.
1. Full name of the contracting party;
2. Place of birth; The 5 year period must be characterized by:
3. Age and date of birth; a. Exclusivity the partners must live together exclusively,
4. Civil status; with no other partners, during the whole 5-year period.
5. If previously married, how, when and where the previous b. Continuity such cohabitation was unbroken.
marriage was dissolved or annulled;
6. Present residence and citizenship; NOTE: The period is counted from the date of celebration of marriage.
7. Degree of relationship of the contracting parties; It should be the years immediately before the day of the marriage.
8. Full name, residence and citizenship of the father;
9. Full name, residence and citizenship of the mother; and 2. No legal impediment to marry each other During the period
10. Full name, residence and citizenship of the guardian or of cohabitation.
person having charge, in case the contracting party has
neither father nor mother and is under the age of twenty-one NOTE: The five-year period of cohabitation must have been a period
years (Art. 11, NCC) of legal union had it not been for the absence of marriage.
FOREIGN NATIONAL 3. Fact of absence of legal impediment must be Present at the

time of the marriage
Additional requirement for foreign national applicants 4. Parties must execute an Affidavit that they are living together
as husband and wife for 5 years and that they do not have
any impediment to marry
When either or both of the contracting parties are citizens of a
5. Solemnizing officer must execute a Sworn statement that he
foreign country, it shall be necessary for them to submit a
had ascertained the qualifications of the parties and found no
certificate of legal capacity to contract marriage, issued by their
legal impediment to their marriage (Manzano v. Sanches,
respective diplomatic or consular officials.
March 1, 2001).
Stateless persons or refugees from other country shall, in lieu of
Q: Pepito was married to Teodulfa. Teodulfa was shot by him
the certificate of legal capacity herein required, submit an affidavit
resulting in her death. After 1 year and 8 months, he married
stating the circumstances showing such capacity to contract
Norma without any marriage license. In lieu thereof, they
marriage (Art 21, FC).
executed an affidavit stating that they had lived together as
husband and wife for at least five years and were thus exempt
Validity of the marriage without the required certificate of legal from securing a marriage license.
capacity to marry a. What is the status of their marriage?
b. Would your answer be the same if Pepito was separated in
The status of the marriage celebrated on the basis of a license fact from Teodulfa?
issued without the required Certificate of Legal Capacity is valid as
this is merely an irregularity in complying with a formal A:
requirement of the law in procuring a marriage license, which will

a) Void for lack of marriage license. To be exempt from the MARRIAGE CERTIFICATE
license requirement under the 5-year cohabitation rule, the
cohabitation should be in the nature of a perfect union that is Marriage license v. Marriage certificate
valid under the law but rendered imperfect only by the
absence of the marriage contract and is characterized by
continuity, that is, unbroken, and exclusivity, meaning no Q: Guillermo and Josefa lived together as husband and wife, but
third party was involved at anytime within the 5 years. It there is doubt as to whether they got married, since no record of
should be a period of legal union had it not been for the the marriage existed in the civil registry but their relatives and
absence of the marriage. friends maintained that the two in fact married each other and
lived as husband and wife for more than half a century. Is
In this case, Pepito and Norma are not exempt from the Guillermo married to Josefa?
marriage license requirement because at the time of Pepito
and Norma's marriage, it cannot be said that they have lived A: They are presumed to be married. In this jurisdiction, every
with each other as husband and wife for at least five years intendment of the law leans toward legitimizing matrimony.
prior to their wedding day because from the time Pepito's Persons dwelling together apparently in marriage are presumed to
first marriage was dissolved to the time of his marriage with be in fact married. This is the usual order of things in society and, if
Norma, only about twenty months had elapsed. the parties are not what they hold themselves out to be, they
would be living in constant violation of the common rules of law
b) Yes, the marriage is still void. Even if they were separated in and propriety. Semper praesumitur pro matrimonio always
fact, and thereafter both Pepito and Norma had started living presume marriage (Vda.De la Rosa v. Heirs of Vda. De Damian, G.R.
with each other that has already lasted for five years, the fact No. 103028, October 10, 1997).
remains that Pepito had a subsisting marriage at the time
when he started cohabiting with Norma. It is immaterial that NOTE: Although a marriage contract is considered a primary evidence of
when they lived with each other, Pepito had already been marriage, its absence is not always proof that no marriage took place
separated in fact from his lawful spouse. The subsistence of (Delgado Vda. De la Rosa, et al. v. Heirs of Marciana Rustia Vda. De Damian,
et al., G.R. No. 103028, October 10, 1997).
the marriage even where there was actual severance of the
filial companionship between the spouses cannot make any
cohabitation by either spouse with any third party as being EFFECT OF MARRIAGE CELEBRATED ABROAD
one as "husband and wife" (Nial v. Bayadog, GR No. 133778, AND FOREIGN DIVORCE
March 14, 2000).
Rules governing the validity of marriage
Q: Roderick and Faye were high school sweethearts. When
Roderick was 18 and Faye, 16 years old, they started living 1. As to its extrinsic validity Lex loci celebrationis
together as husband and wife without the benefit of marriage.
NOTE: Locus regit actum (the act is governed by the law of the place
When Faye reached 18 years of age, her parents forcibly took her where it is done) - is adhered to here in the Philippines as regards the
back and arranged for her marriage to Brad. Although Faye lived extrinsic validity of marriage.
with Brad after the marriage, Roderick continued to regularly visit
Faye while Brad was away at work. During their marriage, Faye 2. As to its intrinsic validity Personal law
gave birth to a baby girl, Laica. When Faye was 25 years old, Brad
discovered her continued liaison with Roderick and in one of their NOTE: Personal law may either be the national law or the law of the
heated arguments, Faye shot Brad to death. She lost no time in place where the person is domiciled.
marrying her true love Roderick, without a marriage license,
claiming that they have been continuously cohabiting for more If the person involved is a stateless person, domiciliary rule applies,
than 5 years. Was the marriage of Roderick and Faye valid? (2008 otherwise, lex nationalii applies.
Bar Question)
Marriages between Filipinos solemnized abroad in accordance
A:The marriage was void because there was no marriage license. with the law in force in said country
Their marriage was not exempt from the requisite of a marriage
license because Roderick and Faye have not been cohabiting for at GR: Marriages between Filipinos solemnized outside the
least 5 continuous years before the celebration of their marriage. Philippines in accordance with the law of the foreign country
Their lovers trysts and brief visitations did not amount to where it is celebrated, if valid there, shall be valid here as such.
cohabitation. Moreover, the Supreme Court held that for the
marriage to be exempt from a license, there should be no XPNs: It shall be void, even if it is valid in the foreign country where
impediment for them to marry each other during the entire 5 years the marriage was celebrated, if any of the following circumstances
of cohabitation. Roderick and Faye could not have cohabited for 5 are present: (LIM 2B 2P)
years of cohabitation. Roderick and Faye could not have been 1. Lack of legal capacity even with parental consent (e.g. party is
cohabited for 5 continuous years without impediment because below 18);
2. Incestuous;
BASIS MARRIAGE LICENSE MARRIAGE 3. Contracted through Mistake of one party as to the identity of
CERTIFICATE the other;
Authorization by Best evidence of the 4. Contracted following the annulment or declaration of nullity
Nature the state to existence of the of a previous marriage but Before partition, etc.;
celebrate marriage. marriage. 5. Bigamous or polygamous except as provided in Art. 41 FC on
Formal requisite of Neither essential terminable bigamous marriages;
Requisite of
marriage. nor formal requisite 6. Void due to Psychological incapacity;
Marriage
of marriage. 7. Void for reasons of Public policy
Faye was then legally married to Brad.
Q: Suppose in a valid mixed marriage (marriage between a citizen
of a foreign country and a citizen of the Philippines) the foreign

CIVIL LAW
spouse obtained a divorce decree abroad and was capacitated to VOID MARRIAGE
remarry.
Marriages that are void ab initio (LAaMB- PIPS-18)
a. May the Filipino spouse remarry despite the fact that
divorce is not valid in the Philippines? 1. Absence of any of the essential or formal requisites of
b. Will your answer be the same if it was a valid marriage marriage;
between Filipinos? 2. Marriages contracted by any party below 18 years of age
even with the consent of parents or guardians;
A: 3. Solemnized without License, except those marriages that are
a. Yes, the Filipino spouse is likewise capacitated. Divorce validly exempt from the license requirement;
obtained abroad by the alien spouse capacitating him/her to 4. Solemnized by any person not Authorized to perform
remarry will likewise allow the Filipino spouse to remarry. marriages unless such marriages were contracted with either
This is the rule laid down in Art. 26 (2) of the FC. or both parties believing in good faith that the solemnizing
officer had the legal authority to do so;
It should be noted however that the foreign spouse must be 5. Contracted through Mistake of one of the contracting parties
capacitated to remarry before the Filipino spouse may also be as to the identity of the other;
capacitated to remarry. 6. Bigamous or polygamous marriages;
7. Subsequent marriages which are void under Art. 53 FC;
NOTE: It is true that owing to the nationality principle embodied in 8. Marriages contracted by any party, who at the time of the
Art. 16 of the NCC, only Philippine nationals are covered by the policy
against absolute divorces, the same being considered contrary to our
celebration of the marriage, was Psychologically
concept of public policy and morality. Nevertheless, aliens may obtain incapacitated (Art. 36, FC);
divorces abroad which may be recognized in the Philippines, provided 9. Incestuous Marriages (Art. 37, FC);
they are valid according to their national law (Van Dorn v. Romillo, Jr., 10. Marriages declared void because they are contrary to Public
GR No. L-68470, October 8, 1985). policy (Art. 38, FC).
b. It depends. What is material in this case is the citizenship of Void v. Voidable marriages
the spouse who obtained a divorce decree abroad at the time
the decree was obtained and not their citizenship at the time BASIS VOID MARRIAGE VOIDABLE
the marriage was celebrated. MARRIAGE
Status of Void ab initio Valid until annulled
If the Filipino spouse was naturalized as a citizen of a foreign marriage
country before he/she obtains a divorce decree and was Declaration of Nullity Annulment of
thereafter capacitated to remarry, the Filipino spouse will be Petition filed
of Marriage Marriage
capacitated to remarry. GR: Solely by the GR: Offended
husband or wife. Spouse
NOTE: Burden of Proof lies with "the party who alleges the existence
of a fact or thing necessary in the prosecution or defense of an
action." Since the divorce was a defense raised by respondent, the XPN: Any real party in XPN:
burden of proving the pertinent foreign law validating it falls squarely interest, only in the 1. Parents or
upon him. Courts cannot take judicial notice of foreign laws. The following cases: guardians in
power of judicial notice must be exercised with caution, and every 1. Nullity of cases of
reasonable doubt upon the subject should be resolved in the negative marriage cases insanity
(Garcia v. Recio, G.R. No. 138322, October 2, 2001). commenced 2. Parents or
before the guardians
The naturalization of one of the parties, as well as the divorce decree
obtained by him or her, must be proven as a fact under our rules on effectivity of A.M. before the
evidence. The foreign law under which the divorce was obtained must No. 02-11-10 - party reaches
likewise be proven as our courts cannot take judicial notice of foreign March 15, 2003. 21 years old on
laws. 2. Marriages the ground of
celebrated during Lack of
However, if the Filipino spouse remained to be a citizen of the the effectivity of ParentalAutho
Philippines when he/she obtained a divorce decree abroad, such
the Civil Code (De rity
decree will not be recognized in the Philippines even if that spouse is
subsequently naturalized as a citizen of a foreign country. This is so Dios Carlos v.
Who may file
because at the time the spouse obtained the divorce decree, he/she Sandoval, G.R.
was still a citizen of the Philippines and being naturalized afterwards No. 179922,
does not cure this defect (Republic v. Iyoy, G.R. No. 152577, September December 16,
21, 2005). 2008).
3. A party to the
STATUS OF MARRIAGES previous
marriage may
seek the nullity of
Status of Marriages the subsequent
1. Valid marriage on the
2. Void ground that the
3. Voidable subsequent
marriage is
bigamous
(Estrellita Juliano-
Llave vs. Republic
of the Philippines
G.R. No. 169766

March 20,2011)
2. If the change is natural He/she can.
Q: Jennifer was registered as a female in her Certificate of Live

Birth. In her early years, she suffered from clitoral hypertrophy
and was found out that her ovarian structures had minimized.
No prescriptive period GR: Within 5 years She also alleged that she has no breasts or menstruation. She was
from discovery of the diagnosed to have Congenital Adrenal Hyperplasia (CAH) a
ground condition where persons thus afflicted possess secondary male
characteristics because of too much secretion of androgen. She
XPN: then alleged that for all interests and appearances as well as in
1. Lifetime of mind and emotion, she has become a male person. What is
Prescriptive spouse in cases Jennifers gender or sex?
period of insanity
2. Before the party A: Male. Where the person is biologically or naturally intersex the
reaches 21 in determining factor in his gender classification would be what the
cases where individual, having reached the age of majority, with good reason
parents or thinks of his/her sex. Jennifer here thinks of himself as a male and
guardians may considering that his body produces high levels of androgen, there is
file annulment preponderant biological support for considering him as being male.
Either directly or Judicial declaration Sexual development in cases of intersex persons makes the gender
How may be collaterally is necessary classification at birth inconclusive. It is at maturity that the gender
impugned of such persons is fixed.
GR: Illegitimate; Legitimate Jennifer has simply let nature take its course and has not taken
unnatural steps to arrest or interfere with what he was born with.
XPN: Those conceived And accordingly, he has already ordered his life to that of a male.
or born of marriages He could have undergone treatment and taken steps, like taking
declared void under: lifelong medication, to force his body into the categorical mold of a
Children
1. Art. 36 female but he did not. He chose not to do so. Nature has instead
(Psychological taken its due course in his development to reveal more fully his
incapacity), or male characteristics.
2. Art. 52 in relation
to Art. 53 To him belongs the primordial choice of what courses of action to
Property relations are GR:Governed by take along the path of his sexual development and maturation. In
governed by rules on rules on absolute the absence of evidence that he is an incompetent and in the
co-ownership community absence of evidence to show that classifying him as a male will
Property harm other members of society who are equally entitled to
XPN:Unless another protection under the law, the Court affirms as valid and justified his
system is agreed position and his personal judgment of being a male (Republic v.
upon in marriage Jennifer Cagandahan, G.R. No. 166676, Sep. 12, 2008).
settlement
GR: There is no Necessary Status of marriages where one or both of the parties are below 18
necessity to obtain a years of age
judicial declaration
Judicial
Declaration Marriages contracted where one or both of the parties are below
XPN: For purposes of 18 years of age are void for lack of legal capacity even if the
remarriage, one is parents consented to such marriage.
required.
Validity of the marriage if it is a mixed marriage where the
ABSENCE OF REQUISITES Filipino is 18 years old but the foreigner is below 17 years of age
Status of a marriage between Filipinos if the parties thereto are If the national law of the foreigner recognizes 17 year old persons
of the same sex to be capacitated to marry, then their marriage is valid, otherwise
it is void.
Void. For a marriage to be valid, it must be between persons of
opposite sexes. Effect of lack of authority of solemnizing officer
Q: In case of a change in sex, can the person who has undergone GR: The marriage is void ab initio.
said change be allowed to marry another of the same sex as
he/she originally had? XPN:
1. Express - If either or both parties believed in good faith that
A: It depends upon the cause for the change in sex. the solemnizer had the legal authority to do so (Art. 35, FC).
2. Implied - Article 10 in relation to Article 26 of the Family
1. If the change is artificial No, he/she cannot. Code. If the marriage between a foreigner and a Filipino
citizen abroad solemnized by a Philippine consul assigned in
NOTE: The sex or gender at the time of birth shall be taken into that country is recognized as valid in the host country, such
account. He is still, in the eyes of the law, a man although because of marriage shall be considered as valid in the Philippines (Sta.
the artificial intervention, he now has the physiological characteristics
Maria Jr., Persons and Family Relations Law).
of a woman (Silverio v. Republic, G.R. No. 174689, October22, 2007)

CIVIL LAW
Q: Judge Palaypayon solemnized marriages even without the Necessity of physicians examination for proving psychological
requisite of marriage license. Thus, some couples were able to get incapacity
married by the simple expedient of paying the marriage fees. As a
consequence, their marriage contracts did not reflect any The physicians examination is not required in establishing
marriage license number. In addition, the judge did not sign their psychological incapacity as ground for declaration of nullity. If the
marriage contracts and did not indicate the date of the totality of evidence presented is enough to sustain a finding of
solemnization, the reason being that he allegedly had to wait for psychological incapacity, physicians examination of the person
the marriage license to be submitted by the parties. Such concerned need not be resorted to.
marriage contracts were not filed with the Local Civil Registry. Are
such marriages valid? Guidelines set by the Court to aid it in its disposition of cases
involving psychological incapacity
A: No. The Family Code pertinently provides that the formal
requisites of marriage are, inter alia, a valid marriage license, 1. Burden of proof to show the nullity of the marriage belongs
necessary for the validity of marriage, except in the cases provided to the plaintiff;
for therein. Complementarily, it declares that the absence of any of 2. The root cause of the psychological incapacity must be: (a)
the essential or formal requisites shall generally render the medically or clinically identified, (b) alleged in the complaint,
marriage void ab initio and that, while an irregularity in the formal (c) sufficiently proven by experts and (d) clearly explained in
requisites shall not affect the validity of the marriage, the party or the decision.
parties responsible for the irregularity shall be civilly, criminally and 3. The incapacity must be proven to be existing at the time of
administratively liable (Cosca v. Palaypayon, A.M. No. MTJ-92-721, the celebration of the marriage.
September 30, 1994). 4. Such incapacity must also be shown to be medically or
clinically permanent or incurable.
Mistake to render the marriage void 5. Such illness must be grave enough to bring about the
disability of the party to assume the essential obligations of
For marriage to be rendered void, the mistake in identity must be marriage.
with reference to the actual physical identity of other party, not 6. The essential marital obligations must be those embraced by
merely a mistake in the name, personal qualifications, character, Arts. 68 up to 71 of the FC as regards the husband and wife,
social standing, etc (Rabuya, 2009). as well as Arts. 220, 221 and 225 of the same Code in regard
to parents and their children. Such non-complied marital
PSYCHOLOGICAL INCAPACITY obligation(s) must also be stated in the petition, proven by
evidence and included in the text of the decision.
Psychological incapacity 7. Interpretations given by the National Appellate Matrimonial
Tribunal of the Catholic Church in the Philippines, while not
The Supreme Court defined psychological incapacity as no less controlling or decisive, should be given great respect by our
than a mental (not physical) incapacity that causes a party to be courts.
truly incognitive of the basic marital covenants that concomitantly 8. The trial court must order the prosecuting attorney or fiscal
must be assumed and discharged by the parties to the marriage. and the Solicitor General to appear as counsel for the
state. No decision shall be handed down unless the Solicitor
The determination is left solely with the courts on a case-to-case General issues a certification, which will be quoted in the
basis. Determination of psychological incapacity depends on the decision, briefly stating therein his reasons for his agreement
facts of the case. Each must be judged, not on the basis of a priori or opposition, as the case may be, to the petition (Danilo A.
assumptions, predilections or generalizations but according to its Aurelio v. Vide Ma. Corazon P. Aurelio, G.R. No. 175367, June
own facts (Republic v. Dagdag, G.R. No. 109975, February 9, 2001). 6, 2011).
The intendment of the law has been to confine the meaning of Instances where allegations of psychological incapacity were not
"psychological incapacity" to the most serious cases of personality sustained
disorders clearly demonstrative of an utter insensitivity or inability
to give meaning and significance to the marriage (Santos v. CA, G.R. 1. Mere showing of irreconcilable differences and conflicting
No. 112019, January 4, 1995). personalities (Carating-Siayngco v. Siayngco, G.R. No. 158896,
Oct, 27. 2004).
Requisites of Psychological Incapacity
Mere sexual infidelity or perversion, do not by themselves
1. Juridical antecedence Must be rooted in the history of the constitute psychological incapacity, as well as immaturity and
party antedating the marriage, although overt manifestations irresponsibility.
may arise only after such marriage.
2. Gravity Grave enough to bring about the disability of the NOTE: It must be shown that these acts are manifestations of a
party to assume the essential marital obligations. disordered personality which would make respondent completely
unable to discharge the essential obligations of a marital state, not
3. Permanence or incurability Must be incurable. If curable,
merely youth, immaturity or sexual promiscuity (Dedelvs CA, G.R. no.
the cure should be beyond the means of the parties involved. 151867, January29, 2004).
Proof of Psychological Incapacity 2. Disagreements regarding money matters (Tongol v. Tongol,

G.R. No. 157610, October 19, 2007).
The root cause of psychological incapacity must be: 3. Mere abandonment.
a. Medically or clinically identified
b. Alleged in the complaint NOTE:To constitute psychological incapacity, it must be shown that
c. Sufficiently proven by experts the unfaithfulness and abandonment are manifestations of a
d. Clearly explained in the decision disordered personality that completely prevented the erring spouse
from discharging the essential marital obligations (Republic of the
Philippines vs. Cesar Enselan G.R. No. 170022; January 9, 2013).
NOTE: Expert evidence may be given by qualified psychiatrists and clinical
psychologists.

4. Sexual infidelity (Republic v. Dagdag, GR No. 109975, NOTE: Regardless of whether the relationship between the parties is
February 9, 2001). legitimate or illegitimate.
Q: Would the state of being of unsound mind or the concealment Void marriages by reason of public policy
of drug addiction, habitual alcoholism, homosexuality or
lesbianism be considered indicia of psychological incapacity, if Marriages between:
existing at the inception of marriage? (2002 Bar Question) 1. Collateral blood relatives (legitimate or Illegitimate) up to the
4th civil degree;
A: In the case of Santos v. CA (240 SCRA 20, 1995), the Supreme 2. Step-parents & step-children;
Court held that being of unsound mind, drug addiction, habitual 3. Parents-in-law & children-in-law;
alcoholism, lesbianism or homosexuality may be indicia of 4. Adopting parent & the adopted child;
psychological incapacity, depending on the degree of severity of the 5. Surviving spouse of the adopting parent & the adopted child;
disorder. However, the concealment of drug addiction, habitual 6. Surviving spouse of the adopted child & the adopter;
alcoholism, lesbianism or homosexuality is a ground of annulment 7. Adopted child & legitimate child of the adopter;
of marriage. 8. Adopted children of the same adopter;
9. Parties where one, with the intention to marry the other, kills
Q: Art. 36 of the FC provides that a marriage contracted by any the latters spouse, or his/her spouse (Art. 38, FC).
party who, at the time of the celebration, was psychologically
incapacitated to comply with the essential marital obligations of NOTE: The list is exclusive. If not falling within this enumeration, the
marriage shall be valid. Such as marriages between:
marriage, shall be void. i. Adopted and Illegitimate child of the adopter
ii. Step brother and step sister
Choose the spouse listed below who is psychologically iii. Brother-in-law and sister-in-law
incapacitated. iv. Parties who have been guilty of adultery or concubinage
a. Nagger
b. Gay or Lesbian Q: Amor gave birth to Thelma when she was 15 years old.
c. Congenital sexual pervert Thereafter, Amor met David and they got married when she was
d. Gambler 20 years old. David has a son, Julian, with his ex-girlfriend Sandra.
e. Alcoholic (2006 Bar Question) Can Julian and Thelma get married? (2007 Bar Question)
A: B and C. To be sure, the existence and concealment of these A: If the marriage was solemnized during the effectivity of the NCC,
conditions at the inception of marriage renders the marriage the marriage between stepbrother and stepsister is void. However,
contract voidable (Art 46, FC). They may serve as indicia of under the FC, the marriage may be valid.
psychological incapacity, depending on the degree and severity of
the disorder (Santos v. CA, G.R. No. 112019, January 4, 1995). SUBSEQUENT MARRIAGE
Hence, if the condition of homosexuality, lesbianism or sexual
perversion, existing at the inception of the marriage, is of such a Q: If a person contracts a subsequent marriage during the
degree as to prevent any form of sexual intimacy, any of them may subsistence of a prior marriage, what is the status of the
qualify as a ground for psychological incapacity. The law provides subsequent marriage?
that the husband and wife are obliged to live together, observe
mutual love, respect and fidelity (Art. 68, FC). The mandate is A: GR: Void for being bigamous or polygamous, even if celebrated
actually the spontaneous, mutual affection between the spouses/ abroad and valid there as such.
in the natural order it is sexual intimacy which brings the spouses
wholeness and oneness (Chi Ming Tsoi v. CA, G.R. No. 119190, XPN: Valid if it is a terminable bigamous marriage.
January 16, 1997).
Bigamous Marriage
Alternative Answer:
None of them are necessarily psychologically incapacitated. Being It is when a person contracts a second or subsequent marriage
a nagger, etc., are at best only physical manifestations indicative of before the former marriage has been legally dissolved, or before
psychological incapacity. More than just showing the the absent spouse has been declared presumptively dead by
manifestations of incapacity, the petitioner must show that the means of judgment rendered in the proper proceedings (Art. 349,
respondent is incapacitated to comply with the essential marital RPC).
obligations of marriage and that it is also essential that he must be
shown to be incapable of doing so due to some psychological, not NOTE: The same applies to polygamy.
physical illness (Republic v. Quintero-Hamano, G.R. No. 149498,
May 20, 2004). Q: Arnold, a Filipino, and Britney, an American, both residents of
California, decided to get married in their local parish. Two years
Alternative Answer: after their marriage, Britney obtained a divorce in California.
While in Boracay, Arnold met Jenny, a Filipina, who was
A congenital sexual pervert may be psychologically incapacitated if vacationing there. Arnold fell in love with her. After a brief
his perversion incapacitates him from discharging his marital courtship and complying with all the requirements, they got
obligations; for instance, if his perversion is of such a nature as to married in Hong Kong to avoid publicity, it being Arnolds second
preclude any normal sexual activity with his spouse. marriage. Is his marriage with Jenny valid? (2006 Bar Question)
INCESTUOUS MARRIAGES A: Yes. The marriage will not fall under Art. 35(4) on bigamous
marriages, provided that Britney obtained an absolute divorce,
Marriages that are considered as incestuous capacitating her to remarry under her national law. Consequently,
the marriage between Arnold and Jenny may be valid as long as it
a) Between ascendants and descendants of any degree; was solemnized and valid in accordance with the laws of Hong
b) Between brothers and sisters whether of the full or half blood Kong.
(Art. 37, FC).

CIVIL LAW
Q: May a person contract a valid subsequent marriage before a Effect if both parties in the subsequent marriage under Article 41
first marriage is declared void ab initio by a competent court? acted in bad faith
A:No. The Supreme Court has consistently held that a judicial 1. The subsequent marriage is void ab initio
declaration of nullity is required before a valid subsequent 2. All donations propter nuptias made by one in favour of the
marriage can be contracted; or else, what transpires is a bigamous other are revoked by operation of law
marriage, reprehensible and immoral. Article 40 of the Family Code 3. All testamentary dispositions made by one in favour of the
expressly requires a judicial declaration of nullity of marriage (In re: other are revoked by operation of law
Salvador v. Serafico, A.M. 2008-20-SC, March 15, 2010). 4. The parties shall be liable for the crime of bigamy (Rabuya,
Civil Law Reviewer Vol. 1)
NOTE: Under Art. 40 of the FC, before one can contract a second marriage
on the ground of nullity of the first marriage, there must first be a final Termination of Subsequent Bigamous Marriage
judgment declaring the first marriage void. If a party fails to secure a judicial
declaration of nullity of the first marriage, he or she runs the risk of being
charged with bigamy as the marital bond or vinculum in the first nuptial
The recording of the affidavit of reappearance of the absent spouse
subsists (Mercado v. Tan GR: 137110, August, 2000; Te v. CA GR No: 126746, in the civil registry of the residence of the parties to the
November 29, 2009). subsequent marriage shall automatically terminate the terminable
bigamous marriage unless there is a judgment annulling the
Special cases when subsequent marriage is allowed previous marriage or declaring it void ab initio (Art. 42, FC).
1. Marriage between a Filipino and a foreigner and procurement In Art 42, FC, no judicial proceeding to annul a subsequent
by the alien spouse of a valid divorce decree abroad, marriage contracted under Art. 41 is necessary. Also, the
capacitating him/her to remarry. termination of the subsequent marriage by affidavit provided for in
2. Terminable bigamous marriages (Art. 41). Art. 42 does not preclude the filing of an action in court to prove
the reappearance of the absentee and obtain a declaration of
Requisites of a Terminable Bigamous Marriage dissolution or termination of the subsequent marriage (SSS v.
Jarque Vda. De Bailon, G.R. No. 165545, March 24, 2006).
Before the celebration of the subsequent marriage: (ABD)
Q: Gregorio married Janet. When he was employed overseas, he
1. The Absent spouse had been absent for 4 consecutive years was informed that Janet left. Five years later, he filed an action
(ordinary absence) or 2 consecutive years (extra-ordinary for her to be declared presumptively dead without alleging that
absence); he wishes to remarry. Will his action prosper?
2. The present spouse has a well-founded Belief that the absent
spouse is already dead; A:No. A petition to declare an absent spouse presumptively dead
3. There is judicial Declaration of presumptive death in a may not be granted in the absence of any allegation that the
summary proceeding. spouse present will remarry. Also, there is no showing that
Gregorio conducted a search for his missing wife with such
NOTE: If both spouses of subsequent marriage acted in bad faith, such diligence as to give rise to a "well-founded belief" that she is dead.
marriage is void ab initio. The four requisites not having concurred, his action for the
declaration of presumptive death of his wife should be denied
Requisites of judicial declaration of presumptive death (Republic v. Nolasco, G.R. No. 94053, March 17, 1993).
1. That the absent spouse has been missing for four consecutive Q: What is the effect if the parties to the subsequent marriage
years, or two consecutive years if the disappearance occurred obtains knowledge that the spouse absent has reappeared?
where there is danger of death under the circumstances laid
down in Article 391 of the New Civil Code A: None. If the absentee reappears, but no step is taken to
2. That the present spouse wishes to remarry terminate the subsequent marriage, either by affidavit or by court
3. That the present spouse has well-founded belief that the action, such absentee's mere reappearance, even if made known to
absentee is dead the spouses in the subsequent marriage, will not terminate such
4. That the present spouse files a summary proceeding for the marriage (SSS v. Jarque Vda. De Bailon, G.R. No. 165545, March 24,
declaration of presumptive death of the absentee (Republic 2006).
of the Philippines vs. Nolasco G.R. 94053, March 17, 1993).
Q: When are non-bigamous subsequent marriages void?
Finality of judicial declaration of presumptive death
A: The subsequent marriage of a person whose prior marriage has
GR:The order of the trial court granting the petition for judicial been annulled but contracted said subsequent marriage without
declaration of presumptive death under Article 41 of the Family compliance with Art. 52, FC, shall be void.
Code is immediately final and executory by the express provision of
Article 247 of the Family Code (Republic of the Philippines vs. Before he contracts a subsequent marriage, he must first comply
Bermudez-Lorino, G.R.160258 January 19,2005). with the requirement provided for in Art. 52, viz:
XPN:Under Article 41 of the Family Code, the losing party in a The recording in the civil registries and registries of properties of
summary proceeding for the declaration of presumptive death may the following: (JPDD)
file a petition for certiorari with the CA on the ground that, in 1. Judgment of annulment;
rendering judgment thereon, the trial court committed grave 2. Partition;
abuse of discretion amounting to lack of jurisdiction. From the 3. Distribution of properties, and
decision of the CA, the aggrieved party may elevate the matter to 4. Delivery of presumptive legitimes
this Court via a petition for review on certiorari under Rule 45 of
the Rules of Court (Republic of the Philippines vs Yolanda Cadacio Q: Ana Rivera had a husband, a Filipino citizen like her, who was
Granada, G.R. 187512, June 13, 2012). among the passengers on board a commercial jet plane which
crashed in the Atlantic Ocean ten (10) years earlier and had never

been heard of ever since. Believing that her husband had died, 2. After the entry of judgment The decision shall be binding
Ana married Adolf Cruz Staedler, a divorced German national upon the parties and their successors-in-interest in the
born of a German father and a Filipino mother residing in settlement of the estate.
Stuttgart. To avoid being required to submit the required
certificate of capacity to marry from the German Embassy in Petition for the declaration of nullity of marriage by the heirs of a
Manila, Adolf stated in the application for marriage license stating deceased person after his death
that Adolf was a Filipino, the couple got married in a ceremony
officiated by the Parish Priest of Calamba, Laguna in a beach in The heirs cannot file for declaration of nullity of marriage. . The
Nasugbu, Batangas, as the local parish priest refused to solemnize advent of the Rule on Declaration of Absolute Nullity of Void
marriage except in his church. Is the marriage valid? (2008 Bar Marriages marks the beginning of the end of the right of the heirs
Question) of the deceased spouse to bring a nullity of marriage case against
the surviving spouse. The heirs can still protect their successional
A: The issue hinges on whether or not the missing husband was right, for, compulsory or intestate heirs can still question the
dead or alive at the time of the second marriage. validity of the marriage of the spouses, not in a proceeding for
declaration of nullity but upon the death of a spouse in a
If the missing husband was in fact dead at the time the second proceeding for the settlement of the estate of the deceased spouse
marriage was celebrated, the second marriage was valid. Actual filed in the regular courts.
death of a spouse dissolves the marriage ipso facto whether or not
the surviving spouse had knowledge of such fact. A declaration of However, with respect to nullity of marriage cases commenced
presumptive death even if obtained will not make the marriage before the effectivity of A.M. No. 02-11-10 and marriages
voidable because presumptive death will not prevail over the fact celebrated during the effectivity of the NCC, the doctrine laid down
of death. in the Nial v. Bayadog case still applies; that the children have the
personality to file the petition to declare the nullity of marriage of
If the missing husband was in fact alive when the second marriage their deceased father to their stepmother as it affects their
was celebrated, the second marriage was void ab initio because of successional rights (De Dios Carlos v. Sandoval, G.R. No. 179922,
a prior subsisting marriage. Had Ana obtained a declaration of December 16, 2008).
presumptive death, the second marriage would have been
voidable. Q: If the court denies a petition for declaration of nullity of
marriage based on psychological incapacity, may a party to the
In both cases, the fact that the German misrepresented his said case file another petition for declaration of its nullity based
citizenship to avoid having to present his Certificate of Legal on the absence of marriage license?
Capacity, or the holding of the ceremony outside the church or
beyond the territorial jurisdiction of the solemnizing officer, are all A: A petition to declare the marriage void due to absence of
irregularities which do not affect the validity of the marriage. marriage license, filed after the court denied a petition to declare
the marriage void due to psychological incapacity is barred by res
JUDICIAL DECLARATION OF NULLITY OF MARRIAGE judicata. There is only one cause of action which is the declaration
of nullity of the marriage. Hence, when the second case was filed
Judicial Declaration of Nullity of Marriage based on another ground, there was a splitting of a cause of action
which is prohibited. The petitioner is estopped from asserting that
Judicial declaration of absolute nullity of a void marriage is the first marriage had no marriage license because in the first case,
necessary only for purposes of remarriage. he impliedly admitted the same when he did not question the
absence of a marriage license. Litigants are provided with the
NOTE: In the instance where a party who has previously contracted a options on the course of action to take in order to obtain judicial
marriage which is legally unassailable, he is required by law to prove that the relief. Once an option has been taken and a case is filed in court,
previous one was an absolute nullity. But this he may do on the basis solely
of a final judgment declaring such previous marriage void.
the parties must ventilate all matters and relevant issues therein.
The losing party who files another action regarding the same
No judicial action is needed for purposes other than remarriage. controversy will be needlessly squandering time, effort and
financial resources because he is barred by law from litigating the
NOTE: Here, evidence may be adduced, testimonial or documentary, to same controversy all over again (Mallion v. Alcantara, G.R. No.
prove the existence of the grounds rendering such a previous marriage an 141528, October 31, 2006).
absolute nullity. But these need not be limited solely to an earlier final
judgment of a court declaring such marriage void (Rabuya, Civil Law Q: Is the declaration of nullity of marriage applied prospectively?
Reviewer, 2009 ed.).
A: No, it retroacts to the date of the celebration of the marriage.
Prescriptive Period However, although the judicial declaration of nullity of a marriage
on the ground of psychological incapacity retroacts to the date of
The time for filing an action or defense for the declaration of the celebration of the marriage insofar as the vinculum between
absolute nullity of marriage, whether in a direct or collateral the parties is concerned, it must be noted that the marriage is not
manner, does not prescribe (Art. 39, FC). without legal consequences or effects. One such consequence or
effect is the incurring of criminal liability for bigamy. To hold
NOTE: Any of the parties in a void marriage can file an action for the otherwise would be to render nugatory the State's penal laws on
declaration of nullity of marriage even though such party is the wrongdoer.
bigamy as it would allow individuals to deliberately ensure that
each marital contract be flawed in some manner, and to thus
Effect of death of a party in a petition for declaration of nullity of
escape the consequences of contracting multiple marriages
marriages
(Tenebro v. CA, G.R. No. 150758, February 18, 2004).
1. Before the entry of judgment The court shall order the case
closed and terminated without prejudice to the settlement of
estate in proper proceedings.

CIVIL LAW
Q: Is a decree of nullity of the first marriage required before a but the marriage
subsequent marriage can be entered into validly? is not yet
cleansed of its
A: defect.
Either party Insane spouse: GR: Sane At any time
GR: Under the Art. 40 of the FC, the absolute nullity of a previous was of unsound Through free spouse who before the
marriage may be invoked for purposes of remarriage on the basis mind cohabitation had no death of
solely of a final judgment declaring such previous marriage void. after coming to knowledge of either party
reason. the others
XPN: If the second marriage, however, took place prior to the insanity During a
effectivity of the FC, there is no need for judicial declaration of lucid
nullity of the first marriage pursuant to the prevailing XPN: interval or
jurisprudence at that time (Rabuya, 2006). Any relative, after
guardian or regaining
NOTE: Art. 40 is applicable to remarriages entered into after the effectivity person having sanity
of the FC on August 3, 1988 regardless of the date of the first marriage. legal charge of
Besides, under Art. 256 of the FC, said Article is given "retroactive effect
the insane
insofar as it does not prejudice or impair vested or acquired rights in
accordance with the Civil Code or other laws" (Atienza v. Brillantes, A.M. No.
MTJ-92-706, March 29, 1995). Insane spouse
during a lucid
Q: While his marriage is subsisting, Veronico married Leticia, interval or
which marriage was later declared void on the ground of after regaining
psychological incapacity. When Veronico got married for the third sanity
time, Leticia filed a case for bigamy against him. Consent of Injured party: Injured party Within 5
either party Through free years after
For his defense, Veronico claims that effects of the nullity of his was obtained cohabitation the
marriage with Leticia retroacts to the date when it was by fraud with full discovery of
contracted, hence, he is not guilty of bigamy for want of an knowledge of fraud
essential element the existence of a valid previous marriage. the facts
Rule on Veronicos argument. constituting the
fraud.
A: Veronicos argument has no merit. Art. 349 of the RPC penalizes
Vices of consent Injured party: Injured party Within 5
the mere act of contracting a second or subsequent marriage
such as force, Through free years from
during the subsistence of a previous valid marriage. Here, as soon
intimidation or cohabitation the time
as the second marriage to Leticia was celebrated, the crime of
undue after the vices the force,
bigamy had already been consummated as the second marriage
influence have ceased or intimidation
was contracted during the subsistence of the valid first marriage
disappeared. or undue
(Tenebro v. CA, G.R. No. 150758, February 18, 2004).
influence
disappeared
VOIDABLE MARRIAGES
or ceased
Voidable Marriage Impotence and May not be Injured party Within 5
STD ratified but years after
A voidable marriage is considered valid and produces all its civil action may be the
effects until it is set aside by final judgment of a competent court in barred by celebration
an action for annulment (Rabuya, 2006, p. 295). prescription of marriage
only, which is 5
Voidable marriages and its ratification years after the
marriage
WHO MAY WHEN TO
GROUND RATIFICATION Determination of the unsoundness of mind as a ground for
FILE FILE
annulment
Marriage of a Contracting By the Within 5
party 18 years party who contracting years after
It is essential that the mental incapacity must relate specifically to
of age or over failed to obtain party attaining
the contract of marriage and the test is whether the party at the
but below 21 parental the age of
time of the marriage was capable of understanding the nature and
solemnized consent: Parent, 21
consequences of the marriage (Rabuya, 2006).
without the Through free guardian, or
consent of the cohabitation person having At any time
Fraud as a ground for annulment
parents, after attaining legal charge of before such
guardian or the age of 21. the party has
Fraud, as distinguished from fraud as a ground for annulment of
person having contracting reached the
NOTE: The
contracts, refers to the non-disclosure or concealment of some
substitute party age of 21
parents cannot facts deemed material to the marital relations (Rabuya, 2009).
parental
authority over ratify the
marriage. The Circumstances constituting fraud under Art. 45(3)
the party, in effect of
that order prescription on 1. Non-disclosure of conviction by final judgment of crime
their part is that involving moral turpitude;
they are barred
from contesting it

2. Concealment by the wife of the fact that at the time of Q: If drug addiction, habitual alcoholism, lesbianism or
marriage, she was Pregnant by a man other than her homosexuality should occur only during the marriage, would
husband; these constitute grounds for a declaration of nullity or for legal
3. Concealment of Sexually transmitted disease, regardless of separation, or would they render the marriage voidable (2002 Bar
nature, existing at the time of marriage; Question)?
4. Concealment of Drug addiction, habitual alcoholism,
homosexuality and lesbianism (Art. 46, FC). A: In accordance with law, if drug addiction, habitual alcoholism,
lesbianism or homosexuality should occur only during the
NOTE: Where there has been no misrepresentation or fraud, that is, when marriage, they will:
the husband at the time of the marriage knew that the wife was pregnant, 1. Not constitute grounds for declaration of nullity (Art. 36, FC).
the marriage cannot be annulled (Buccat v. Buccat, G.R. No. 47101, April 25, 2. Constitute grounds for legal separation (Art. 55, FC); and
1941).
3. Not constitute grounds to render the marriage voidable (Arts.
45 and 46 of the FC) .
Q: Aurora prayed for the annulment of her marriage with
Fernando on the ground of fraud in obtaining her consent after
Vitiated consent as a ground for annulment of marriage
having learned that several months prior to their marriage,
Fernando had pre-marital relationship with a close relative of his.
There is vitiation of consent when:
According to her, the "non-divulgement to her of such pre-marital
secret" constituted fraud in obtaining her consent w/in the
GR: Consent of either party was obtained by force, intimidation or
contemplation of Art. 46 of the FC. Is the concealment by the
undue influence
husband of a pre-marital relationship with another woman a
ground for annulment of marriage?
XPN: However, if the same having disappeared or ceased, such
party thereafter freely cohabited with the other as husband and
A:No. The non-disclosure to a wife by her husband of his pre-
wife
marital relationship with another woman is not a ground for
annulment of marriage. For fraud as a vice of consent in marriage,
Impotence or physical incapacity
which may be a cause for its annulment, comes under Art. 46 of
the FC. This fraud, as vice of consent, is limited exclusively by law
Impotence (impotentia copulandi) refers to lack of power of
to those kinds or species of fraud enumerated in Art. 86.
copulation and not to mere sterility (impotentia genrandi) which
NOTE: The intention of Congress to confine the circumstances that can
refers to ability to procreate. The test is not the capacity to
constitute fraud as ground for annulment of marriage to the 3 cases therein reproduce, but the capacity to copulate (Paras,2008).
may be deduced from the fact that, of all the causes of nullity enumerated in
Art. 85 (now, Art. 46 of the FC), fraud is the only one given special treatment Requisites for impotence to be a ground for annulment of
in a subsequent article within the chapter on void and voidable marriages. If marriage
its intention were otherwise, Congress would have stopped at Art. 85, for
anyway, fraud in general is already mentioned therein as a cause for 1. Exists at the time of the Celebration of marriage
annulment (Anaya v. Palaroan, GR L-27930, November 26, 1970).
2. Permanent (does not have to be absolute)
3. Incurable
Q: Under what conditions, respectively, may drug addiction be a
4. Unknown to the other spouse
ground, if at all, for the declaration of nullity of marriage,
5. Other spouse must not also be Impotent
annulment of marriage, and legal separation? (1997 Bar
Question)
Presumption of potency of one spouse
A:
GR: Presumption is in favor of potency.
Declaration of Nullity a. The drug addiction must amount
of Marriage to psychological incapacity to
XPN: Doctrine of triennial cohabitation.
comply with the essential
obligations of marriage;
Doctrine Triennial cohabitation
b. It must be antecedent (existing at
the time of marriage), grave and
If after 3 years of living together with her husband, the wife
incurable:
remained a virgin, the husband is presumed to be impotent
Annulment of a. The drug addiction must be (Rabuya, 2009). The husband will have to overcome this
Marriage concealed; presumption.
b. It must exist at the time of
marriage; Q: The day after John and Marsha got married, John told her that
c. There should be no cohabitation he was impotent. Marsha continued to live with John for two
with full knowledge of the drug years. Is Marsha now estopped from filing an annulment case
addiction; against John? (2007 Bar Question)
d. The case is filed within five (5)
years from discovery. A: No. Unlike the other grounds for annulment of voidable
Legal Separation a. There should be no condonation marriage which are subject to ratification by continued
or consent to the drug addiction; cohabitation, the law does not allow ratification in case of
b. The action must be filed within impotency.
five (5) years from the
occurrence of the cause. Requisites of affliction of a sexually transmitted disease (STD) as a
c. Drug addiction arises during the ground for annulment
marriage and not at the time of
marriage. 1. One of the parties is Afflicted with STD
2. STD must be:
a. Existing at the time the marriage is celebrated

CIVIL LAW
b. Serious stipulation of facts or confession of judgment if sufficiently supported by
c. Apparently Incurable other independent substantial evidence to support the main ground relied
3. The other spouse must not be Aware of the others affliction upon, may warrant an annulment or declaration of absolute nullity.
4. Injured party must be Free from STD.
PENDENCY OF ACTION
Q: Yvette was found to be positive for HIV virus, considered
sexually transmissible, serious and incurable. Her boyfriend During the pendency of the action for annulment, declaration of
Joseph was aware of her condition and yet married her. After two absolute nullity of marriage or legal separation, the Court shall, in
(2) years of cohabiting with Yvette, and in his belief that she the absence of adequate written agreement between the spouses,
would probably never be able to bear him a healthy child, Joseph provide for the:
now wants to have his marriage with Yvette annulled on the 1. Support of the spouses
ground that Yvette has STD. Yvette opposes the suit contending 2. Support and custody of the common children
that Joseph is estopped from seeking annulment of their marriage 3. Visitation rights of the other parent (Art.49, FC).
since he knew even before their marriage that she was afflicted
with HIV virus. Can the action of Joseph for annulment of his EFFECTS OF NULLITY
marriage with Yvette prosper?
Effects of Judicial Declaration of Nullity of Marriage
A: No. Concealment of a sexually transmitted disease may annul
the marriage if there was fraud existing in the party concerned. In 1. Status of the Children
this case, there was no fraud because Joseph knew that Yvette was
suffering from HIV when he married her (Art. 46, par 3, FC). GR: Illegitimate
Art. 45 v. 46 of the FC on STD as ground for annulment XPN: Legitimate if:

i. If the marriage is void on the ground of psychological
incapacity of either or both parties
ARTICLE 45 ARTICLE 46
ii. If the marriage is void due to the non-compliance with
Affliction Concealment the requirements set forth under Article 52 of the
Ground for Annulment Family Code
The act of concealing because
The fact of being afflicted 2. Property Relations
it constitutes fraud
Concealment GR: Either Article 147 or 148 will apply
Not necessarily Necessary
Nature of the Disease XPN: If the subsequent marriage is void due to non-
Does not have to be serious compliance with Article 40, the property relations of the void
Must be serious and incurable subsequent marriage will either be absolute community or
and incurable
conjugal partnership of gains
PRESENCE OF PROSECUTOR 3. Donations Propter Nuptias
Role of the prosecutor or Solicitor General in cases of annulment GR: Donations propter nuptias are revocable at the instance
and judicial declaration of Nullity of the donor
The prosecutor or Solicitor General shall take steps to prevent XPN:

collusion between the parties and to take care that evidence is not i. If the donation propter nuptias is embodied in a
fabricated or suppressed. Concomitantly, even if there is no marriage settlement, the donation is void under Article
suppression of evidence, the public prosecutor has to make sure 86 par. 1
that the evidence to be presented or laid down before the court is ii. If the subsequent marriage is judicially declared void by
not fabricated. Truly, only the active participation of the public reason of Article 40, the donation remains valid
prosecutor or the Solicitor General will ensure that the interest of
the State is represented and protected in proceedings for XPN to the XPN: If the donee spouse contracted the
declaration of nullity of marriages by preventing the fabrication or marriage in bad faith, all donations are revoked by
suppression of evidence(Art. 48, FC). operation by law.
NOTE: The non-intervention of the prosecutor is not fatal to the validity of iii. When both parties to a subsequent marriage contracted
the proceedings in cases where the respondent in a petition for annulment
in bad faith under Article 44, all donations propter
vehemently opposed the same and where he does not allege that evidence
was suppressed or fabricated by any of the parties (Tuason v. CA, G.R. No. nuptias are revoked by operation by law.
116607, April 10, 1996).
4. Designation as Beneficiary in Insurance Policy
Actions prohibited in annulment and declaration of absolute
nullity of marriage cases If the subsequent marriage is judicially declared to void by
reason of Article 40, the innocent spouse may revoke such
1. Compromise designation if the beneficiary spouse acted in bad faith, even
2. Confession of judgment if such designation be stipulated as irrevocable.
3. Stipulation of facts
4. Summary judgment 5. Right to Inherit
5. Judgment on the pleadings a. Intestate Succession: The parties cannot inherit from
each other by way of intestate succession since they are
NOTE: What the law prohibits is a judgment based exclusively or mainly on no longer considered as spouses
defendant's confession (Ocampo v. Florenciano, 107 Phil. 35). Thus, b. Testate Succession:

Final judgment of nullity or annulment
GR: Any Testamentary provision by one in favour of the other
shall remain valid The final judgment of nullity or annulment shall provide the
following:
XPN: 1. Liquidation, partition and distribution of the properties of the
1. If the subsequent marriage is rendered void by non- spouses;
compliance with Article 40 of the Family Code, the 2. Custody and support of the common children; and
spouse who contracted the subsequent marriage in bad 3. Delivery of their presumptive legitimes.
faith is disqualified to inherit from the innocent spouse
2. If the marriage is void by reason of the bad faith of both Unless such matters had already been adjudicated in previous
parties under Article 41 of the Family Code, all judicial proceedings, in which case, the final judgment of nullity or
testamentary dispositions made by one in favour of the annulment need not provide for those which have already been
other are revoked by operation of law adjudicated.
NOTE: The parties are not disqualified to institute each other as NOTE: Where there was a failure to record in the civil registry and registry of
voluntary heir in their respective wills to be executed after the property the judgment of annulment or absolute nullity of the marriage, the
judicial declaration of nullity partition and distribution of the property of the spouses, and the delivery of
the childrens presumptive legitimes, it shall not affect third persons (Arts.
6. Parental Authority and Custody of Children 52, FC).
GR: Since the children are considered as illegitimate, the Forms of presumptive legitime
parental authority and the custody of the children will be
exercised by their mother. The illegitimate father even if he 1. Cash
admits paternity, will only have visitation rights. 2. Property
3. Sound security
XPN: If the marriage is declared void by the reason of
psychological incapacity of either or both of the parties, the Q: What must be done by a person whose prior marriage was
parental authority and the custody will be exercised by the annulled or declared void if he wishes to remarry?
parent designated by the court.
A: Hemust comply with the requirement provided for in Art. 52,
Effects of Decree of Annulment before he contracts a subsequent marriage, viz:
1. Termination of the marital bond, as if it had never been The recording in the civil registries and registries of properties of
entered into, but the effects thereof are not totally wiped the following:
out. 1. Judgment of annulment;
2. Children conceived or born before the judgment of 2. Partition;
annulment has become final and executory are considered 3. Distribution of properties; and
legitimate. 4. Delivery of presumptive legitimes.
3. Absolute community property regime or the conjugal
partnership property regime is terminated of dissolved and LEGAL SEPARATION
the same shall be liquidated in accordance with the
provisions of Arts. 102 and 129. Legal separation
4. The innocent spouse may revoke the designation of the other
spouse who acted in bad faith as beneficiary in the insurance Legal separation is a legal remedy available to a parties in a valid
policy whether or not the designation is revocable. but failed marriage for the purpose of obtaining a decree from the
5. The spouse who contracted the marriage in bad faith shall be court entitling him or her certain reliefs such as the right to live
disqualified to inherit from the innocent spouse by testate separately from each other (without affecting the marital bond
and intestate succession that exists between them), the dissolution and liquidation of their
6. Donation propter nuptias absolute community or conjugal partnership property regime and
the custody of their minor children.
GR: It shall remain valid
Nature of legal separation
XPN: If the donee spouse acted in bad faith, the donor may
revoke the donation. An action for legal separation which involves nothing more than
bed-and-board separation of the spouses is purely personal. The
Q: What will happen to the liquidation of property, after final Civil Code recognizes this by:
judgment of annulment, if either spouse contracted the marriage 1. By allowing only the innocent spouse and no one else to claim
in bad faith? legal separation;
2. By providing that the spouses can, by their reconciliation,
A: If either spouse contracted the marriage in bad faith, his or her stop or abate the proceedings and even rescind a decree of
share of the net profits of the community property or conjugal legal separation already granted (Lapuz v. Eufemio, G.R. No.
partnership property shall be forfeited in favour of the common L-31429, January 31, 1972).
children or if there be none, the children of the guilty spouse by
previous marriage or in default thereof, the innocent spouse.

CIVIL LAW
GROUNDS 6. Attempting to restrict or restricting the womans or her

childs freedom of movement or conduct by:
Grounds for legal separation a. Force, or
b. Threat of force;
1. Repeated Physical violence or grossly abusive conduct against c. Physical, or
petitioner, common child, child of petitioner; d. Other harm, or
2. Attempt to corrupt or induce petitioner, common child, child e. Threat of physical or other harm;
of petitioner to engage in prostitution, or connivance in such f. Intimidation directed against the woman or child. This
corruption or inducement; shall include, but not limited to, the following acts
3. Attempt by respondent against Life of petitioner; committed with the purpose or effect of controlling or
4. Final judgment sentencing respondent to imprisonment of restricting the womans or her childs movement or
more than 6 years, even if pardoned; conduct:
5. Drug Addiction or habitual alcoholism of respondent; i. Threatening to deprive or actually depriving the
woman or her child of custody to her/his family;
NOTE: It must exist after celebration of marriage ii. Depriving or threatening to deprive the woman or
her children of financial support legally due her or
6. Physical violence or moral pressure to Compel petitioner to her family, or deliberately providing the womans
change religious or political affiliation; children insufficient financial support;
7. Bigamous marriage Subsequently contracted by respondent iii. Depriving or threatening to deprive the woman or
in the Philippines or abroad her child of a legal right;
8. Sexual Infidelity or perversion; iv. Preventing the woman in engaging in any
9. Lesbianism or homosexuality of respondent; legitimate profession, occupation, business or
activity or controlling the victims own money or
NOTE: It must exist after celebration of marriage properties, or solely controlling the conjugal or
common money, or properties;
10. Abandonment of petitioner by respondent without justifiable
cause for more than 1 year. 7. Inflicting or threatening to inflict physical harm on oneself for
the purpose of controlling her actions or decisions;
Q: If a man commits several acts of sexual infidelity, particularly 8. Causing or attempting to cause the woman or her child to
in 2002, 2003, 2004, 2005, does the prescriptive period to file for engage in any sexual activity which does not constitute rape,
legal separation run from 2002? (2007 Bar Question) by:
a. Force, or
A: The prescriptive period begins to run upon the commission of b. Threat of force;
each act of infidelity. Every act of sexual infidelity committed by c. Physical harm, or
the man is a ground for legal separation. d. Through intimidation directed against the woman or her
child or her/his immediate family;
Q: Lucita left the conjugal dwelling and filed a petition for legal
separation due to the physical violence, threats, intimidation and 9. Engaging in purposeful, knowing, or reckless conduct,
grossly abusive conduct she had suffered at the hands of Ron, her personally or through another that alarms or causes
husband. Ron denied such and claimed that since it was Lucita substantial emotional or psychological distress to the woman
who had left the conjugal abode, then the decree of legal or her child. This shall include, but not be limited to, the
separation should not be granted, following Art. 56 (4) of the FC following acts:
which provides that legal separation shall be denied when both
parties have given ground for legal separation. Should legal a. Stalking or following the woman or her child in public or
separation be denied on the basis of Rons claim of mutual guilt? private places;
b. Peering in the window or lingering outside the
A:No. Art. 56 (4) of the FC does not apply since the abandonment residence of the woman or her child;
that is a ground for legal separation is abandonment without c. Entering or remaining in the dwelling or on the property
justifiable cause for more than one year. In this case, Lucita left of the woman or her child against her/his will;
Ron due to his abusive conduct. Such act does not constitute the d. Destroying the property and personal belongingness or
abandonment contemplated in the said provision. Therefore, there inflicting harm to animals or pets of the woman or her
is no mutual guilt between them as there is only one erring spouse child; and
(Ong Eng Kiam v. CA, GR No. 153206, October 23, 2006). e. Engaging in any form of harassment or violence;
Acts considered as acts of violence under R.A. 9262 10. Causing mental or emotional anguish, public ridicule or
humiliation to the woman or her child, including, but not
1. Causing, threatening to cause, or attempting to cause limited to, repeated verbal and emotional abuse, and denial
physical harm to the woman or her child; of financial support or custody of minor children of access to
2. Threatening to cause the woman or her child physical harm; the womans child/children.
3. Attempting to cause the woman or her child physical harm;
4. Placing the woman or her child in fear of imminent physical Protection Order
harm;
5. Attempting to compel or compelling the woman or her child Aprotection order under R.A. 9262 is an order issued under this act
to: for the purpose of preventing further acts of violence against a
a. Engage in conduct which the woman or her child has woman or her child and granting other necessary relief.The relief
the right to desist from; or granted under a protection order serves the purpose of
b. Desist from conduct which the woman or her child has safeguarding the victim from further harm, minimizing any
the right to engage in, disruption in the victims daily life, and facilitating the opportunity
and ability of the victim to independently regain control over her
life. The provisions of the protection order shall be enforced by law

enforcement agencies. The protection orders that may be issued 1. Yes, the abandonment of Rosa by Ariel for more than one (1)
under this Act are the barangay protection order (BPO), temporary year is a ground for legal separation unless upon returning to
protection order (TPO) and permanent protection order (PPO). the Philippines, Rosa agrees to cohabit with Ariel which is
allowed under the Muslim Code. In this case, there is
Who may file Petition for Protection orders condonation.
The following may file for protection order: The contracting of a subsequent bigamous marriage whether
1. The offended party; in the Philippines or abroad is a ground for legal separation
2. Parents or guardians of the offended party; under Art. 55 (7) of the FC. Whether the second marriage is
3. Ascendants, descendants or collateral relatives within the valid or not, Ariel having converted into Islam, is immaterial.
fourth civil degree of consanguinity or affinity;
4. Officers or social workers of the DSWD or social workers of 2. No. Under Art. 57 of the FC, the aggrieved spouse must file
local government units (LGUs); the action within 5 years from the occurrence of the cause.
5. Police officers, preferably those in charge of women and The subsequent marriage of Ariel could not have occurred
childrens desks; earlier than 1990, the time he went to Saudi Arabia. Hence,
6. Punong barangay or Barangay Kagawad; Rosa has until 1995 to bring the action under the FC.
7. Lawyer, counselor, therapist or healthcare provider of the
petitioner; COOLING-OFF PERIOD
8. At least 2 concerned responsible citizens of the city or
municipality where the violence against women and their Mandatory cooling-off period
children occurred and who has personal knowledge of the
offense committed. The requirement set forth by law that an action for legal separation
shall be in no case tried before 6 months has elapsed since the
DEFENSES filing of the petition, to enable the contending spouses to settle
differences. In other words, it is for possible reconciliation (Art. 58,
Grounds for denial of petition for legal separation FC).
1. Condonation of the act complained of; The 6 months cooling-off period is a mandatory requirement.
2. Consent to the commission of the offense/act; Petition shall not be granted if it is not observed (Pacete v.
3. Connivance in the commission of the act; Carriaga, G.R. No. L-53880 March 17, 1994).
4. Collusion in the procurement of decree of LS;
5. Mutual guilt; NOTE: There is no cooling-off period if the grounds alleged are those under
6. Prescription: 5 yrs from occurrence of cause; R.A. 9262 (Anti-Violence against Women and Children Act). The court can
immediately hear the case.
7. Death of either party during the pendency of the case (Lapuz-
Sy v. Eufemio, G.R. No. L-31429, January 31, 1972);
8. Reconciliation of the spouses during the pendency of the case RECONCILIATION EFFORTS
(Art. 56, FC)
The Court is required to take steps toward the reconciliation of the
Prescriptive period for filing a petition for legal separation spouses and must be fully satisfied that, despite such efforts,
reconciliation is highly improbable (Art. 59, FC).
An action for legal separation shall be filed within five years from
the time of the occurrence of the cause (Art. 57, FC). An action filed CONFESSION OF JUDGMENT
beyond that period is deemed prescribed.
Rule in rendering a judgment of legal separation based upon a
Failure to interpose prescription as a defense stipulation of facts or confession of judgment
While it is true that prescription was not interposed as a defense, A decree of legal separation cannot be issued solely on the basis of
nevertheless, the courts can take cognizance thereof, because a stipulation of facts or a confession of judgment. The grounds for
actions seeking a decree of legal separation, or annulment of legal separation must be proved. Neither confession of judgment
marriage, involve public interest and it is the policy of our law that nor summary judgment is allowed. In any case, the court shall
no such decree be issued if any legal obstacles thereto appear order the prosecuting attorney or fiscal to take steps to prevent
upon the record. collusion between the parties and to take care that the evidence is
not fabricated or suppressed. (Art. 60, FC).
This is an exception to the Rules of Court provision that defenses
NOTE: What the law prohibits is a judgment based exclusively or mainly on
not raised in the pleadings will not be considered since provisions defendant's confession (Ocampo v. Florenciano, G.R. No. L-13553, February
on marriage are substantive in nature (Brown v. Yambao, G.R. No. 23, 1960).
L-10699, October 18, 1957).
Q: After learning of Juanitas misconduct, William filed a petition
Q: Rosa and Ariel were married in the Catholic Church of Tarlac, for legal separation. During his cross-examination by the
Tarlac on January 5, 1988. In 1990, Ariel went to Saudi Arabia to Assistant Fiscal, it was discovered that William lived with a
work. There, after being converted into Islam, Ariel married woman named Lilia and had children with her after the liberation.
Mystica. Rosa learned of the second marriage of Ariel on January The court denied the petition on the ground that both of them
1, 1992 when Ariel returned to the Philippines with Mystica. Rosa had incurred in a misconduct of similar nature that barred the
filed an action for legal separation on February 5, 1994. right of action under Art. 100, NCC.
1. Does Rosa have legal grounds to ask for legal separation? William argues that in cross-examining him with regard to his
2. Has the action prescribed? (1994 Bar Question) marital relation with Lilia, who was not his wife, the Assistant
Fiscal acted as counsel for Juanita when the power of the
A: prosecuting officer is limited to finding out whether or not there

CIVIL LAW
is collusion, and if there is no collusion, to intervene for the state. settlement of the estate in the regular courts(Sec. 21, A.M. 02-11-
Is his argument correct? 11-SC).
A:The argument is untenable. It was legitimate for the Fiscal to Q: May the heirs of the deceased spouse continue the suit
bring to light any circumstances that could give rise to the (petition for decree of legal separation) if the death of the spouse
inference that Juanita's default was calculated, or agreed upon, to takes place during the pendency of the suit?
enable him to obtain the decree of legal separation that he sought
without regard to the legal merits of his case. One such A:No. An action for legal separation is purely personal, therefore,
circumstance is the fact of William's cohabitation with Lilia, since it the death of one party to the action causes the death of the action
bars him from claiming legal separation by express provision of Art. itself action personalis moritur cum persona.
100 of the NCC. Such evidence of misconduct is a proper subject of
inquiry as they may justifiably be considered circumstantial NOTE: In cases where one of the spouses is dead, or where the deceaseds
evidence of collusion between the spouses. heirs continue the suit, separation of property and any forfeiture of share
already effected subsists, unless spouses agree to revive former property
regime.
Art. 101 of the NCC, calling for the intervention of the state
attorneys in case of uncontested proceedings for legal separation
EFFECTS OF LEGAL SEPARATION
(and of annulment of marriages, under Art. 88) emphasizes that
marriage is more than a mere contract; that it is a social institution
Effects of decree of legal separation
in which the state is vitally interested, so that its continuation or
interruption cannot be made dependent upon the parties
1. Spouses entitled to live separately but the marriage bond is
themselves. It is consonant with this policy that the inquiry by the
not severed;
Fiscal should be allowed to focus upon any relevant matter that
2. ACP/CPG shall be dissolved and liquidated. The share of the
may indicate whether the proceedings for separation or annulment
offending spouse in the net profits shall be forfeited in favour
are fully justified or not (Brown v. Yambao, G.R. No. L-10699,
of:
October 18, 1957).
a. Common children
b. In default of the common children, children of the guilty
Filing of petition for legal separation
spouse by a previous marriage
c. In default of common children and the children of the
Who may file Husband or wife
guilty spouse, innocent spouse
Within 5 years from the time of the
When to file 3. Custody of minor children is awarded to the innocent spouse
occurrence of the cause
(subject to Art. 213, FC);
Family Court of the province or city where the 4. Offending spouse is disqualified to inherit from innocent
petitioner or the respondent has been spouse by intestate succession;
residing for at least 6 months prior to the 5. Provisions in the will of innocent spouse which favors
Where to file
date of filing or in case of a non-resident, offending spouse shall be revoked by operation of law;
where he may be found in the Philippines, at 6. Innocent spouse may revoke donations he/she made in favor
the election of the petitioner of offending spouse;
EFFECTS OF FILING PETITION NOTE: Prescriptive period: 5 years from finality of decree of legal
separation
Effects of filing of a petition for legal separation
7. Innocent spouse may revoke designation of offending spouse
1. The spouses shall be entitled to live separately from each as beneficiary in any insurance policy, even when stipulated
other. as irrevocable.
2. In the absence of a written agreement between the parties,
the court shall designate either the husband or the wife or a Q: Which of the following remedies,
3rd person to administer the absolute community or conjugal A. Declaration of nullity of marriage,
partnership property. B. Annulment of marriage,
C. Legal separation, and/or
EFFECT OF DEATH DURING PENDENCY D. Separation of property,
Effect of the death of a party Can an aggrieved spouse avail himself/herself of:
Being personal in character, it follows that the death of one party a. If the wife discovers after the marriage that her husband has
to the action causes the death of the action itself - actio personalis AIDS?
moritur cum persona(Lapuz v. Eufemio, G.R. No. L-31429, January b. If the wife goes abroad to work as a nurse and refuses to
31, 1972, as cited in Rabuya, 2009). come home after the expiration of her three-year contract
there?
Effect of death of a party before entry of judgment c. If the husband discovers after the marriage that his wife has
been a prostitute before they got married?
The court shall order the case closed and terminated without d. If the husband has a serious affair with his secretary and
prejudice to the settlement of estate proper proceedings in the refuses to stop notwithstanding advice from relatives and
regular courts (Sec. 21, A.M. 02-11-11-SC). friends?
e. If the husband beats up his wife every time he comes home
Effect of death of a party after entry of judgment drunk? (2003 Bar Question)
If the party dies after the entry of judgment, the same shall be
binding upon the parties and their successors in interest in the

A:
a) A. Annulment of marriage RECONCILIATION
Since AIDS is a serious and incurable sexually transmissible
disease, the wife may file an action for annulment of the Effects of reconciliation
marriage on this ground whether such fact was concealed or
not from the wife, provided that the disease was present at 1. As to the Decree:
the time of the marriage. The marriage is voidable even a. During the pendency of the case: LS proceedings
though the husband was not aware that he had the disease at terminated at whatever stage
the time of marriage. b. After the issuance of the decree: Final decree of LS to be
set aside
b) D.Separation of property,
If the wife refuses to come home for three (3) months from 2. As to the Property Regime:
the expiration of her contract, she is presumed to have
abandoned the husband and he may file an action for judicial GR: In case there had been already separation of property
separation of property. If the refusal continues for more than and forfeiture of the share of the guilty spouse, the same
one year from the expiration of her contract, the husband shall be maintained (Pineda, 2008).
may file the action for legal separation under Art. 55(10) of
the FC on the ground of abandonment of petitioner by XPN: The parties, however, can come into an agreement to
respondent without justifiable cause for more than one year. revive their previous regime. Their agreement must be under
The wife is deemed to have abandoned the husband when oath and must contain a list of the properties desired to be
she leaves the conjugal dwelling without any intention of returned to the community or conjugal property and those
returning (Art. 101, FC). The intention not to return cannot be which will remain separate, a list of creditors and their
presumed during the 3-year period of her contract. addresses.
b) None. 3. As to capacity to succeed: The Family Code does not provide

If the husband discovers after the marriage that his wife was for the revival of revoked provisions in a will originally made
a prostitute before they got married, he has no remedy. No in favor of the offending party as a result of the LS. This
misrepresentation or deceit as to character, health, rank, absence gives the innocent spouse the right to choose
fortune or chastity shall constitute fraud as legal ground for whether the offending spouse will be reinstituted.
an action for the annulment of marriage (Art. 46, FC).
4. As to the forfeited shares: Those given to the children cannot
c) C. Legal separation be returned since the spouses are no longer the owners of
The wife may file an action for legal separation. The such. But those given to the innocent spouse may be
husbands sexual infidelity is a ground for legal separation returned.
(Art. 55, FC). She may also file an action for judicial separation
of property for failure of her husband to comply with his Revival of previous property regime after reconciliation
marital duty of fidelity (Art. 135[4], Art. 101, FC).
Reconciliation does not automatically revive the former property
d) C. legal separation, and D. separation of property, regime of the spouses. If the spouses want to revive the previous
The wife may file an action for legal separation on the ground property regime, they must execute an agreement to revive the
of repeated physical violence on her person (Art. 55[1], FC). former property regime, which agreement shall be submitted in
She may also file an action for judicial separation of property court, together with a verified motion for its approval (Art. 67, FC).
for failure of the husband to comply with his marital duty of
mutual respect (Art. 135[4], Art. 101, FC). She may also file an The agreement to revive must be under oath and specify:
action for declaration of nullity of the marriage if the 1. The properties to be contributed anew to the restored
husbands behavior constitutes psychological incapacity regime;
existing at the time of the celebration of marriage. 2. Those to be retained as separated properties of each
spouse; and
Effect to the donations made by the spouses to each other 3. The names of all their known creditors, their addresses
and the amounts owing to each (Pineda, 2008).
The revocation of the donations shall be recorded in the registries
of property in the places where the properties are located. Effects of reconciliation while the petition is being heard by the
Alienations, liens and encumbrances registered in good faith court
before the recording of the complaint for revocation in the
registries of property shall be respected. The revocation of or 1. If the spouses should reconcile, a corresponding joint
change in the designation of the insurance beneficiary shall take manifestation under oath duly signed by them shall be filed
effect upon written notification thereof to the insured. with the court in the same proceeding for legal separation.
2. The legal separation proceedings, if still pending, shall
The action to revoke the donation must be brought within five thereby be terminated at whatever stage.
years from the time the decree of legal separation has become
final.

CIVIL LAW
Difference of Declaration of Nullity of Marriage, Annulment and Legal Separation
BASIS DECLARATION OF NULLITY OF MARRIAGE ANNULMENT LEGAL SEPARATION
Marriage No effect, marriage bond

Dissolved Dissolved
bond remains
GR: Illegitimate
Status of
Legitimate
children XPN: Children conceived or born of marriages before declaration of nullity
under Arts. 36 and 53 considered legitimate
ACP/CPG shall be dissolved & liquidated. (Art. 43
[2], FC)
GR: Governed either by Article 147 or Article 148 of the Family Code. Thus,
Share of spouse, who contracted the subsequent
property regime shall be liquidated pursuant to the ordinary rules on co-
marriage in bad faith, in the net profits of the
ownership.
community property or conjugal partnership,
Property
shall be forfeited in favor of the common
relations XPN: Marriages declared void under Art. 40 which shall be liquidated in
children, or
accordance with Art. 43 (2) (Valdes v. RTC, G.R. No. 122749. July 31, 1996).
If there are none, the children of the guilty
spouse by a previous marriage, or
In default of children, the innocent spouse

GR: Donations propter nuptias are revocable at the instance of the donor
XPN:
GR: Shall remain valid. (Art. 43 [3], FC)
ii. If the donation propter nuptias is embodied in a marriage settlement, the
donation is void under Article 86 par. 1
XPN:
iii. If the subsequent marriage is judicially declared void by reason of Article 40,
Donations 1. If donee contracted the marriage in bad
the donation remains valid
propter faith, such donations made to said donee
nuptias shall be revoked by operation of law.
XPN to the XPN:
2. If both spouses to the marriage acted in bad
1. If the donee spouse contracted the marriage in bad faith, all donations are
faith, all donations propter nuptias shall be
revoked by operation by law.
revoked by operation of law.
2. When both parties to a subsequent marriage contracted in bad faith under
Article 44, all donations propter nuptias are revoked by operation by law.
If one spouse acted in bad faith, innocent spouse

If the subsequent marriage is judicially declared by void by reason of Article may revoke his designation as beneficiary in the
Insurance 40, the innocent spouse may revoke such designation if the beneficiary spouse insurance policy even if such designation be
acted in bad faith, even if such designation be stipulated as irrevocable stipulated as irrevocable. (Art. 43 [4], FC)
Intestate Succession: The parties cannot inherit from each other by way of If one spouse contracted the marriage in bad
intestate succession since they are no longer considered as spouses faith, he shall be disqualified to inherit from
innocent spouse by testate and intestate
Testate Succession: succession. (Art. 43 [5], FC)
GR: Any Testamentary provision by one in favour of the other shall remain
valid
XPN:
Succession 1. If the subsequent marriage is rendered void by non-compliance with Article
40 of the Family Code, the spouse who contracted the subsequent
marriage in bad faith is disqualified to inherit from the innocent spouse
2. If the marriage is void by reason of the bad faith of both parties under
Article 41 of the Family Code, all testamentary dispositions made by one in
favour of the other are revoked by operation of law
NOTE: The parties are not disqualified to institute each other as voluntary heir in their
respective wills to be executed after the judicial declaration of nullity

RIGHTS AND OBLIGATIONS BETWEEN HUSBAND AND WIFE Other obligations of spouses
ESSENTIAL OBLIGATIONS 1. Exercise the duties and enjoy the rights of parents;
2. Answer for civil liability arising from injuries caused by
Rights and obligations of the spouses children below 18;
3. Exercise parental authority over childrens property (Republic
1. Essential marital obligations (EMO): (LOR) v. CA, Molina, G.R. No. 108763, February 13, 1997).
a. Live togetherwhich includes consortium (cohabitation)
and copulation (sexual intercourse) Essential marital obligations cannot be compelled by court
b. Observe mutual love, respect, fidelity
c. Render mutual help and support GR: Performance of essential marital obligation under Art. 68
cannot be compelled by court because it will be a violation of
NOTE:It is true that the Family Code, obligates the spouses to love one personal liberty.
another but this rule sanctions affection and sexual intimacy, as
expressions of love, that are both spontaneous and mutual and not XPN: Giving support (Arroyo v. Arroyo, G.R. No. L-17014, August 11,
the kind which is unilaterally exacted by force or coercion. Further, the 1921)
delicate and reverent nature of sexual intimacy between a husband
and wife excludes cruelty and coercion. Sexual intimacy brings spouses Reasons when the Court may exempt one spouse from living with
wholeness and oneness. It is a gift and a participation in the mystery
of creation. It is a deep sense of spiritual communion. It is a function
the other
which enlivens the hope of procreation and ensures the continuation
of family relations. It is an expressive interest in each other's feelings 1. If one spouse should live abroad.
at a time it is needed by the other and it can go a long way in 2. Other valid and compelling reasons.
deepening marital relationship. When it is egoistically utilized to
despoil marital union in order to advance a felonious urge for coitus by NOTE: The Court shall not grant the exemption if it is not compatible with
force, violence or intimidation, the Court will step in to protect its lofty the solidarity of the family.
purpose, vindicate justice and protect our laws and State policies.
Besides, a husband who feels aggrieved by his indifferent or PROPERTY RELATIONS
uninterested wife's absolute refusal to engage in sexual intimacy may
legally seek the court's intervention to declare her psychologically
incapacitated to fulfill an essential marital obligation. But he cannot
GENERAL PROVISIONS
and should not demand sexual intimacy from her coercively or
violently (People vs. Jumawan, G.R. no. 187495, April 21, 2014). Rule on Property Relations
Therefore:
a. The right to sexual intercourse involves normal intercourse. The property relations shall be governed by the ff. in the stated
Thus the wife may refuse to have sexual intercourse with the order:
husband if he resorts to abnormal or perverse practices.
1. Property relation agreed and embodied in the marriage
b. The wife can also refuse to have sexual intercourse with the
husband if she is ill, if it would endanger her health, or if he is
settlement
suffering from some venereal disease. 2. Provisions of the FC
c. If the husband forces the wife to have sexual intercourse with 3. Local custom
him against her will, he may be charged with coercion.
(Sempio-Diy, 1995). Laws that will govern the property relations of the spouses
2. Fix the family domicile (Art. 69, FC) GR: Philippine laws shall govern, regardless of place of celebration
of marriage and residence of spouses, in the absence of contrary
NOTE: In case of disagreement the Court shall decide. stipulation in a marriage settlement (Art. 80, FC).
3. Jointly support the family (Art. 70, FC) XPN: Lex rei sitae applies:
a. Expenses shall be paid from the community property 1. Where both spouses are aliens;
b. In the absence thereof from the income or fruits of their 2. With respect to the extrinsic validity of contracts affecting
separate properties property not situated in the Philippines; and executed in the
c. In the absence or insufficiency thereof from their country where the property is located;
separate properties 3. With respect to extrinsic validity of contracts entered into in
4. Manage the household (Art. 71, FC) the Philippines but affecting property situated in a foreign
5. Not to neglect duties, or commit acts which tend to bring country whose laws require different formalities for its
danger, dishonor, or injury to family (Art. 72, FC) extrinsic validity
6. Either spouse may practice any legitimate
profession/business, even without the consent of the other. Rule on waiver of rights over the share in the community or
conjugal property
NOTE: The other spouse may object on valid, serious and moral
grounds. In case of disagreement, the court shall decide whether:
a. Objection is proper; and
GR: Cannot be waived during the marriage.
b. Benefit has accrued to the family prior to the objection or
thereafter. If the benefit accrued prior to the objection, the XPN: In case of judicial separation of property.
resulting obligation shall be enforced against the community
property. If the benefit accrued thereafter, such obligation shall NOTE: The waiver must be in a public instrument and recorded in the office
be enforced against the separate property of the spouse who of the local civil registrar where the marriage contract was recorded as well
has not obtained consent (Art. 73, FC as amended by R.A. as in the proper registry of property.
10572).
The foregoing provisions shall not prejudice the rights of

creditors who acted in good faith.

CIVIL LAW
Q: Marriage being a contract, may the parties enter into DONATIONS BY REASON OF MARRIAGE
stipulations which will govern their marriage?
Donation propter nuptias or Donation by reason of marriage
A: The nature, consequences and incidents of marriage are
governed by law and not subject to stipulation between the Those donations which are made before the celebration of the
spouses. This, however, is not an absolute rule. The law allows the marriage, in consideration of the same, and in favor of one or both
spouses to fix their property relations during the marriage through of the future spouses
a device known as marriage settlement subject only to the
condition that whatever settlement they may have must be within The formalities of the donation propter nuptias follows the same
the limits provided by the Family Code. formalities as set forth in the law on donations
MARRIAGE SETTLEMENTS NOTE: Donations of future property are governed by provisions on

testamentary succession and formalities of wills.
Marriage Settlement (MS) Donation propter nuptias (DPN) v. Ordinary Donation
It is a contract entered into by spouses about to be married for the BASIS DPN ORDINARY
purpose of fixing the terms and conditions of their property DONATION
relations with regard to their present and future property. As to formalities Donations of future Governed by Title
property are III, Book III of the
It is also referred to as Ante Nuptial Agreement or Matrimonial governed by the NCC
Contract (Pineda, 2008 ed.). provisions on
testamentary
Requisites of a valid MS succession and the
formalities of wills
1. In Writing; (Art. 84, par. 2)
2. Signed by the parties; As to inclusion of Present property There is no limit
3. Executed before the celebration of marriage; present property may be donated up except that the
4. Registration (to bind 3rd persons) to 1/5 of the donors donor shall leave
present property if sufficient property
NOTE: The provisions in the marriage settlement must be in the future spouses for his support and
accordance with law, morals or public policy; otherwise such have chosen a that of all relatives
agreement is void (Paras, book I, p. 516). regime other than entitled to support
absolute community from him (Art. 750,
Additional requirements for validity of the MS of property NCC) and further
no legitimes of
FACTUAL SITUATION ADDITIONAL REQUIREMENT compulsory heirs
The ff. must be made a party shall be impaired
If one of both of the parties (Art. 752, NCC)
to the MS,
are: As to inclusion of Future property may Future property
otherwise the MS is void:
Parents; or future property be included provided cannot be included
18-21 years old the donation is (Art. 751, NCC)
those required to give consent
mortis causa (Art.
Sentenced with civil Guardian appointed by the 84, par. 2)
interdiction court
Guardian appointed by the Requisites for DPN
Disabled
court
1. Made before celebration of marriage;
Modification of the marriage settlement 2. Made in consideration of the marriage;
3. Made in favor of one or both of the future spouses.
For any modification in the MS to be valid:
1. The requisites for a valid MS must be present; Requisites if the DPN is made by one spouse in favor of the other
2. There must be judicial approval;
3. Subject to the provisions of Arts. 66, 67, 128, 135, and 136. 1. There must be a MS stipulating a property regime other than
AC
Effect on the ante-nuptial agreement in case the marriage is not 2. Donation in the MS be not more than 1/5 of the present
celebrated property
3. There must acceptance by other spouse
GR: Everything stipulated in the settlements or contracts in
consideration of the marriage shall be rendered void. Rule regarding DPN made between spouses
XPN: Those stipulations not dependent upon, or are not made in GR: Future spouses cannot donate to each other more than 1/5 of
consideration of, the marriage, subsist. their present property and any excess from which shall be
considered void.
XPN: If they are governed by ACP, then each spouse can donate to
each other in their marriage settlements present property without
limit, provided there is sufficient property left for their support and
the legitimes are not impaired.

Effect of donations of encumbered property ingratitude knowledge of the
commission of
Such donations are valid. In case of foreclosure of the an act of
encumbrance and the property is sold for less than the total ingratitude.
amount of the obligation secured, the donee shall not be liable for
the deficiency. If the property is sold for more than the total NOTE: Acts of ingratitude:
amount of the obligation, the donee shall be entitled to the excess 1. Commission of an offense against the person, honor or property of the
(Art. 85, FC). donor, his wife or his children under his parental authority
2. GR: Imputation to the donor any criminal offense or any act involving
moral turpitude
Donations that may be revoked by the donor
XPN: if the crime was committed against the donee himself, his wife
A donation by reason of marriage may be revoked by the donor in or his children under his authority
the following cases:
1. GR: Marriage is not celebrated or is judicially declared void ab 3. Undue refusal to support the donor when he is legally or morally
initio bound to give such support.
XPN: donations made in the marriage settlements DONATIONS DURING THE MARRIAGE
2. Marriage takes place without the required consent of parents Rule regarding donations between spouses during the marriage
or guardians
3. Marriage is annulled and done acted in bad faith GR: Every donation or grant of gratuitous advantage, direct or
4. Upon legal separation, the donee being the guilty spouse indirect, between spouses is considered void.
5. If with a resolutory condition which was complied with
6. Donee has committed an act of ingratitude XPN: Moderate gifts on the occasion of any family rejoicing.
NOTE: The aforementioned rules also apply to common law spouses.

Grounds for filing an action for revocation of a DPN and their
respective prescriptive periods
Rationale
PRESCRIPTIVE
1. To protect unsecured creditors from being defrauded;
GROUNDS (Art. 86) PERIOD
2. To prevent the stronger spouse from imposing upon the
Period Reckoning Point
weaker spouse transfer of the latters property to the former;
From the time
1. Marriage is not celebrated 3. To prevent indirect modification of the marriage settlement.
the marriage was
5 yrs not solemnized PROPERTY REGIME OF THE SPOUSES
XPN: Those automatically
on the fixed date
rendered void by law
(Art. 1149) Different property regimes which may be adopted by future
Ground for spouses
nullity:
a. Contracted 1. Absolute Community of Property (ACP)
subsequent 2. Conjugal Partnership of Gains (CPG)
marriage 3. Absolute Separation of Property (ASOP)
before prior Revoked by operation of law 4. Any other regime within limits provided by the FC
marriage has
2. Marriage is been ACP v. CPG v. ASOP.
judicially judicially
declared void declared ACP CPG ASOP
void
When it applies
Finality of
judicial When spouses: 1. When the future 1. When future
b. Any other declaration of 1. Adopt it in a spouses adopt it spouses adopt it
5 yrs
grounds nullity (if action marriage in a marriage in a marriage
is to recover settlement; settlement. settlement
property) 2. Do not choose 2. If the marriage is 2. ACP or CPG is
Time the donor any economic celebrated under dissolved
came to know system; or the New Civil 3. Prior marriage is
3. Marriage took place without 3. Adopted a Code and they dissolved due to
that the required
consent of parents or guardian, 5 yrs different have not adopt death of one
parental consent
when required by law property any economic spouse and
was not
obtained. regime and the system surviving spouse
4. Marriage is annulled and donee same is void. failed to comply
5 yrs Finality of decree with the
acted in bad faith
Time decree of requirements
5. Upon legal separation (LS), under Art. 103
5 yrs LS has become
donee being the guilty spouse (judicial
final
6. Donation subject to resolutory Happening of the settlement
condition which was complied 5 yrs resolutory proceeding of
with condition. the estate of
deceased
7. Donee committed an act of 1 yr From donors
spouse)

CIVIL LAW
4. By judicial order. XPNs:
Judicial 1. For marriages contracted prior to the effectivity of the Family
separation of Code on August 3, 1988, conjugal partnership of gains shall
property may govern the property relations. This is so because Art. 119 of
either be the NCC will apply. The provisions of the FC shall have no
voluntary or for retroactive effect because it shall impair vested rights.
sufficient cause. 2. Subsequent marriage contracted within one year from the
death of the deceased spouse without liquidation of the
Composition
community property or conjugal partnership of gains, either
All the properties Each spouse retains judicially or extrajudicially, as required under Arts. 103 and
owned by the his/her property 130 of the FC. In such case, a mandatory regime of complete
spouses at the time before the marriage separation of property shall govern the subsequent marriage
of marriage and only the fruits (Rabuya, Civil Law Reviewer, p. 100).
become community and income of such
property properties become Grounds for revival of former property regime
part of the conjugal
properties during 1. Civil interdiction of the prisoner-spouse terminates;
the marriage 2. Absentee spouse reappears;
Effect of Separation In Fact 3. Court authorizes resumption of administration by the spouse
formerly exercising such power;
The separation in fact shall not affect the
4. Spouse who has abandoned the conjugal home returns and
regime of ACP, but:
resumes common life with the other;
1. The spouse who leaves the conjugal
5. Parental authority is judicially restored to the spouse
home or refuses to live therein,
previously deprived thereof;
without just cause, shall not have
6. Reconciliation and resumption of commonlife of spouse who
the right to be supported;
had been separated in fact for at least 1 year;
2. When consent of one spouse to any
7. Spouses agree to revive their former property regime
transaction of the other is required
by law, judicial authorization shall
Grounds for transfer of administration of the exclusive property
be obtained in a summary
of each spouse
proceeding.
3. In case of insufficiency of
When one spouses:
community or conjugal partnership
1. Is sentenced to penalty with civil interdiction;
property, separate property of both
2. Becomes fugitive from justice or is hiding as an accused in a
spouses shall be solidarily liable for
criminal case;
the support of the family. Spouse
3. Is judicially declared absent
present shall, upon proper petition
4. Becomes guardian of another
in a summary proceeding, be given
judicial authority to administer or NOTE: Transfer of administration of the exclusive property of either spouses
encumber any specific separate does not confer ownership over the same (Rodriguez v.De la Cruz, G.R. No.
property of the other spouse and 3629, September 28, 1907).
use the fruits or proceeds thereof to
satisfy the latters share (Arts. 100 & ABSOLUTE COMMUNITYY
127, FC).
Effect of Dissolution GENERAL PROVISIONS
Upon dissolution Upon dissolution of Absolute community property

and liquidation of the partnership, the
the community separate properties A property regime wherein the spouses are considered co-owners
property, what is of the spouses are of all property brought into the marriage, as well as those acquired
divided equally returned and only during the marriage, which are not otherwise excluded from the
between the the net profits of community either by the provisions of the Family Code or by the
spouses or their the partnership are marriage settlement (Rabuya, Civil Law Reviewer Vol. 1).
heirs is the net divided equally
remainder of the between the Commencement of ACP
properties of the spouses of their
ACP. heirs. Absolute community of property commences at the precise
moment of the celebration of the marriage. i.e. actual time the
Commencement of property regime marriage is celebrated on a certain date.
Property regime commences at the precise moment of the NOTE: Any stipulation, express or implied, for the commencement of the
celebration of the marriage. community regime at any other time shall be void.
Property regime governing the property relations of spouses in Law that governs the absolute community of property
the absence of marriage settlement
1. Family Code
GR: Absolute Community Property 2. Civil Code provisions on co-ownership
Properties included in the absolute community

1. All the property owned by the spouses: Q: Andres sold a parcel of land belonging to the conjugal
a. At the time of the celebration of the marriage; or partnership to Pepito. Days before the sale, Kumander, his wife,
b. Acquired thereafter; assented to such by signing a document entitled "Marital
2. Property acquired during the marriage by gratuitous title, if Consent" contained in a jurat, which was then sworn to before
expressly made to form part of the community property by the same notary public who notarized the deed of sale, and then
the donor, testator or grantor; appended to the deed of sale itself. Is the conveyance valid?
3. Jewelry or properties with monetary value;
4. Winnings in gambling. A:It depends. The use of the jurat, instead of an acknowledgment,
does not elevate the marital consent into the level of a public
Properties excluded in the Absolute Community document but instead consigns it to the status of a private writing.
Hence, the presumption of regularity does not apply and the wife
1. Property acquired during the marriage by gratuitous title and still needs to prove its genuineness and authenticity as required
its fruits as well as income thereof unless the grantor under the rules of evidence (Pan Pacific Industrial Sales Co., Inc. v.
expressly provide they shall form part of the community CA, G.R. No. 125283, February 10, 2006).
property
2. Property for personal and exclusive use of either spouse but NOTE: The fact that the document contains a jurat, and not an
jewelries shall form part of the ACP because of their acknowledgment, should not affect its genuineness or that of the related
monetary value. document of conveyance itself, the Deed of Absolute Sale. In this instance, a
jurat suffices as the document only embodies the manifestation of the
3. Property acquired before the marriage by one with legitimate spouse's consent, a mere appendage to the main document (Pan Pacific
descendants by former marriage and its fruits and income, if Industrial Sales Co., Inc. v. CA, G.R. No. 125283, February 10, 2006).
any;
4. Those excluded by the marriage settlement. CHARGES UPON AND OBLIGATIONS OF THE
COMMUNITY PROPERTY
Presumption of inclusion in the absolute community
Charges upon the ACP
In absence of evidence, property acquired during the marriage is
presumed to belong to the community, unless proven otherwise by 1. The support of
strong and convincing evidence (Art. 93, FC). a. The spouses
b. Their common children
Q: Mister, without Missus consent, executed a special power of c. Legitimate children of either spouse;
attorney in favor of Drepa in order to secure a loan to be secured 2. All debts and obligations contracted during the marriage by:
by a conjugal property, which loan was later obtained. When the a. the designated administrator-spouse for the benefit of
loan was not paid, the mortgage was foreclosed and sold on the community
auction. Missus seeks the declaration of the mortgage and sale as b. by both spouses
void invoking Art. 124 of the FC. Will the wifes action prosper? c. by one spouse with the consent of the other;
3. Debts and obligations contracted by either spouse without
A:Yes. The settled rule is that the sale or encumbrance of a the consent of the other to the extent that the family may
conjugal property requires the consent of both the husband and have been benefited;
the wife (Guiang v. CA, 353 Phil. 578). The absence of the consent 4. All taxes, liens, charges and expenses, including major or
of one renders the entire sale or encumbrance null and void, minor repairs, upon the community property;
including the portion of the conjugal property pertaining to the 5. All taxes and expenses for mere preservation made during
husband who contracted the sale. Neither would the conjugal marriage upon the separate property of either spouse used
partnership be liable for the loan on the ground that it redounded by the family;
to the benefit of the family. The sweeping conclusion that the loan 6. Expenses to enable either spouse to commence or complete a
was obtained by the husband in order to finance the construction professional or vocational course, or other activity for self-
of housing units, without however adducing adequate proof, does improvement;
not persuade (Homeowners Savings &Loan Bank v. Dailo, G.R. No. 7. Ante-nuptial debts of either spouse insofar as they have
153802, March 11, 2005). redounded to the benefit of the family;
8. The value of what is donated or promised by both spouses in
Q: In a sale of a piece of land that she and her husband, David, favor of their common legitimate children for the exclusive
owned, Lorenza, who witnessed the sale, signed on the page purpose of commencing or completing a professional or
reserved for witnesses to the deed. When the buyer sought to vocational course or other activity for self-improvement;
register the sale, it was denied by the Register of Deeds for lack of 9. Payment, in case of absence or insufficiency of the exclusive
the wife's consent to the sale. Decide. property of the debtor-spouse, of:
a. Ante-nuptial debts of either spouse which did not
A: The register of deeds is incorrect. A wife, by affixing her redound to the benefit of the family;
signature to a deed of sale on the space provided for witnesses, is b. the support of illegitimate children of either spouse;
deemed to have given her implied consent to the contract of sale. c. liabilities incurred by either spouse by reason of a crime
The consent need not always be explicit or set forth in any or quasi-delict;
particular document so long as it is shown by acts of the wife that
such consent or approval was in fact given (Pelayo v. Perez, G.R. NOTE: The payment of which shall be considered as advances to be
No. 141323, June 8, 2005). deducted from the share of the debtor-spouse upon liquidation of the
community
NOTE: In this case, it will be noted that the sale was entered into prior to the
effectivity of the FC. Because of such, Art. 173, in relation to Art. 166 of the 10. Expenses of litigation between the spouses. However, if suit is
NCC would have applied if there was a finding of lack of the wife's consent. found to be groundless, it cannot be charged against the ACP.
Under said provisions, the sale would have been merely voidable, and not
void.

CIVIL LAW
Q: An individual, while single, purchases a house and lot in 1990 The absence of consent of one the spouse renders the entire sale
and borrows money in 1992 to repair it. In 1995, such individual is null and void, including the sale of the portion of the conjugal
married while the debt is still being paid. After the marriage, is property pertaining to the spouse who contracted the sale.
the debt still the responsibility of such individual? (2007 Bar
Question) NOTE: The consent of one spouse regarding the disposition does not always
have to be explicit or set forth in any particular document, so long as it is
A: No. Ante-nuptial debts of either spouse shall be considered as shown by acts of the said spouse that such consent or approval was indeed
given.
the liability of the absolute community of property insofar as they
have redounded to the benefit of the family.
Donation of a community property by a spouse
Insufficiency of the community property to cover liabilities
GR: A spouse cannot donate any community property without the
consent of the other.
GR: The spouses shall be solidarily liable for the unpaid balance
with their separate properties.
XPN: Moderate donations for charity or on occasion of family
rejoicing or distress (Art. 98, FC).
XPN: Those falling under paragraph 9 of Art. 94. (Ante-nuptial
debts, support of illegitimate children, liabilities incurred by spouse
Separation in fact between husband and wife
by reason of a crime or quasi-delict) in which case the exclusive
property of the spouse who incurred such debts will be liable.
GR: Such separation does not affect the regime of absolute
However, if the exclusive property is insufficient, payment will be
community
considered as advances to be deducted from share of debtor-
spouse (Art. 94 [9], FC).
XPNs:
1. Spouse who leaves the conjugal home or refuses to live
OWNERSHIP, ADMINISTRATION, ENJOYMENT AND DISPOSITION
therein without just cause has no right to be supported
OF THE COMMUNITY PROPERTY
2. When consent of one spouse to any transaction of the other
is required by law, judicial authorization must be obtained
Administration of Community Property
3. If community property is insufficient, the separate property
of both spouses shall be solidarily liable for the support of the
GR: The administration of community property belongs to both
family
spouses jointly.
Abandonment
XPN:
1. Agreement that only one of the spouses shall administer the
If a spouse without just cause abandons the other or fails to
community property
comply with his or her obligations to the family, the aggrieved
2. If one spouse is incapacitated or otherwise unable to
spouse may petition the court for:
participate in the administration of the common properties
1. Receivership;
capacitated or able spouse may assume sole powers of
2. Judicial separation of property;
administration without the need of court approval or
3. Authority to be the sole administrator of the absolute
authorization
community (Art. 101, FC)
3. If a spouse without just cause abandons the other or fails to
comply with his or her obligations to the family, the aggrieved
Presumption of Abandonment
spouse may petition the court for sole administration
4. During the pendency of the legal separation case, the court
A spouse is deemed to have abandoned the other when he or she
may designate either of the spouses as sole administrator
has left the conjugal dwelling without intention of returning. The
NOTE: But such powers do not include:
spouse who has left the conjugal dwelling for a period of three
1. Disposition; months or has failed within the same period to give any
2. Alienation; or information as to his or her whereabouts shall be prima facie
3. Encumbrance of the conjugal or community property. presumed to have no intention of returning to the conjugal
dwelling (Pineda, 2008).
Disagreement in the administration of community property
NOTE: The presumption is rebuttable by the presentation of clear, strong
In case of disagreement, the decision of the husband shall prevail and convincing evidence that the absent spouse did not intend to leave the
but subject to recourse to the court by the wife for proper remedy. present spouse and family (Pineda, 2008).
NOTE: Prescriptive period for recourse is within 5 years from the date of the Prohibition against the sale of property between spouses
contract implementing such decision.
GR: Spouses cannot sell property to each other.
Sale or Disposition of Community Property
XPNs:
Alienation or encumbrance of community property must have the 1. When a separation of property was agreed upon in the
written consent of the other spouse or the authority of the court marriage settlement;
without which the disposition or encumbrance is void. However, 2. When there has been a judicial separation of property under
the transaction shall be construed as a continuing offer on the part Articles 135 and 136 of FC (Art. 1490, NCC).
of the consenting spouse and the third person, and may be
perfected as a binding contract upon the acceptance by the other NOTE: The proscription against the sale of property between spouses under
spouse or authorization by the court before the offer is withdrawn Art. 1490 applies even to common law relationships. In an earlier ruling, the
by either or both offerors. SC nullified a sale made by a husband in favor of a concubine, after he had
abandoned his family and left the conjugal home where his wife and children
lived, and from whence they derived their support, for being contrary to

morals and public policy. The sale was regarded by the court as subversive of CONJUGAL PARTNERSHIP OF GAINS
the stability of the family, a basic social institution which public policy
cherishes and protects (Ching v. CA, GR No. 165879, November 10, 2006).
GENERAL PROVISIONS
DISSOLUTION OF COMMUNITY REGIME
Conjugal Partnership of Gains
Dissolution of Absolute Community Property
It is the property relation formed by the husband and the wife by
Absolute Community Property is terminated by: placing in a common fund:
1. Death of either spouse; 1. The proceeds, product, fruits and income of their separate
properties;
NOTE: If the surviving spouse contracts another marriage without 2. Those acquired by either or both of them through:
compliance with the foregoing requirement, a mandatory regime of
a. Effort
complete separation shall govern the property relations of the
subsequent marriage
b. Chance
2. Legal separation; Commencement of CPG

3. Annulment;
4. Judicial separation of property during marriage (Art. 99, FC) CPG shall commence at the precise moment when the marriage
ceremony is celebrated.
LIQUIDATION OF THE ABSOLUTE COMMUNITY
ASSETS AND LIABILITIES Law that governs the conjugal partnership
Procedure in case of dissolution of ACP The rules on the contract of partnership in all that is not in conflict
with what is expressly determined in the FC and by the spouses in
1. Inventory of all properties of the ACP, listing separately the their marriage settlements (Art. 108, FC).
communal properties from exclusive properties of each
spouse; EXCLUSIVE PROPERTY OF EACH SPOUSE
2. Payment of community debts;
Exclusive properties of the spouses
NOTE: First, pay out of the community assets. If not enough, husband
and the wife are solidarily liable for the unpaid balance with their 1. Those brought into the marriage as his/her own;
separate properties.
NOTE:
3. Delivery to each spouse of his/her remaining exclusive (a) A property purchased before the marriage and fully paid during
the marriage remains to be a separate property of either spouse
properties;
(Lorenzo v. Nicolas, L-4085, July 30, 1952).
4. Equal division of net community assets (b) Fruits and income of said properties shall be included the
Unless there is: conjugal partnership
a. An agreement for a different proportion; or (c) Those included therein in the marriage settlement, subject to
b. A voluntary waiver of such share; the 1/5 limitation under Article 84 and the rule in Article 92(3)
5. Delivery of the presumptive legitimes of the common of the Family Code which apply by analogy
children;
6. Adjudication of conjugal dwelling and custody of common 2. Those acquired during the marriage by gratuitous title;
children (Art. 102, FC).
NOTE:
(a) Pensions will not form part of the conjugal partnership of gains
Applicable procedure in the dissolution of the ACP in case the when it is given to him voluntarily and he is not entitled as a
marriage is terminated by death matter of right such as a fruit of industry or labor
(b) Proceeds of life insurance policy will not form part of the
Community property shall be liquidated in the same proceeding for conjugal partnership of gains when the beneficiary of the life
the settlement of the estate of the deceased. insurance is the estate and the premiums are sourced from the
separate property of the spouse
(c) Retirement Benefits will not form part of the conjugal
If no judicial proceeding is instituted, the surviving spouse shall,
partnership of gains when it is given to him voluntarily and he is
judicially or extra-judicially, liquidate the community property not entitled as a matter of right such as a fruit of industry or
within 1 year from the death of the deceased spouse (Art. 103, FC). labor
Consequences of failure to liquidate within 1 year 3. Those acquired by right of redemption, barter or exchange
with exclusive property;
1. Failure to liquidate the community property within 1 year
from the death of the deceased spouse contrary to Art. 103, NOTE: In right of redemption, for it to form part of the exclusive
FC, would render any disposition or encumbrance involving property of the spouse, the ownership over such property must still
community property of the terminated marriage void. pertain to the said spouse.
2. If the surviving spouse contracts a subsequent marriage
without compliance with the foregoing requirements, the 4. That purchased with exclusive money of either spouse.
subsequent marriage shall be governed, mandatorily, by a
NOTE: The controlling factor is the source of the money used, or the
regime of complete separation of property (Rabuya, 2006).
money promised to be paid (Rivera v. Bartolome, C.A., 40 O.G. 2090).

CIVIL LAW
Alienation of exclusive properties of either spouse CONJUGAL PARTNERSHIP PROPERTY
Either spouse may mortgage, encumber, alienate or otherwise Composition of CPG

dispose of his or her exclusive property (Art. 111 as amended by
R.A. 10572). 1. Those acquired by onerous title during the marriage with
conjugal funds;
Rules in cases of improvement of exclusive property
NOTE: Requisites:
1. Reverse accession If the cost of the improvement and the (a) Acquisition is made during the marriage
(b) Thru onerous title
value of the improvement is more than the value of the
(c) At the expense of common fund
principal property at the time of the improvement, the entire
property becomes conjugal.
2. Those obtained from labor, industry, work or profession of
NOTE: For reverse accession to apply, the separate property must be
either or both spouses;
owned by a spouse exclusively at the time of the introduction of the 3. Fruits of conjugal property due or received during the
improvement neither it will apply if the property is partly owned by a marriage and net fruits of separate property;
spouse and partly owned by a third person. 4. Share of either spouse in hidden treasure;
5. Those acquired through occupation such as hunting or
2. Accession If the cost of the improvement and the value of fishing;
the improvement is equal to or less than the value of the 6. Livestock in excess of what was brought to the marriage;
principal property, the entire property becomes the exclusive 7. Those acquired by chance such as winnings in gamblings and
property of the spouses bettings (Art. 117, FC).
NOTE: In either case, there shall be reimbursement upon the Property bought through installment
liquidation of the conjugal partnership and ownership of entire
property shall be vested only upon reimbursement. Requisites:
1. Property is bought on installment prior to the marriage
Q: A parcel of land is owned by the father of W. With his 2. Paid partly from exclusive funds and partly from conjugal
permission, H and W constructed their house over the said parcel funds
of land. After some time, the father of W died leaving W as his
sole heir. Who now owns the parcel of land and the Rules in determining ownership:
improvements introduced by the H and W? Assume that the 1. If full ownership was vested before the marriage it shall
property regime of the H and W is conjugal partnership of gains. belong to the buyer spouse.
2. If full ownership was vested during the marriage it shall
A: The wife will now own both the parcel of land the house belong to the conjugal partnership.
introduced by the H and W. Reverse Accession under Article 120 of
the Family Code will not apply since at the time of the introduction NOTE: In either case, any amount advanced by the partnership or by
of the improvement the parcel of land is owned by the father of W either or both spouses shall be reimbursed by the owner/s upon
which she inherited it when her father died. What will apply her liquidation of the partnership.
instead is the ordinary rule of accession. However, the conjugal
partnership of gains will still enjoy the said property as a Q: Yamane asserts that the parcel of land, which was purchased
usufructuary and W will be the naked owner thereof. at auction, belonged to the conjugal partnership of him and his
late wife. In the title, his name appeared to be merely descriptive
Presumption of inclusion of property in the Conjugal Partnership of the civil status of the registered owner, his late wife. The
of Gains purchase took place prior to the advent of the Family Code. Is the
property conjugal or paraphernal property of his late wife?
GR: All property acquired during the marriage, whether the
acquisition appears to have been made, contracted or registered in A:Conjugal. In this case, the provisions of the NCC would apply
the name of one or both spouses, is presumed to be conjugal. since the purchase took place before the FC took effect. Under Art.
160 of the NCC, all property of the marriage is presumed to belong
XPN: Unless the contrary is proved. to the conjugal partnership, unless it be proved that it pertains
exclusively to the husband or the wife. In this case, there was no
Obligations Chargeable to Separate Property proof that the property had been acquired exclusively by Yamane's
late wife. The mere registration of a property in the name of one
1. Support of illegitimate children spouse does not destroy its conjugal nature in the absence of
2. Liabilities incurred by reason of a crime or quasi-delict strong, clear and convincing evidence that it was acquired using
3. Expenses of litigation between the spouses if found to be the exclusive funds of said spouse (Spouses Go v. Yamane, G.R. No.
groundless 160762, May 3, 2006).
4. Debts contracted during the marriage by the administrator-
spouse which does not benefit the community Q: Dolores seeks to recover a parcel of land, alleging that she and
5. Debts contracted during the marriage without the consent of her husband acquired such during their marriage, that it formed
the other which did not benefit the family part of their conjugal properties and that he sold it without her
6. Antenuptial debts by either spouse which did not benefit the consent. She presents as evidence their marriage contract and the
family initial tax declaration over the property.
7. Taxes incurred on the separate property which is not used by
the family A:Recovery is not warranted. The rule is all property of the
8. Expenses incurred during the marriage on a separate marriage is presumed to be conjugal in nature. However, for this
property if the property is not used by the family and not for presumption to apply, the party who invokes it must first prove that
its preservation it was acquired during the marriage. Here, Dolores' evidence
consisted of her marriage contract and the initial tax declaration

over the property. She did not identify when she and her husband 3. Fines and indemnities arising from delicts and quasi-delicts.
first occupied and possessed the land. Neither did she present any
witness to prove that they first occupied the property during their Q: Levy was made on the conjugal partnership of husband and
marriage and that they both, worked on the land (Pintiano-Anno v. wife on the basis of liability of the husband as guarantor. Is the
Anno, G.R. No. 163743, January 27, 2006). levy proper?
Q: H & W got married on October 1926. H subsequently cohabited A: No. The payment of personal debts contracted by the husband
with X. During the cohabitation of H with X, H acquired certain or the wife before or during the marriage shall not be charged to
properties and places his status as single. What is the nature of the conjugal partnership except as they redounded to the benefit
said properties? of the family (Art. 122, FC).
A: They are conjugal properties.Whether a property is conjugal or ADMINISTRATION OF THE CPG

not is determined by law and not by the will of one of the spouses.
No unilateral declaration by one spouse can change the character Administration of CPG
of conjugal property. The clear intent of H in placing his status as
single is to exclude W from her lawful share in the conjugal GR: The right to administer the conjugal partnership belongs to
property. The law does not allow this. The cohabitation of a spouse both spouses jointly.
with another person, even for a long period, does not sever the tie
of a subsisting previous marriage. H and Xs cohabitation cannot XPN:
work to the detriment of W as the legal spouse. The marriage of H 1. If one spouse is incapacitated or otherwise unable to
and W continued to exist regardless of the fact that H was already participate in the administration of the common properties
living with X. Hence, all property acquired from the date of their capacitated or able spouse may assume sole powers of
marriage until the death of W are presumed conjugal. It was administration.
neither claimed nor proved that any of the subject properties was 2. If a spouse without just cause abandons the other or fails to
acquired outside or beyond this period (Villanueva v. CA, G.R. No. comply with his or her obligations to the family, the aggrieved
143286, April 14, 2004). spouse may petition the court for sole administration
3. During the pendency of a legal separation case, the court may
CHARGES UPON AND OBLIGATIONS OF THE CPG designate either of the spouse as sole administrator.
Charges upon the CPG But such powers do not include: (DAE)
1. Disposition;
1. Support of the spouses, their common children and the 2. Alienation; or
legitimate children of either spouse; 3. Encumbrance of the conjugal or community property.
2. Debts and obligations contracted by one without the consent
of the other to the extent that the family benefited; Disagreement in the administration of the CPG
3. Debts and obligations contracted during the marriage by an
administrator-spouse, both spouses or one with the consent In case of disagreement, the decision of the husband shall prevail
of the other; subject to recourse to the court by the wife for proper remedy.
4. Taxes, liens, charges, expenses, including major or minor
repairs upon conjugal property; NOTE: Prescriptive period for recourse is 5 years from the date of the
5. Taxes and expenses for mere preservation made during the contract implementing such decision.
marriage of separate property;
6. Expenses for professional, vocational or self-improvement DISSOLUTION OF CPG REGIME
courses of either spouse;
7. Ante-nuptial debts to the extent the family has been Dissolution of CPG
benefited;
8. Value of what is donated or promised to common legitimate Conjugal partnership is terminated by:
children for professional, vocation or self- improvement 1. Death of either spouse;
courses; 2. Legal separation;
9. Expenses of litigation between the spouses unless the suit is 3. Annulment or Declaration of Nullity;
found to be groundless (Art. 121, FC). 4. Judicial separation of property during marriage (Art. 126, FC).
NOTE: If the conjugal partnership is insufficient to cover the foregoing LIQUIDATION OF THE CONJUGAL PARTNERSHIP ASSETS AND
liabilities, spouses shall be solidarily liable for the unpaid balance with their LIABILITIES
separate properties.
Steps in the liquidation of the CPG
Charges against the Separate Property that may be charged upon
the CPG 1. Inventory of all the properties;
2. Restitution of advances made to each of the spouses;
Requisites: 3. Reimbursement for use of exclusive funds;
1. All the responsibilities of the partnership have already been 4. Debts and obligations of the CP are paid;
covered 5. Delivery of exclusive properties;
2. The spouse who is bound has no exclusive properties or the 6. Payment of losses and deterioration of movables belonging
same are insufficient to each of the spouses;
7. Division of the net conjugal partnership;
Charges: 8. Delivery of the common childrens presumptive legitimes;
1. Personal debts of either spouse contracted before the 9. Adjudication of conjugal dwelling and custody of common
marriage which did not redound to the benefit of the family children (Art. 129, FC).
2. Support of the illegitimate children of either spouse

CIVIL LAW
Liquidation of community property if the termination of the a. Present property
marriage by death b. Future property
c. Both present and future property
Upon termination of marriage by death, the community property
shall be liquidated in the same proceeding for the settlement of Instances when separation of property is allowed
the estate of the deceased spouse.
1. By agreement through marriage settlement
Support to the surviving spouse and to the children during 2. By judicial order
liquidation
Sufficient causes for judicial separation of property
The support to be given to the surviving spouse and to the children
during liquidation shall come from the common mass of property 1. Civil interdiction of the spouse of petitioner;
and shall be particularly charged against the fruits, rents or income 2. Judicial declaration of absence;
pertaining to their shares to the inventories property. But where 3. Loss of parental authority as decreed by the court;
the support given exceeds the fruits, rents or income pertaining to 4. Abandonment or failure to comply with family obligation;
their shares, the excess shall be deducted from their respective 5. Administrator spouse has abused authority;
shares as these are deemed advances from the inventoried 6. Separation in fact for one year and reconciliation is highly
property (Art. 133, FC). improbable (Art. 135, FC).
Liquidation of community property in the absence of a judicial NOTE: In cases provided in 1, 2 and 3, the presentation of the final judgment
settlement proceeding against the guilty or absent spouse shall be enough basis for the grant of the
decree of judicial separation of property.
In the absence of a judicial settlement proceeding, the surviving
spouse shall liquidate the community property either, judicially or Effects of judicial separation of property between spouses
extrajudicially within 1 year from the death of the deceased
spouse. 1. The absolute community or conjugal partnership is dissolved;
2. The liability of the spouses to creditors shall be solidary with
If during the liquidation of the CP, the conjugal partnership assets their separate properties;
are less than the conjugal partnership liabilities, the surviving 3. Mutual obligation to support each other continues except
spouse and the children shall not be entitled to support. when there is legal separation;
4. Rights previously acquired by creditors are not prejudiced.
Effects if the community property is not liquidated
Rights of the spouses under the regime of separation of property
1. Any disposition or encumbrance made by the surviving
spouse involving community property of the terminated 1. Each spouse shall own, dispose of, administer, possess, and
marriage shall be void. enjoy his or her own separate property, without need of the
2. Should the surviving spouse contract a subsequent marriage a consent of the other.
mandatory regime of complete separation of property shall 2. Each spouse shall own all earnings from his or her profession,
govern the property relations of the subsequent marriage business or industry and all fruits, natural, industrial or civil,
due or received during the marriage from his or her separate
REGIME OF SEPARATION OF PROPERTY property.
Complete separation of property Liabilities of the spouses for family expenses under the regime of
separation of property
The system of complete separation of property will govern the
property relations between the spouses only in the following cases: GR: Both spouses shall bear the family expenses in proportion to
1. When it is expressly provided for in the marriage settlement their income.
2. When it is so decreed by a competent court
3. Mandatory regime of complete separation of property XPN: In case of insufficiency or default thereof, to the current
4. By failure of the surviving spouse to liquidate the absolute market value of their separate properties.
community or conjugal partnership of gains of a previous
marriage which has been terminated by death within the Revival of previous property regime
one-year period required by law prior to contracting another
marriage. The subsequent marriage is mandatorily governed If the spouses opted for voluntary separation of property, the
by a regime of complete separation. parties may agree to the revival even in the absence of a
reason/ground. However, a subsequent voluntary separation of
Rules governing the regime of separation of property property is no longer allowed.
1. Marriage settlement If the separation of property is for a sufficient cause, the revival of
2. Family Code in suppletory character (Art. 149, FC). the previous property regime depends upon the cessation of the
ground which was the basis of the judicial order. A subsequent
Kinds of separation of property judicial separation of property for a sufficient cause may be
allowed so long as there is a new ground to rely on.
1. As to extent:
a. Total The procedure of the revival of previous property regime is the
b. Partial In this case, the property not agreed upon as same as those followed upon reconciliation of the spouses after
separate shall pertain to the absolute community. the finality of legal separation
2. As to kinds of property:

PROPERTY REGIME OF UNIONS WITHOUT MARRIAGE parties are in BF,

such share be
Property regime of unions without marriage forfeited in manner
provided in the last
ART. 147 ART. 148 par. of Art. 147
Applicability 1. Parties without With legal impediment Proof of actual Not necessary Necessary
legal impediment to caused by: contribution
marry; 1. Adulterous
2. Void marriage on relationships NOTE: For as long as it is proven that property was acquired during marriage,
the presumption of conjugality will attach regardless in whose name the
the ground of 2. Bigamous/polygam property is registered.
psychological ous marriages
incapacity. 3. Incestuous void The presumption is not rebutted by the mere fact that the certificate of title
marriages under of the property or the tax declaration is in the name of one of the spouses
Art. 37 (Villanueva v. CA, G.R. No. 143286, Apr. 14, 2004 ).
4. Void marriages by
reason of public Property regime in case the marriage is declared null and void
policy (Art. 38) on the ground of psychological incapacity
Salaries & Owned in equal shares Separately owned by
wages the parties. If any is The property relation between the parties is governed by Art. 147
married, his/her of the FC. Under this property regime, property acquired by both
salary pertains to spouses through their work and industry shall be governed by the
the CPG of the rules on equal co-ownership. Any property acquired during the
legitimate marriage. union is prima facie presumed to have been obtained through their
Property Belongs to party Belongs to such party joint efforts. A party who did not participate in the acquisition of
exclusively upon proof of the property shall still be considered as having contributed thereto
acquired acquisition through jointly if said party's "efforts consisted in the care and maintenance
exclusive funds of the family household." Unlike the conjugal partnership of gains,
the fruits of the couple's separate property are not included in the
Property Governed by rules of Owned in common in
co-ownership.
acquired by co-ownership proportion to their
both through respective
Q: Josefinas petition for nullity of her marriage to Eduardo was
their work or contributions
granted on the ground of existence of a prior marriage. She now
industry asserts that since her marriage to Eduardo is void, their property
Presumption Property acquired No presumption of relation is to be governed by the rules on co-ownership under
while living together joint acquisition. Art. 148 of the FC and not by Art.144 of the Civil Code. In this
presumed obtained regime, Eduardo has no share at all in the properties since no
by their joint Actual joint proof was adduced by him as regards his participation in their
efforts, work or contribution of purchase. However, she did not prove that she acquired the
industry and owned money, property or properties using her personal funds and prior to her cohabitation
by them in equal industry shall be with Eduardo. Is her contention correct?
shares. owned by them in
common proportion. A:No. Art. 148 of the FC does not apply since, in said article, a co-
If one party did not ownership may ensue in case of cohabitation where, for instance,
participate in However, their one party has a pre-existing valid marriage, provided that the
acquisition: contributions are parties prove their actual joint contribution of money, property or
presumed to have presumed equal, in industry and only to the extent of their proportionate interest
contributed through the absence if proof thereon. Petitioner failed to adduce preponderance of evidence
care and to the contrary that she contributed money, property or industry in the acquisition
maintenance of of the subject property and, hence, is not a co-owner of the
family and property. Since the subject property was acquired during the
household subsistence of the first marriage of Eduardo, under normal
(Buenaventura v. circumstances, the same should be presumed to be conjugal
Buenaventura, G.R. property of Eduardo and Josefina (Francisco v. Master Iron Works
No. 127358, March Construction Corp., G.R. No. 151967. February 16, 2005).
31, 2005)
Forfeiture When only one is in If one of the parties is Q: Francisco and Ermindas marriage was nullified by the trial
GF, share of party in validly married to court due to psychological incapacity. He did not contest the
BF in the co- another, his/her decree of nullity but he assailed the division in the properties
ownership be share in the co- which was contained in the decree. He asserted that the
forfeited in favor of: ownership shall properties were acquired through his efforts and that she had no
1. Their common accrue to the ACP or contribution whatsoever in their acquisition and maintenance;
children CPG existing in the hence, she should not be entitled to a joint share in their
2. Innocent party marriage. properties. Is Franciscos contention correct?
3. In default of /
waiver by any/all If the party who A:No. The property relation between the parties is governed by
common children, acted in BF is not Art. 147 of the FC. Under this article, there is a presumption that
or by validly married to the properties which they acquired during their cohabitation were
4. Their descendants another or if both acquired through their joint efforts, work or industry. It further

CIVIL LAW
provides that a party who did not participate in the acquisition 1. The wages and salaries of Luis in the amount of P200, 000.00
thereof shall be deemed to have contributed jointly in the shall be divided equally between Luis and Rizza.
acquisition thereof if his or her efforts consisted in the care and 2. The house and lot valued at P500.000.00 having been
maintenance of the family and of the household. acquired by both of them through work or industry shall be
divided between them in proportion to their respective
NOTE: In this case, Francisco himself testified that his wife was not a plain contribution, in consonance with the rules on co-ownership.
housewife but one who helped him in managing the family's business. Hence, Luis gets 2/5 while Rizza gets 3/5 of P500.000.00.
Hence, Erminda is rightfully entitled to a joint share in their properties
3. The car worth P100, 000.00 shall be exclusively owned by
(Gonzales v. Gonzales, G.R. No. 159521, December16, 2005).
Rizza, the same having been donated to her by her parents.
Q: Romeo and Juliet lived together as husband and wife without
Q: In 1989, Rico, then a widower 40 years of age, cohabited with
the benefit of marriage. During their cohabitation, they acquired
Cora, a widow 30 years of age. While living together, they
a house. When they broke up, they executed an agreement
acquired from their combined earnings a parcel of riceland. After
where he agreed to leave the house provided Juliet will pay his
Rico and Cora separated, Rico lived together with Mabel, a
entire share in their properties. She failed to do so but she also
maiden 16 years of age. While living together, Rico was a salaried
ignored his demand for her to vacate. Romeo sued her for
employee and Mabel kept house for Rico and did full-time
ejectment which the court granted. Was the court correct in
household chores for him. During their cohabitation, a parcel of
granting the same?
coconut land was acquired by Rico from his savings.
A:No. Under Art. 147 of the FC, the property is co-owned by the
After living together for 1 year, Rico and Mabel separated. Rico
parties. Under said provision, in the absence of proof to the
then met and married Letty, a single woman 26 years of age.
contrary, any property acquired by common-law spouses during
During the marriage of Rico and Letty, Letty bought a mango
their cohabitation is presumed to have been obtained thru their
orchard out of her own personal earnings.
joint efforts and is owned by them in equal shares. Their property
relationship in such a case is essentially governed by the rules on
a. Who would own the riceland, and what property relation
co-ownership. Thus, Romeo cannot seek the ejectment of Juliet
governs the ownership? Explain.
therefrom. As a co-owner, she is as much entitled to enjoy its
b. Who would own the coconut land, and what property
possession and ownership as him (Abing v. CA,G.R. No. 146294, Jul.
relation governs the ownership? Explain.
31, 2006).
c. Who would own the mango orchard, and what property
relation governs the ownership? Explain. (1992 Bar
Q: Luis and Rizza, both 26 years of age and single, live exclusively
Question)
with each other as husband and wife without the benefit of
marriage, Luis is gainfully employed, Rizza is not employed, stays
A:
at home, and takes charge of the household chores.
a. Rico and Cora are the co-owners of the riceland. The relation
is that of co-ownership (Art. 147, [1] FC)
After living together for a little over twenty years, Luis was able
to save from his salary earnings during that period the amount of
Addendum: However, after Rico's marriage to Letty, the half
P200,000.00 presently deposited in a bank. A house and lot worth
interest of Rico in the riceland will then become absolute
P500,000.00 was recently purchased for the same amount by the
community property of Rico and Letty.
couple. Of the P500.000.00 used by the common-law spouses to
purchase the property, P200.000.00 had come from the sale of
b. Rico is the exclusive owner of the coconut land. The relation
palay harvested from the hacienda owned by Luis and
is a sole/single proprietorship (Art. 148, [1] FC, and not Art.
P300,000.00 from the rentals of a building belonging to Rizza. In
147 FC).
fine, the sum of P500.000.00 had been part of the fruits received
during the period of cohabitation from their separate property, a
Addendum: However, after Rico's marriage to Letty, the
car worth P100.000.00 being used by the common-law spouses,
coconut land of Rico will then become absolute community
was donated just months ago to Rizza by her parents.
property of Rico and Letty.)
Luis and Rizza now decide to terminate their cohabitation, and
c. Rico and Letty are the co-owners. The relations is the
they ask you to give them your legal advice on how, under the
Absolute Community of Property (Arts, 75, 90 and 91, FC).
law should the bank deposit of P200,000.00 the house and lot
valued at P500.000.00 and the car worth P100.000.00 be
allocated to them (1997 Bar Question)?
THE FAMILY
A: Art. 147 of the FC provides in part that when a man and a
THE FAMILY AS AN INSTITUTION
woman who are capacitated to marry each other, live exclusively
with each other as husband and wife without the benefit of
Family relations
marriage or under a void marriage, their wages and salaries shall
be owned by them in equal shares and the property acquired by
Family relations include:
both of them through their work or industry shall be governed by
1. Between husband and wife
the rules of co-ownership. In the absence of proof to the contrary,
2. Between parents and children
properties acquired while they lived together shall be presumed to
3. Among other ascendants and descendants
have been obtained by their joint efforts, worker industry, and
4. Among brothers and sisters, whether of the full or half blood
shall be owned by them in equal shares. A party who did not
(Art. 150, FC)
participate in the acquisition by the other party of any property
shall be deemed to have contributed jointly in the acquisition
Rules governing family relations
thereof if the former's efforts consisted in the care and
maintenance of the family and of the household. Thus:
Family relations are governed by law.No custom, practice or
agreement destructive of the family shall be recognized or given

effect (Art. 149, FC). 4. Must be permanent;
5. Same rule applies to both valid and voidable marriages and
NOTE: Even if not all forms of extra-marital relations are punishable under even to common law spouses; (Arts. 147 and 148)
penal law, the sanctity of marriage is constitutionally recognized and likewise 6. It continues despite death of one or both spouses or an
affirmed by our statutes as a special contract of permanent union.
unmarried head of the family for 10 years or as long as there
Accordingly, the Court has had little qualms with penalizing judicial
employees for their dalliances with married persons or for their own
is a minor beneficiary.
betrayals of the marital vow of fidelity (Concerned Employee v. Mayor, A.M.
No. P-02-1564, November 23, 2004). NOTE: The heirs cannot partition the same unless the court finds compelling
reasons therefor. This rule shall apply regardless of whoever owns the
property or constituted the family home.
Requisites before a suit between members of the same family
may prosper
Q: On which patrimony must the family pertain?
1. Earnest efforts toward a compromise have been made;
A: The family home must be part of the properties of the absolute
2. Such efforts failed;
community or the conjugal partnership or the exclusive properties
3. The fact that earnest efforts toward a compromise have been
of either spouse with the latters consent. It may also be
made but the same have failed appears in the verified
constituted by an unmarried head of a family on his or her own
complaint or petition.
property.
NOTE: This rule shall not apply to cases which may not be subject of
NOTE: Property that is subject of a conditional sale on installments where
compromise under the Art. 2035 of the NCC.
ownership is reserved by the vendor to guarantee payment of the purchase
price may be constituted as a family home.
Q: In a complaint filed by Manolo against his brother, Rodolfo, it
was alleged that the case "xxx passed through the Barangay and Beneficiaries of a FH
no settlement was forged between the plaintiffs and defendant
as a result of which Certification to File Action was issued xxx". 1. Husband and wife, or unmarried head of the family
Rodolfo moved to dismiss for failure to comply with a condition 2. Parents (may include parents-in-law), ascendants, brothers
precedent - that earnest efforts for an amicable settlement and sisters (legitimate or illegitimate) living in the FH and
among the parties had been exerted but that none was reached. dependent on the head of the family for support
Decide.
Q: Miko contends that he should be deemed residing in the family
A: The case will prosper. There was in fact substantial compliance home because his stay in the U.S. is merely temporary. He asserts
with Art. 151 of the FC since the spouses alleged in the complaint that the person staying in the house is his overseer and that
for ejectment that the case "xxx passed through the Barangay and whenever his wife, Rosanna, visited the Philippines, she stayed in
no settlement was forged between the plaintiffs and defendant as the family home. Is the contention of Miko meritorious?
a result of which Certification to File Action was issued by Barangay
97, Zone 8, District I, Tondo, Manila xxx". It bears stressing that A: The law explicitly provides that occupancy of the family home
under Sec. 412 (a) of R.A. 7160, no complaint involving any matter either by the owner thereof or by any of its beneficiaries must be
within the authority of the Lupon shall be instituted or filed directly actual. That which is actual is something real, or actually existing,
in court for adjudication unless there has been a confrontation as opposed to something merely possible, or to something which is
between the parties and no settlement was reached. presumptive and constructive. Actual occupancy, however, need
not be by the owner of the house. Rather, the property may be
Moreover, the phrase "members of the same family" found in Art. occupied by the beneficiaries enumerated by Art. 154 of the FC
151 of the FC must be construed in relation to Art. 150 thereof (Manacop v. CA, 277 SCRA 65, August 11, 1997).
(Martinez, et al. v. Martinez, G.R. No. 162084. Jun. 28, 2005).
NOTE: This enumeration may include the in-laws where the family home is
NOTE: A sister-in-law or a brother-in-law is not covered by these two constituted jointly by the husband and wife. But the law definitely excludes
provisions. Being an exception to the general rule, Art. 151 must be strictly maids and overseers.
construed (Gayon v. Gayon, G.R. No. L-28394, November 26, 1970).
Effect of death of one or both spouses or of the unmarried head
THE FAMILY HOME of the family upon the family home
Family home (FH) The family home shall continue despite the death of one or both
spouses or of the unmarried head of the family for a period of 10
It is the dwelling house where the husband and wife and their years or for as long as there is a minor beneficiary and the heirs
family reside, and the land on which it is situated. It is constituted cannot partition the same unless the court finds compelling
jointly by the husband and the wife or by an unmarried head of a reasons therefor. This rule shall apply regardless of whoever owns
family (Art. 152, FC). the property or constituted the family home (Art. 159, FC).
Constitution of FH Exemption of FH from execution, forced sale or attachment
The family home is deemed constituted on a house and lot from From the time of its constitution and so long as any of its
the time it is occupied as a family residence (Art. 153, FC). beneficiaries resides therein, the FH continues to be such and is
exempt from execution, forced sale or attachment (Art. 153, FC).
Guidelines in the constitution of the family home
However, the rule is not absolute. Art. 155 of the FC provides the
1. FH is deemed constituted from the time of actual occupation circumstances wherein the FH will not be exempt from execution,
as a family residence; forced sale of attachment, to wit:
2. Only 1 FH may be constituted;
3. Must be owned by the person constituting it;

CIVIL LAW
1. Debts due to laborers, mechanics, architects, builders, must prove that the actual value of the FH exceeds the
material men and others who rendered service or furnished maximum amount fixed by the Family Code, either at the
materials for the constitution of the building; time of its constitution or as a result of improvements
2. Non-payment of Taxes; introduced after its constitution;
3. Debts incurred Prior to its constitution; 3. If the creditor proves that the actual value exceeds the
4. Debts secured by Mortgages on the premises before or after maximum amount, the court will order its sale in execution;
such constitution. 4. If the family home is sold for more than the value allowed,
the proceeds shall be applied as follows:
NOTE: Exemption is limited to the value allowed in the FC. a. The obligations enumerated in Art. 155 must be paid
b. The judgment in favor of the creditor will be paid, plus
Rule for the family home to be exempted from execution all the costs of execution
1. If the family home was constructed before the effectivity of The excess, if any, shall be delivered to the judgment debtor (Art.
the FC, then it must have been constituted either judicially or 160, FC).
extrajudicially as provided under Arts. 225, 229-231 and 233
of the NCC. Judicial constitution of the family home requires Q: A complaint for damages was filed against Hinahon in 1986
the filing of a verified petition before the courts and the when she incurred liabilities as early as 1977, which action
registration of the courts order with the Registry of Deeds prospered in 1989. The house and lot that she owned was levied
of the area where the property is located. Meanwhile, upon and sold at auction. She assails the levy and sale on the
extrajudicial constitution is governed by Arts. 240 to 242 of ground that it was her family home and therefore exempt from
the NCC and involves the execution of a public instrument execution. Decide.
which must also be registered with the Registry of Property.
2. For family homes constructed after the effectivity of the FC, A:It is not exempt. Under Art. 155 of the FC, the family home shall
there is no need to constitute extrajudicially or judicially, be exempt from execution, forced sale, or attachment except for,
and the exemption is effective from the time it was among other things, debts incurred prior to the constitution of the
constituted and lasts as long as any of its beneficiaries family home. In the case at bar, the house and lot was not
actually resides therein. Moreover, the family home should constituted as a family home, whether judicially or extra-judicially,
belong to the absolute community or conjugal partnership, or at the time that the debtor incurred her debts. Under prevailing
if exclusively by one spouse, its constitution must have been jurisprudence, it is deemed constituted as such by operation of law
with consent of the other, and its value must not exceed only upon the effectivity of the Family Code on August 3, 1988,
certain amounts depending upon the area where it is located. thus, the debts were incurred before the constitution of the family
Further, the debts incurred for which the exemption does not home (Gomez-Salcedo, et al. v. Sta. Ines, et al., G.R. No. 132537,
apply as provided under Art. 155 for which the family home October 14, 2005).
is made answerable must have been incurred after the
effectivity of the FC. Q : Has the residential house and lot of Cesario Montana which
3. And in both cases, whether under the Civil Code or the Family he and his family built in 1960 but which was not constituted as a
Code, it is not sufficient that the person claiming family home, whether judicially or extrajudicially, under the NCC
exemption merely alleges that such property is a family been constituted as a family home by operation of law under Art.
home. This claim for exemption must be set up and proved 153 of the FC, and therefore, exempt from execution from a
(Juanita Trinidad Ramos, et al. v. Danilo Pangilinan et al. G.R. money judgement where the debt or liability was incurred before
No. 185920, July 20, 2010). the effectivity of the FC ?
Exemption of Family Home must first be set up and proved A : Under Art. 162 of the FC, it is provided that the provisions of
this Chapter shall also govern existing family residences insofar as
The family homes exemption from execution must be set up and said provisions are applicable. It does not mean that Arts. 152 and
proved to the Sheriff before the sale of the property at public 153 of the FC have a retroactive effect such that all existing family
auction. It should be asserted that the property is a family home residences are deemed to have been constituted as a family home
and that it is exempted from execution at the time it was levied or at the time of their occupation prior to the effectivity of the FX and
within a reasonable time thereafter. It is not sufficient that the are exempt from execution for the payment of obligations before
person claiming exemption merely alleges that such property is a the effectivity of the FC. Art. 162 simply means that all existing
family home. Failure to do so will estop one from later claiming the family residences at the time of the effectivity of the FC are
said exemption (Spouses Araceli Oliva-De Mesa and Ernesto de considered family homes and are prospectively entitled to the
Mesa v. Spouses Claudio D. Acero Jr. and Ma.Rufina D. Acero, benefits accorded to a family home under the FC (Manacop v. CA,
Sheriff Felixberto L. Samonte and Registrar Alfredo Santos, G.R. No. 277 SCRA 64, August 11, 1997).
185064, January 16, 2012).
Requisites in the sale, alienation, donation, assignment or
Requisites for the creditor to avail of the right to execute encumbrance of the FH
1. He must be a judgment creditor; The following must give their written consent:
2. His claim must not be among those excepted under Art. 155; 1. The person who constituted the FH;
3. He has reasonable grounds to believe that the family home is 2. The spouse of the person who constituted the FH;
worth more than the maximum amount fixed in Art. 157. 3. Majority of the beneficiaries of legal age.
Procedure in exercising the right to execute NOTE: In case of conflict, the court shall decide.
1. Creditor must file a motion in the court proceeding where he

obtained a favorable judgment for a writ of execution against
the FH;
2. There will be a hearing on the motion where the creditor

PATERNITY AND FILIATION child is legitimate does not arise (Angeles vs Maglaya, G.R. 153798,
September 2, 2005).
Paternity and Filiation
NOTE: The child by himself cannot choose his own filiation. Neither can he
elect the paternity of the husband of his mother when the presumption of
Paternity is the civil status of a father with regard to the child his legitimacy has been successfully overthrown.
Filiation is the civil status of a child with regard to his parents Q: What is the effect of the declaration of a wife against the
legitimacy of the child where the child is conclusive presumed to
Filiation may be by nature or adoption, legitimate or illegitimate. be the legitimate child of H and W?
Classifications of filiation A: The child shall still be legitimate, although the mother may have
declared against his legitimacy. This law likewise applies to such
1. Legitimate conceived or born within a valid marriage instances where the mother may have been sentenced as an
2. Illegitimate conceived and born outside a valid marriage adulteress (Art. 167, FC).
3. Legitimated conceived and born outside of wedlock of
parents without impediment to marry at the time of Q: Roderick and Faye were high school sweethearts. When
conception or were so disqualified only because either or Roderick was 18 and Faye, 16 years old, they started living
both of them were below eighteen (18) years of age. together as husband and wife without the benefit of marriage.
4. Adopted a filiation created by law which vests between two When Faye reached 18 years of age, her parents forcibly took her
persons a relationship similar to that which results from back and arranged for her marriage to Brad. Although Faye lived
legitimiate paternity and filiation with Brad after the marriage, Roderick continued to regularly visit
Faye while Brad was away at work. During their marriage, Faye
LEGITIMATE CHILDREN gave birth to a baby girl, Laica. When Faye was 25 years old, Brad
discovered her continued liaison with Roderick and in one of their
Legitimate child heated arguments, Faye shot Brad to death. She lost no time in
One who is conceived or born during the marriage of the parents claiming that they have been continuously cohabiting for more
than 5 years.
Requisites for a child conceived by artificial insemination to be a. What is the filial status of Laica?
considered legitimate b. Can Laica bring an action to impugn her own status on the
ground that based on DNA results, Roderick is her biological
1. The artificial insemination is made on the wife, not on father? (2008 Bar Question)
another woman;
2. The artificial insemination on the wife is done with the sperm A:
of the husband or of a donor, or both the husband and a a) Having been born during the marriage of Faye and Brad, she
donor; is presumed to be the legitimate child of Faye and Brad, she is
3. The artificial insemination has been authorized or ratified by presumed to be the legitimate child of Faye and Brad. This
the spouse on a written instrument executed and signed by presumption had become conclusive because the period of
them before the birth of the child; and time to impugn her filiation had already prescribed.
4. The written instrument is recorded in the civil registry
together with the birth certificate of the child. b) No, she cannot impugn her own filiation. The law does not
allow a child to impugn his or her own filiation. In the
Rights of legitimate children problem, Laicas legitimate filiation was accorded to her by
operation of law which may be impugned only by Brad, or his
1. To bear the surname of the father and the mother; heirs in the cases provided by law within the prescriptive
2. To receive support from their parents, their ascendants, and period.
in proper cases, their brothers and sisters;
3. To be entitled to the legitimate and other successional rights Action to impugn legitimacy v. Action to claim legitimacy.
granted to them by Art. 174 of the FC.
BASIS ACTION TO IMPUGN ACTION TO CLAIM
Presumption of legitimacy LEGITIMACY LEGITIMACY
Remedy Action to impugn Action to claim
Article 164 of the Family Code provides that the children conceived legitimacy or legitimacy
or born during the marriage of the parents are legitimate. illegitimacy (compulsory recognition)
Real party GR: Husband GR: Child
The presumption of legitimacy of children does not only flow out in interest
from a declaration contained in the statute but is based on the XPNs: Heirs, in cases XPNs: Heirs of the child,
broad principles of natural justice and the supposed virtue of the where: in cases where:
mother. The presumption is grounded in a policy to protect 1. Husband died 1. Child died in state of
innocent offspring from the odium of illegitimacy (Liyao, Jr. vs before the insanity
Tanhoti-Liyao, G.R. 138961, March 7, 2002). expiration of the 2. Child died during
period for bringing minority
The presumption of legitimacy under Article 164 of the Family the action;
Code may be availed only upon convincing proof of the factual 2. Husband died after NOTE: Must be filed within 5
basis therefor, i.e., that the childs parents were legally married filing the years.
and that his/her conception or birth occurred during the complaint, without
subsistence of that marriage. Else, the presumption of law that a having desisted;
3. Child was born

CIVIL LAW
after the death of Grounds in impugning legitimacy of a child
husband.
Legitimacy of the child may be impugned only on the following
Prescription 1 year husband GR: During the lifetime grounds:
reside in the same of the child 1. Physical impossibility for the husband to have sexual
municipality or city intercourse with his wife within the first 120 days of the 300
where birth took place XPN: Lifetime of the days which immediately preceded the birth of the child
2 years husband putative father because of:
reside NOT in the a. Physical incapacity of the husband to have sexual
same municipality or In cases where the action intercourse with his wife,
city is for the recognition of b. The fact that the husband and wife were living
3 years husband is illegitimate child by separately in such a way that sexual intercourse was not
living abroad open and continuous possible, or
possession of the status. c. Serious illness of the husband which absolutely
prevented intercourse;
2. Proved that for biological or other scientific reasons, the child
Person/s who may attack the legitimacy of the child could not have been that of the husband, except in the case
of children conceived through artificial insemination;
GR: Only the husband can contest the legitimacy of the child. 3. In case of children conceived through artificial insemination,
the written authorization or ratification of either parent was
XPNs: Heirs of the husband may impugn the filiation of the child obtained through mistake, fraud, violence, intimidation or
within the period prescribed in Art. 170 of the FC only in the undue influence.
following cases:
1. If the husband should die before the expiration of the period Sterility and Impotency
fixed for bringing his action;
2. If he should die after the filing of the complaint, without Sterility is not synonymous with impotency. Sterility is the inability
having desisted therefrom; or to procreate, while impotency is the physical inability to copulate
3. If the child was born after the death of the husband (Art. 171, (Menciano v. San Jose, 89, Phil. 63).
FC).
Q: Will an infliction of the last stages of tuberculosis be a ground
Prescriptive period for filing action impugning the legitimacy of for impugnation of the legitimacy of the child?
the child
A: Tuberculosis, even in its last stages, is not the kind of serious
GR: The prescriptive period for filing action impugning the illness of the husband that will establish physical impossibility of
legitimacy of the child shall be counted from the knowledge of access (Andal v. Macaraig, 89 Phil.165).
birth or its recording in the civil registry.
Rule on status of child where the mother contracted another
XPN: If the birth was: marriage within 300 days after termination of the former
1. Concealed from or
2. Was unknown to the husband or his heirs, the periods shall The child shall be considered as conceived during the:
be counted from the discovery or knowledge of the birth of 1. Former marriage if child is born:
the child or of the act of registration of said birth, whichever a. Before 180 days after the solemnization of the
is earlier. subsequent marriage, provided it is born
b. Within 300 days after termination of former marriage
2. Subsequent marriage if a child is born:
a. 180 days after the celebration of the subsequent
marriage;
b. even though it be born within 300 days after the
termination of the former marriage.

Illustrations:
1. 180th day takes place before 300th day
180th day from

Former marriage Subsequent marriage solemnization of 300th day from
terminated solemnized subsequent marriage termination of former
marriage
Born during this period: Born during this period:

Conceived during Former Marriage
Conceived during Subsequent Marriage
2. 180th day takes place after 300th day

Subsequent 300th day from 180th day from
Former marriage marriage termination of solemnization of
terminated solemnized former marriage subsequent marriage
Born during this period: Born during this period:

Conceived during Former Marriage Conceived during Subsequent
Marriage
ILLEGITIMATE CHILDREN to use the surname of the father.
Illegitimate children Republic Act 9255
Children conceived and born outside a valid marriage: This act provides that illegitimate children may optionally use the
1. Children born of couples who are not legally married or of fathers surname provided that:
common law marriages; 1. Filiation has been recognized by the father through the record
2. Children born of incestuous marriage; of birth appearing in the civil register
3. Children born of bigamous marriage; 2. Admission in public document
4. Children born of adulterous relations between parents; 3. Private handwritten instrument is made by the father
5. Children born of marriages which are void for reasons of
public policy under Art. 18, FC; NOTE: Provided that the father has the right to institute an action before the
6. Children born of couples below 18, whether they are married regular courts to prove non-filiation during his lifetime.
(which marriage is valid) or not;
7. Children born of void marriages under art. 35, except where Q: How may illegitimate children establish their illegitimate
the marriage is void for lack of authority on the part of the filiation should their status be impugned? When must the action
solemnizing officer, but the parties or either of them believed to claim illegitimacy be brought?
in good faith that the solemnizing officer had authority, in
which case the marriage will be considered valid and the A: Illegitimate children may establish their illegitimate filiation in
children will be considered legitimate. the same way and on the same evidence as legitimate children (Art.
175, 1st sentence, FC).
Rights of an illegitimate child (LASS)
The action must be brought in the same period specified in Art. 173
1. They shall use the Surname of the mother; of the FC, except when the action is based on the 2nd par. of Art.
2. They shall be under the parental Authority of the mother; 172 of the FC, in which case the action may be brought during the
3. They shall be entitled to Support in conformity with the FC; lifetime of the alleged parent (Art. 175, FC).
4. They shall be entitled to a Legitime which shall consist of of
the legitime of a legitimate child (Art. 176, FC). Q: Why is an illegitimate child of a woman who gets married
allowed to bear the surname of her spouse, while a legitimate
Effect of the recognition of an illegitimate child by the father child may not?
Such recognition would be a ground for ordering the latter to give A: To allow the child to adopt the surname of his mothers second
support to, but not the custody of the child. The law explicitly husband, who is not his father, could result in confusion in his
confers to the mother sole parental authority over an illegitimate paternity. It could also create the suspicion that the child, who was
child; it follows that only if she defaults can the father assume born during the covertures of his mother with her first husband,
custody and authority over the minor (Briones v. Miguel, G.R. No. was in fact sired by the second husband, thus bringing his
156343, October 18, 2004) legitimate status into discredit (Republic v. Vicencio, G.R. No.
88202. December 14, 1998).
Also, under the R.A. 9255, the illegitimate children has the option

CIVIL LAW
LEGITIMATED CHILDREN RIGHTS OF CHILDREN
Legitimated children Rights of legitimate and illegitimate children
Legitimated children are those who, because of the subsequent LEGITIMATE ILLEGITIMATE
BASIS
marriage of their parents to each other, are by legal fiction CHILDREN CHILDREN
considered legitimate. Bear the surnames Bear the surname of
of both parents either the mother or
Legitimation Surname
(mother and the father under R.A.
father) 9255
Legitimation is a remedy or process by means of which those who Receive support Receive support
in fact not born in wedlock and should therefore be ordinarily from: according to
illegitimate, are by fiction, considered legitimate. 1. Parents; provision of FC
2. Ascendants;
It takes place by a subsequent valid marriage between parents. and
Furthermore, it shall retroact to the time of the childs birth (Art Support
3. in proper cases,
180, FC). brothers and
sisters under
NOTE: The annulment of a voidable marriage shall not affect the legitimation
Art. 174.
(Art. 178, FC).
Children entitled to legitimation Full Legitimes and Share is equivalent

other successional to of the share of
Only children conceived and born outside of wedlock of parents Legitime rights under the a legitimate child
who, at the time of conception, were not disqualified by any NCC
impediment to marry each other or were so disqualified only
because either or both of them were below eighteen (18) years of His/her whole For primary proof:
age (Art. 177, FC as amended by R.A. 9858). lifetime regardless his/her whole
of type of proof lifetime
Period for filing
Requisites of legitimation provided under Art.
action for claim of
172 For secondary proof:
legitimacy or
1. Child must have been conceived and born outside of wedlock; only during the
illegitimacy
2. Childs parents, at the time of formers conception, were not lifetime of the
disqualified by any impediment to marry each other or were alleged parent
so disqualified only because either or both of them were
below eighteen (18) years of age; Transmissibility of Yes No
3. The subsequent valid marriage of the parents. right to file an
action to claim
Q: Who may impugn the legitimation? legitimacy
Yes No right to inherit ab
A: Legitimation may be impugned only by those who are intesto from
prejudiced in their rights, within 5 years from the time their cause legitimate children
Right to inherit ab
of action accrues, that is, from the death of the putative parent. and relatives of
intesto
father and mother
Q: Roderick and Faye were high school sweethearts. When under Art. 992, NCC
Roderick was 18 and Faye, 16 years old, they started living (Iron Curtain Rule)
together as husband and wife without the benefit of marriage.
When Faye reached 18 years of age, her parents forcibly took her ACTION TO CLAIM FILIATION
back and arranged for her marriage to Brad. Although Faye lived
with Brad after the marriage, Roderick continued to regularly visit Action to claim filiation
Faye while Brad was away at work. During their marriage, Faye
gave birth to a baby girl, Laica. When Faye was 25 years old, Brad Paternity and filiation or the lack of the same is a relationship that
discovered her continued liaison with Roderick and in one of their must be judicially established and it is for the court to declare its
heated arguments, Faye shot Brad to death. She lost no time in existence or absence. It cannot be left to the will or agreement of
the parties (De Asis vs. Court of Appeals, G.R. 127578, February 15,
claiming that they have been continuously cohabiting for more
1999).
than 5 years. Can Laica be legitimated by the marriage of her
biological parents? (2008 Bar Question)
The manner of claiming filiation is the same for both legitimate and
illegitimate children
A: No, she cannot be legitimated by the marriage of her biological
parents. In the first place she is not, under the law, the child of
Person/s who may file for claim legitimate filiation
Roderick. In the second place, her biological parents could not have
validly married each other at the time she was conceived and born
GR: The right of claiming legitimacy belongs to the child
simply because Faye was still married to Roderick at that time.
Under Art. 177 of the FC, only children conceived or born outside
XPN: The right is transferred to his heirs when the child dies:
of wedlock of parents who, at the time of the conception of the
1. During minority or
child were not disqualified by any impediment to marry each other,
2. In a state of insanity.
may be legitimated.
3. After commencing the action for legitimacy

NOTE: Questioning legitimacy may not be collaterally attacked. It can be Baptismal certificate does not prove filiation
impugned only in a direct action
Just like in a birth certificate, the lack of participation of the
Person/s who may file for claim illegitimate filiation supposed father in the preparation of a baptismal certificate
renders this document incompetent to prove paternity. And while
GR: The right of claiming illegitimacy belongs to the child a baptismal certificate may be considered a public document, it can
only serve as evidence of the administration of the sacrament on
XPN: The right is transferred to his heirs when: the date specified but not the veracity of the entries with respect
1. During minority or to the childs paternity. Thus, baptismal certificates are per
2. In a state of insanity. se inadmissible in evidence as proof of filiation and they cannot be
3. After commencing the action for legitimate filiation admitted indirectly as circumstantial evidence to prove the
same. (Antonio Perla v. Mirasol Baring and Randy B. Perla, G.R.
Prescription of action to claim legitimacy or illegitimacy No. 172471, November 12, 2012).
An action must be brought: Q: May a will which was not presented for probate sufficiently
1. By the child during his lifetime establishes filiation?
2. By his heirs within 5 years should the child dies during
minority, in a state of insanity or after commencing the A: It still constitutes a public document or private handwritten
action for legitimacy instrument signed by parent concerned.
NOTE: Provided that the action for illegitimacy is based on admission of Prima facie case of sexual relations with the putative father
paternity or filiation in a birth certificate or written instrument.
However, if the action for illegitimacy is based on open and continuous We explained that a prima facie case exists if a woman declares
possession of status of illegitimate filiation or any other means allowed by supported by corroborative proof that she had sexual relations
the Rules of Court and special laws, the action must be brought during the with the putative father; at this point, the burden of evidence shifts
lifetime of the alleged parent. to the putative father. We explained further that the two
affirmative defenses available to the putative father are: (1)
Kinds of proof of filiation incapability of sexual relations with the mother due to either
physical absence or impotency, or (2) that the mother had sexual
Proof of filiation has two kinds: relations with other men at the time of conception (Charles
1. Primary proof consists of the ff: Gotardo v. Divina Buling, G.R. No. 165166, August 15, 2012).
a. Record of birth appearing in civil registrar or final
judgment; Q: Rosanna, as surviving spouse, filed a claim for death benefits
b. Admission of legitimate filiation in public document or with the SSS upon the death of her husband, Pablo. She indicated
private handwritten instrument signed by parent in her claim that the decedent is also survived by their minor
concerned. child, Lyn, who was born in 1991. The SSS granted her claim but
2. Secondary consists of the ff: this was withdrawn after investigation, when a sister of the
a. Open and continuous possession of legitimacy; decedent informed the system that Pablo could not have sired a
b. Any means allowed by the Rules of Court and special child during his lifetime because he was infertile. However in
laws. Lyns birth certificate, Pablo affixed his signature and he did not
impugn lyns legitimacy during his lifetime. Was the SSS correct in
NOTE: To prove open and continuous possession of the status of an withdrawing the death benefits?
illegitimate child, there must be evidence of manifestation of the permanent
intention of the supposed father to consider the child as his, by continuous
and clear manifestations of parental affection and care, which cannot be
A:No. Under Art. 164 of the FC, children conceived or born during
attributed to pure charity. the marriage of the parents are legitimate. This presumption
becomes conclusive in the absence of proof that there is physical
Such acts must be of such a nature that they reveal not only the conviction impossibility of access under Art. 166. Further, upon the expiration
of paternity, but also the apparent desire to have and treat the child as such of the periods for impugning legitimacy under Art. 170, and in the
in all relations in society and in life, not accidentally, but continuously (Jison proper cases under Art. 171, of the FC, the action to impugn would
v. CA, G.R. No. 124853, February 24, 1998). no longer be legally feasible and the status conferred by the
presumption becomes fixed and unassailable. In this case, there is
Rules in proving filiation no showing that Pablo, who has the right to impugn the legitimacy
of lyn, challenged her status during his lifetime. Furthermore, there
GR: Primary proof shall be used to prove filiation. is adequate evidence to show that the child was in fact his child,
and this is the birth certificate where he affixed his signature(SSS v.
XPN: In absence of primary proof, secondary proof may be Aguas, et al., G.R. No. 165546, February 27, 2006).
resorted to.
Q: In an action for partition of estate, the trial court dismissed it
Pictures or certificate of baptism do not constitute authentic on the ground that the respondent, on the basis of her birth
documents to prove the legitimate filiation of a child certificate, was in fact the illegitimate child of the deceased and
therefore the latter's sole heir, to the exclusion of petitioners.
Pictures or the canonical baptismal certificate do not constitute the However, trial court failed to see that in said birth certificate, she
authentic documents to prove the legitimate filiation of a child. was listed therein as adopted. Was the trial court correct in
The baptismal certificate of the child, standing alone, is not dismissing the action for partition?
sufficient. It is not a record of birth. Neither is it a public
instrument nor a private handwritten instrument (Abelle v. A:No. The trial court erred in relying upon the said birth certificate
Santiago, 7 SCRA 925). in pronouncing the filiation of the respondent. However, since she

CIVIL LAW
was listed therein as adopted, she should therefore have marriage contract between her alleged parents which would have
presented evidence of her adoption in view of the contents of her supported her claim.
birth certificate. In this case, there is no showing that she
undertook such. It is well-settled that a record of birth is merely In said birth certificate, it was indicated that her birth was
prima facie evidence of the facts contained therein. It is not recorded as the legitimate child of Ramon and Van Bolatis, and
conclusive evidence of the truthfulness of the statements made contains as well the word "married" to reflect the union between
there by the interested parties (Rivera v. Heirs of Romualdo the two. However, it was not signed by Ramon and Vanemon
Villanueva, G.R. No. 141501, July 21, 2006). Bolatis. It was merely signed by the attending physician, who
certified to having attended to the birth of a child. Does the
Q: In a complaint for partition and accounting with damages, Ma. presumption of legitimacy apply to Cherimon?
Theresa alleged that she is the illegitimate daughter of Vicente,
and therefore entitled to a share in the estate left behind by the A: No. Since the birth certificate was not signed by Cher's alleged
latter. As proof, she presented her birth certificate which Vicente parents but was merely signed by the attending physician, such a
himself signed thereby acknowledging that she is his daughter. Is certificate, although a public record of a private document is,
the evidence presented by Ma. Theresa sufficient to prove her under Sec. 23, Rule 132 of the Rules of Court, evidence only of the
claim that she is an illegitimate child of Vicente? fact which gave rise to its execution, which is, the fact of birth of a
child. A birth certificate, in order to be considered as validating
A:Yes. Citing the earlier case of De Jesus v. Estate of Juan Dizon, proof of paternity and as an instrument of recognition, must be
(366 SCRA 499), the Supreme Court held that the Ma. Theresa was signed by the father and mother jointly, or by the mother alone if
able to establish that Vicente was in fact her father. The due the father refuses. There having been no convincing proof of
recognition of an illegitimate child in a record of birth, a will, a respondent's supposed legitimate relations with respect to the
statement before a court of record, or in any authentic writing is, in decedent, the presumption of legitimacy under the law did not
itself, a consummated act of acknowledgment of the child, and no therefore arise in her favor (Angeles v. Angeles-Maglaya, G.R. No.
further court action is required. The rule is, any authentic writing is 153798, September2, 2005).
treated not just as a ground for compulsory recognition; it is in
itself a voluntary recognition that does not require a separate Q: On the basis of the physical presentation of the plaintiff-minor
action for judicial approval (Eceta v. Eceta, G.R. No. 157037, May before it and the fact that the alleged father had admitted having
20, 2004). sexual intercourse with the child's mother, the trial court, in an
action to prove filiation with support, held that the plaintiff-
Q: Gerardo filed a complaint for bigamy against Ma. Theresa, minor is the child of the defendant with the plaintiff-minor's
alleging that she had a previous subsisting marriage when she mother. Was the trial court correct in holding such?
married him. The trial court nullified their marriage and declared
that the son, who was born during their marriage and was A:No. In this age of genetic profiling and DNA analysis, the
registered as their son, as illegitimate. What is the status of the extremely subjective test of physical resemblance or similarity of
child? features will not suffice as evidence to prove paternity and filiation
before courts of law. This only shows the very high standard of
A: The first marriage being found to be valid and subsisting, proof that a child must present in order to establish filiation.
whereas that between Gerardo and Ma. Theresa was void and non-
existent; the child should be regarded as a legitimate child out of NOTE: The birth certificate that was presented by the plaintiff-minor appears
the first marriage. This is so because the child's best interests to have been prepared without the knowledge or consent of the putative
should be the primordial consideration in this case. father. It is therefore not a competent piece of evidence on paternity. The
local civil registrar in this case has no authority to record the paternity of an
illegitimate child on the information of a third person. Similarly, a baptismal
Q: Gerardo and Ma. Theresa, however, admitted that the child certificate, while considered a public document, can only serve as evidence
was their son. Will this affect the status of the child? of the administration of the sacrament on the date specified therein but not
the veracity of the entries with respect to the child's paternity
A:No. The admission of the parties that the child was their son was (Macadangdang v. CA, 100 SCRA 73). Thus, certificates issued by the local
in the nature of a compromise. The rule is that: the status and civil registrar and baptismal certificates are per se inadmissible in evidence as
filiation of a child cannot be compromised. Art. 164 of the FC is proof of filiation and they cannot be admitted indirectly as circumstantial
evidence to prove the same (Jison v. CA, 350 Phil. 138; Cabatania v. CA, G.R.
clear that a child who is conceived or born during the marriage of No. 124814. October 21, 2004).
his parents is legitimate(Concepcion v. CA, G.R. No. 123450. August
31, 2005). Q: Ann Lopez, represented by her mother Araceli Lopez, filed a
complaint for recognition and support of filiation against Ben-Hur
Q: What is the effect of Ma. Theresas claim that the child is her Nepomuceno. She assailed that she is the illegitimate daughter of
illegitimate child with her second husband, to the status of the Nepomuceno submitting as evidence the handwritten note
child? allegedly written and signed by Nepomuceno. She also
demanded for financial support along with filial recognition.
A:None. This declaration an avowal by the mother that her child Nepomuceno denied the assertions reasoning out that he was
is illegitimate is the very declaration that is proscribed by Art. 167 compelled to execute the handwritten note due to the threats
of the FC. This proscription is in consonance with, among others, of the National Peoples Army. RTC ruled in favor of Ann. Is the
the intention of the law to lean towards the legitimacy of children trial court correct?
(Concepcion v. CA, G.R. No. 123450. August 31, 2005).
A: Anns demand for support is dependent on the determination of
Q: In a petition for issuance of letters of administration, Cheri her filiation. However, she relies only on the handwritten note
Bolatis alleged that she is the sole legitimate daughter of executed by petitioner. The note does not contain any statement
decedent, Ramon and Van Bolatis. Phoebe, the decedent's second whatsoever about her filiation to petitioner. It is, therefore, not
wife, opposed the petition and questioned the legitimate filiation within the ambit of Article 172(2) vis--vis Art. 175 of the FC which
of Cheri to the decedent, asserting that Cheris birth certificate admits as competent evidence of illegitimate filiation an admission
was not signed by Ramon and that she had not presented the

of filiation in a private handwritten instrument signed by the 6. Emotionally and psychologically capable of caring for
parent concerned. children;
7. GR: At least 16 years older than adoptee
The Court is mindful that the best interests of the child in cases
involving paternity and filiation should be advanced. It is, however, XPN: It is not necessary that adopter be at least 16 years
just as mindful of the disturbance that unfounded paternity suits older:
cause to the privacy and peace of the putative fathers legitimate a. Adopter is the biological parent of the adoptee,
family (Ben-Hur Nepomuceno v. Archbencel Ann Lopez, represented b. Adopter is the spouse of adoptees parent.
by her mother Araceli Lopez G.R. No. 181258, March 18, 2010).
Qualifications of an alien who may adopt under R.A. 8552
ADOPTION
1. Possesses same qualifications as those enumerated for
Adoption Filipino adopters;
2. His country has diplomatic relations with the Philippines;
Adoption is defined as the process of making a child, whether 3. His government allows the adoptee to enter his country as his
related or not to the adopter, possess in general, the rights adopted child
accorded to a legitimate child. It is a juridical act, a proceeding in 4. He has been certified by his diplomatic or consular office or
any appropriate government agency that he has the legal
rem which creates between two persons a relationship similar to
capacity to adopt in their country
that which results from legitimate paternity and filiation.The
5. GR: Has been living in the Philippines for at least 3 continuous
modern trend is to consider adoption not merely as an act to
years prior to the application for adoption and maintains such
establish a relationship of paternity and filiation, but also as an act residence until adoption decree has been entered.
which endows the child with a legitimate status (In the Matter of
the Adoption Stephanie Nathy Astorga Garcia, G.R. 148311 March XPNs:
31, 2005). a. He is a former Filipino who seeks to adopt a relative
within the 4th civil degree of consanguinity or affinity,
The relationship established by the adoption is limited to the b. He is married to a Filipino and seeks to adopt jointly with
adopting parents and does not extend to their other relatives, his spouse a relative within the 4th degree of
except as expressly provided by law. Thus, the adopted child consanguinity or affinity,
cannot be considered as a relative of the ascendants and c. He is married to a Filipino and seeks to adopt the
collaterals of the adopting parents, nor of the legitimate children legitimate or illegitimate child of his Filipino spouse.
which they may have after the adoption, except that the law
imposes certain impediments to marriage by reason of adoption. Rule when a person seeking to adopt has a spouse
Neither are the children of the adopted considered descendants of
the adopter. GR: Such person must adopt with his spouse jointly.
Preference in adoption XPNs:

1. One spouse seeks to adopt the legitimate son or daughter of
1. Adoption by the extended family the other;
2. Domestic Adoption 2. One spouse seeks to adopt his own illegitimate son or
3. Inter-Country Adoption daughter;
DOMESTIC ADOPTION LAW NOTE: In seeking to adopt his own illegitimate son or daughter, the
law requires that the consent of the spouse of the adopter must be
Domestic Adoption given to such adoption.
Applies to adoption of Filipino children, where the entire adoption If on the other hand, the spouse would adopt the illegitimate son or
process beginning from the filing of the petition up to the issuance daughter of the other, joint adoption is still mandatory
of the adoption decree takes place in the Philippines (Rabuya,
2009). 3. Spouses are legally separated.
WHO CAN ADOPT Q: Spouses Primo and Monina Lim, childless, were entrusted with
the custody of two minor children, the parents of whom were
Who can adopt unknown. Eager to have children of their own, the spouses made
it appear that they were the childrens parents by naming them
1. Filipino citizens; Michelle P. Lim and Michael Jude Lim. Subsequently, Monina
2. Aliens; married Angel Olario after Primos death. She decided to adopt
3. Guardians with respect to their ward. the children by availing the amnesty given under R.A. 8552 to
those individuals who simulated the birth of a child. She filed
NOTE: A guardian may only adopt his ward after termination of separate petitions for the adoption of Michelle, then 25 years old
guardianship and clearance of his financial accountabilities.
and Michael, 18. Both Michelle and Michael gave consent to the
adoption.
Qualifications of a Filipino who may adopt
The trial court dismissed the petition and ruled that Monina
1. Must be of legal age; should have filed the petition jointly with her new husband.
2. In a position to support and care for his children; Monina, in a Motion for Reconsideration argues that mere
3. Good moral character; consent of her husband would suffice and that joint adoption is
4. Full civil capacity and legal rights; not needed, for the adoptees are already emancipated.
5. Not been convicted of any crime involving moral turpitude;

CIVIL LAW
Is the trial court correct in dismissing the petitions for adoption? Necessity of written consent for adoption under domestic
adoption
A: Yes. Sec. 7 Art. 3 of R.A. 8552 reads: Sec. 7 Husband and wife
shall jointly adopt xxx. The written consent of the following is necessary for adoption:
1. Biological parent(s) of the child, if known, or the legal
The use of the word shall in the above-quoted provision means guardian, or the proper government instrumentality which
that joint adoption by the husband and the wife is mandatory. This has legal custody of the child;
is in consonance with the concept of joint parental authority over 2. Adoptee, if ten (10) years of age or over;
the child which is the ideal situation. As the child to be adopted is 3. Illegitimate sons/daughters, ten (10) years of age or over, of
elevated to the level of a legitimate child, it is but natural to the adopter if living with said adopter and the latter's spouse,
require the spouses to adopt jointly. The rule also ensures if any;
harmony between the spouses. 4. Legitimate and adopted sons/daughters, ten (10) years of age
or over, of the adopter(s) and adoptee, if any;
The law is clear. There is no room for ambiguity. Monina, having 5. Spouse, if any, of the person adopting or to be adopted.
remarried at the time the petitions for adoption were filed, must
jointly adopt. Since the petitions for adoption were filed only by Q: Bernadette filed a petition for adoption of the three minor
Monina herself, without joining her husband, Olario, the trial court children of her late brother, Ian. She alleged that when her
was correct in denying the petitions for adoption on this ground (In brother died, the children were left to the care of their paternal
Re: Petition for Adoption of Michelle P. Lim, In Re: Petition for grandmother, Anna, who went to Italy. This grandmother died
Adoption of Michael Jude P. Lim, Monina P. Lim, G.R. Nos. 168992- however, and so she filed the petition for adoption. The minors
93, May 21, 2009). gave their written consent to the adoption and so did all of her
own grown-up children. The trial court granted the decree of
Joint adoption when the adoptees are already emancipated adoption even though the written consent of the biological
mother of the children was not adduced by Bernadette. Was the
Even if emancipation terminates parental authority, the adoptee is trial court correct in granting the decree of adoption?
still considered a legitimate child of the adopter with all the rights
of a legitimate child such as: (1) to bear the surname of the father A:No. The rule is adoption statutes must be liberally construed in
and the mother; (2) to receive support from their parents; and (3) order to give spirit to their humane and salutary purpose which is
to be entitled to the legitime and other successional rights. to uplift the lives of unfortunate, needy or orphaned children.
Conversely, the adoptive parents shall, with respect to the adopted However, the discretion to approve adoption proceedings on the
child, enjoy all the benefits to which biological parents are entitled part of the courts should not to be anchored solely on those
such as support and successional rights. principles, but with due regard likewise to the natural rights of the
parents over the child. The written consent of the biological
Q: May a person who already has children of his own adopt? parents is indispensable for the validity of the decree of adoption.
Indeed, the natural right of a parent to his child requires that his
A:Yes, a person who already has children of his own may still consent must be obtained before his parental rights and duties
adopt, provided, that he is in a position to support and care for his may be terminated and vested in the adoptive parents. In this case,
children, legitimate or illegitimate, in keeping with the means of since the minors' paternal grandmother had taken custody of
the family, both material and otherwise (Art. 183 [1], FC). them, her consent should have been secured instead in view of the
absence of the biological mother. This is so under Sec. 9 (b) of R.A.
ADOPTEE 8552, otherwise known as the Domestic Adoption Act of 1998.
Diwata failed in this respect, thus necessitating the dismissal of her
Adoptee petition for adoption (Landingin v. Republic, G.R. No. 164948, June
27, 2006).
1. Any person below eighteen (18) years of age who has been
administratively or judicially declared available for adoption; Effects of Domestic Adoption
2. The legitimate son/daughter of one spouse by the other
spouse; 1. GR: Severance of all legal ties between the biological parents
3. An illegitimate son/daughter by a qualified adopter to and the adoptee and the same shall then be vested on the
improve his/her status to that of legitimacy; adopters
4. A person of legal age if, prior to the adoption, said person has
been consistently considered and treated by the adopter(s) as XPN: In cases where the biological parent is the spouse of the
his/her own child since minority; adopter;
5. A child whose adoption has been previously rescinded; or
6. A child whose biological or adoptive parent(s) has 2. Deemed a legitimate child of the adopter;
died: Provided, that no proceedings shall be initiated within 3. Acquires reciprocal rights and obligations arising from parent-
child relationship;
six (6) months from the time of death of said parent(s).
4. Right to use surname of adopter;
5. In legal and intestate succession, the adopters and the
Child
adoptee shall have reciprocal rights of succession without
distinction from legitimate filiation. However, if the adoptee
A child is any person below 18 years old.
and his/her biological parents had left a will, the law on
testamentary succession shall govern.
Child legally free for adoption
Q: Who may file the action for rescission of domestic adoption?
A child voluntarily or involuntarily committed to the DSWD, is freed
of his biological parents, guardians, or adopters in case of
A: The adoptee has the sole right to sever the legal ties created by
rescission.
adoption and the one who will file the action for rescission.

However, if the adoptee is still a minor or above 18 years of age c. In his old age, can Andrew be legally entitled to claim
but incapacitated, the Department of Social and Welfare support from Amy, Jon, Ryan, Vina, Wilma and Sandy
Development as the adoptees guardian or counsel may assist the assuming that all of them have the means to support him?
adoptee for rescinding the decree of adoption. d. Can Amy, Jon, Ryan, Vina, Wilma and Sandy legally claim
support from each other?
The adopter cannot seek the rescission of the adoption but he may e. Can Jon and Jane legally marry? (2008 Bar Question)
disinherit the adoptee.
A:
Grounds upon which an adoptee may seek judicial rescission of a. No, there is no legal obstacle to the legal adoption of Amy by
the adoption Andrew. While a person of age may not be adopted, Amy falls
within two exceptions: (1) she is an illegitimate child and she
When the adopter has committed the following: is being adopted by her illegitimate father to improve her
1. Repeated physical and verbal maltreatment by the adopter status; and (2) even on the assumption that she is not an
despite having undergone counselling illegitimate child of Andrew, she may still be adopted,
2. Attempt on the life of the adoptee although of legal age, because she has been consistently
3. Sexual assault or violence committed against the adoptee considered and treated by the adopter as his own child since
4. Abandonment and failure to comply with parental obligations minority. In fact, she has been living with him until now.
Grounds by which an adopter may disinherit adoptee b. Yes. There is a legal obstacle to the adoption of Sandy by
Andrew and Elena. Andrew and Elena cannot adopt jointly
1. Groundless accusation against the testator of a crime because they are not married.
punishable by 6 years or more imprisonment;
2. Found guilty of attempt against the life of the testator, c. Yes. Andrew can claim support from all of them, except from
his/her spouse, descendant or ascendant; Sandy, who is not his legitimate, illegitimate or adopted child.
3. Causes the testator to make changes or changes a testators
will through violence, intimidation, fraud or undue influence; d. Yes. Amy, Jon, Ryan, Vina and Wilma can ask support from
4. Maltreatment of the testator by word or deed; each other because they are half-blood brothers and sisters,
5. Conviction of a crime which carries a penalty of civil and Vina and Wilma are full-blood sisters (Art. 195 [5], FC),
interdiction; but not Sandy who is not related to any of them.
6. Adultery or concubinage with the testators wife;
7. Refusal without justifiable cause to support the parent or e. Yes. Jon and Jane can legally marry because they are not
ascendant; related to each other. Jane is not a daughter of Andrew.
8. Leads a dishonorable or disgraceful life.
INTERCOUNTRY ADOPTION ACT OF 1995
Effects of rescission of the adoption under the Domestic Adoption (R.A. 8043)
Act of 1998 (RA 8552)
Inter-Country Adoption
1. If adoptee is still a minor or is incapacitated Restoration of:
a. Parental authority of the adoptees biological parents, if It is a socio-legal process of adopting a Filipino child by a foreigner
known or or a Filipino citizen permanently residing abroad where the petition
b. Legal custody of the DSWD; is filed, the supervised trial custody is undertaken, and the decree
2. Reciprocal rights and obligations of the adopters and adoptee of adoption is issued outside the Philippines (Sec. 3(a), RA 8043).
to each other shall be extinguished;
3. Court shall order the civil registrar to cancel the amended ADOPTER
certificate of birth of the adoptee and restore his/her original
birth certificate; Adopter
4. Succession rights shall revert to its status prior to adoption,
but only as of the date of judgment of judicial rescission; 1. Any alien;
5. Vested rights acquired prior to judicial rescission shall be 2. Filipino citizen, both permanently residing abroad.
respected.
Qualifications needed for a Filipino or alien to adopt
Q: Despite several relationships with different women, Andrew
remained unmarried. His first relationship with Brenda produced 1. At least 27 years old and 16 years older than the child to be
a daughter, Amy, now 30 years old. His second, with Carla, adopted at the time of the application unless:
produced two sons: Jon and Ryan. His third, with Donna, bore a. adopter is the parent by nature of the child;
him two daughters: Vina and Wilma. His fourth, while Elena, bore b. adopter is the spouse of the parent by nature of the
him no children although Elena has a daughter Jane, from a child to be adopted
previous relationship. His last, with Fe, produced no biological 2. If married, his spouse must jointly file for adoption;
children but they informally adopted without court proceedings, 3. Has the capacity to act or assume all rights and
Sandy, now 13 years old, whom they consider as their own. Sandy responsibilities of parental authority;
was orphaned as a baby and was entrusted to them by the 4. Not been convicted of a crime involving moral turpitude;
midwife who attended to Sandys birth. All the children, including 5. Eligible to adopt under his national law;
Amy, now live with Andrew in his house. 6. In a position to provide for proper care and support and give
necessary moral values;
a. Is there any legal obstacle to the legal adoption of Amy by 7. Agrees to uphold the basic rights of the child mandated by
Andrew? the UN convention of rights of Child and the Philippine Laws;
b. To the legal adoption of Sandy by Andrew and Elena? 8. Comes from a country with which the Philippines has
diplomatic relations and adoption is allowed under his

CIVIL LAW
national law; Commitment.
9. Possesses all the qualifications and none of the
disqualifications under the law or other applicable Philippine XPN:
1. Adoption by relative;
laws. 2. Child with special medical condition.
Necessity of written consent for adoption in intercountry INTER-COUNTRY ADOPTION BOARD

adoption
Function of Inter-Country Adoption Board
The written consent of the following is necessary for adoption:
1. Written consent of the adopters biological or adopted The Inter-Country Adoption Board (ICAB) acts as the central
children above ten (10) years of age in the form of sworn authority in matters relating to inter-country adoption. The Board
statement is required to be attached to the application to be shall ensure that all the possibilities for adoption of the child under
filed with the Family Court or Inter-Country Adoption Board the Family Code have been exhausted and that the inter-country
2. If a satisfactory pre-adoptive relationship is formed between adoption is in the best interest of the child
the applicant and the child, the written consent to the
adoption executed by the DSWD is required. Trial custody
Q: Sometime in 1990, Sarah, born a Filipino but by then a It is the pre-adoptive relationship which ranges 6 months from the
naturalized American citizen, and her American husband Sonny time of the placement. It starts from the actual transfer of the child
Cruz, filed a petition in the Regional Trial Court of Makati, for the to the applicant who, as actual custodian, shall exercise substitute
adoption of the minor child of her sister, a Filipina, can the parental authority over the person of the child
petition be granted? (2000 Bar Question)
Results of Trial Custody
A: It depends. If Sonny and Sarah have been residing in the
Philippines for at least 3 years prior to the effectivity of R.A. 8552, 1. If unsatisfactory the relationship shall be suspended by the
the petition may be granted. Otherwise, the petition cannot be board and the foreign adoption agency shall arrange for the
granted because the American husband is not qualified to adopt. childs voluntary care.
2. If satisfactory the Board shall submit the written consent of
While the petition for adoption was filed in 1990, it was considered the adoption to the foreign adoption agency within 30 days
refiled upon the effectivity of R.A. 8552. This is the law applicable, after the request of the latters request.
the petition being still pending with the lower court. Under the Act,
Sarah and Sonny must adopt jointly because they do not fall in any SUPPORT
of the exceptions where one of them may adopt alone. When
husband and wife must adopt jointly, the Supreme Court has held Support
in a line of cases that both of them must be qualified to adopt.
While Sarah, an alien, is qualified to adopt, for being a former It comprises everything indispensable for sustenance, dwelling,
Filipino citizen who seeks to adopt a relative within the 4th degree clothing, medical attendance and transportation, in keeping with
of consanguinity or affinity, Sonny, an alien, is not qualified to the financial capacity of the family, including the education of the
adopt because he is neither a former Filipino citizen nor married to person entitled to be supported until he completes his education
a Filipino. One of them not being qualified to adopt, their petition or training for some profession, trade or vocation, even beyond the
has to be denied. However, if they have been residents of the age of majority (Art. 194, FC).
Philippines 3 years prior to the effectivity of the Act and continues
to reside here until the decree of adoption is entered, they are Characteristics of support
qualified to adopt the nephew of Sarah under Sec. 7(b) thereof,
and the petition may be granted. 1. Personal
2. Reciprocal on the part of those who are by law bound to
ADOPTEE support each other
3. Intransmissible
Adoptee 4. Mandatory
5. Provisional character of support judgment
Only a legally free child may be adopted provided the following are 6. Exempt from attachment or execution
submitted: 7. Not subject to waiver or compensation
1. Child study;
2. Birth certificate/ foundling certificate; COMPOSITION OF SUPPORT
3. Deed of Voluntary Commitment/Decree of
Abandonment/Death Certificate of parents; Composition of support
4. Medical evaluation or history;
5. Psychological evaluation; Support comprises everything indispensable for:
6. Recent photo; 1. Sustenance
2. Dwelling
Child 3. Clothing
4. Medical attendance
A child is any person below 15 years old. 5. Education includes schooling or training for some
profession, trade or vocation, even beyond the age of
NOTE: No child shall be matched to a foreign adoptive family unless it is
satisfactorily shown that the child cannot be adopted in the Philippines.
majority
6. Transportation includes expenses going to and from school,
GR: There shall be no physical transfer of a voluntarily committed child or to from place of work
earlier than 6 months from the date of execution of Deed of Voluntary

Kinds of support Children
From the From the separate
1. Legal required or given by law; From the community
community properties of the
2. Judicial required by court;May be: property
property spouses
a. Pendente lite
b. In a final judgment Liability to support
3. Conventional by agreement.
The liability to support devolves uponin the following order:
Rules on support of illegitimate children of either spouse 1. Spouse
2. Descendants in the nearest degree
It depends upon the property regime of the spouses. 3. Ascendants in the nearest degree
4. Brothers and sisters
1. ACP:
a. Exclusive property of the debtor spouse shall be liable. Q: Belen, in behalf of her minor children, instituted a petition for
b. If the exclusive property is insufficient, the community is declaration of legitimacy and support against Federico, their
liable. alleged father, and Francisco, father of Federico. It appears that
the marriage of the two was annulled due to the minority of
NOTE: The same being considered as advance made by the absolute Federico. May Francisco be ordered to give support?
community to said spouse.
A: Yes. There appears to be no dispute that the children are indeed
2. CPG: the daughters of Federico by Belen. Under Art. 199 of the FC,
a. Property of the debtor-spouse is liable. Whenever two or more persons are obliged to give support, the
b. If the debtor spouse has no property or the same is liability shall devolve upon the following persons in the following
insufficient, it may be enforced against the conjugal order herein provided:
property. 1. The spouse;
2. The descendants in the nearest degree;
PERSONS OBLIGED TO GIVE SUPPORT 3. The ascendants in the nearest degree: and
4. The brothers and sisters.
Persons obliged to support each other
The obligation to give support rests principally on those more
1. Spouses; closely related to the recipient. However, the more remote
relatives may be held to shoulder the responsibility should the
NOTE: The spouse must be the legitimate spouse in order to be
entitled to support
claimant prove that those who are called upon to provide support
do not have the means to do so. Here, since it has been shown that
2. Legitimate ascendants & descendants; the girls' father, Federico, had no means to support them, then
3. Parents and their legitimate children, and the legitimate and Francisco, as the girls grandfather, should then extend the support
illegitimate children of the latter; needed by them.
4. Parents and their illegitimate children, and the legitimate and
illegitimate children of the latter; NOTE: The second option in Art. 204 of the FC, that of taking in the family
dwelling the recipient, is unavailing in this case since the filing of the case
5. Legitimate brothers and sisters whether full or half-blood
has evidently made the relations among the parties bitter and unpleasant
(Art. 195, FC). (Mangonon, et al. v. CA, et al., G.R. No. 125041, Jun. 30, 2006).
NOTE:Brothers and sisters not legitimately related likewise bound to

Q: Marcelo and Juana called Dr. Arturo to their house to render
support each other. However, when the need for support of the
brother or sister, being of age, is due to a cause imputable to the
medical assistance to their daughter-in-law who was about to
claimants fault or negligence. In this case, the illegitimate brother or give birth to a child. He performed the necessary operation.
sister has no right to be supported. When Dr. Arturo sought payment, Marcelo and Juana refused to
pay him without giving any good reason. Who is bound to pay the
Sources of support bill for the services rendered by Arturo?
SOURCES OF SUPPORT
During A:Her husband, not her father and mother- in-law. The rendering
Pending Litigation After Litigation of medical assistance in case of illness is comprised among the
Marriage
Spouses mutual obligations to which the spouses are bound by way of
ACP GR: No obligation mutual support (Arts. 142 and 143). If every obligation consists in
GR: From the community to support giving, doing or not doing something (Art. 1088), and spouses are
property assets mutually bound to support each other, there can be no question
XPN: If there is but that, when either of them by reason of illness should be in
XPN: If Art. 203 applies,
that if the claimant Legal Separation. need of medical assistance, the other is under the unavoidable
spouse is the guilty In which case, the obligation to furnish the necessary services of a physician in order
From the spouse, he/she is not court may require that health may be restored, and he or she may be freed from the
community entitled to support. the guilty spouse sickness by which life is jeopardized.
property to give support
CPG Q: Cheryl married Edward Lim and they begot three children.
Support is considered an Cheryl, Edward and their children lived at the house of Edwards
advance of such spouses parents, Prudencio and Filomena, together with Edwards ailing
share.
grandmother and her husband. Edward was employed with the
NOTE: The rule does not family business, which provided him with a monthly salary of
apply if the spouses are under P6,000 and shouldered the family expenses. Cheryl had no steady
ACP based on Art. 153.

CIVIL LAW
source of income. Cheryl caught Edward in a very compromising support. But if both are equally at fault, the principle of in pari
situation with the midwife of Edwards grandmother. After a delicto applies in which case, the husband cannot avail of the
violent confrontation with Edward, Cheryl left the Forbes Park defense of adultery.
residence. She subsequently sued, for herself and her children,
Edward, Edwards parents and grandparents for support. Edward Q: H and W are living separately. Both had been unfaithful to
and his parents were ordered by the RTC to jointly provide, each other. After their separation, H had been giving money to W
monthly support to Cheryl and her children. Is the courts for her support. Subsequently, W brought an action against H for
judgment in making Edwards parents concurrently liable with separate maintenance. Will the action prosper?
Edward to provide support to Cheryl and her children correct?
A:Yes. The principle of in pari delicto is applicable. Both are at
A: Yes. However, the Supreme Court modified the appealed fault. Consequently, H cannot avail of himself of the defense of
judgment by limiting liability of Edwards parents to the amount of adultery of W. Besides, the act of H in giving money to W is implied
monthly support needed by Cheryls children. Edwards parents are condonation of the adultery of W (Amacen v. Baltazar, L-10028,
liable to provide support but only to their grandchildren. By May 28, 1958).
statutory and jurisprudential mandate, the liability of ascendants
to provide legal support to their descendants is beyond cavil. AMOUNT
Petitioners themselves admit as much they limit their petition to
the narrow question of when their liability is triggered, not if they Amount of support
are liable.
Amount shall be in proportion to the resources or means of the
There is no showing that private respondent is without means to giver and to the necessities of the recipient (Art. 201, FC).
support his son; neither is there any evidence to prove that
petitioner, as the paternal grandmother, was willing to voluntarily Support may be decreased or increased proportionately according
provide for her grandson's legal support. Cheryl is unable to to the reduction or increase of the necessities of the recipient and
discharge her obligation to provide sufficient legal support to her the resources of the person obliged to furnish the same (Art. 202,
children. It also shows that Edward is unable to support his FC).
children. This inability of Edward and Cheryl to sufficiently provide
for their children shifts a portion of their obligation to the WHEN DEMANDABLE
ascendants in the nearest degree, both in the paternal (petitioners)
and maternal lines, following the ordering in Article 199 (Spouses The obligation to give support is demandable from the time the
Lim v. Cheryl Lim, G.R. No. 163209, October 30, 2009). person who has a right to receive support needs it for
maintenance.
SUPPORT DURING MARRIAGE LITIGATION
The support shall be paid only from the date of judicial or
Source of support during the pendency of legal separation, extrajudicial demand.
annulment and declaration of nullity of marriage proceedings
The right to support does not arise from mere fact of relationship
The spouses and their common children shall be supported from but from imperative necessity without which it cannot be
the properties of the absolute community or the conjugal demanded. The law presumes that such necessity does not exist
partnership. unless support is demanded.
Mutual support of the spouses after the final judgment granting

OPTIONS
the petition for legal separation, annulment and declaration of
nullity of marriage
Options given to persons giving support
GR: Spouses areno longer obliged to render mutual support after
final judgment. The obligation of mutual support ceases after final 1. To give a fixed monthly allowance; or
judgment. 2. To receive and maintain the recipient in the givers home or
family dwelling (Art. 204, FC).
XPN: In case of legal separation the Court may order that the guilty
spouse shall give support to the innocent one. Q: What if support is given by a stranger without the knowledge
of the person obliged to give support?
Q: May the woman oblige her husband to pay the attorneys fee
for the lawyer who defended her in a criminal action for adultery A:
instituted against her by the husband?
GR: The stranger shall have the right of reimbursement.
A:It depends. She may, in case of acquittal. Expenses such as
judicial costs and attorneys fees incurred by the wife to defend XPN: Unless it appears that he gave it without any intention of
herself against unjust prosecution are chargeable as support being reimbursed (Art. 206, FC).
against the husband. However, the rule is different in case of
conviction. Adultery on the part of the wife, when proved, is a valid Q: What if the person obliged to give support unjustly refuses or
defense against an action for support (Quinatana v. Lerma, G.R. fails to give support when urgently needed?
No. L-7426, February 5, 1913).
A: Any third person may furnish support to the needy individual,
Effect of adultery of the wife with a right of reimbursement (Art. 207, FC).
Adultery of the wife is a valid defense in an action for support. If

adultery is proved and sustained, it will defeat the action for

ATTACHMENT enriching himself at the expense of another (Lacson v. Lacson, et

al., GR No. 150644, August 28, 2006).
Attachment or execution of the right to receive support
Q: Fe and her son Martin sued Martins alleged biological father
GR: The right to receive support and any money or property Arnel for support. Arnel denied having sired Martin, arguing that
obtained as support cannot be attached nor be subject to his affair and intimacy with Fe had allegedly ended in long before
execution to satisfy any judgment against the recipient. Martins conception. As a result, Fe and Martin moved for the
issuance of an order directing all the parties to submit themselves
XPN: In case of contractual support or support given by will, the to DNA paternity testing. The said motion was granted by the
excess in amount beyond that required for legal support shall be court. Did the order of the court convert the complaint for
subject to levy on attachment or execution. support to a petition for recognition?
NOTE: Contractual support shall be subject to adjustment whenever A: The assailed order did not convert the action for support into
modification is necessary due to changes in circumstances beyond the one for recognition but merely allowed Fe to prove their cause of
contemplation of the parties action. But even if the order effectively integrated an action to
compel recognition with an action for support, such was valid and
Q: Jurisdictional questions may be raised at any time. What is the in accordance with jurisprudence. In Tayag v. Court of Appeals (209
exception with respect to the provisional character of judgment SCRA 665), the Supreme Court allowed the integration of an action
for support and the application of estoppel? to compel recognition with an action to claim one's inheritance. A
separate action will only result in a multiplicity of suits.
A: Judgment for support is always provisional in character. Res Furthermore, the declaration of filiation is entirely appropriate to
Judicata does not apply. The lower court cannot grant a petition the action for support (Agustin v. CA, G.R. No. 162571, June 15,
based on grounds, such as bigamy, not alleged in the petition. Such 2005).
a decision based on grounds not alleged in the petition is void on
the ground of no jurisdiction. Q: Can DNA testing be ordered in a proceeding for support
without violating the constitutional right against self-
However, if the lower courts void decision is not assailed on incrimination?
appeal which dealt only with the matter of support, the losing
party is now estopped from questioning the declaration of nullity A: Yes. In People v. Yatar (428 SCRA 504), the Supreme Court had
and the SC will not undo the judgment of the RTC declaring the already upheld the constitutionality of compulsory DNA testing and
marriage null and void for being bigamous. the admissibility of the results thereof as evidence. Moreover, it
has mostly been in the areas of legality of searches and seizure and
It is axiomatic that while a jurisdictional question may be raised at in the infringement of privacy of communication where the
any time, this however admits of an exception where estoppel has constitutional right to privacy has been critically at issue.
supervened (Lam v. Chua, G.R. No. 131286, March 18, 2004).
If, in a criminal case, an accused whose very life is at stake can be
Q: Edward abandoned his legitimate children when they were compelled to submit to DNA testing, so much more so may a party
minors. After 19 years from the time Edward left them, they, in a civil case, who does not face such dire consequences, be
through their mother, finally sued him for support, which the likewise compelled. DNA testing and its results is now acceptable
court granted. The court ordered him to pay 2M pesos as support as object evidence without running afoul self-incrimination rights
in arrears. of a person (Agustin v. CA, GR No. 162571, June 15, 2005).
Edward assails the grant of the support in arrears as erroneous PARENTAL AUTHORITY
since under Art. 203 of the FC, there was never any demand for
support, judicial or extra-judicial, from them. Rule on his Parental authority
contention.
Parental authority refers to mass of rights and obligations which
A:No. Edward could not possibly expect his daughters to demand parents have in relation to the person and property of their
support from him considering their tender years at the time that children until the latter reaches the age of majority, the
he abandoned them. In any event, the mother of the girls had obligational aspect is now supreme. In other words, the rights of
made the requisite demand for material support although this was the parents are but ancillary to the proper discharge of parental
not in the standard form of a formal written demand. Asking one duties to their children under parental authority
to give support owing to the urgency of the situation is no less a
demand just because it came by way of a request or a plea (Lacson GENERAL PROVISIONS
v. Lacson, et al., G.R. No. 150644, August 28, 2006).
Patria potestas
Q: Noel helped Lea by extending financial help to support Leas
children with Edward. May Noel seek reimbursement of his The sum total of the rights of parents over the person and property
contributions? If yes, from whom may he do so? of their minor child.
A: Yes. Pursuant to Art. 207 of the FC, Noel can rightfully exact Parental authority includes
reimbursement from Edward. This provision reads that "[W]hen
the person obliged to support another unjustly refuses or fails to 1. Caring for and rearing of such children for civic consciousness
give support when urgently needed by the latter, any third person and efficiency;
may furnish support to the needy individual, with right of 2. Development of their moral, mental and physical character
reimbursement from the person obliged to give support." The and well-being.
resulting juridical relationship between the Edward and Noel is a
quasi-contract, an equitable principle enjoining one from unjustly

CIVIL LAW
Characteristics of parental authority can deny his petition for the exercise of his visitation rights (Silva v.
CA, G.R. No. 114742, July 17, 1997).
1. Jointly exercised by the father and mother;
2. Natural right and duty of the parents; Parental preference rule
3. GR: Cannot be Renounced, transferred or waived;
The natural parents, who are of good character and who can
XPN: In cases authorized by law such as in cases of adoption, reasonably provide for the child are ordinarily entitled to custody
guardianship and surrender to a children's home or an as against all persons.
orphan institution (Santos v. CA, G.R. No. 113054, March 16,
1995). Exercise of parental authority in case of absence, death,
remarriage of either parent, or legal or de facto separation of
4. Purely personal; parents
5. Temporary.
1. Absence or death of either parent parent present shall
Exercise of parental authority continue exercising parental authority
2. Remarriage of either parent it shall not affect the parental
1. The father and the mother shall jointly exercise parental authority over the children, unless the court appoints another
authority over the persons of their common children. In case person to be the guardian of the person or property of the
of disagreement, the fathers decision shall prevail unless children (Art. 213, FC).
there is a judicial order to the contrary. 3. Legal or de facto separation of parents the parent
2. If the child is illegitimate, parental authority is with the designated by the court.
mother.
Considerations in the designation of child custody
Visitation rights
The Court shall take into account all relevant considerations in the
It is the right of access of a noncustodial parent to his or her child designation of the parent, especially the choice of the child over
or children. seven years of age except when the parent chosen is unfit.
Q: Who are entitled of visitation rights? NOTE: The relevant Philippine law on child custody for spouses separated in
fact or in law (under the second paragraph of Art. 213 of the FC) is also
undisputed: no child under seven years of age shall be separated from the
A: The following are entitled for visitation rights:
mother x x x.(This statutory awarding of sole parental custody to the
1. The non-custodial parent in cases of: mother is mandatory,grounded on sound policy consideration, subject only
a. Legal separation to a narrow exception not alleged to obtain here.) Clearly then, the
b. Separation de facto Agreements object to establish a post-divorce joint custody regime between
c. Annulment respondent and petitioner over their child under seven years old
d. Declaration of nullity on the ground of psychological contravenes Philippine law. The Philippine courts do not have the authority
incapacity or failure to comply with the requirements of to enforce an agreement that is contrary to law, morals, good customs,
Article 52 public order, or public policy (Dacasin v. Dacasin, G.R. No. 168785, February
5, 2010).
2. Illegitimate father over his illegitimate child
NOTE: In case of annulment or declaration of absolute nullity of marriage,

Tender-Age Presumption
Article 49 of the Family Code grants visitation rights to a parent who is
deprived of custody of his children. Such visitation rights flow from the GR: No child below 7 years of age shall be separated from the
natural right of both parent and child to each others company. There being mother because the law presumes that the mother is the best
no such parent-child relationship between them, a person has no legally custodian.
demandable right of visitation (Concepcion vs. Court of Appeals, G.R. 123450,
August 31, 2005). XPN: When the court finds compelling reasons to consider
otherwise
Q: Carlitos Silva and Suzanne Gonzales had a live-in relationship.
They had two children, namely, Ramon Carlos and Rica Natalia. NOTE: The paramount consideration in matters of custody of a child is the
Silva and Gonzales eventually separated. They had an welfare and well-being of the child
understanding that Silva would have the children in his company
on weekends. Silva claimed that Gonzales broke that The use of the word shall in Art. 213 of the FC is mandatory in character. It
understanding on visitation rights. Hence, Silva filed a petition for prohibits in no uncertain terms the separation of a mother and her child
custodial rights over the children before the RTC. The petition below 7 years, unless such separation is grounded upon compelling reasons
as determined by a court (Lacson v. San Jose-Lacson, G.R. No. L-23482,
was opposed by Gonzales who claimed that Silva often engaged August 30, 1968).
in gambling and womanizing which she feared could affect the
moral and social values of the children. In the meantime, Suzanne
had gotten married to a Dutch national. She eventually The so-called tender-age presumption under Article 213 of the
immigrated to Holland with her children Ramon Carlos and Rica Family Code may be overcome only by compelling evidence of the
Natalia. Can Silva be denied visitation rights? mothers unfitness. The mother has been declared unsuitable to
have custody of her children in one or more of the following
A: GR: No. instances: neglect, abandonment, unemployment, immorality,
habitual drunkenness, drug addiction, maltreatment of the child,
XPN: If the fears and apprehensions were unfounded as to the insanity or affliction with a communicable disease (Pablo-
fathers corrupting influence over the children and if it is proven Gualberto vs. Gualberto, G.R. 154994 & 156254, June 28, 2005).
therefore that indeed the father is a negative influence because of
reasons like immorality, drunkenness, etc. on the children, the
court, taking into consideration the best interest of the children,

Q: If the parents are separated de facto, who between them has judicial guardian over the persons and estate of Valerie Vancil
custody over their child/ children? and Vincent Vancil, Jr. She alleged that Helen was morally unfit as
guardian of Valerie considering that Helens live-in partner raped
A: In the absence of a judicial grant of custody to one parent, both Valerie several times. Can Bonifacia exercise substitute parental
of them have custody over their child/children authority over Valerie and Vincent?
The parent who has been deprived of the rightful custody of the A: Bonifacia, as the surviving grandparent, can exercise substitute
child may resort to the remedy of habeas corpus(Salientes v. parental authority only in case of death, absence or unsuitability of
Abanilla, G.R. No. 162734, August 29, 2006). Helen. Considering that Helen is very much alive and has exercised
continuously parental authority over Vincent, Bonifacia has to
Q: The petition for declaration of nullity of marriage filed by prove, in asserting her right to be the minors guardian, Helens
Crisanto against his wife included a prayer for custody pendente unsuitability. Bonifacia, however, has not proffered convincing
lite of their 4-year old son. The supplication for custody was evidence showing that Helen is not suited to be the guardian of
based on the alleged immorality of the mother who, the husband Vincent. Bonifacia merely insists that Helen is morally unfit as
asserted, was a lesbian. However, the trial court citing Art. 213 of guardian of Valerie considering that her live-in partner raped
the FC, denied Crisanto's prayer for temporary custody of his son, Valerie several times. (But Valerie, being now of major age, is no
there having been no compelling reason to so order it. Was the longer a subject of this guardianship proceeding.)
trial court correct in denying Crisantos prayer for temporary
custody? Even assuming that Helen is unfit as guardian of minor Vincent, still
Bonifacia cannot qualify as a substitute guardian. She is an
A: Yes. The petitioner failed to overcome the so-called "tender-age American citizen and a resident of Colorado. Obviously, she will not
presumption" rule under Art. 213 of the FC. There was no be able to perform the responsibilities and obligations required of
compelling evidence of the mother's unfitness. Sexual preference a guardian. In fact, in her petition, Bonifacia admitted the difficulty
or moral laxity alone does not prove parental neglect or of discharging the duties of a guardian by an expatriate, like her. To
incompetence to deprive the wife of custody, the husband must be sure, she will merely delegate those duties to someone else
clearly establish that her moral lapses have had an adverse effect who may not also qualify as a guardian (Vancil v. Belmes, G.R. No.
on the welfare of the child or have distracted the errant spouse 132223, June 19, 2001).
from exercising proper parental care.
Special Parental Authority
NOTE: The general rule that children less than 7 years of age shall not be
separated from the mother finds its raison d'etre in the basic need of minor
It is the parental authority granted by law to certain persons,
children for their mother's loving care. This is predicated on the "best
interest of the child" principle which pervades not only child custody cases
entities or institutions in view of their special relation to children
but also those involving adoption, guardianship, support, personal status and under their supervision instruction or custody. It is denominated as
minors in conflict with the law (Pablo-Gualberto v. Gualberto, G.R. No. special because it is limited and is present only when the child is
154994/G.R. No. 156254, Jun. 28, 2005). under their supervision instruction or custody. It can also co-exists
with the parents parental authority
SUBSTITUTE AND SPECIAL PARENTAL AUTHORITY
Persons who may exercise special parental authority
Substitute Parental Authority
1. The school
It is the parental authority which the persons designated by law 2. School administrators
may exercise over the persons and property of unemancipated 3. School teachers
children in case of death, absence or unsuitability of both parents 4. Individual, entity or institution engaged in child care
or in default of a judicially appointed guardian.
Scope of special parental authority
Order of substitute parental authority
The scope of special parental authority and responsibility applies to
1. Surviving Grandparent; all authorized activities, whether inside or outside the premises of
the school, entity or institution.
NOTE: The law considers the natural love of a parent to outweigh that
of the grandparents, such that only when the parent present is shown Substitute parental authority v. Special parental authority
to be unfit or unsuitable may the grandparents exercise substitute
parental authority (Santos v. CA, G.R. No. 113054, March 16, 1995).
SUBSTITUTE PARENTAL SPECIAL PARENTAL
AUTHORITY AUTHORITY
2. Oldest brother or sister, over 21 years unless unfit or
disqualified Exercised in case of: DAU 1. Exercised concurrently
3. Actual Custodian over 21 year unless unfit or disqualified (Art. with the parental
216, FC) 1. Death, authority of the parents;
4. In case of foundlings, abandoned, neglected or abused 2. Absence, or 2. Rests on the theory that
children similarly situated, parental authority shall be 3. Unsuitability of parents. while the child is in the
entrusted in summary judicial proceedings to heads of custody of the person
childrens homes, orphanages and similar institutions duly exercising special
accredited by the proper government agency. parental authority, the
parents temporarily
Q: Bonifacia Vancil, a US citizen, is the mother of Reeder C. Vancil, relinquish parental
a US Navy serviceman who died in the USA on December 22, authority over the child
1986. During his lifetime, Reeder had two children named Valerie to the latter.
and Vincent by his common-law wife, Helen G. Belmes. Bonifacia
obtained a favorable court decision appointing her as legal and

CIVIL LAW
EFFECTS OF PARENTAL AUTHORITY UPON THE PERSON OF THE
CHILDREN Liability of persons exercising special parental authority over the
child
Right to Childs Custody
They are principally and solidarily liable for damages caused by the
The right of parents to the custody of their minor children is one of acts or omissions of the child while under their supervision,
the natural rights incident to parenthood, a right supported by law instruction or custody.
and sound public policy. The right is an inherent one, which is not
NOTE: Parents, judicial guardians or those exercising substitute parental
created by the state or decisions of the courts, but derives from authority over the minor are subsidiarily liable for said acts and omissions of
the nature of the parental relationship (Sagala-Eslao vs Court of the minor.
Appeals, G.R. 116773, January 16, 1997).
Q: Jayson and his classmates were conducting a science
Parents right to custody of the child experiment about fusion of sulphur powder and iron fillings
under the tutelage of Tabugo, the subject teacher and employee
GR: Parents are never deprived of the custody and care of their of St. Joseph College. Tabugo left her class while the experiment
children. was ongoing without having adequately secured the students
from any untoward incident or occurrence. In the middle of the
XPNS: experiment, Jayson checked the result of the experiment by
1. For cause looking into the test tube with magnifying glass and it was moved
towards his eyes. At that instance, the compound spurted from
NOTE: the law presumes that the childs welfare will be best served in the test tube and several particles hit Jaysons eyes. His left eye
the care and control of his parents. was chemically burned, for which he had to undergo surgery and
spend for medication. Jayson filed a complaint for damages
2. If in consideration of the childs welfare or well-being, against the school and Tabugo. Can the said school and its
custody may be given even to a non-relative. teacher, Tabugo, be held liable for the unfortunate incident of
Jayson?
Basis for the duty to provide support
A:Yes. The proximate cause of the students injury was the
Family ties or relationship, not parental authority. concurrent failure of petitioners to prevent the foreseeable mishap
that occurred during the conduct of the science experiment.
NOTE: The obligation of the parents to provide support is not coterminous
with the exercise of parental authority.
Petitioners were negligent by failing to exercise the higher degree
of care, caution and foresight incumbent upon the school, its
Rule on the parents duty of representation administrators and teachers. Art. 218 of the FC, in relation to Art.
2180 of the NCC, bestows special parental authority on a school, its
GR: Parents are duty-bound to represent their minor children in all administrators and teachers, or the individual, entity or institution
matters affecting their interests; engaged in child care, and these persons have responsibility over
the minor child while under their supervision, instruction or
NOTE: This duty extends to representation in court litigations. custody. Authority and responsibility shall apply to all authorized
activities whether inside or outside the premises of the school,
XPN: A guardian ad litem may be appointed by the court to entity or institution.
represent the child when the best interest of the child so requires.
In this case, the petitioners negligence and failure to exercise the
Scope of the parents right to discipline the child requisite degree of care and caution was demonstrated by the
following: (i) petitioner school did not take affirmative steps to
Persons exercising parental authority may: avert damage and injury to its students although it had full
1. Impose discipline on minor children as may be required under information on the nature of dangerous science experiments
the circumstances. conducted by the students during class; (ii) petitioner school did
2. Petition the court for the imposition of appropriate not install safety measures to protect the students who conduct
disciplinary measures upon the child, which include the experiments in class; (iii) petitioner school did not provide
commitment of the child in entities or institutions engaged in protective gears and devices, specifically goggles, to shield
child care or in childrens homes duly accredited by the students from expected risks and dangers; and (iv) petitioner
proper government agency. Tabugo (the teacher) was not inside the classroom the whole time
her class conducted the experiment, specifically, when the accident
NOTE: Such commitment must not exceed 30 days. involving the student occurred (St. Josephs College v. Miranda,
G.R. No. 182353, June 29, 2010).
Limitations on the exercise of the right to discipline the child and
its consequences EFFECTS OF PARENTAL AUTHORITY UPON THE
PROPERTY OF THE CHILDREN
Persons exercising such right are not allowed to:
1. Treat the child with excessive harshness or cruelty; or Parental authority upon the property of the children
2. Inflict corporal punishment.
Legal guardianship can be exercised by the father or mother,
Otherwise, the following are its consequences: jointly, without need of court appointment over the property of an
1. Parental authority may be suspended; unemancipated child.
2. Parent concerned may be held criminally liable for violation
of RA 7160 (Special Protection of Children against Abuse, NOTE: In case of disagreement, the fathers decision shall prevail unless
Exploitation and Discrimination Act) there is a judicial order to the contrary.

Kinds of properties of a minor 5. Culpable negligence of parent or person exercising pa;
6. Compels child to beg.
ADVENTITIOUS PROSFECTITIOUS
NOTE: If the person exercising PA has subjected the child or allowed him to
1. Earned or acquired by the 1. Property given by the be subjected to sexual abuse, he/she shall be permanently deprived of PA.
child through his work or parents to the child for the
industry by onerous or latter to administer; If the ground for suspension of parental authority is civil interdiction, the
gratuitous title; 2. Owned by the parents; suspension is automatic so as its reinstatement.
2. Owned by the child; 3. Parents are usufructuary;
3. Child is also the 4. Property administered by Revocation of suspension of PA and its revival
usufructuary, but the childs the child.
use of the property shall be The suspension may be revoked and parental authority revived by
secondary to all collective filing a case for the purpose, or in the same proceeding if the court
daily needs of the family; finds that the cause therefore had ceased and will not be repeated.
4. Administered by the
parents. Transfer or renunciation of PA
Necessity of posting a bond by the parents GR: Parental authority and responsibility are inalienable and may
not be transferred and renounced.
A parent is required to post a bond if the market value of the
property or the annual income of the child exceeds Php 50,000. XPN: In cases authorized by law.
NOTE: Parents may exercise authority over their childrens property.

NOTE: The bond shall not be less than 10% of the value of the property or
annual income (Art. 225, FC).
Loss of parental authority over the minor under the Child Abuse
Rules regarding the use of the childs property Law (R.A. 7610)
1. The property of minor children shall be devoted to their When an ascendant, stepparent or guardian of the minor, induces,
support and education unless the title or transfer provides delivers or offers him to any person who would keep or have in his
otherwise. company such minor, twelve (12) years or under or who in ten (10)
2. The parents have the right to use only the fruits and income years or more his junior, in any public or private place, hotel,
of said property for the following purposes: motel, beer joint, discotheque, cabaret, pension house, sauna or
a. Primarily, to the childs support; massage parlor, beach and/or other tourist resort or similar places.
b. Secondarily, to the collective daily needs of the family.
Corporal punishment
Rule on lease of property belonging to minor children
It is the infliction of physical disciplinary measures to a student.
GR:The parents, as legal guardians of the minors property, may This is absolutely prohibited under the Family Code (Sta. Maria, Jr.,
validly lease the same, even without court authorization, because Persons and Family Relations Law).
lease has been considered as an act of administration.
NOTE:While a teacher is administratively liable or civilly liable in the event
that he or she inflicts corporal punishment to a student, it has been held that
XPNs: Court authorization is required if: where there was no criminal intent on the part of the teacher who angrily
1. If the lease will be recorded in the Registry of Property; and repeatedly whipped a student resulting in slight physical injuries to the
2. If the lease is for a period of more than one year, because this said student and where the purpose of the teacher was to discipline a
is already deemed an act of dominion. student, the said teacher cannot be held feloniously liable for the criminal
offense of slight physical injuries (Bagajo v. Marave, G.R. No. L-33345,
SUSPENSION OR TERMINATION OF PARENTAL AUTHORITY November 20, 1978, also cited by Sta. Maria, Jr., Persons and Family
Relations Law).
Termination of parental authority
EMANCIPATION
1. Permanently:
Emancipation
a. Death of parents;
b. Emancipation of the child;
It is the release of a person from parental authority whereby he
c. Death of child.
becomes capacitated for civil life.
2. Temporarily: it may be revived
Emancipation takes place by attainment of majority at the age of
a. Adoption of the child;
(18) eighteen years.
b. Appointment of general guardian;
c. Judicial declaration of abandonment;
Effects of emancipation
d. Final judgment divesting parents of pa;
e. Incapacity of parent exercising pa;
1. Parental authority over the person and property of the child
f. Judicial declaration of absence.
is terminated
2. Child shall be qualified and responsible for all acts of civil life,
Grounds for suspension of PA
save exceptions established by existing laws.
3. Contracting marriage shall require parental consent until the
1. Gives corrupting orders, counsel and example;
age of 21.
2. Treats child with excessive harshness and cruelty;
3. Subjects/allows child be subjected to acts of lasciviousness;
4. Conviction of crime with penalty of civil interdiction ;

CIVIL LAW
4. The responsibility of parents or guardians for children and RETROACTIVITY OF THE FAMILY CODE
wards below 21 under the second and third paragraphs of
Art. 2180 of the NCC shall not be derogated. Rule on the retroactivity of the Family Code
SUMMARY JUDICIAL PROCEEDINGS IN FAMILY LAW CASES GR: The Code shall have retroactive effect.
Matters subject to summary proceedings XPN: When retroactivity would prejudice vested rights.
1. Petition for judicial authority to administer or encumber Vested right

specific separate property of the abandoning spouse.
2. Petition for an order providing for disciplinary measures over Some right or interest in property that has become fixed or
a child. established, and is no longer open to doubt or controversy. Rights
3. Petition for approval of bond of parents who exercise are vested when the right to enjoyment, present or prospective,
parental authority over the property of their children. has become the property of some person as present interest.
4. Judicial declaration of presumptive death.
5. Action of a child for delivery of presumptive legitime Q: Antonia Aruego and her sister Evelyn filed a petition in the
6. Judicial determination of family domicile in case of courts seeking Jose Aruego, Jr. and his five children to recognize
disagreement between the spouses them as illegitimate children and compulsory heirs of Jose. They
7. Objection of one spouse as to the profession of the other. claim that there is open and continuous possession of status of
8. Action entrusting parental authority over foundlings, illegitimate children of Jose who had an amorous relationship
abandoned, neglected or abused children to heads of with their mother Luz Fabian until the time of the death of Jose.
institutions. The court declared that Antonia Aruego is an illegitimate
9. Annulment by wife of the husband's decision in the daughter of the deceased with Luz Fabian while Evelyn is not.
administration and enjoyment of community or conjugal Antonia and Evelyn contested the decision citing provisions of the
property. Family Code particularly Art. 127 on Filiation, Art. 172 on
10. Appointment of one of the spouses as sole administrator but illegitimate childrens filiation, and Art. 256 on the retroactivity of
only when the other spouse is absent, or separated in fact, or the code. Whether or not the provisions of the Family Code be
has abandoned the other or the consent is withheld (Uy v. CA, applied retroactively and will it impair the vested rights of the
G.R. No. 109557, November 29, 2000). respondents?
Q: W filed a petition with the RTC under the rules on Summary A: The action for compulsory recognition and enforcement of
Judicial Proceedings in the Family Law provided for in the FC, for successional rights which was filed prior to the advent of the FC,
the declaration of the presumptive death of her absent spouse, H, must be governed by Art. 285 of the NCC and not by Art. 175, par.
based on the provisions of Art. 41 of the FC, for purposes of 2 of the FC. The present law cannot be given retroactive effect
remarriage. After trial, the RTC rendered a decision declaring the insofar as the instant case is concerned, as its application will
presumptive death of H. The Republic received a copy of the prejudice the vested right of private respondent to have her case
decision on November 14, 2001. Subsequently, the Republic filed decided under Art. 285 of the NCC. The right was vested to her by
a Notice of Appeal on November 22, 2001. The RTC held that the the fact that she filed her action under the regime of the NCC.
appeal was filed within the reglementary period and thus, Prescinding from this, the conclusion then ought to be that the
elevated the records to the Court of Appeals. However, the Court action was not yet barred, notwithstanding the fact that it was
of Appeals denied the Republics appeal and accordingly affirmed brought when the putative father was already deceased, since
the appealed RTC decision. Did the Court of Appeals acquire private respondent was then still a minor when it was filed, an
jurisdiction over the appeal on a final and executory judgment of exception to the general rule provided under Art. 285 of the NCC.
the RTC? Hence, the trial court, which acquired jurisdiction over the case by
A: No. In Summary Judicial Proceedings under the Family Code, the filing of the complaint, never lost jurisdiction over the same
there is no reglementary period within which to perfect an appeal, despite the passage of E.O. No. 209, also known as the Family Code
precisely because judgments rendered thereunder, by express of the Philippines (Aruego v. CA,G.R. No. 112193, March 13, 1996).
provision of Art. 247 of the FC, are immediately final and
executory. An appellate court acquires no jurisdiction to review a NOTE: If an action for recognition was filed prior to the effectivity of the FC,
judgment which, by express provision of law, is immediately final Art. 173 of the FC cannot be given retroactive effect because it will prejudice
and executory. The right to appeal is not a natural right nor is it a the vested rights of petitioners transmitted to them at the time of the death
part of due process, for it is merely a statutory privilege. Since, by of their father, Eutiquio Marquino. "Vested right" is a right in property which
express mandate of Article 247 of the Family Code, all judgments has become fixed and established and is no longer open to doubt or
controversy. It expresses the concept of present fixed interest, which in right
rendered in summary judicial proceedings in Family Law are reason and natural justice should be protected against arbitrary State action
immediately final and executory, the right to appeal was not (Marquino v. IAC, G.R. No. 72078, June 27, 1994).
granted to any of the parties therein. The Republic, as oppositor in
the petition for declaration of presumptive death, should not be FUNERALS
treated differently. It had no right to appeal the RTC decision of
November 7, 2001. The RTC's decision was immediately final and Rules regarding funeral
executory upon notice to the parties (Republic v. Bermudez-Lorino,
G.R. No. 160258, January 19, 2005). General Guidelines:
1. Duty and right to make arrangements in funerals in
NOTE: However, an aggrieved party may file a petition for certiorari to accordance with Art. 199, FC:
question abuse of discretion amounting to lack of discretion (Republic v.
Tango, G.R. No. 161062, July 31, 2009).
a. Spouse,
b. Descendants in the nearest degree,
c. Ascendants in the nearest degree,
d. Brothers and Sisters

NOTE: In case of descendants of the same degree, or of brothers and wished to be buried in the Fes family plot at the Manila Memorial
sisters, the oldest shall be preferred. Park, the result remains the same. Article 307 simply seeks to
prescribe the "form of the funeral rites" that should govern in the
In case of ascendants, the paternal shall have a better right.
burial of the deceased. The right and duty to make funeral
arrangements reside in the persons specified in Article 305 in
2. Funeral shall be:
relation to Article 199 of the Family Code. Even if Article 307 were
a. In keeping with the social position of the deceased,
to be interpreted to include the place of burial among those on
b. In accordance with the expressed wishes of the
which the wishes of the deceased shall be followed, Dr. Arturo M.
deceased,
Tolentino (Dr. Tolentino), an eminent authority on civil law,
c. In absence of the expressed wishes, his religious beliefs
commented that it is generally recognized that any inferences as to
or affiliation shall determine;
the wishes of the deceased should be established by some form of
testamentary disposition.As Article 307 itself provides, the wishes
3. Any person who disrespects the dead or allows the same shall
of the deceased must be expressly provided. It cannot be inferred
be liable for damages;
lightly, such as from the circumstance that Atty. Adriano spent his
4. Funeral expenses are chargeable against the property of the
last remaining days with Valino. It bears stressing once more that
deceased. However, if the deceased is one of the spouses,
other than Valinos claim that Atty. Adriano wished to be buried at
they are chargeable against the conjugal partnership property
the Fes family plot, no other evidence was presented to
(Art. 310, NCC).
corroborate it (Valino v. Adriano, G.R. No. 182894, April 22, 2014).
5. If the deceased is married, the tombstone or mausoleum is
deemed part of the funeral expense and chargeable against
USE OF SURNAMES
the community property or conjugal partnership property.
Rule with regard to the use of surname by a child who is (1)
Q: Adriano and Rosario are married to each other. However, their
legitimate, (2) legitimated, (3) adopted and (4) illegitimate
marriage turned into sourand they were eventually separated-in-
fact. Years later, Adriano met Fe which he courted and eventually
CHILD CONCERNED SURNAME TO BE USED
decided to live together as husband and wife while his marriage
with Rosario is still subsisting. Adriano later died while Rosario Legitimate
Fathers
and the rest of his family are in the United States spending their Legitimated
Christmas vacation. When Rosario learned of Adrianos death, Adopted Adopters
she immediately called Fe for the delay of Adrianos interment Mothers or Fathers if
which was unheeded by Fe. The remains of Adriano were interred Illegitimate requisites of R.A. 9255 are
at the mausoleum of Fes family allegedly according to Adrianos complied with
oral request from her. Who between Rosario and Fe is entitled to Conceived prior to annulment
Fathers
the remains of Adriano? of marriage
Conceived after annulment of
Mothers
marriage
A: It is clear that the law gives the right and duty to make funeral
arrangements to Rosario, she being the surviving legal wife of Atty.
Rule with regard to the use of surname of a married woman
Adriano. The fact that she was living separately from her husband
and was in the United States when he died has no controlling
FACTUAL CIRCUMSTANCE OF
significance. To say that Rosario had, in effect, waived or SURNAME TO BE USED
THE WIFE
renounced, expressly or impliedly, her right and duty to make
1. First name and maiden
arrangements for the funeral of her deceased husband is baseless.
name + husbands
The right and duty to make funeral arrangements, like any other
surname
right, will not be considered as having been waived or renounced,
2. First name + husbands
except upon clear and satisfactory proof of conduct indicative of a
surname
free and voluntary intent to that end. While there was disaffection 3. Husbands full name +
Valid marriage (before
between Atty. Adriano and Rosario and their children when he was prefix indicating that she
husband dies)
still alive, the Court also recognizes that human compassion, more is his wife (e.g. Mrs.)
Art. 370
often than not, opens the door to mercy and forgiveness once a 4. Retain the use of her
family member joins his Creator. maiden name
Fe insists that the expressed wishes of the deceased should *Use of husbands surname is
nevertheless prevail pursuant to Article 307 of the Civil Code. Fes not a duty but merely an
own testimony that it was Atty. Adrianos wish to be buried in their option for the wife
family plot is being relied upon heavily. It should be noted, Wife is the Shall resume using her
however, that other than Fes claim that Atty. Adriano wished to be guilty party maiden name
buried at the Manila Memorial Park, no other evidence was Choices:
presented to corroborate such claim. Considering that Rosario 1. Resume using her maiden
equally claims that Atty. Adriano wished to be buried in the name
Adriano family plot in Novaliches, it becomes apparent that the Marriage is 2. Continue using husbands
supposed burial wish of Atty. Adriano was unclear and undefinite. Annulled surname
Considering this ambiguity as to the true wishes of the deceased, it Art. 371 Wife is the
is the law that supplies the presumption as to his intent. No innocent party
Unless:
presumption can be said to have been created in Valinos favor, a. Court decrees otherwise;
solely on account of a long-time relationship with Atty. Adriano. b. She or the former
husband is married again
Even assuming, ex gratia argumenti, that Atty. Adriano truly to another person

CIVIL LAW
prejudiced by the use of his true and official name. Under the Civil
Register Law, a birth certificate is a historical record of the facts as
they existed at the time of birth. Thus, the sex of a person is
Wife shall continue using the
determined at birth, visually done by the birth attendant (the
Legally Separated name and surname employed
physician or midwife) by examining the genitals of the infant.
Art. 372 by her prior to the legal
Considering that there is no law legally recognizing sex
separation.
reassignment, the determination of a persons sex made at the
She may use the deceaseds time of his or her birth, if not attended by error, is immutable
Widowed Spouse
husbands surname as (Silverio v. Republic, G.R. No. 174689, October 22, 2007).
Art. 373
though he were still living.
Procedural requirements for a petition for change of name
Divorced (at least if they allow
Choices same as widowed
it later or for those who got
spouse. 1. 3 years residency in the province where the change is sought
divorced during the Japanese
prior to the filing;
occupation)
2. Must not be filed within 30 days prior to an election;
3. Petition must be verified.
Grounds for change of name which have been held valid
Q: Virginia Remo, a Filipino citizen, is married to Francisco
1. One has Continuously used and been known since childhood
Rallonza. In her passport, the following entries appear: "Rallonza"
by a Filipino name and was unaware of alien parentage;
as her surname, "Maria Virginia" as her given name, and "Remo"
2. The change results as a Legal consequence, as in legitimation;
as her middle name. Prior to the expiration of her passport,
3. There is a sincere desire to adopt a Filipino name to Erase
Virginia applied for the renewal of her passport with the DFA,
signs of former alienage, all in good faith and without
with a request to revert to her maiden name and surname in the
prejudicing anyone;
replacement passport. Virginia, relying on Article 370 of the Civil
4. The change will Avoid confusion;
Code, contends that the use of the husbands surname by the
5. The name is:
wife is permissive rather than obligatory. Is Virginia correct?
a. Ridiculous,
b. Extremely difficult to write or pronounce,
A:No.A married woman has an option, but not a duty, to use the
c. Dishonorable.
surname of the husband in any of the ways provided by Art. 370 of
the Civil Code. However, R.A. 8239 or the Philippine Passport Act of
Q: The petition filed by the parents in behalf of their minor son
1996 limits the instances when a married woman applicant may
Julian Lin Carulasan Wang sought the dropping of the latter's
exercise the option to revert to the use of her maiden name. These
middle name, "Carulasan." The parents averred that their plan for
are death of husband, divorce, annulment, and declaration of
Julian to study in Singapore and adjust to its culture necessitates
nullity of marriage.
the drop since in that country, middle names or the mother's
surname are not carried in a person's name. They therefore
In case of renewal of passport, a married woman may either adopt
anticipate that Julian may be subjected to discrimination on
her husbands surname or continuously use her maiden name.
account of his middle name, which is difficult to pronounce in
However, once she opted to use her husbands surname in her
light of Singapore's Mandarin language which does not have the
original passport, she may not revert to the use of her maiden
letter "R" but if there is, Singaporeans pronounce it as "L." Should
name, except if any of the four grounds provided under R.A. 8239
the petition for the dropping of his middle name be granted?
is present.
A:No. Petitioners justification for seeking the change in the name
Further, even assuming R.A. 8239 conflicts with the Civil Code, the
of their child, that of convenience, was characterized by the
provisions of R.A. 8239 which is a special law specifically dealing
Supreme Court as amorphous, to say the least, and would not
with passport issuance must prevail over the provisions of the Civil
warrant a favorable ruling. As Julian is only a minor and has yet to
Code which is the general law on the use of surnames. A basic
understand and appreciate the value of any change in his name, it
tenet in statutory construction is that a special law prevails over a
is best that the matter be left to his judgment and discretion when
general law (Remo v. Sec. of Foreign Affairs, G.R. No. 169202,
he reaches legal age.
March 5, 2010).
The State has an interest in the names borne by individuals and
Elements of usurpation of name
entities for purposes of identification, and that a change of name is
a privilege and not a right, such that before a person can be
1. Actual use of anothers name by the defendant;
allowed to change the name given him either in his birth certificate
2. Use is unauthorized;
or civil registry, he must show proper or reasonable cause, or any
3. Use of anothers name is to designate personality or identify
compelling reason which may justify such change. Otherwise, the
a person.
request would be denied (In Re: Petition for change of name
and/or correction/cancellation of entry in civil registry of Julian Lin
Remedies available to the person whose name has been usurped
Carulasan Wang, G.R. No. 159966, March 30, 2005).
1. Civil insofar as private persons are concerned:
NOTE: The touchstone for the grant of a change of name is that there be
proper and reasonable cause for which the change is sought. a. Injunction
b. Damages
Q: Can a person change his registered first name and sex on the 2. Criminal when public affairs are prejudiced.
basis of a sex reassignment?
Use of anothers name is not always actionable
A:No. Before a person can legally change his given name, he must
present proper or reasonable cause or any compelling reason It is not actionable when it is used as stage, screen or pen name.
justifying such change. In addition, he must show that he will be

Provided: that time, Aimee was still in the process of securing a judicial
1. Use is in good faith; declaration of nullity on her marriage to her ex-husband. Giannas
2. No injury is caused to the rights of the person whose birth certificate, which was signed by both Andy and Aimee,
name was used; registered the status of Gianna as legitimate, her surname
3. Use is motivated by: carrying that of Andys, and that her parents were married to
a. Modesty each other.
b. Desire to avoid unnecessary trouble
c. Other reason not prohibited by law or morals. Can a judicial action for correction of entries in Giannas birth
certificate be successfully maintained to:
MIDDLE NAME
a. Change her status from legitimate to illegitimate; and
Middle name b. Change her surname from that of Andys to Aimees maiden
surname?
A middle name has practical or legal significance as it serves to c. Instead of a judicial action, can administrative proceedings
identify the maternal pedigree or filiation of a person and be brought for the purpose of making the above
distinguishes him from others who may have the same given name corrections?
and surname as he has. Art. 364 of the Civil Code states that d. Assuming that Aimee is successful in declaring her former
legitimate and legitimated children shall principally use the marriage void, and Andy and Aimee subsequently married
surname of their father. Art. 174 of the Family Code gives each other, would Gianna be legitimated? (2008 Bar
legitimate children the right to bear the surnames of the father and Question)
mother, while illegitimate children, under Art. 176, as amended by
R.A. 9255, shall use the surname of their mother, unless their A:
father recognizes their filiation, in which case, they may bear the a. A judicial action cannot be maintained to change the status of
father's surname. In the case of these children, their registration in Gianna from legitimate to illegitimate child of Andy and
the civil registry requires that their middle names be indicated Aimee. While it is true that Gianna is the biological daughter
therein, apart of course from their given names and surnames (In of Andy and Aimee conceived and born without marriage
re: Petition for Change of Name and/or Correction of Entry in the between them, Gianna is presumed, under the law as the
Civil Registry of Julian Lin Carulasan Wang, 454 SCRA 155). legitimate child of Aimee and her husband. This filiation may
be impugned only by the husband. To correct the status of
Q: Honorato filed a petition to adopt his minor illegitimate child Gianna in her birth certificate from legitimate child of Andy
Stephanie. Stephanie has been using her mother's middle name and Aimee to illegitimate child of Andy and Aimee will
and surname. He prayed that Stephanie's middle name be amount to indirectly impugning her filiation as the child of
changed from "Astorga" to "Garcia," which is her mother's Aimees husband in a proper action. What cannot be done
surname and that her surname "Garcia" be changed to directly cannot be done indirectly.
"Catindig," which is his surname. This the trial court denied. Was
the trial court correct in denying Honoratos request for b. A judicial action to change the surname of Gianna from the
Stephanies use of her mothers surname as her middle name? surname of Andy to the maiden surname of Aimee is also not
allowed. Gianna, being presumed to be the legitimate child of
A:No. The name of an individual has two parts the given name or Aimees husband is required by law to be registered under
proper name and the surname or family name. The given name the surname of Aimees husband. While it is true that
may be freely selected by the parents for the child, but the Giannas registered surname is erroneous, a judicial action for
surname to which the child is entitled is fixed by law. The Civil Code correction of entry to change the surname of Gianna to that
(Arts. 364 to 380) is silent as to the use of a middle name. Even Art. of Aimees maiden surname will also be erroneous. A judicial
176 of the FC, as amended by R.A. 9255 (An Act Allowing action to correct an entry in the birth certificate is allowed to
Illegitimate Children to Use the Surname of Their Father) is correct an error and not to commit another error.
silent as to what middle name a child may use.
Alternative Answers: It may be noted that the problems does
An adopted child is entitled to all the rights provided by law to a not show whether Gianna was born while Aimee was living
legitimate child without discrimination of any kind, including the with her ex-husband. Neither does it show who filed the
right to bear the surname of her father and her mother. As she had judicial action to correct the entries.
become a legitimate child on account of her adoption, it follows
that Stephanie is entitled to utilize the surname of her father, If the problem is intended only for purpose of determining
Honorato Catindig, and that of her mother, Gemma Garcia. whether factual changes are in order, then the answers are:
a. A change from legitimate to illegitimate is proper
Since there is no law prohibiting an illegitimate child adopted by upon proof of lack of marriage between Andy and
her natural father, like Stephanie, to use, as middle name her Aimee.
mother's surname, the High Court found no reason why she should b. If the child is considered illegitimate, then she should
not be allowed to do so. follow the surname of her mother.
NOTE: The Supreme Court, in granting the petition, predicated its ruling c. Under R.A. 9048, only typographical errors are allowed to be
upon the statutory principle that adoption statutes, being humane and corrected administratively. The change of status from
salutary, should be liberally construed to carry out the beneficent purposes legitimate to illegitimate is not a typographical error and even
of adoption. The modern trend is to consider adoption not merely as an act
to establish a relationship of paternity and filiation, but also as an act which
assuming that it is, its administrative correction is not allowed
endows a child with legitimate status (In the Matter of the Adoption of under R.A. 9048. Typographical errors involving status, age,
Stephanie Nathy Astorga Garcia, G.R. No. 148311. March 31, 2005). citizenship, and gender are expressly excluded from what
may be corrected administratively.
Q: Giana was born to Andy and Aimee, who at the time of Gianas
birth were not married to each other. While Andy was single at The change of the surname is also not allowed

CIVIL LAW
administratively. R.A. 9048 provides for an administrative The Court shall:
procedure for change of first name only and not for change of 1. Take the necessary measures to safeguard the rights and
surname. interests of the absentee.
2. Specify the powers, obligations, and remuneration of the
d. No, Gianna will not be legitimated. While the court may have representative.
declared the marriage void ab initio and, therefore, no 3. Regulate the powers, obligations and remuneration according
marriage took place in the eyes of the law, Gianna will still to the circumstances by the rules concerning guardians.
not be legitimated. This is because at the time she was
conceived and born her biological parents could not have Order of preference in the appointment of a representative
validly married each other. For their marriage to be valid, the
court must first declare the first marriage null and void. In the 1. Spouse present, except, when legally separated.
problem, Gianna was conceived and born before the court 2. In the absence of spouse, any competent person.
has decreed the nullity of her mothers previous marriage.
NOTE: The administrator of the absentee's property shall be appointed in
NOTE: The word "principally" as used in the codal provision is not equivalent accordance with the same order.
to "exclusively" so that there is no legal obstacle if a legitimate or legitimated
child should choose to use the surname of its mother to which it is equally DECLARATION OF ABSENCE
entitled. If the use of the mothers surname is since childhood and the child
has been using it already in various records, then there is an ample Requisites for a declaration of absence
justification for the continuation of the use of the mothers surname. It is
therefore, not whimsical but on the contrary is based on a solid and
reasonable ground, i.e. to avoid confusion (Alfon v. Republic, G.R No. L-
1. The absentee have disappeared from his domicile
51201, May 29, 1980). 2. His whereabouts are not known
3. He has been absent without any news for 2 years, if nobody
ABSENCE was left to administer his property or 5 years if somebody
was left to administer such property
PROVISIONAL MEASURES IN CASE OF ABSENCE
Absence may be judicially declared if:
Absence 1. The absentee left no agent to administer his property- after
two (2) years without any news about the absentee or since
Thespecial status of a person who has left his domicile and receipt of the last news.
thereafter his whereabouts and fate are unknown, it being 2. The absentee has left a person to administer his property-
uncertain whether he is already dead or still alive (Olaguiviel v. after five (5) years.
Morada, 63 O.G. 4940).
Person who may ask for the declaration of absence
Kinds of absence
1. Spouse present
1. Physical Absence 2. Heirs instituted in a will
2. Legal Absence 3. Relatives who may succeed by intestacy
4. Persons who may have over the property of the absentee
3 Stages of Absence some right subordinated to the condition of his death.
1. Provisional Absence when a person disappears from his Effectivity of judicial declaration of absence
domicile his whereabouts being unknown, without leaving an
agent to administer his property Judicial declaration of absence takes effect six (6) months after its
2. Declared Absence when a person disappears from his publication in a newspaper of general circulation.
domicile and 2 years thereafter have elapsed without any
news about him or since the receipt of the last news, or 5 NOTE: A judicial declaration of absence is necessary for interested persons to
be able to protect their rights, interests and benefits in connection with the
years have elapsed in case he left a person to administer his person who has disappeared. It is also necessary to protect the interest of
property the absentee (Sta. Maria, Jr., Persons and Family Relations Law).
3. Presumptive Death the absentee is presumed dead (Jurado,
2009) ADMINISTRATION OF THE PROPERTY OF THE ABSENTEE
Provisional absence Administration of the property of the absentee ceases when:

1. Absentee appears personally or by means of an agent.
1. When a person disappears from his domicile 2. Death of the absentee is proved and his testate or intestate
2. His whereabouts are unknown and: heirs appear.
a. he did not leave any agent; or 3. A third person appears, showing by a proper document that
b. he left an agent but the agents power has expired he has acquired the absentee's property by purchase or other
title.
Remedy of an interested party, a relative or a friend of the
absentee to protect the latter's interest PRESUMPTION OF DEATH
They may petition the Court for the appointment of a Kinds of presumed death
representative to represent the absentee in all that may be
necessary. 1. Ordinary presumption- ordinary absence; absentee
disappears under normal conditions without danger or idea
Duty of the Court after appointing the representative of death.

2. Extraordinary presumption- qualified absence; disappearance Arturo left the conjugal dwelling on October 1975. Years passed
with great probability of death. without any word from Arturo. Juana didnt hear any news of
Arturo, his whereabouts or even if he was alive or not. Believing
Rules in ordinary presumption of death that Arturo was already dead, Juana married Dante on June 1986.
Subsequently, however, Dante's application for naturalization
In case of: filed with the United States Government was denied because of
1. Disappearance upon or before reaching the age of seventy the subsisting marriage between Juana and Arturo. Hence, on
five (75) years: March, 2007, Juana filed a Petition for declaration of presumptive
a. After an absence of seven (7) years -the absentee is death of Arturo with the RTC. The RTC dismissed the petition on
presumed dead for all purposes except, succession. the ground that Juana was not able to prove the existence of a
b. After an absence of ten (10) years - the absentee is well-grounded belief that her husband Arturo was already dead
presumed dead for all purposes including succession. as required under Article 41 of the Family Code.
2. Disappearance at the age of seventy six (76) years or older,
after an absence of five (5) years -the absentee is presumed a. Was the RTC correct in dismissing the petition based on
dead for all purposes including succession. Article 41 of the Family Code?
b. Will the petition for declaration of presumptive death,
NOTE: The word absence in the rule that a presumption of death is raised therefore, prosper?
by the absence of a person from his domicile when unheard of for seven
years, means that a person is not at the place of his domicile and his actual A:
residence is unknown, and it is for this reason that his existence is doubtful,
and that, after seven years of such absence, his death is resumed. But
a) No. Since the marriages were both celebrated under the
removal alone is not enough (Gorham v. Settegast, 98 SW 655, also cited by auspices of the Civil Code it is the Civil Code that applies to
Sta. Maria, Jr. Persons and Family Relations Law). this case not Art. 41 of the FC. Under the Civil Code, proof of
well-founded belief is not required. Juana could not have
Presumption of death of absentee under an ordinary been expected to comply with the requirement of proof of
presumption "well-founded belief" since the FC was not yet in effect at the
time of her marriage to Dante. Moreover, the enactment of
Absentee is presumed to have died under an ordinary the FC in 1988 does not change this conclusion. The FC shall
presumptionat the end of the five, seven or ten year period, as the have no retroactive effect if it impairs vested rights. To
case may be. retroactively apply the provisions of the FC requiring Juana to
exhibit "well-founded belief" will, ultimately, result in the
Presumption of death for all purposes invalidation of her second marriage, which was valid at the
time it was celebrated. Such a situation would be untenable
The following are presumed dead for all purposes including the and would go against the objectives that the Family Code
division of estate among heirs in case of extraordinary presumption wishes to achieve.
of death:
1. Person on board a vessel lost during a sea voyage, or an b) No. Under the NCC, the presumption of death is established
airplane which is missing, who has not been heard of for four by law and no court declaration is needed for the
(4) years since the loss of the vessel or airplane; presumption to arise. For the purposes of the civil marriage
2. Person in the armed forces who has taken at in war, and has law, Art. 83 of the Civil Code, it is not necessary to have the
been missing for four (4) years; former spouse judicially declared an absentee. The law only
3. Person who has been in danger of death under other requires that the former spouse has been absent for seven
circumstances and his existence has not been known for four consecutive years at the time of the second marriage, that
(4) years. the spouse present does not know his or her former spouse
to be living, that such former spouse is generally reputed to
Presumption of death of absentee under an extraordinary be dead and the spouse present so believes at the time of the
presumption celebration of the marriage. Since death is presumed to have
taken place by the seventh year of absence, Arturo is to be
The absentee presumed to have died under an extraordinary presumed dead starting October 1982.
presumptionat the time of disappearance. i.e. when the calamity
took place. Further, the presumption of death cannot be the subject of
court proceedings independent of the settlement of the
Q: May a petition for the declaration of presumptive death be absentees estate. In case the presumption of death is
subject of a judicial declaration, if it is the only question upon invoked independently of such an action or special
which a competent court has to pass? proceeding there is no right to be enforced nor is there a
remedy prayed for by the petitioner against her absent
A:No. Under the NCC, the presumption of death is established by husband. Neither is there a prayer for the final determination
law and no court declaration is needed for the presumption to of his right or status or for the ascertainment of a particular
arise. Moreover, it is clear that a judicial declaration that a person fact, for the petition does not pray for a declaration that the
is presumptively dead, being a presumption juris tantum only, petitioner's husband is dead, but merely asks for a
subject to contrary proof, cannot become final. If a judicial decree declaration that he be presumed dead because he had been
declaring a person presumptively dead, cannot become final and unheard from in seven years. In sum, the petition for a
executory even after the lapse of the reglementary period within declaration that the petitioner's husband is presumptively
which an appeal may be taken, then a petition for such a dead, even if judicially made, would not improve the
declaration is useless, unnecessary, superfluous and of no benefit petitioner's situation, because such a presumption is already
to the petitioner. established by law (Valdez v. Republic, G.R. No. 180863,
September 8, 2009).
Q: Juana married Arturo in January 1973. However, because the
latter was unemployed the spouses constantly argued. Thus,

CIVIL LAW
Declaration of presumptive death for purpose of contracting property in the marriage, the of those who may
subsequent marriage v. Opening succession and declaration of condition in reappearance must have a right thereto.
absence under Rules of Court which it may be be made in an
found, and the affidavit of
DECLARATION OF PRESUMPTIVE DECLARATION OF price of any reappearance and
DEATH FOR PURPOSE OF: ABSENCE property that the recording of a
CONTRACTING may have been sworn statement
OPENING OF
SUBSEQUENT alienated or the of the fact and
SUCCESSION
MARRIAGE property circumstances of
Applicable laws acquired such reappearance
Arts. 390-396, Arts. 41-44, Family Rule 107, Rules of therewith; but he in the civil registry.
Civil Code Code Court cannot claim
Who may file petition either fruits or If, however, there
1. Spouse present; rents. (Art. 392, was previous
2. Heirs instituted in Civil Code) judgment annulling
the will; or declaring the
3. Relatives who prior marriage
Absentees co- will succeed by void, then the
heirs, heirs, intestacy; or reappearance of
assigns, 4. Those who have the absent spouse,
Spouse present the execution of
representative or over the property
successors-in- of the absentee the affidavit, and
interest some right the recording of
subordinated to the sworn
the condition of statement shall not
his death (Sec. 2, result to the
Rule 107). termination of the
Purpose of petition subsequent
It is to appoint an marriage.
administrator over
For the purpose of
the properties of the CIVIL REGISTRAR
contracting
To open absentee. This is
subsequent
succession proper only where ARTICLE 407-413
marriage by spouse
the absentee has
present
properties to be Civil register
administered
When to file petition Refers to the various registry books and related certificates and
GR: 4 consecutive documents kept in the archives of the local civil registry offices,
years absence of Philippine Consulate, and of the Office of the Civil Registrar
spouse and the General.
After 2 years:
spouse present has
1. From his Recorded in the civil register concerning civil status of persons
GR: Absence of a well-founded
disappearanc
ten years. belief that the
e and The following shall be recorded in the civil register concerning civil
absent spouse was
without any status of persons:
XPN: If he already dead
news about 1. Acts
disappeared
the 2. Events
after the age of XPN: 2 consecutive
absentee; or 3. Judicial decrees
seventy-five years absence of
2. Of the last
years, an spouse In case of
news about Civil status
absence of five disappearance
the
years shall be where there is
absentee. The circumstances affecting the legal situation or sum total of
sufficient in danger of death
order that his under the capacities or incapacities of a person in view of his age, nationality
After 5 years: If he and family membership (Beduya v. Republic, G.R. L-71639, May 29,
succession may circumstances set
left an administrator 1964). It also includes all his personal qualities and relations, more
be opened forth in the
of his property (Sec. or less permanent in nature, not ordinarily terminable at his own
provisions of
2). will, such as his being legitimate or illegitimate, or his being
Article 391 of the
Civil Code (Art. 41, married or not.
FC)
Effect of reappearance Acts authorized to be entered in the civil register
If the absentee It does not The trustee or
appears, or automatically administrator shall 1. Legitimation
without terminate the cease in the 2. Acknowledgment of illegitimate children
appearing his subsequent performance of his 3. Naturalization
existence is marriage. To cause office, and the
proved, he shall the termination of property shall be
recover his the subsequent placed at the disposal

Events authorized to be entered in the civil register and changed his first name Zirxthoussous to "Jesus." His full name
now reads "Jesus delos Santos."
1. Birth
2. Marriages Jesus delos Santos moved to General Santos City to work in a
3. Naturalization multi-national company. There, he fell in love and married Mary
4. Death Grace delos Santos. She requested him to have his first name
changed because his new name "Jesus delos Santos" is the same
Judicial decrees authorized to be entered in the civil register name as that of her father who abandoned her family and
became a notorious drug lord. She wanted to forget him. Hence,
1. Legal separation Jesus filed another petition with the Office of the Local Civil
2. Annulments of marriage Registrar to change his first name to "Roberto." He claimed that
3. Declarations of nullity of marriage the change is warranted because it will eradicate all vestiges of
4. Adoption the infamy of Mary Grace's father. Will the petition for change of
5. Naturalization name of Jesus delos Santos to Roberto delos Santos under
6. Loss or recovery of citizenship Republic Act No. 9048 prosper? (2006 Bar Question)
7. Civil interdiction
8. Judicial determination of filiation A: No, under the law, Jesus may only change his name once. In
9. Changes of name (Silverio v. Republic, G.R. No. 174689, addition, the petition for change of name may be denied on the
October 22, 2007) following grounds:
1. Jesus is neither ridiculous, nor tainted with dishonor nor
Nature of the books making up the civil register and the extremely difficult to write or pronounce.
documents relating thereto 2. There is no confusion to be avoided or created with the use
of the registered first name or nickname of the petitioner.
The books and documents shall be considered public documents 3. The petition involves the same entry in the same document,
and shall be prima facie evidence of the facts therein contained. which was previously corrected or changed under the Rules
and Regulations Implementing RA 9048.
NOTE: Applications for delayed registration of birth go through a rigorous
process. The books making up the civil register are considered public RULE 108, RULES OF COURT
documents and as a public document, a registered certificate of live birth
enjoys the presumption of validity (Nieves Estares Baldos, substituted by
Francisco Baldos and Martin Baldos v. Court of Appeals and Reynaldo Pillazar
Clerical or typographical errors cannot be corrected under Rule
a.k.a. Reynaldo Estares Baldos, G.R. No. 170645, July 9, 2010). 108 of the Rules of Court
R.A. 9048 The correction or change of clerical or typographical errors can

now be made through administrative proceedings and without the
Effectivity of RA 9048 need for a judicial order. In effect, RA 9048 removed from the
ambit of Rule 108 of the Rules of Court the correction of such
R.A. 9048 took effect on March 22, 2001 errors. Rule 108 now applies only to substantial changes and
corrections in entries in the civil register (Silverio v. Republic, G.R.
Rule with regard to changing or correction of entries in the civil No. 174689, October 22, 2007).
register
First name
GR: No entry in a civil register shall be changed or corrected
without a judicial order. It refers to a name or nickname given to a person which may
consist of one or more names in addition to the middle and last
XPNs: names.
1. Clerical or typographical errors and
2. Change of first name or nickname which can be corrected or Q: John Lloyd Cruzada filed a petition for the change of his first
changed administratively by the concerned city or municipal name and sex in his birth certificate in the RTC. He alleged that
civil registrar or consul general in accordance with the his name was registered as John Lloyd Cruzada in his certificate
provisions of RA 9048 (Clerical Error Law). of live birth. His sex was registered as male. Further, he alleged
that he is a male transsexual. Prior to filing the petition, he
Clerical or Typographical error underwent sex reassignment surgery Thailand. Thus, he seeks to
have his name in his birth certificate changed from John Lloyd
It refers to a mistake committed in the performance of clerical to Joanna, and his sex from male to female on the ground
work in writing , copying, transcribing or typing an entry in the civil of sex reassignment pursuant to Articles 407 to 413 of the Civil
register that is harmless and innocuous, such as misspelled name Code, Rules 103 and 108 of the Rules of Court and RA 9048.
or misspelled place of birth or the like, which is visible to the eyes
or obvious to the understanding, and can be corrected or changed a. May a person's first name be changed on the ground of sex
only by reference to other existing record or records: Provided, reassignment?
that no correction must involve the change of , nationality, age, b. May a person's sex as indicated in his certificate of birth be
status or sex of the petitioner (Section 2(c), RA 9048). changed on the ground of sex reassignment?
Q: Zirxthoussous delos Santos filed a petition for change of name A:

with the Office of the Civil Registrar of Mandaluyong City under
the administrative proceeding provided in RA No. 9048. He a. No. The State has an interest in the names borne by
alleged that his first name sounds ridiculous and is extremely individuals and entities for purposes of identification. A
difficult to spell and pronounce. After complying with the change of name is a privilege, not a right. Petitions for
requirements of the law, the Civil Registrar granted his petition change of name are controlled by statutes. RA 9048 now

CIVIL LAW
governs the change of first name. RA 9048 provides the
grounds for which change of first name may be allowed:
(1) The petitioner finds the first name or nickname to be
ridiculous, tainted with dishonor or extremely difficult
to write or pronounce;
(2) The new first name or nickname has been habitually
and continuously used by the petitioner and he has
been publicly known by that first name or nickname in
the community; or
(3) The change will avoid confusion.
RA 9048 does not sanction a change of first name on the ground of

sex reassignment. Rather than avoiding confusion, changing
petitioners first name for his declared purpose may only create
grave complications in the civil registry and the public interest.
Before a person can legally change his given name, he must
present proper or reasonable cause or any compelling reason
justifying such change. In addition, he must show that he will be
prejudiced by the use of his true and official name. In this case, he
failed to show, or even allege, any prejudice that he might suffer as
a result of using his true and official name.
b. No. Under RA 9048, a correction in the civil registry involving

the change of sex is not a mere clerical or typographical error.
It is a substantial change for which the applicable procedure
is Rule 108 of the Rules of Court. The entries correctable
under Rule 108 of the Rules of Court are those provided in
Arts. 407 and 408 of the NCC. These acts, events and judicial
decrees provided in Arts. 407 and 408 of the NCC produce
legal consequences that touch upon the legal capacity, status
and nationality of a person. Their effects are expressly
sanctioned by the laws. In contrast, sex reassignment is not
among those acts or events mentioned in Art. 407. Neither is
it recognized nor even mentioned by any law, expressly or
impliedly. A persons sex is an essential factor in marriage and
family relations. It is a part of a persons legal capacity and
civil status. In this connection, Art. 413 of the NCC provides
that all other matters pertaining to the registration of civil
status shall be governed by special laws. But there is no such
special law in the Philippines governing sex reassignment and
its effects (Silverio v. Republic, G.R. No. 174689, October 22,
2007).
NOTE: The jurisdiction over applications for change of first name is now
primarily lodged with the city or municipal civil registrar or consul general
concerned. The intent and effect of the law is to exclude the change of first
name from the coverage of Rules 103 (Change of Name) and 108
(Cancellation or Correction of Entries in the Civil Registry) of the Rules of
Court, until and unless an administrative petition for change of name is first
filed and subsequently denied. Hence, the remedy and the proceedings
regulating change of first name are primarily administrative in nature, not
judicial (Silverio v. Republic, G.R. No. 174689, October 22, 2007).

PROPERTY
PROPERTY 4. As to individuality
a. Specific property
b. Generic property
CHARACTERISTICS
5. As to susceptibility to touch
a. Tangible
Property
b. Intangible
6. As to susceptibility to substitution
It is any object which is, or may be, appropriated (Art. 414, NCC).
a. Fungible
b. Non fungible
It is an object or a right which is appropriated or susceptible of
7. As to accession
appropriation by man, with capacity to satisfy human wants and
a. Principal
needs (Pineda, 1999).
b. Accessory
8. As to existence
Requisites for a thing to be considered as property (USA)
c. Existing or present property (res existentes)
d. Future property (res futurae)
1. Utility Capacity to satisfy human wants
9. As to consumability
2. Substantivity/ Individuality It has a separate and
a. Consumable
autonomous existence. It can exist by itself and not merely as
b. Non-consumable
a part of a whole (Paras, 2008).
10. As to divisibility
3. Appropriability Susceptibility to ownership/possession,
a. Divisible
even if not yet actually appropriated
b. Indivisible
Properties NOT susceptible of appropriation CLASSIFICATION OF PROPERTY BY MOBILITY
1. Common things (res communes) REAL OR IMMOVABLE
GR: Those properties belonging to everyone. While in Categories of immovable property:

particular no one owns common property, still in another
sense, res communes are really owned by everybody in that Real Property by: (NIDA)
their use and enjoyment are given to all of mankind. 1. Nature Those which cannot be carried from place to place
Examples: air, wind, sunlight (Paras, 2008). 2. Incorporation Those which are attached to an immovable in
a fixed manner and considered as an integral part thereof,
XPN: Those that may be appropriated under certain irrespective of its ownership
conditions in a limited way. 3. Destination Things placed in buildings or on lands by the
e.g. Electricity owner of the immovable or his agent in such a manner that it
reveals the intention to attach them permanently thereto
2. Not susceptible due to physical impossibility 4. Analogy Classified by express provision of law.
e.g. Sun
3. Not susceptible due to legal impossibility IMMOVABLE BY NATURE & INCORPORATION
e.g. Human body
Par. 1, Art. 415. Land, buildings, roads and constructions of all
Human body NOT a property kinds adhered to the soil.
The human body, whether alive or dead, is neither real nor
Building
personal property. It is not even property at all, in that it generally
cannot be appropriated.
A building is always immovable unless the same is merely
superimposed on the soil or is sold for immediate demolition, in
While a human being is alive, he cannot, as such, be the object of a
which case it may be considered as movable or personal property;
contract, for he is considered outside the commerce of man. He
thus, barong-barongsare not permanent structures but mere
may donate part of his blood, may even sell part of his hair, but he
superimpositions on land.
cannot sell his body (Paras, 2008).
Where buildings are sold to be demolished immediately, the
NOTE: Under the R.A. 7170 or the Organ Donation Act of 1991, donation of
all or a part of a human body may only occur after a persons death (i.e., building is not an immovable property.The sale involves movable
the irreversible cessation of circulatory and respiratory functions or the property. What are really sold are the materials.
irreversible cessation of all functions of the entire brain, including the brain
system) (Sec. 2[j], R.A. 7170, as amended). Effect of demolition of a house
CLASSIFICATION OF PROPERTY Once a house is demolished, its character as an immovable ceases.

This is because a house is classified as an immovable property by
Classifications of property reason of its adherence to the soil on which it is built (Bicerra v.
Teneza, G.R. No. L-16218, November 29, 1962).
1. As to mobility
a. Immovable or real property Mortgage of a building erected on a land belonging to another
b. Movable or personal property
2. As to ownership A building may be mortgaged apart from the land on which it was
a. Public dominion built. While it is true that a mortgage of land necessarily includes,
b. Private ownership in the absence of stipulation of the improvements thereon,
3. As to alienability buildings, still a building by itself may be mortgaged apart from the
a. Alienable land on which it has been built. Such a mortgage would still be a
b. Inalienable real estate mortgage for the building would still be considered

CIVIL LAW
immovable property even if dealt with separately and apart from IMMOVABLE BY INCORPORATION & BY DESTINATION
the land (Yee v. Strong Machinery Company, G.R. No. 11658,
February15, 1918).
A valid real estate mortgage can be constituted. Art. 415 of the Par. 4, Art. 415. Statutes, reliefs, paintings or other objects for
New Civil Code mentions buildings separate from land. This use or ornamentation, placed in buildings or on lands by the
means that the building by itself is an immovable and may be owner of the immovable in such a manner that it reveals the
subject of a REM (Prudential Bank v. Panis, G.R. No. L-50008, intention to attach them permanently to the tenements.
August 31, 1987).
The annotation or inscription of a deed of sale of real property in a Placed by the owner
chattel mortgage registry is NOT considered an inscription in the
registry of real property.By its express terms, the Chattel Mortgage This means that the objects must be placed by the owner of the
Law contemplates and makes provisions for mortgages of personal immovable and not necessarily the owner of the object.
property; and the sole purpose and object of the chattel mortgage
registry is to provide for the registry of Chattel mortgages, that is Par. 3 distinguished from Par. 4
to say, mortgages of personal property executed in the manner
and form prescribed in the statute (Yee v. Strong Machinery Co, PAR. 3 PAR. 4
G.R. No. L-11658, February 15, 1918).
Cannot be separated from the Can be separated from the
immovable without breaking or immovable without breaking or
Par. 2, Art. 415. Trees, plants and growing fruits, while they are deterioration deterioration.
attached to the land or form an integral part of an immovable.
Must be placed by the owner of
Need not be placed by the
the immovable, or by his agent
Trees and plants owner
whether express or implied
Real property by incorporation
Trees may be either be: Real property by incorporation
and destination
1. A real property
a. by nature - if they are spontaneous products of the soil.
Par. 5, Art. 415. Machinery, receptacles, instruments or
b. by incorporation - If they have been planted thru
implements intended by the owner of the tenement for an
cultivation or labor.
industry or works which may be carried on in a building or on a
piece of land & which tend directly to meet the needs of the said
2. A personal property
industry or works.
The moment trees are detached or uprooted from the land it
is considered as personal property. Requisites for machinery to be considered real property (COTE)
NOTE: However, in case of uprooted timber, they are still not 1. The industry or work must be Carried on in a building or on a
considered as personal property because timber is an integral part of piece of land;
the timber land. 2. The machinery must:
a. Be placed by the Owner of the tenement or his agent;
Growing fruits b. Tend directly to meet the needs of the said industry or
work; and
GR: Growing fruits are considered as real property so long as they c. Be Essential and principal to the industry or work, and
are still attached to the soil. not merely incidental thereto.
XPN: Growing fruits may be exceptionally treated as personal Machinery placed by a tenant or by a usufructuary
property pursuant to the provisions of Art. 416(2) of the New Civil
Code (Rabuya, 2008) It is NOT considered real property. Since it is placed by a person
having only a temporary right, it does not become immobilized.
Example: Where a tenant places the machinery under the express provision
1. Ungathered fruits are considered personal property for the of lease that it shall become a part of the land belonging to the
purpose of sale of the whole or part of the crops. owner upon the termination of the lease without compensation to
2. Ungathered fruits have the nature of personal property for the lessee, the tenant acts as an agent of the owner and the
the purpose s of attachment and execution and in applying immobilization of the machineries arises from the act of the owner
the provisions of the Chattel Mortgage Law. in giving by contract a permanent destination to the machinery
(Valdez v. Central Altagracia, 225 U.S. 58, 1912).
IMMOVABLE BY INCORPORATION Equipment of a transportation business classified as personal

property
Par. 3, Art. 415. Everything attached to an immovable in a fixed
manner, in such a way that it cannot be separated therefrom A transportation business is not carried on in a building or on a
without breaking the material or deterioration of the object. specified land. Hence, equipment destined only to repair or service
a transportation business may not be deemed real property, but
Res vinta personal property (Mindanao Bus Co. v. City Assessor and
Treasurer, G.R. No. L-17870, September 29, 1962).
These are immovables by incorporation, which when separated
from the immovable, regain their condition as movable. Machines must be essential and principal elements in the industry
and must directly meet the needs of said industry. It does not
include movables which are merely incidentals, without which the
business can still continue or carry on their functions.

PROPERTY
elements of their chocolate making industry. Hence, although
Machineries bolted or cemented on real property mortgaged each of them was movable or personal property on its own, all of
them have become immobilized by destination because they are
It is NOT considered an immovable property. The fact that essential and principal elements in the industry. Petitioners argue
machineries were bolted or cemented on real property mortgaged that said machines are real properties pursuant to Art. 415 (5) of
does not make them ipso facto immovable under Art. 415 (3) and the NCC and are not, therefore, the proper subjects of a Writ of
(5) as the parties intent has to be looked into. Seizure. However, the lease agreement entered into by the
petitioners provides that the machines in question are to be
When immovable property by nature may be treated as a chattel considered as personal property. How should the machines be
classified?
Even if the properties appear to be immovable by nature, nothing
detracts the parties from treating them as chattels to secure an A: The machines should be deemed personal property pursuant to
obligation under the principle of estoppel (Tsai v. CA, G.R. No. the Lease Agreementis good only insofar as the contracting
120098, October 2, 2001). persons are concerned. Hence, while the parties are bound by the
Lease Agreement, third persons acting in good faith are not
Q: What is the effect of temporary separation of movables from affected by its stipulation characterizing the subject machinery as
the immovables to which they are attached? personal (Sergs Products, Inc. v. PCI Leasing and Finance, Inc., 338
A: There are two views regarding the issue; namely: SCRA 504, August 22, 2000).
1. They continue to be regarded as immovables.
2. Fact of separation determines the condition of the objects Q: The City Assessor sought to impose realty tax on steel towers
thus recovering their condition as movables. of MERALCO. The taxes were paid under protest, MERALCO
contending that the towers were exempt from taxation and that
Q: Manila Petroleum Co. (MPC) owned and operated a petroleum they were personal and not real properties. Decide.
operation facility off the coast of Manila. The facility was located
on a floating platform made of wood and metal, upon which was A: The towers are personal properties. They are not buildings
permanently attached the heavy equipment for the petroleum adhered to the soil (Art. 415 par. 1); they are not attached to an
operations and living quarters of the crew. The floating platform immovable in a fixed manner and they can be separated without
likewise contained a garden area, where trees, plants and flowers substantial damage or deterioration, and they are not machineries
were painted. The platform was tethered to a ship, the MV101, intended for works on the land (Board of Assessment Appeals v.
which was anchored to a seabed. Meralco, G.R. No. L-15334, January 31, 1964).
1. Is the platform movable or immovable property? PERSONAL OR MOVABLE

2. Are the equipment and living quarters movable or
immovable property? Movable properties (SOFTSS)
3. Are the trees, plants and flowers immovable or movable
property?(2007 Bar Question) 1. Movables Susceptible of appropriation which are not
included in Art. 415;
A: 2. Real property which by any Special provision of law considers
as personalty;
1. The platform is an immovable property by destination. It was e.g. growing crops under the Chattel Mortgage Law.
intended by the owner to remain at a fixed place on a river or 3. Forces of nature which are brought under the control of
coast. Art. 415 (9) of the NCC considers as real property science ;
docks and structures which, though floating are intended by e.g. electricity generated by electric powers, solar light for
their nature and object to remain at a fixed place on a river, batteries power.
lake, or coasts (2007 Bar Question; Fels Energy, Inc. v. The 4. In general, all things which can be Transported from place to
Province of Batangas, G.R. No. 168557, February 16, 2007). place without impairment of the real property to which they
are fixed;
2. With respect to the equipment, the same is real property 5. Obligations and actions which have for their object movables
under paragraph 5 of Art. 415, NCC. It is intended to meet the or demandable sums; and
needs of the industry being undertaken by MPC. The 6. Shares of stock of agricultural, commercial and industrial
equipment partakes of the nature of the immovable upon entities, although they have real estate (Art. 416, NCC).
which it has been placed.
Tests to determine whether a property is a movable property
The living quarters, if attached to the immovable platform (MES)
with permanence, becomes an immovable as well.
Permanence means they cannot be separated without 1. Test of Exclusion Everything not included in Art. 415, e.g.
destroying the platform or the quarters. On the other hand, if ships or vessels or interest in a business
the attachment is not permanent, or not merely 2. By reason of a Special law Immovable by nature but
superimposed on the platform, then the living quarters are movable for the purpose of the special law, e.g. Growing
movable property. crops for purposes of the Chattel Mortgage Law
3. Test of Mobility If the property is capable of being carried
3. The trees, plants and flowers are also immovable, having from place to place without injuring the real property to
been planted in the garden area, under Art. 415 (2) which which it may in the meantime be attached
provides that Trees, plants and growing fruits, while they are
attached to the land or form an integral part of the
immovable are likewise immovable property.
Q: Petitioners contend that the machines that were the subjects

of the Writ of Seizure were placed in the factory built on their
own land. Indisputably, they were essential and principal

CIVIL LAW
CLASSIFICATION OF PROPERTY BY OWNERSHIP Local Government Units DOES NOT have the power to withdraw a
public street from public use, unless it has been granted such
1. In relation to the State authority by law (Dacanay v. Asistio Jr., G.R. No. 93654, May 6,
a. Public Dominion 1992).
b. Patrimonial
2. In relation to political subdivisions/local government unit PRIVATE OWNERSHIP
a. Public use
b. Patrimonial Properties in private ownership of private persons or entities
3. In relation to private persons
a. Owned individually All properties not belonging to the State or its political subdivision
b. Owned collectively are properties of private ownership pertaining to private persons,
either individually or collectively.
NOTE: Sacred and religious objects are considered outside the commerce of
man. They are neither public nor private party. Patrimonial property of the State
PUBLIC DOMINION It is the property not devoted to public use, public service, or the
development of the national wealth. It is intended rather for the
Public Dominion attainment of the economic ends of the State, that is, for
subsistence. It is owned by the State in its private or proprietary
It means ownership by the public in general. It may also mean capacity.
properties or things held by the State by regalian right.
NOTE: It may be disposed of by the State in the same manner that private
individuals dispose of their own property subject, however, to administrative
Properties classified as public dominion cannot be alienated but
laws and regulations.
are not totally outside the commerce of man as the Constitution
allows the State to enter into co-production, joint ventures or
Properties for public service and properties for the development
production-sharing agreements with private individuals or
of national wealth
corporations for their exploration, development and utilization.
NOTE: In order to be classified as property of public dominion, an intention

1. Public service depends on who pays for the service. If paid
to devote it to public use or to public service is sufficient and it is not for by the political subdivision, public; if for profit,
necessary that it must actually be used as such. patrimonial.
2. National wealth still property for public use under the
Kinds of property of public dominion (USD) regalian doctrine
1. For public Use; Canals constructed by private persons within private lands are
2. Intended for public Service and not for public use; and NOT of public dominion but of private ownership.
3. For the Development of the national wealth (Art. 420, NCC).
Art. 420 states that canals constructed by the State are of public
Characteristics of properties of public dominion (ULEP- ROB) ownership; conversely, canals constructed by private persons
within private lands are of private ownership (Santos v. Moreno,
1. In general, they can be Used by everybody; G.R. No. L-15829, December 4, 1967).
2. Cannot be Levied upon by execution or attachment;
3. May Either be real or personal property; Q: The City of Cebu obtained a loan which was to be paid with its
4. Cannot be acquired by Prescription; own funds. Part of the proceeds of this loan was used to fund the
5. Cannot be Registered under Land Registration Law and be the construction of the Citys sewage system. NAWASA sought to
subject of Torrens Title; expropriate the sewage system. This was opposed with the
6. Outside the commerce of man cannot be alienated or arguments that there was no payment of just compensation;
leased or be subject of any contract; NAWASA offered unliquidated assets and liabilities. NAWASA
7. Cannot be Burdened by voluntary easement. averred, as an alternative course of action, that the property is
one for public use and under the control of the legislature. Decide
Classification of lands of public dominion whether the property is patrimonial property of the city or
property for public use.
1. Agricultural;
2. Forest or timber; A: The property is patrimonial and not subject to legislative
3. Mineral lands; control. It is property of the city, purchased with private funds and
4. National Parks (Art. XIV, Sec. 10, Philippine Constitution). not devoted to public use (it is for profit). It is therefore
patrimonial under the Civil Code. Nor can the system be considered
Authority to classify or reclassify public lands public works for public service under Art. 424 because such
classification is qualified by ejusdem generis; it must be of the same
As provided in the Public Land Act, the classification or character as the preceding items (City of Cebu v. NAWASA, G.R. No.
reclassification of public lands into alienable or disposable, mineral 12892, April 20, 1960).
or forest lands is a prerogative of the executive department of the
government and not of the courts. CLASSFICATION OF PROPERTY BY NATURE
Property of public dominion can be converted to patrimonial Properties classified according to consumability
property through a formal declaration by the executive or
legislative body that the property is no longer needed for public 1. Consumable property That which cannot be used according
use or for public service. to its nature without being consumed or being eaten or used
up

PROPERTY
2. Non-Consumable property That which can be used REMEDIES TO RECOVER POSSESSION
according to its nature without being consumed or being
eaten or used up. ACTIONS TO RECOVER OWNERSHIP AND POSSESSION OF REAL
PROPERTY
Properties classified according to susceptibility to substitution
Legal remedies to recover possession of ones property
1. Fungible property That property which belongs to a
common genus permitting its substitution 1. Personal property- Replevin
2. Non- fungible property That property which is specified and 2. Real property
not subject to substitution a. Accion Interdictal
i. Forcible Entry
NOTE: As to whether a property is fungible or non-fungible is determined by
ii. Unlawful detainer
the agreement of the parties and not on the consumability of the thing.
b. Accion Publiciana
OWNERSHIP c. Accion Reinvindicatoria
RIGHTS IN GENERAL DISTINCTIONS BETWEEN ACCION REIVINDICATORIA, ACCION

PUBLICIANA, ACCION INTERDICTAL
Ownership
Accion interdictal
It is the juridical relation of a person over a thing by virtue of which
said person has the exclusive power or authority to receive all the It is a summary action to recover physical or material possession
benefits and advantages arising from said thing, save those only and it must be brought within one year from the time the
restricted by law or the recognized rights of others. cause of action arises. It may be:
1. Forcible Entry
Kinds of ownership (FNSC) 2. Unlawful detainer
1. Full ownership Includes all the rights of an owner; Accion publiciana
NOTE: Naked ownership + Usufruct It is an ordinary civil proceeding to recover the better right of
possession, except in cases of forcible entry and unlawful detainer.
2. Naked ownership Ownership where the rights to the use What is involved here is not possession de facto but possession de
and to the fruits have been denied; jure.
NOTE: Full ownership Usufruct Accion reinvindicatoria
3. Sole ownership Ownership is vested in only one person; It is anaction to recover real property based on ownership. Here,
4. Co-ownership Ownership is vested in 2 or more persons. the object is the recovery of the dominion over the property as
There is Unity of the property, and plurality of the subjects. owner.
Characteristics of ownership NOTE: Where the facts averred in the complaint reveals that the action is
1. Elastic Power/s may be reduced and thereafter neither one of forcible entry nor unlawful detainer but essentially involves a
automatically recovered upon the cessation of the limiting boundary dispute, the same must be resolved in an accion reinvindicatoria
(Sarmiento v. CA, G.R. No. 116192, November 16, 1995).
rights.
2. General The right to make use of all the possibilities or
Requisites of accion reinvindicatoria
utility of the thing owned, except those attached to other real
rights existing thereon.
1. Identity of property
3. Exclusive There may be two or more owners, but only one
2. Plaintiffs title to the property
ownership.
4. Independent Other rights are not necessary for its
Q: A contract of lease executed by Alava (lessor) and Anita Lao
existence.
(lessee) was not registered with the Register of Deeds. Aside from
5. Perpetual Ownership lasts as long as the thing exists. It
Anita, Rudy Lao also leased a portion of the same property where
cannot be extinguished by nonuser but only by adverse
he put up his business. At that time, Rudy knew that Anita and
possession.
her husband were the owners of the said building. He also knew
that she had leased that portion of the property, and that Jaime
BUNDLE OF RIGHTS PERSONAL OR MOVABLE
Lao, their son, managed and maintained the building, as well as
the business thereon. Rudy eventually purchased the entire
JUS UTENDI, FRUENDI, ABUTENDI, VINDICANDI, DISPODENDI,
property from Alava. Rudy then filed a complaint for unlawful
POSSIDENDI, ACCESIONES
detainer against Jaime alleging that the latter had occupied a
portion of his property without any lease agreement and without
Attributes of ownership
paying any rentals, and prayed that an order be rendered
directing Jaime to vacate the premises. Should the complaint be
1. Right to enjoy (jus utendi)
dismissed?
2. Right to the fruits (jus fruendi)
3. Right to abuse (jus abutendi)
A: Yes. The records in this case show that the respondent has been
4. Right to dispose (jus dispodendi)
in possession of the property in question, not by mere tolerance or
5. Right to recover (jus vindicandi)
generosity of Rudy, but as the manager of his mother, who
6. Right to accessories (jus accessiones)
conducted her business in the building which stood on a portion of
7. Right to possess (jus possidendi)
the property leased from Alava. Jaimes possession was in behalf of
his mother, and not in his own right.

CIVIL LAW
REQUISITES FOR RECOVERY OF PROPERTY

Q: What is the effect of non-registration of the contract of lease?
Requisites in an action to recover property
A: Although the lease contract was not filed with the Register of
Deeds, nevertheless, Rudy was bound by the terms and conditions 1. Clearly identify the land he is claiming in accordance with the
of said contract. The lease, in effect became a part of the contract title/s on which he bases his right of ownership; and
of sale. However, Rudy had no cause of action for unlawful
detainer against Anita because of the subsisting contract of lease; NOTE: Burden of proof lies on the party who asserts the affirmative of
hence, he could not file the complaint against her (Lao v. Lao, G.R. an issue. The description should be so definite that an officer of the
No. 149599, May 16, 2000). court might ho to the locality where the land is situated and definitely
locate it.
DISTINCTION BETWEEN FORCIBLE ENTRY AND
UNLAWFUL DETAINER 2. Prove that he has a better title than the defendant
a. Best proof is a Torrens certificate.
Forcible entry v. Unlawful detainer b. Tax receipts, tax declarations are only prima facie
evidence of ownership; it is rebuttable.
Forcible Entry Unlawful Detainer
NOTE: Plaintiffs title must be founded on positive right or title and
As to when possession became unlawful not merely on the lack or inefficiency of the defendants title. In other
words, he shall not be permitted to rely upon the defects of the
Possession is inceptively lawful defendants title (Art. 434, NCC).
but becomes illegal from the
time defendant unlawfully Reasons why the plaintiff is NOT allowed to rely on the weakness
withholds possession after the of defendants title
Possession of the defendant is expiration or termination of his
unlawful from the beginning as right thereto.
he acquired possession by force, 1. Possibility that neither the plaintiff nor the defendant is the
intimidation, strategy, threat or NOTE: The question of possession is true owner of the property. In which case, the defendant who
stealth (FISTS). is in possession will be preferred.
primordial, while the issue of
ownership is generally unessential in 2. One in possession is presumed to be the owner and he
unlawful detainer (Rosa Rica Sales cannot be obliged to show or prove a better title
Center v. Sps. Ong, G.R. 132197, 3. Possessor in the concept of an owner is presumed to be in
August 16, 2005). good faith and he cannot be expected to be carrying every
As to necessity of demand now and then his proofs of ownership over the property
4. He who relies on the existence of a fact, should prove that
No previous demand for the Demand is jurisdictional if the fact. If he cannot prove, the defendant does not have to
defendant to vacate is ground is non-payment of prove.
necessary. rentals or failure to comply with
the lease contract. REAL v. PERSONAL RIGHTS
As to necessity of proof of prior physical possession
Plaintiff must prove that he was Plaintiff need not have been in Real rights v. personal rights
in prior physical possession of prior physical possession.
the premises until he was Real Right Personal Right
deprived thereof by the NOTE: The fact that petitioners are in Creation
defendant. possession of the lot does not
automatically entitle them to remain Created by title alone
in possession (Ganilla v. CA, G.R. No. It is not directly created over a
Created by both title and mode
150755, June 28, 2005). thing but is exercised through
directly over a thing
As to when 1 year period is counted from another against whom the
action is to be brought.
1 year period is generally 1 year period is counted from
Object
counted from the date of actual the date of last demand or last
entry of the land. letter of demand. Incorporeal or intangible.
Generally corporeal or tangible.
Object covers all the present
Object is specific property or
and future property of the
ACTIONS FOR RECOVERY OF POSSESSION OF MOVABLE thing.
debtor. (Art. 2236, NCC)
PROPERTY
Subjects
Replevin (a) One definite active
subject (e.g. owner)
It is the remedy when the complaint prays for the recovery of the (b) One indefinite
possession of personal property. passive subject which (a) An active subject
is the whole world (creditor)
NOTE: A property validly deposited in custodia legis cannot be subject of a Right of pursuit is (b) A definite passive
replevin suit (Calub v. CA, G.R. No. 115634, Apr. 27, 2000). therefore available. subject (debtor)
Real right follows its
object in the hands
of any possessor
Enforceability
Enforceable only against the
Enforceable against the whole original debtor or his
world transferee charged with notice
of the personal rights

PROPERTY
Limit XPN: If the finder is not the owner or is a stranger (includes the
Limited by usefulness, value or lessee or usufructuary), he is entitled to thereof (Art 566, NCC).
No such limitation
productivity of the thing
If the finder is married
Extinguishment
Not so extinguished. Claim for If the finder is married, he or she gets one half of the treasure or its
Extinguished by loss or damages may still be pursued- value his or her spouse is entitled to share one-half of that share it
destruction of the thing in case of loss or destruction of being a conjugal property (Art. 117, par. 4, FC).
the thing
Requisites in order that the finder be entitled to any share in the
LIMITATIONS hidden treasure(ACTA)
Limitations on the right of ownership 1. Discovery was made on the property of Another, or of the
State or any of its political subdivisions;
Those imposed by the: (CC-SLOG) 2. Made by Chance; and
1. State in the exercise of: 3. He is not a Trespasser or Agent of the landowner (Art. 438(2),
a. Power of taxation NCC).
b. Police power
c. Power of eminent domain NOTE: If the things found be of interest to science or the arts, the State may
2. Law acquire them at their just price, which shall be divided in conformity with the
a. Legal easements (i.e., easements of waters and of right rule stated (Art. 438, NCC).
of way) and
b. The requirement of legitime in succession; A trespasser (one prohibited to enter, or not given the authority to
3. Owner himself enter) who discovers hidden treasure is NOT entitled to any share
a. Voluntary easement of the treasure (Paras, 2008)
b. Mortgage
c. Pledge By Chance
d. Lease;
4. Grantor of the property on the grantee, either by: The finder had no intention to search for the treasure. There is no
a. Contract agreement between the owner of the property and the finder for
b. Donation or the search of the treasure.
c. Will;
5. Those arising from Conflicts of private rights Q: Adam, a building contractor, was engaged by Blas to construct
a. Those which take place in accession continua; a house on a lot which he (Blas) owns. While digging on the lot in
6. Constitution order to lay down the foundation of the house, Adam hit a very
a. Prohibition against the acquisition of private lands by hard object. It turned out to be the vault of the old Banco de las
aliens. Islas Filipinas. Using a detonation device, Adam was able to open
7. Acts in state of necessity The law permits injury or the vault containing old notes and coins which were in circulation
destruction of things owned by another provided this is during the Spanish era. While the notes and coins are no longer
necessary to avert a greater danger (with right to indemnity legal tender, they were valued at P 100 million because of their
v. principle of unjust enrichment) historical value and the coins silver and nickel content. The
8. True owner must resort to judicial process When thing is in following filed legal claims over the notes and coins:
possession of another; law creates a disputable presumption i. Adam, as finder;
of ownership to those in actual possession ii. Blas, as owner of the property where they were found;
iii. Bank of the Philippine Islands, as successor-in-interest of the
HIDDEN TREASURE owner of the vault; and
iv. The Philippine Government because of their historical value.
Hidden treasure
Who owns the notes and coins?
It isany hidden and unknown deposit of money, jewelry or other
precious objects, the lawful ownership of which does not appear A: Hidden treasure is money jewelry or other precious objects the
(Art 439, NCC). ownership of which does not appear (Art. 439, NCC). The vault of
the Banco de las Islas Filipinas has been buried for about a century
Other precious objects and the Bank of the Philippine Islands cannot succeed by
inheritance to the property of Banco de las Islas Filipinas. The
Under the ejusdem generis rule, the phrase should be understood ownership of the vault, together with the notes and coins can now
as being similar to money or jewelry. legally be considered as hidden treasure because its ownership is
no longer apparent. The contractor, Adams, is not a trespasser and
Oil or gold NOT considered as hidden treasure. therefore entitled to one-half of the hidden treasure and Blas as
owner of the property, is entitled the other half (Art. 438, NCC).
These are natural resources. The Regalian Doctrine applies and not Since the notes and coins have historical value, the government
the provisions on hidden treasure. may acquire them at their just price which in turn will be divided
equally between Adam and Blas (Art. 438, par.3, NCC)
Rule regarding discovery of hidden treasure
Alternative Answer: The Banco de las Islas Filipinas is the owner of
GR: If the finder is the owner of the land, building, or other the vault. The finder and the owner of the land cannot share in the
property where it is found, the entire hidden treasure belongs to notes and coins, because they are not buried treasure under the
him. law, as the ownership is known. Although under Art. 720 of the
NCC the finder shall be given a reward of one-tenth of the price of

CIVIL LAW
the thing found, as a lost movable, on the principle of quasi-
contract. Obligation of the owner who receives the fruit from a third
person
However, the notes and coins may have become res nullius
considering that Banco de las Islas Filipinas is no longer a juridical He who receives the fruits has the obligation to pay the expenses
person and has apparently given up looking for them and Adam, made by a third person in their production, gathering and
the first one to take possession with intent to possess shall become preservation.
the sole owner.
NOTE: Only such as are manifest or born are considered as natural or
Q: Assuming that either or both Adam and Blas are adjudged as industrial fruits.
owners, will the notes and coins be deemed part of their absolute
With respect to animals, it is sufficient that they are in the womb of the
community or conjugal partnership of gains with their respective mother, although unborn.
spouses? (2008 Bar Question)
Existence of the fruit
A: Yes. The hidden treasure will be part of the absolute community
or conjugal property, of the respective marriages. (Arts. 91, 93 & It depends on the type of fruit:
106, FC) 1. Annual (must be planted every year/must re-plant after
harvest; rice, wheat, corn) deemed manifest the moment
Alternative Answer: It is not hidden treasure and therefore, not their seedlings appear.
part of the absolute or conjugal partnership of the spouses. But the 2. Perennial (only planted once and bear fruit for several
finder of the lost movable, then his reward equivalent to one-tenth seasons; mango and coconut trees) deemed to exist only
of the value of the vaults contents, will form part of the conjugal when they actually appear.
partnership. If the government wants to acquire the notes and
coins, it must expropriate them for public use as museum pieces Animal young
and pay just compensation.
They are considered existing even if still in the maternal womb.
ACCESSION They should be considered existing only at the commencement of
the maximum ordinary period for gestation.
Accession
Pratus sequitor ventrem offspring follows the mother
It may be defined as the right pertaining to the owner of a thing
over everything which is produced thereby, or which is This legal maxim means that the offspring follows the dam
incorporated or attached thereto, either naturally or artificially (mother). The legal presumption, in the absence of proof to the
(Art. 440, NCC). contrary, is that the calf, as well as its mother belongs to the owner
of the latter, by the right of accretion (US v. Caballero, G.R. No.
Right of accession 8608, September 26, 1913). Thus, when the ownership over the
offspring of the animal when the male and female belongs to
It is that right of ownership of which an owner of a thing has over different owners, the owner of the female was considered also the
the products of said thing (accession discreta), as well as to all owner of the young, unless there is a contrary custom or
things inseparably attached or incorporated thereto whether speculation.
naturally or artificially (accession continua) (Pineda, 2009).
When fruits are deemed to exist
Accession NOT a mode of acquiring ownership
1. Civil fruits accrue daily and are considered personal property
It is not one of the modes enumerated under Art. 712 (different and may be pro-rated.
modes of acquiring ownership). It is therefore safe to conclude that 2. Natural and industrial fruits, while still growing, are
accession is not a mode of acquiring ownership. considered as real property; ordinarily, they cannot be pro-
rated.
The reason is simple: accession presupposes a previously existing
ownership by the owner over the principal. Fundamentally and in Ownership of fruits
the last analysis, accession is a right implicitly included in
ownership, without which it will have no basis or existence (Paras, GR: Fruits belong to the owner of the land (Art. 441, NCC).
2008).
XPNS: If the thing is: [PULPA]
NOTE: In general, the right to accession is automatic (ipso jure), requiring no 1. In possession of a possessor in good faith (Art 546, NCC);
prior act on the part of the owner or principal.
before the possession is legally interrupted.
FRUITS 2. Subject to a Usufruct (Art. 566, NCC)
3. Lease of rural land
Rule on the owners right of accession with respect to what is 4. Pledged (Art. 1680 and Art. 2102, par. 7, NCC); pledge is
produced by his property entitled to the fruits but has the obligation to compensate or
set-off what he receives with those which are owing to him.
To the owner belongs the: 5. In possession of an Antichretic creditor (Art. 2132, NCC)
1. Natural fruits - the spontaneous products of the soil,
and the young and other products of animals;
2. Industrial fruits -are those produced by lands of any kind
through cultivation or labor;
3. Civil fruits - the rents of buildings, the price of leases of
lands and other property and the amount of perpetual
or life annuities or other similar income (Art. 441, NCC).

PROPERTY
GENERAL RULES OF ACCESSION a single object, the owner of the principal thing acquires the accessory,
indemnifying the former owner thereof for its value.
FOR MOVABLES Separation of things is allowed in cases of (WIB)

ACCESSION CONTINUA 1. Separation Without injury
2. Separation with Injury Accessory is much more precious
Basic principle of accession with respect to movable property than the principal, the owner of the former may demand its
separation even though the principal may suffer injury.
Accession exists only if separation is not feasible. Otherwise, 3. Owner of the principal acted in Bad faith. (Art. 469, NCC)
separation may be demanded.
Rights of owners over the thing in adjunction
Different kinds of accession continua as regard movables (AMS)
OWNER OF THE PRINCIPLE OWNER OF THE ACCESSORY
1. Adjunction or conjunction
2. Mixture Good Faith Good Faith
3. Specification 1. Receive payment for value of
accessory; OR
1. Acquire accessory and
Adjunction 2. GR: Demand separation
pay owner of the
provided the thing suffers no
accessory for its value;
It is the process by virtue of which two movable things belonging to injury
OR
different owners are united in such a way that they form a single
2. Demand separation
object and each of the things united preserves its own nature (Art. XPN: If accessory is more
provided the thing
466, NCC). precious than principal, he may
suffers no injury
demand separation w/ or w/o
Requisites of adjunction (2BUS) injury to the thing
Good Faith Bad Faith
There is adjunction when there are: Acquire accessory w/o paying
1. 2 movables; the owner of accessory and Lose accessory and pay damages
2. Belonging to different owners; entitled to damages
3. United forming a single object; Bad Faith Good Faith
4. Separation would impair their nature or result in substantial 1. Pay value of accessory 1. Receive payment and
injury to either thing. and pay damages; OR damages; OR
2. Have the things 2. Have accessory separated w/
Classes of adjunction or conjunction (PEWWS) separated, even though or w/o injury to principal and
there is injury to the receive damages
1. Painting (pintura) principal and pay
2. Engraftment - Like setting a precious stone on a golden ring) damages
3. Writing (escritura) Bad Faith Bad Faith
4. Weaving Same as though both acted in good faith
5. Soldering- Joining a piece of metal to another metal)
a. Ferruminacion - Principal and accessory are of the same Indemnity
metal
b. Plumbatura Different metals (Art. 468, NCC) It is made either by:
1. Delivery of a thing equal in kind and value; or
Ownership of the resulting object 2. Payment of its price including the sentimental value. (Art.
471, NCC)
The owner of the principal by law becomes owner of the resulting
object and should indemnify the owner of the accessories for the Mixture
values thereof.
It is the combination of materials where the respective identities of
Tests to determine the principal (VVUM) the component elements are lost either voluntarily or by chance.
(Arts. 472-473, NCC)
1. That of greater Value- If two things are of equal value. (Art.
468, NCC) Kinds of mixtures (COM-CON)
2. That of greater Volume- If two things are of equal volume. 1. Commixtion mixture of solids
(Art. 468, NCC) 2. Confusion mixture of liquids
3. That to which the other has been United as an ornament, or
for its use or perfection- If it cannot be determined from Art. Rules regarding mixtures
467 (Art. 467, NCC).
4. That which has greater Merits, utility and volume if things. 1st Owner 2nd Owner
Ownership when the adjunction involves three or more things By Will of Both Owners or by Accident
Good Faith Good Faith

If the adjunction involves three or more things,the court should
first distinguish the principal and apply Art. 466 in an equitable 1. Right is subject to stipulations; OR
manner such that the principal acquires the accessory, 2. Right is in proportion to the part belonging to him (Co-
indemnifying the former owner thereof for its value. ownership arises)
NOTE: Art. 466 states that Whenever two movable things belonging to
By Will of Only 1 Owner/ By Chance
different owners are, without bad faith, united in such a way that they form

CIVIL LAW
Good Faith Good Faith Adjunction, mixture and specification distinguished
1. Have the things separated provided the thing suffers no injury; ADJUNCTION MIXTURE SPECIFICATION
OR
2. If cannot be separated w/o injury, acquire interest on mixture May involve 1
in proportion to his part (co-ownership) Involves at least 2 Involves at least 2
thing(or more) but
things things
Bad Faith form is changed
Good Faith
(caused the mixture)
Accessory follows Co-ownership Accessory follows the
1st owner will lose his part on the 2nd owner will acquire entire
the principal results principal
mixture and pay damages to the 2nd mixture and entitled to
owner damages Things mixed or
The new object
Good Faith confused may
Bad Faith Things joined retain retains or preserves
(caused the mixture) either retain or lose
their nature the nature of the
their respective
original object
As if both acted in GF, since natures
As if both acted in GF, because the
nd the 1st owner is in BF and the
2 owner in GF was the one who nd
2 owner who caused the
caused the ratification, because the RULES FOR DETERMINING THE PRINCIPAL AND ACCESSORY
mixture in GF in a way
1st owner
ratifies the BF of 1st owner.
Factors to determine the principal and the accessory
Specification Primary Factors (Importance/purpose)

1. The thing which is incorporated to another thing as an
It is the giving of new form to anothers material thru application of ornament is the accessory. The other is the principal
labor. The material undergoes a transformation or change of 2. The thing to which is added to or joined to another for the
identity. use or perfection of the latter is the accessory. The other is
the principal.
Respective rights of the maker and the owner of the materials in
specification Secondary Factors
1. The one which has a greater value shall be considered
Maker (M) Owner of Materials (OM) principal
Good Faith Good Faith 2. If they have equal value, the one with greater volume shall be
GR: Appropriate the thing Receive payment for value of considered principal (Art. 467-468, NCC)
transformed and pay the owner materials
NOTE: In painting and sculpture, writings, printed matter, engraving and
of the materials for its value
lithographs, the board, metal, stone, canvas, paper or parchment shall be
deemed the accessory thing. (Art. 468, NCC)
XPN: If the material is more
precious than the thing FOR IMMOVABLES
transformed, the owner of the
materials has the option to: ACCESSION DISCRETA
1. Acquire the work and
indemnify the maker for his Accession discreta
labor; or
2. Demand indemnity for the GR: It is the right pertaining to the owner of a thing over everything
material produced thereby.
XPNs:
1. Receive payment for value 1. Appropriate new thing and
of his work; OR pay the maker for the work;
It is subject to the following exceptions:
2. Appropriate the new thing OR
1. If the thing is in possession of a possessor in good faith in
and pay the owner of 2. Receive payment for value
which case such possessor is entitled to the fruits (Art. 544,
materials for its value of materials
NCC).
Bad Faith Good Faith 2. If the thing is subject to a usufruct, in which case the
1. Lose the new thing and pay 1. Appropriate the new thing usufructuary is entitled to the fruits(Art. 566, NCC).
damages to owner of the without paying and receive 3. If the thing is leased, in which case the lessee is entitled to
materials; OR damages; OR the fruits of the thing, although such lessee must pay the
2. Pay value of materials and owner rentals which are in the nature of civil fruits (Art. 1654,
damages to owner of the NOTE: Not available if the NCC).
materials new thing is more valuable 4. If the thing is in possession of an antichretic creditor, in which
than materials for scientific case such creditor is entitled to the fruits with the obligation
or artistic reasons of applying them to the interest and principal (Art. 2132,
NCC).
2. Receive payment for the
value of materials and Requisites of accession discreta
damages
1. Increase or addition to the original thing
2. At repeated intervals
3. By inherent forces

PROPERTY
ACCESSION CONTINUA 4. To the Owner of the thing belongs the extension or increases
to such thing.
Accession continua 5. Bad faith of one party Neutralizes the bad faith of the other
so that they shall be considered in good faith.
It is the right pertaining to the owner of a thing over everything 6. He who is in Good faith may be held responsible but not
incorporated or attached thereto either naturally or artificially; by penalized.
external forces. 7. No one shall unjustly Enrich himself at the expense of
another.
1. With respect to real property [IN]
a. Accession Industrial (building, planting or sowing) ACCESSION INDUSTRIAL
b. Accession Natural (alluvium, avulsion, change of a river
course, and formation of islands) Maxims in connection with accession industrial
NOTE: In case of uprooted trees, the owner retains ownership if 1. The accessory follows the principal.
he makes a claim within 6 months. This does not include trees 2. The accessory follows the nature of that to which it relates.
which remain planted on a known portion on land carried by the 3. What is built upon the land goes with it; or the land is the
force of the waters. In this latter case, the trees are regarded as
accessions of the land through gradual changes in the course of
principal, and whatever is built on it becomes the accessory.
adjoining stream (Payatas v. Tuazon, No. 30067, March 23,
1929). Rule on ownership regarding accession industrial
2. With respect to personal property [SAC] GR: The owner of the land is the owner of whatever is built,
a. Specification planted or sown on that land, including the improvements or
b. Adjunction or conjunction repairs made thereon.
c. Commixtion or confusion
XPNS:
Basic principles in accession continua (BADONG-E) 1. When the doer is in good faith the rule is modified.
2. Improvements on the land of one of the spouses at the
1. He who is in Bad faith is liable for damages. expense of the conjugal partnership will belong to the
2. Accessory follows the principal partnership or to the spouse who owns the land depending
3. Union or incorporation must generally be effected in such a on which of the two properties has a higher value (Art. 120,
manner that to separate the principal from the accessory FC)
would result in substantial Damage to either or diminish its
value. NOTE: If the doer is in bad faith, he is entitled only to necessary expenses for
the preservation of the land.
Rule if the planter and owner of the land are different
Gathered Fruits
Planter in GF Planter in BF
Keeps fruits (Art. 544 par 1, NCC) Reimbursed for expenses for production,
Planter gathering and preservation (Art. 443, NCC)
No necessity to reimburse the planter of Owns fruits provided he pays planter expenses
Owner expenses since the planter retains the fruits. for production, gathering and preservation
(Art. 544 par 1, NCC) (Art. 443, NCC)
Standing Crops
Planter in GF Planter in BF
Reimbursed for expenses,for production, Loses what is built, planted or sown without
gathering and preservation (Art.443, NCC) right to indemnity (Art 449, NCC).
Planter
Entitled to reimbursement for the necessary
expenses of preservation of the land. (Art. 452,
NCC).
Owns fruits provided he pays planter expenses Owns fruits (Art. 449, NCC)
Owner for production, gathering and preservation (Art.
443, NCC)

CIVIL LAW
Rule when the land owner is the builder, planter or sower
Land Owner and Builder, Planter or Sower Owner of Materials

1. Receive indemnity for value of materials; or
Acquire building etc. after paying indemnity for value of materials. (Art. 2. Remove materials if w/o injury to works, plantings or
447, NCC) constructions (Art. 447, NCC)
Bad Faith Good Faith

Acquire building etc. after paying value of materials AND indemnity for 1. Be indemnified for value of materials and damages; or
damages, subject to the right of the owner of materials to remove. 2. Remove materials, w/ or w/o injury and be indemnified for
(Art. 447, NCC) damages (Art, 447, NCC)
1. Acquire w/o paying indemnity and right to damages (Art 445 and 1. Lose materials w/o being indemnified and pay damages (Art 445
449, NCC by analogy) and 449, NCC by analogy)
2. Pay necessary expenses for preservation. (Art. 452 & 546, NCC) 2. Recover necessary expenses for preservation of land without the
right to retain the thing until the indemnity is paid. (Art. 452 &
546, NCC)
Bad Faith Bad Faith

As though both acted in good faith (in pari delicto)
(Art. 453, NCC)
Rule when the land owner is NOT the builder, planter or sower
Land Owner Builder, Planter, Sower and Owner of Materials

He can either: (Art. 448, NCC) If the Land Owner:
1. Acquire improvements after paying indemnity for: 1. Acquires the improvements after paying indemnity, Builder,
a. Necessary expenses, and Planter, or Sower has the right to retain the thing (and cannot be
b. Useful expenses which could either be: required to pay rent) until indemnity is paid (Art. 546, NCC) .
a. Original costs of improvements
b. Increase in the value of the whole (Art. 443 & 546, If the useful improvements can be removed without damage to
NCC) the principal thing, the Builder, Planter or Sower may remove
them, unless the person who recovers the possession exercises
2. Sell the land to builder and planter or collect rent from sower the other (Art. 547 & 447, NCC).
unless the value of the land is considerably greater than the
building etc., in which case, the builder and planter shall pay rent. 2. Sells the land, Builder or Planter cannot be obliged to buy the
land if its value is considerably more than that of the building or
The parties shall agree upon the terms of the lease and in case of trees.
disagreement, the court shall fix the terms thereof.
In such case, he shall pay reasonable rent
The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof (Art. 448,
NCC).
1. The land owner can either: 1. Lose improvements without right to be indemnified unless the
a. Acquire improvements without paying indemnity and latter sells the land (Art. 449, NCC).
collect damages (Art. 445 & 449, NCC). 2. Recover necessary expenses for preservation of land without the
b. Order the demolition of work or restoration to former right to retain the thing until the indemnity is paid (Art. 452 &
condition and collect damages in both cases (Art. 450, NCC). 546).
c. Sell the land to builder and planter or rent it to the sower, 3. Pay damages to land owner (Art. 451, NCC).
and collect damages in both cases (Art. 450, NCC).
2. Pay necessary expenses for preservation (Art. 452 & 546, NCC).
Bad Faith Good Faith
Acquires improvements after paying indemnity and damages to 1. Receive indemnity for improvements and receive damages; or
builder, planter, sower, unless the latter decides to remove (Art. 2. Remove them in any event and receive damages
454,447&443, NCC). (Art. 454 & 447, NCC).
He cannot compel the builder planter or sower to buy the land.
The reason why said article (Art. 447, NCC) applies may be explained as
follows:
That if the land owner knew that something was
being built, planted or sown on his land by

PROPERTY
another and he did not interpose any objection
thereto, it is as if he was the one building,
planting or sowing in bad faith on his own land
with materials belonging to another, using the
owner of the materials as his worker (Rabuya,
Property, 2008 Ed.)
Bad Faith Bad Faith

As though both acted in good faith (in pari delicto)
(Art. 453, NCC)
Rule when the land owner, builder, planter, sower and owner of materials are different persons
Land Owner Builder, Planter, Sower Owner of Materials

Good Faith Good Faith Good Faith
He shall answer subsidiarily for their value and Pay value of materials to its owner (Art. 455, 1. Collect value of materials primarily from
only in the event that the one who made use NCC). builder, planter, sower, subsidiarily from
of them has no property with which to pay land owner (Art. 455, NCC). Or
(Art. 455, NCC). and
2. Remove the materials only if w/o injury
and If the Land Owner: to the work constructed, or without the
plantings, constructions or works being
He can either: (Art. 448, NCC) 1. Acquires the improvement, Builder, destroyed (Art. 447, NCC).
1. Acquire improvements after paying Planter, or Sower may demand from the
indemnity for: landowner the value of the materials and
a. Necessary expenses, and labor (Art 455, NCC).
b. Useful expenses which could either
be: And he has the right to retain the thing
a. Original costs of (and cannot be required to pay rent)
improvements until indemnity is paid (Art. 546, NCC).
b. Increase in the value of the
whole (Art. 546 & 443, NCC) If the useful improvements can be
2. Sell the land to builder and planter or removed without damage to the
collect rent from sower unless the value principal thing, the possessor in good
of the land is considerably greater than faith may remove them, unless the
the building etc., in which case, the person who recovers the possession
builder and planter shall pay rent. exercises the other (Art. 547 & 447, NCC)
The parties shall agree upon the terms of 2. Sell the land or rents it, Builder or Planter
the lease and in case of disagreement, cannot be obliged to buy the land if its
the court shall fix the terms thereof. value is considerably more than that of
the building or trees.
In such case, he shall pay reasonable

rent.
The parties shall agree upon the terms of

the lease and in case of disagreement,
the court shall fix the terms thereof (Art.
448, NCC).
Good Faith Good Faith Bad Faith

Land Owner can either: (Art. 448, NCC) If the Land Owner: 1. Loses materials without right to
1. Acquire improvements after paying indemnity (Art. 449, NCC)
indemnity for: 1. Acquires the improvement, Builder,
a. Necessary expenses, and Planter, or Sower has the right to retain 2. Pays damages (Art. 451, NCC)
b. Useful expenses which could either the thing (and cannot be required to
be: pay rent) until indemnity is paid (Art. The builder, planter or sower would be
a. Original costs of 546, NCC). considered merely an agent of the owner of
improvements materials.
b. Increase in the value of the If the useful improvements can be
whole (Art. 546 & 443, NCC) removed without damage to the Therefore, the provisions of Article 449 of the
principal thing, the possessor in good Civil Code will apply by analogy. He is even
2. Sell the land to builder and planter or faith may remove them, unless the liable for damages (Rabuya, Property, 2008).
collect rent from sower unless the value person who recovers the possession
of the land is considerably greater than exercises the other (Art. 547, NCC).
the building etc., in which case, the
builder and planter shall pay rent. 2. Sells or rents it, Builder or Planter
The parties shall agree upon the terms of cannot be obliged to buy the land if its

CIVIL LAW
the lease and in case of disagreement, value is considerably more than that of
the court shall fix the terms thereof. the building or trees.
Without subsidiary liability for cost of
materials
rent
The parties shall agree upon the terms

of the lease and in case of
disagreement, the court shall fix the
terms thereof (Art. 448, NCC).
Without indemnity to owner of

materials and collects damages from
him.
Good Faith Bad Faith Bad Faith

1. Option to: 1. Lose improvements without right to be 1. Recover value from builder, planter,
a. Acquire improvements without indemnified unless the latter sells the sower (in pari delicto)
paying indemnity and collect land (Art. 449, NCC).
damages (Art. 445 & 449, NCC). 2. If builder, planter, sower acquired
b. Order the demolition of work or 2. Recover necessary expenses for improvements, remove the materials
restoration to former condition and preservation of land without the right only if w/o injury to the work
collect damages in both cases (Art. to retain the thing until the indemnity is constructed, or without the plantings,
450, NCC). paid (Art. 452 & 546, NCC). constructions or works being destroyed
c. Sell the land to builder and planter (Art. 447, NCC).
or rent it to the sower, and collect 3. Pay the value of the materials to the
damages in both cases (Art. 450, owner of the materials. 3. No action against land owner and
NCC).
Since both the owner of the materials 4. May be liable to the land owner for
2. Has right to demand damages from both and the builder, etc. acted in bad faith, damages (Art. 451, NCC)
(Art. 451, NCC). as between them, they are treated as
having both acted in good faith (De
3. Pay necessary expenses for preservation Leon, 2006)
(Art. 452 & 546, NCC).
4. Pay damages to land owner (Art. 451,
4. Not subsidiarily liable to the owner of the NCC).
materials because as to him, the two
acted in bad faith. (De Leon, Comments
and Cases on Property, 2006 Ed.)
Bad Faith Bad Faith Bad Faith
Same as though both acted in good faith (in pari delicto)(Art. 453, NCC)
Bad Faith Good Faith Good Faith

1. Acquires improvements after paying If he pays the owner of the materials, plants or 1. Collect value of materials primarily from
indemnity and damages, unless the latter seeds: builder, planter, sower, subsidiarily from
decides to remove (Art. 454, 447 & 443, land owner (Art. 455, NCC) or
NCC). i. He may demand from the landowner the
value of the materials and labor (Art 455, 2. Remove the materials in any event, with
2. Cannot compel builder, planter and NCC) and shall also be obliged to the a right to be indemnified for damages
sower to buy land. reparation of damages (Art. 447, NCC) or (Art. 447, NCC)
ii. Remove the materials in any event, with
a right to be indemnified for damages
(Art. 454 & 447, NCC)
Bad Faith Bad Faith Good Faith
The owner of the land shall answer subsidiarily Pay value of materials to its owner (Art. 455, 1. Collect value of materials primarily from
for their value and only in the event that the NCC) builder, planter, sower, subsidiarily from
one who made use of them has no property land owner (Art. 455, NCC) or
with which to pay (Art. 455, NCC) and
2. Remove the materials in any event, with
and If the Land Owner: a right to be indemnified for damages
(Art. 447, NCC)
Land Owner can either: (Art. 448, NCC) 1. Acquires the improvement, Builder,
Planter, or Sower may demand from the
1. Acquire improvements after paying landowner the value of the materials and
indemnity for: labor (Art 455, NCC)
a. Necessary expenses, and

PROPERTY
b. Useful expenses which could either And he has the right to retain the thing
be: (and cannot be required to pay rent)
a. Original costs of until indemnity is paid (Art. 546, NCC).
improvements
b. Increase in the value of the If the useful improvements can be
whole (Art. 546 & 443, NCC) removed without damage to the
principal thing, the possessor in good
2. Sell the land to builder and planter or faith may remove them, unless the
collect rent from sower unless the value person who recovers the possession
of the land is considerably greater than exercises option 2. (Art. 547 & 447, NCC)
the building etc., in which case, the
builder and planter shall pay rent. 2. Sells or rents it, Builder or Planter cannot
be obliged to buy the land if its value is
The parties shall agree upon the terms of considerably more than that of the
the lease and in case of disagreement, building or trees.
the court shall fix the terms thereof.
rent.
The parties shall agree upon the terms of

the lease and in case of disagreement,
the court shall fix the terms thereof (Art.
448, NCC).
Good Faith Bad Faith Good Faith
1. Option to: 1. Lose improvements without right to be 1. Collect value of materials primarily from
a. Acquire improvements without indemnified unless the latter sells the builder, planter, sower, subsidiarily from
paying indemnity and collect land (Art. 449, NCC). land owner (Art. 455, NCC) or
damages (Art. 445 & 449, NCC).
b. Order the demolition of work or 2. Recover necessary expenses for 2. Remove materials in any event if builder,
restoration to former condition and preservation of land without the right to planter, sower.
collect damages in both cases (Art. retain the thing until the indemnity is
450, NCC). paid (Art. 452 & 546, NCC).
c. Sell the land to builder and planter
or rent it to the sower, and collect 3. Pay value of materials to its owner plus
damages in both cases (Art. 450, damages (Art. 455, NCC).
NCC).
4. Pay damages to land owner (Art. 451,
2. Pay necessary expenses for preservation NCC).
(Art. 452 & 546, NCC).
3. Subsidiarily liable to owner of materials
Bad Faith Good Faith Bad Faith

1. Acquires improvements after paying If he pays the owner of the materials, plants or 1. Loses materials without right to
indemnity and damages, unless the latter seeds: indemnity (Art. 449, NCC)
decides to remove (Art. 454, 447 & 443,
NCC). i. He may demand from the landowner the 2. Pays damages (Art. 451, NCC)
value of the materials and labor (Art 455,
2. Cannot compel builder, planter and NCC) and shall also be obliged to the The builder, planter or sower would be
sower to buy land. reparation of damages (Art. 447, NCC) or considered merely an agent of the owner of
ii. Remove the materials in any event, with materials.
a right to be indemnified for damages
(Art. 454 & 447, NCC) Therefore, the provisions of Article 449 of the
Civil Code will apply by analogy. He is even
liable for damages (Rabuya, Property, 2008).

CIVIL LAW
When there is good faith on the part of both the owner of the A: The rights of Y, as owner of the lot, and of X, as builder of a
land and the builder, planter or sower house thereon, are governed by Art. 448 which grants to Y the
right to choose between two remedies: (a) appropriate the house
The owner of the land only has the options of paying the value of by indemnifying X for its value plus whatever necessary expenses
the building or selling the land. He cannot refuse either to pay or the latter may have incurred for the preservation of the land, or (b)
sell and compel the owner of the building to remove it from the compel X to buy the land if the price of the land is not considerably
land where it is erected. He is entitled to such removal only when, more than the value of the house. If it is, then X cannot be obliged
after having chosen to sell the land, the other party fails to pay for to buy the land but he shall pay reasonable rent, and in case of
the same (Ignacio v. Hilario, 76 Phil 606, 1946). disagreement, the court shall fix the terms of the lease.
The landowner upon demand for payment CANNOT automatically Suppose X was in good faith but Y knew that X was constructing
become the owner of the improvement for failure of the builder to on his (Y's) land but simply kept quiet about it, thinking perhaps
pay for the value of the land.There is nothing in Arts. 448 and 546 that he could get X's house later. What are the respective rights
which would justify the conclusion that upon failure of the builder of the parties over X's house in this case? (1999 Bar Question)
to pay the value of the land, when such is demanded by the
landowner, the land owner becomes automatically the owner of A: Since the lot owner Y is deemed to be in bad faith (Art. 453), X
the improvement under Art. 445. as the party in good faith may (a) remove the house and demand
indemnification for damages suffered by him, or (b) demand
When the lands value is considerably more than the payment of the value of the house plus reparation for damages
improvement,the landowner cannot compel the builder to buy the (Art. 447, in relation to Art. 454). Y continues as owner of the lot
land. In such event, a forced lease is created and the court shall and becomes, under the second option, owner of the house as
fix the terms thereof in case the parties disagree thereon (Depra v. well, after he pays the sums demanded.
Dumalo, No. L-57348, May 16, 1985).
Q: Pecson owned a commercial lot on which he built a building.
Rule when landowner sells the land to a 3rd person who is in bad For failure to pay realty taxes, the lot was sold at public auction
faith to Nepomuceno, who in turn sold it to the spouses Nuguid. The
sale, however, does not include the building. The spouses
Builder must go against the 3rd person but if the latter has paid the subsequently moved for the delivery of possession of the said lot
land owner, a case against such land owner may still be filed by the and apartment. Pecson filed a motion to restore possession
builder and the 3rd person may file a 3rd party complaint against pending determination of the value of the apartment.
land owner.
May Pecson claim payment of rentals?
Recourse left to the parties where the builder fails to pay the
value of the land. A: Yes, Pecson is entitled to rentals by virtue of his right of
retention over the apartment. The construction of the apartment
The Civil Code is silent on this point. Guidance may be had from was undertaken at the time when Pecson was still the owner of the
these decisions: lot. When the Nuguids became the uncontested owner of the lot,
1. In Miranda v. Fadullon, G.R. No. L-8220, October 29, 1955, the apartment was already in existence and occupied by tenants.
the builder might be made to pay rental only, leave things as
they are, and assume the relation of lessor and lessee; Art. 448 does not apply to cases where the owner of the land is the
2. In Ignacio v. Hilario, G.R. L-175, April 30, 1946, owner of the builder but who later lost the land; not being applicable, the
land may have the improvement removed; or indemnity that should be paid to the buyer must be the fair market
3. In Bernardo v. Bataclan, G.R. No. L-44606, November 28, value of the building and not just the cost of construction thereof.
1938, the land and the improvement may be sold in a public To do otherwise would unjustly enrich the new owner of the land.
auction, applying the proceeds first to the payments of the
value of the land, and the excess if any, to be delivered to the NOTE: While the law aims to concentrate in one person the ownership of the
land and the improvements thereon in view of the impracticability of
owner of the house in payment thereof (Filipinas College Inc.
creating a state of forced co-ownership, it guards against unjust enrichment
v. Timbang, G.R. No. L-12812, September 29, 1959). insofar as the good-faith builders improvements are concerned. The right of
retention is considered as one of the measures to protect builders in good
Q: Felix cultivated a parcel of land and planted sugar cane, faith.
believing it to be his own. When the crop was eight months old,
and harvestable after two more months, a resurvey of the land Pending complete reimbursement, may the spouses Nuguid
showed that it really belonged to Fred. What are the options benefit from the improvement?
available to Fred? (2000 Bar Question)
A: No. Since spouses Nuguid opted to appropriate the
A: As to the pending crops planted by Felix in good faith, Fred has improvement for themselves when they applied for a writ of
the option of allowing Felix to continue the cultivation and to execution despite knowledge that the auction sale did not include
harvest the crops, or to continue the cultivation and harvest the the apartment building, they could not benefit from the lots
crops himself. In the latter option, however, Felix shall have the improvement until they reimbursed the improver in full, based on
right to a part of the expenses of cultivation and to a part of the the current market value of the property (Pecson v. CA, G.R. No.
net harvest, both in proportion to the time of possession (Art. 545). 115814, May 26, 1995).
Q: Because of confusion as to the boundaries of the adjoining lots Q: In good faith, Pedro constructed a five-door commercial
that they bought from the same subdivision company, X building on the land of Pablo who was also in good faith. When
constructed a house on the adjoining lot of Y in the honest belief Pablo discovered the construction, he opted to appropriate the
that it is the land that he bought from the subdivision company. building by paying Pedro the cost thereof. However, Pedro insists
that he should be paid the current market value of the building,
What are the respective rights of X and Y with respect to X's which was much higher because of inflation. (2000 Bar Question)
house?
1. Who is correct, Pedro or Pablo?

PROPERTY
2. In the meantime that Pedro is not yet paid, who is entitled
to the rentals of the building, Pedro or Pablo? Accretion v. Alluvium
A: Accretion is the process whereby the soil is deposited while

1. Pablo is correct. Under Art. 448 in relation to Art. 546, the alluvium is the soil deposited.
builder in good faith is entitled to a refund of the necessary
and useful expenses incurred by him, or the increase in value Requisites of alluvium (GRA)
which the land may have acquired by reason of the
improvement, at the option of the landowner. The builder is 1. Deposit be Gradual and imperceptible
entitled to a refund of the expenses he incurred, and not to 2. Resulted from the effects of the current of the water
the market value of the improvement. 3. The land where the accretion takes place is Adjacent to the
banks of a river
NOTE: The case of Pecson v. CA, G.R. No. 115814, May 26, 1995 is not
applicable. If all the requisites are present, the riparian owner is automatically
entitled to the accretion.
2. Pablo is entitled to the rentals of the building. As the owner
of the land, Pablo is also the owner of the building being an NOTE: The alluvion starts to become the property of the riparian owner from
accession thereto. However, Pedro who is entitled to retain the time that the deposit created by the current of water becomes manifest
the building is also entitled to retain the rentals. He, however, (Heirs of Navarro v. IAC, GR. No. 68166, February 12, 1997).
shall apply the rentals to the indemnity payable to him after
deducting reasonable cost of repair and maintenance. Man-made or artificial accretions to lands NOT included
Q: The Church, despite knowledge that its intended contract of The rule on alluvion does not apply to man-made or artificial
sale with the National Housing Authority (NHA) had not been accretions to lands that adjoin canals or esteros or artificial
perfected, proceeded to introduce improvements on the disputed drainage system (Ronquillo v. CA, G.R. No 43346, March 20, 1991).
land. On the other hand, NHA knowingly granted the Church
temporary use of the subject properties and did not prevent the NOTE: If the deposits accumulate, not through the effects of the current of
Church from making improvements thereon. Did the Church and the water, but because of the constructions made by the owner purely for
NHA act in bad faith? defensive purposes against the damaging action of the water, the deposits
are still deemed to be alluvion and will belong to the riparian owner.
A: Yes. The Church and the NHA, both acted in bad faith, hence,
If the deposit is brought about by sea water
they shall be treated as if they were both in good faith (National
Housing Authority v. Grace Baptist Church, G.R. No. 156437, March
It belongs to the State and forms part of the public domain.
1, 2004).
Registration
ACCESSION: USUFRUCTUARY
Alluvial deposits must be registered. Though, automatically it is
Rights of the usufructuary over improvements he introduced on
owned by the riparian owner (Heirs of Navarro v. IAC, G.R. No.
the property held in usufruct
68166, February 12, 1997) it still subject to acquisitive prescription
which may divest the riparian owner the ownership over the
GR: The usufructuary is not entitled to indemnity for the expenses
accretion
he had incurred in the making of the improvements.
Failure to register
XPN: He may remove the improvements even against the will of
the owner, provided, that no damage would be caused to the
If the riparian owner fails to register the deposits within the
property (Art. 579, NCC).
prescriptive period of 50 years subjects said accretion to
acquisition thru prescription by third persons (Reynante v. CA, G.R.
The usufructuary may introduce useful or luxurious improvements
No. 95907, Apr. 8, 1992).
but is prohibited from altering the form and substance of the
property. However, registration under the Torrens System does not protect
the riparian owner against the diminution of the area of his
If the improvements cannot be removed without causing damage registered land through gradual changes in the course of an
to the property,the usufructuary may set off the improvements he adjoining stream.
may have made on the property against any damage to the same
(Art 580, NCC). Reasons for granting a riparian owner the right to alluvion
deposited by a river
ACCESSION NATURAL
1. To compensate him for:
ALLUVION
a. danger of loss that he suffers due to the location of his
land; and
Alluvium or alluvion
b. for the encumbrances and other easements on his land
2 To promote the interests of agriculture as he is in the best
It is the gradual deposit of sediment by natural action of a current
position to utilize the accretion.
of fresh water (not sea water), the original identity of the deposit
being lost. Where it is by sea water, it belongs to the State
(Government of Philippine Islands v. Cabangis, G.R. No. L-28379,
March 27, 1929).
NOTE: Art. 457, NCC states To the owners of the lands adjoining the banks
of the rivers belongs the accretion which they gradually receive from the
effects of the current of the waters.

CIVIL LAW
CHANGE IN THE COURSE OF RIVER

NOTE: By analogy, land transferred from one tenement to another by forces
of nature other than the river current can still be considered as an avulsion.
Change in the course of river
Rule on acquisition of titles over an avulsion
When a river changes its course by natural causes and its bed is
formed on a private estate,it becomes a property of public
GR: Original owner retains title.
dominion whether it is navigable or floatable.
XPNs: The owner must remove (not merely claim) the transported
Requisites (NAPA)
portion within 2 years to retain ownership, otherwise, the land not
removed shall belong to the owner of the land to which it has been
1. There must be a Natural change in the course of the waters
adjudicated in case of:
of the river; otherwise, the bed may be the subject of a State
1. Abandonment; or
grant (Reyes-Puno, p.54).
2. Expiration of 2 years, whether the failure to remove be
2. The change must be Abrupt or sudden;
voluntary or involuntary, and irrespective of the area of the
3. The change must be Permanent;
portion known to have been transferred.
NOTE: The rule does not apply to temporary overflowing of the river.
Rule on avulsion of uprooted trees
4. There must be Abandonment by the owner of the bed.
GR: The owner of the tree retains ownership.
NOTE: Abandonment pertains to the decision not to bring back the
river to the old bed (Reyes-Puno, p.53). XPN:
1. The owner must claim them within a period of 6 months.
Effect when the river bed is abandoned 2. If uprooted trees have been transplanted by the owner of the
land which the trees may have been cast and said trees have
River beds which are abandoned through the natural change in the taken root in said land, the owner of the trees, upon making
course of the waters ipso facto belong to the owners whose lands the claim, is required to refund the expenses incurred in
are occupied by the new course in proportion to the area lost. gathering them or in putting them in safe place, including the
However, the owners of the lands adjoining the old bed shall have expenses incurred by the owner of the land for the
the right to acquire the same by paying the value thereof, which preservation of the trees (Rabuya, 2008).
value shall not exceed the value of the area occupied by the new
bed (Art 461, NCC). ISLANDS
NOTE: The rule on abandoned river bed does not apply to cases where the Rules on ownership with regard to formation of islands
river simply dries up because there are no persons whose lands are occupied
by the waters of the river.
LOCATION OWNER
AVULSION If formed on the sea
W/in territorial waters State
Avulsion
Outside territorial waters First country to occupy
It is the deposit of known (identifiable) portion of land detached If formed on lakes or navigable/ floatable rivers
from the property of another which is attached to the property of State
another as a result of the effect of the current of a river, creek or If formed on non-navigable/ floatable rivers
torrent. Owner of nearer margin is the
Nearer in margin to one bank
sole owner
Art. 459, NCC states that whenever the current of a river, creek, or Island divided longitudinally in
torrent segregates from an estate on its banks a known portion of If equidistant
halves
land and transfers it to another estate, the owner of the land to
which the segregated portion belonged retains the ownership of it, Q: Eduave is the owner of land forming part of an island in a non-
provided he removes it within 2 years. navigable river. Said land was eroded due to a typhoon,
destroying the bigger portion thereof and improvements thereon.
Alluvium v. Avulsion
Due to the movements of the river deposits on the part of the
land that was not eroded, the area was increased. Later, Eduave
ALLUVIUM AVULSION allowed Dodong to introduce improvements thereon and live
Gradual and imperceptible Sudden or abrupt process there as a caretaker. However, Dodong however later denied
Eduaves claim of ownership so the latter filed action to quiet title
Soil cannot be identified Identifiable and verifiable over the property. Who has a better right to the land?
Belongs to the owner of the Belongs to the owner from A: Eduave. Clearly, the land in question is an island that appears in
property to which it is whose property it was a non-floatable and non-navigable river, and it is not disputed that
attached detached Eduave is the owner of the parcel of land along the margin of the
Detachment followed by river and opposite the island. Applying Art. 465, the island belongs
Merely an attachment to the owner of the parcel of land nearer the margin. More
attachment
accurately, because the island is longer than the property of
Requisites of avulsion (CAP) Eduave, he is deemed ipso jure the owner of that portion which
corresponds to the length of his property along the margin of the
1. Transfer is caused by the Current of a river, creek, or torrent. river. If however, the riparian owner fails to assert his claim
2. Transfer is sudden or Abrupt thereof, the same may yield to the adverse possession of the third
3. The Portion of the land transported is known or identifiable. parties, as indeed even accretion to land titled under the Torrens

PROPERTY
system must itself still be registered. Dodong thus may acquire a. Instrument;
said land by acquisitive prescription. But here, Dodongs b. Record;
possession cannot be considered to be in good faith, so 30 years of c. Claim;
possession is needed (Jagualing v. CA, G.R. No. 94283, March 4, d. Encumbrance; or
1991). e. Proceeding which is apparently valid but is in truth
invalid, ineffective, voidable or unenforceable, and is
NOTE: There is no accession when islands are formed by the branching of a prejudicial to the plaintiffs title; and
river; the owner retains ownership of the isolated piece of land. 4. Plaintiff must
a. Return to the defendant all benefits he may have
QUIETING OF TITLE received from the latter; or
b. reimburse him for expenses that may have redounded
Action to quiet title to his benefit.
It is a proceeding in equity, the purpose of which is the declaration Reasons for quieting of title
of the invalidity of a claim on a title or the invalidity of an interest
in property adverse to that of the plaintiff, and thereafter to free 1. Prevent future litigation on the ownership of the property
the plaintiff and all those claiming under him from any hostile claim 2. Protect true title & possession
thereon (Pineda,2009). 3. To protect the Real interest of both parties
4. To determine and make known the precise state of title for
An action for quieting of title is essentially a common law remedy the guidance of all
grounded on equity. The competent court is tasked to determine
the respective rights of the complainant and other claimants, not Persons who may file an Action to Quiet Title
only to place things in their proper place, to make the one who has
no rights to said immovable respect and not disturb the other, but 1. Registered owner;
also for the benefit of both, so that he who has the right would see 2. A person who has an equitable right or interest in the
every cloud of doubt over the property dissipated, and he could property; or
afterwards without fear introduce the improvements he may 3. The State.
desire, to use, and even to abuse the property as he deems best
(Dionisio Mananquil, et al. v. Roberto Moico; G.R. No. 180076. Rules in actions for Quieting of Title
November 20, 2012).
1. These put an end to vexatious litigation in respect to property
Quieting of title is a common law remedy for the removal of any involved; plaintiff asserts his own estate & generally declares
cloud upon, doubt, or uncertainty affecting title to real that defendants claim is without foundation
property. Whenever there is a cloud on title to real property or any 2. Remedial in nature
interest in real property by reason of any instrument, record, claim, 3. Not suits in rem nor personam but suits against a particular
encumbrance, or proceeding that is apparently valid or effective, person or persons in respect to the res (quasi in rem)
but is, in truth and in fact, invalid, ineffective, voidable, or 4. May not be brought for the purpose of settling a boundary
unenforceable, and may be prejudicial to said title, an action may disputes.
be brought to remove such cloud or to quiet the title. In such 5. Applicable to real property or any interest therein. The law,
action, the competent court is tasked to determine the respective however, does not exclude personal property from actions to
rights of the complainant and the other claimants, not only to quiet title.
place things in their proper places, and make the claimant, who has 6. An action to quiet title brought by the person in possession of
no rights to said immovable, respect and not disturb the one so the property is IMPRESCRIPTIBLE.
entitled, but also for the benefit of both, so that whoever has the 7. If he is not in possession, he must invoke his remedy within
right will see every cloud of doubt over the property dissipated, the prescriptive period.
and he can thereafter fearlessly introduce any desired
improvements, as well as use, and even abuse the property (Phil- Classifications of actions
Ville Development and Housing Corporation v. Maximo Bonifacio,
et al., G.R. No. 167391, June 8, 2011). 1. Remedial action one to remove cloud on title
2. Preventive action on to prevent the casting of a
Nature of the action to quiet title (threatened) cloud on the title.
An action to quiet title is quasi in rem - an action in personam Requisites for existence of a cloud (ATP)
concerning real property where judgment therein is enforceable
only against the defeated party and his privies. 1. There is an Apparently valid or effective instrument.
Scope of the action to quiet title NOTE: They must appear valid or effective and extraneous evidence
is needed to prove their invalidity or ineffectivity.
Only real properties can be subject of an action for quieting of title.
Art. 476 makes reference only to real property without hinting to 2. But such instrument is in Truth:
include personal property (Pineda, 2009). a. Invalid;
b. Ineffective;
QUIETING OF TITLE: REQUIREMENTS c. Voidable;
d. Unenforceable;
Requisites for an action to quiet title (LCDR) e. Has been extinguished or terminated;
f. Has been barred by extinctive prescription.
1. Plaintiff must have a Legal or equitable title to, or interest in 3. Such instrument may be Prejudicial to the title.
the real property which is the subject matter of the action;
2. There must be Cloud in such title;
3. Such cloud must be Due to some

CIVIL LAW
Purpose of an action to remove cloud on title CO-OWNERSHIP
It is intended to procure the cancellation, or delivery of, release of CHARACTERISTICS OF CO-OWNERSHIP

an instrument, encumbrance, or claim constituting a claim on IN GENERAL
plaintiffs title, and which may be used to injure or vex him in the
enjoyment of his title. Co-ownership
Action to quiet title v. Action to remove cloud on title It is a state where an undivided thing or right belongs to 2 or more
persons (Art. 484, NCC). It is the right of common dominion which
ACTION TO REMOVE CLOUD two or more persons have in a spiritual (or ideal) part of the thing
ACTION TO QUIET TITLE
ON TITLE which is not physically divided.
To put an end to troublesome For the removal of a possible
litigation with respect to the foundation for a future hostile Characteristics of co-ownership (PRES-LG)
property involved claim
1. Plurality of subjects / owners;
A remedial action A preventive action 2. There is no mutual Representation by the co-owners;
To prevent a future cloud on 3. It exists for the common Enjoyment of the co-owners;
Involving a present adverse claim
the title 4. There is a Single object which is not materially divided;
5. It has no distinct Legal personality
Q: Edgardo donated a parcel of land to a barangay subject to the 6. It is Governed first of all by the contract of the parties;
condition that it shall be used for the construction of a public otherwise, by special legal provisions, and in default of such
plaza within 5 years from execution of the Deed of Donation. provisions, by the provisions of Title III of the New Civil Code
Otherwise, the deed shall have no force and effect and ownership on co-ownership.
of the land will revert to the donor. The barangay took
possession of the property and allowed the construction of Requisites of co-ownership (POL)
buildings by public and private entities. Edgardo filed a complaint
for quieting of title and recovery of possession of the area 1. Plurality of owners;
donated against the barangay claiming that the donation had 2. Object, which is an undivided thing or right;
ceased to be effective, for failure to comply with the conditions of 3. Each co-owners right must be Limited only to his ideal share
the donation. Was the action to quiet title properly made? of the physical whole
A: No.The action to quiet title is unavailing until the donation shall NOTE: By the very nature of co-ownership, a co-owner cannot point to any
specific portion of the property owned in common as his own because his
have first been revoked. In the case at bar, the barangay traces its
share remains intangible and ideal (Spouses Avila et al v. Spouses Barabat,
claim of ownership over the disputed property to a valid contract GR. No. 141993, May 17, 2006).
of donation which is yet to be effectively revoked. Such rightful
claim does not constitute a cloud on the supposed title of Edgardo Co-ownership v. Joint tenancy
over the same property removable by an action to quiet title.
(Dolar v. Brgy. Lublub, G.R. No. 152663, November 18, 2005) CO-OWNERSHIP JOINT OWNERSHIP
Tenancy in common Joint Tenancy
PRESCRIPTION OR
As to the extent of ownership
NON-PRESCRIPTION OF ACTION
Each co-owner is the owner of Each joint owner owns the
Prescriptive periods for bringing an action to quiet title his own ideal share. whole thing.
1. Plaintiff in possession Imprescriptible As to disposition
2. Plaintiff not in possession
Joint owner may not dispose of
a. 10 years (ordinary) or Each co-owner may dispose of
his own share without of all the
b. 30 years (extra-ordinary) his undivided share without the
rest, because he really has no
other co-owners consent.
ideal share.
NOTE: Laches is defined as the failure or neglect, for unreasonable and
unexplained length of time, to do that which by exercising due diligence, As to transfer of shares in case of death
could or should have been done earlier.
Upon the death of a joint owner,
Upon the death of a co-owner,
The negligence or omission to assert a right within a reasonable time, his share goes to the other joint
his ideal share goes to his heirs.
warranting a presumption that the party entitled to assert it either has owners by accretion.
abandoned it or declined to assert it (Tijam v Sibonghanoy, L-21450, Apr. 15,
1968). As to minority or legal disability
In case of a minor who is a co-
The legal disability of one joint
An action filed within the period of limitations, may still be barred, owner, this does not benefit the
owner benefits the others.
by laches (See Arts. 1431, 1433, 1437, NCC). others.
Prescription
Imprescriptibility of action to quiet title
Prescription will continue to run Prescription will not run among
among co-owners them.
Even though the NCC does not include an action to quiet title as
one of those actions which are imprescriptible, the SC in this case
Co-ownership v. Partnership
held that such action is imprescriptible. The basis of the court is
Art. 480. The imprescriptibility of an action to quiet title is a
general principle from American jurisprudence (Bucton v. Gabar, CO-OWNERSHIP ORDINARY PARTNERSHIP
G.R. No. L-36359, January 31, 1974). No legal personality Has legal personality
Can be created without the Can be created only by contract,
formalities of a contract express or implied

PROPERTY
By contract or by will By contract only SPECIAL RULES
Agreement to exist for more
No term limit is set by law
than 10 years is void CONCEPT OF CONDOMINIUM
No mutual representation There is mutual representation
CONDOMINIUM CORPORATION
Not dissolved by the Dissolved by death or incapacity
death/incapacity of a co-owner of a partner
Condominium corporations
A co-owner can dispose of his
share w/o the consent of the A partner cannot be substituted A condominium may include, in addition, a separate interest in
others hence in a way a co- w/o the consent of the others other portions of such real property. Title to the common areas,
owner is substituted including the land, or the appurtenant interests in such areas, may
Profits may be stipulated upon be held by a corporation specially formed for the purpose (known
Profits of a co-owner depend on
(for e.g., profit-sharing as the condominium corporation) in which the holders of
his proportionate share
agreements) separate interest shall automatically be members or shareholders,
For collective enjoyment For profit to the exclusion of others, in proportion to the appurtenant
interest of their respective units in the common areas.
No public instrument is needed May be made in any form
even if the object of the co- except when real property is
The real right in condominium may be ownership or any other
ownership is an immovable contributed
interest in real property recognized by law, on property in the Civil
Code and other pertinent laws (Sec. 2, RA No. 4726).
Limitations upon the right of a co-owner to use the thing owned
in common INTEREST IN REAL PROPERTY
The thing should be used by a co-owner only: A condominiumis an interest in real property consisting of:
1. In accordance with the purpose for which it is intended;
2. In such a way as not to injure the interest of the co- 1. A separate interest in a unit in a residential, industrial or
ownership; and commercial building; and
3. In such a way as not to prevent the other co-owners from 2. An undivided interest in common, directly or indirectly, in the
using it according to their rights (Art. 486, NCC). a. Land on which it is located; and
b. In other common areas of the building.
Alienation of property co-owned
CONCEPT OF COMMON AREAS, AMENDMENT
When a co-owner sells the whole property as his,the sale will affect
only his own share but not those of the other co-owners who did Common area
not consent to the sale.
It consists of the entire project excepting all units separately
A sale of the entire property by one co-owner without the consent granted or held or reserved.
of the other co-owners is not null and void but affects only his
undivided share and the transferee gets only what would Project
correspond to his grantor in the partition of the thing owned in
common (Paulmitan v. CA, GR No. 51584, November 25, 1992). Itconsists of the entire parcel of real property divided or to be
divided in condominiums, including all structures thereon.
Duration of the co-ownership
Conveyance of units
An agreement to keep the thing undivided for a certain period of
time, not exceeding ten years, shall be valid. This term may be GR: Only to Filipino citizens
extended by a new agreement. XPN: To aliens in case of hereditary succession
A donor or testator may prohibit partition for a period which shall GROUNDS FOR PARTITION OF COMMON AREAS, OR
not exceed twenty years. DISSOLUTION OF THE CONDOMINIUM
Neither shall there be any partition when it is prohibited by law Partition of common areas
(Art. 494, NCC).
GR: No, there can be no judicial partition of common areas.
Share of the co-owners in the benefits and charges arising from
the co-ownership XPNs: A partition shall be made only upon a showing that: (COURE)
1. That 3 years after damage to the project which rendered a
According to the NCC, the share of the co-owners in the benefits material part thereof unfit for its use prior thereto, it has not
and charges arising from the co-ownership shall be proportional to been Repaired substantially to its state prior to said damage;
their respective interests and any stipulation in a contract to the or
contrary shall be void (Art. 485, par.1, NCC). Consequently, in order 2. That damage to the project has rendered 1/2 or more of the
to determine the share of the co-owners in the benefits and units therein Untenantable and owners holding, in aggregate,
charges, we must first determine their respective interests in the more than 30% interest in the common areas are opposed to
co-ownership. Under the law, such interests are presumed equal, the repair; or
unless the contrary is proved (Art. 485, par.2, NCC) 3. That the project which has been in existence for more than
50 yrs, is Obsolete and is uneconomic, and owners holding, in
aggregate, more than 50% interest in the common areas are
opposed to the repair or modernizing; or
4. That the project or a material part thereof has been
condemned or Expropriated, the project is no longer viable
CIVIL LAW
and owners holding, in aggregate, more than 70% interest in SOURCES OF CO-OWNERSHIP
the common areas are opposed to continuation of the
condominium after such expropriation or condemnation; or Sources of co-ownership (LOST-CC)
5. That the Conditions for such partition by sale have been met.
1. Law - ex. Easement of party walls (Article 658, NCC)
Voluntarily dissolution of a Corporation Condominium 2. Occupancy - ex. When two persons gather forest products or
catch a wild animal
1. By the affirmative vote of all the stockholders or members 3. Succession- ex. Heirs of undivided property before partition
thereof at a general or special meeting duly called for the 4. Testamentary (or mortis causa) / Donation inter vivos
purpose: Provided all the requirements of Section 62 of the
Corporation Law are complied with. i.e. Where the donor prohibits partition of the property for a
2. GR: When the enabling or master deed is revoked certain period of time
XPNs: 5. Contract
a. That 3 years after damage or destruction to the project 6. by Chance or fortuitous event
which renders a material part thereof unfit for its use
prior thereto, it has not been rebuilt or repaired i.e. Hidden treasure
substantially to its prior state; or
b. That damage or destruction to the project has rendered RIGHTS OF CO-OWNERS
1/2 or more of the units therein untenantable and that
more than 50% of the members of the corporation, if General rights of each co-owner as to the thing owned in
non-stock, or the shareholders representing more than common (USA-COPE-P)
30% of the capital stock entitled to vote, if a stock
corporation, are opposed to the repair or 1. To Use the thing according to the purpose intended provided
reconstruction of the project, or that:
c. That the project has been in existence in excess of 50 a. It is w/o prejudice to the interest of the co-ownership;
years, that it is obsolete and uneconomical, and more and
than 50% of the members of the corporation, if non- b. w/o preventing the use of other co-owners (Art. 486,
stock, or the stockholders representing more than 50% NCC).
of the capital stock entitled to vote, if a stock
corporation, are opposed to the repair or restoration or 2. To Share in the benefits in proportion to his interest,
remodeling or modernizing of the project; or provided the charges are borne in the same proportion (Art.
d. That the project or a material part thereof has been 485, NCC).
condemned or expropriated and that the project is no
longer viable, or that the members holding in aggregate NOTE: A contrary stipulation is void. Hence, benefits cannot be
more than 70% interest in the corporation, if non-stock, stipulated upon by the co-owners.
or the stockholders representing more than 70% of the
capital stock entitled to vote, if a stock corporation, are 3. Each co-owner may bring an Action for ejectment (Art. 487,
opposed to the continuation of the condominium NCC).
regime after expropriation or condemnation of a
NOTE: Action for ejectment covers; forcible entry, unlawful detainer,
material portion thereof; or
accion publiciana, quieting of title, accion reivindicatoria, replevin.
e. That the conditions for such a dissolution have been
met. (Secs. 13 & 14, R.A. 4726)
4. To Compel other co-owners to contribute to expenses for
Transfer of interest in the project to third persons
preservation of the thing (Art. 488, NCC)
5. To Oppose to any act of alteration (Art. 491, NCC) even if
An owner of a unit in a condominium project, such as an
beneficial to the co-owners
apartment, office or store, can transfer his interest in the project to
6. To Protect against acts of majority which are prejudicial to
a third person. However, the limitations prescribed by Sec. 5 of the
the minority (Art. 492, par. 3, NCC)
Condominium Act must be observed. According to this section:
7. To Exercise legal redemption
Any transfer or conveyance of a unit or an apartment, office or
8. To ask for Partition (Art. 494, NCC)
store or other space therein, shall include the transfer or
9. Right to exempt himself from obligation of paying necessary
conveyance of the undivided interest in the common areas or, in a
expenses and taxes by renouncing his share in the pro-
proper case, the membership or shareholding in the condominium
indiviso interest; but cant be made if prejudicial to co-
corporation: Provided, however, that where the common areas in
ownership
the condominium project are held by the owners of separate units
10. Right to make repairs for preservation of things can be made
as co-owners thereof, no condominium unit therein shall be
at will of one co-owner; receive reimbursement therefrom;
conveyed or transferred to person other than Filipino citizens or
notice of necessity of such repairs must be given to co-
corporations at least 60% of the capital stock of which belong to
owners, if practicable
Filipino citizens, except in cases of hereditary succession. Where
11. Right to full ownership of his part and fruits
the common areas in a condominium project are held by a
12. Right to alienate, assign or mortgage own part; except
corporation, no transfer or conveyance of a unit shall be valid if the
personal rights like right to use and habitation
concomitant transfer of the appurtenant membership or
13. Right of pre-emption
stockholding in the corporation will cause the alien interest in such
14. Right to be adjudicated thing (subject to right of others to be
corporation to exceed the limits imposed by existing laws.
indemnified)
15. Right to share in proceeds of sale of thing if thing is indivisible
and they cannot agree that it be allotted to one of them.

PROPERTY
Effect of redemption of the whole property of a co-owner XPN: Ifthey were also served with summons, even as unwilling
plaintiffs.
Redemption of the whole property by a co-owner does not vest in
him sole ownership over said property. Redemption within the A suit for ejectment CANNOT be brought by one co-owner against
period prescribed by law by a co-owner will inure to the benefit of another co-owner, since the latter also has a right of possession;
all co-owners. Hence, it will not put an end to existing co- the only effect of the action will be to obtain recognition of the co-
ownership (Mariano v. CA , 222 SCRA 76). ownership.
Duties/liabilities of co-owners RIGHT TO PROPERTY OWNED IN COMMON v. FULL OWNERSHIP

OVER HIS/HER IDEAL SHARE
1. Share in charges proportional to respective interest;
stipulation to contrary is void Right to property owned in common v. full ownership over
2. Pay necessary expenses and taxes May be exercised by only his/her ideal share
one co-owner
3. Pay useful and luxurious expenses If determined by 1. Right to property owned in common
majority
4. Duty to obtain consent of all if thing is to be altered even if NOTE: Each co- owner is granted the right to use the property owned
beneficial; resort to court if non-consent is manifestly in common for the purpose for which it is intended.
prejudicial There are two restrictions in the enjoyment of this right:
5. Duty to obtain consent of majority with regards to a. The co- ownership shall not be injured; and
administration and better enjoyment of the thing; controlling b. The exercise shall not prevent the other co- owners from using
interest; court intervention if prejudicial Appointment of the property according to their own rights.
administrator
6. No prescription to run in favor co-owner as long as he 2. Full ownership over his/her ideal share
recognizes co-ownership; requisites for acquisition through
prescription: NOTE: A co- owner has full ownership of his share (undivided interest)
a. He has repudiated through unequivocal acts and the fruits and benefits arising therefrom. Being the full owner
thereof he may alienate, assign or mortgage it; he can also substitute
b. Such act of repudiation is made known to other co- another person in the enjoyment of his share, except only when
owners personal rights are involved.
c. Evidence must be clear and convincing
7. Co-owners cannot ask for physical division if it would render ACTS OF ALTERATION
thing unserviceable; but can terminate co-ownership.
8. After partition, duty to render mutual accounting of benefits Alteration
and reimbursements for expenses.
It is a change which is more or less permanent, which changes the
Rights of a co-owner to 3rd parties use of the thing and which prejudices the condition of the thing or
its enjoyment by the others. (Paras, 2008)
1. Assignees may take part in division and object if being
effected without their concurrence, but cannot impugn Alteration includesthe act by virtue of which a co-owner changes
unless there is fraud or made not withstanding their formal the thing from the state in which the others believe it should
opposition. remain. It is not limited to material charges (Viterbo v. Quinto,
2. Non-intervenors Retain rights of mortgage and servitude 35226-R, December 19, 1973).
and other real rights and personal rights belonging to them
before partition was made. Acts of administration v. Acts of alteration
Q: Borromeo, a co-owner of a parcel of land, allowed Resuena to

reside in said land. After sometime, Borromeo later demands that ACTS OF ADMINISTRATION ACTS OF ALTERATION
Resuena should vacate the property, but the latter refused. May
Borromeo file an ejectment suit even if he is a mere co-owner of
the lot? Acts, by virtue of which, a co-
owner, in opposition to the
A: Yes. Art. 487 of the Civil Code which provides that Anyone of expressed or tacit agreement of
the co-owners may bring an action in ejectment is a categorical Refer to the enjoyment, all the co-owners, and in
and an unqualified authority in favor of Borromeo to evict Resuena exploitation, alteration of the violation of their will, chang the
from the portion occupied. Borromeos action for ejectment thing which do not affect its thing from the state in which
against Resuena is deemed to be instituted for the benefit of all co- substance, form, or purpose the others believe it would
owners of the property (Resuena v. CA, G.R. No. 128338, March 28, remain, or withdraws it from
2005). the use to which they believe it
is intended
The filing of an ejectment suit
Transitory in character Permanent
Art. 487, NCC states that Any one of the co-owners may bring
action for ejectment. The law does not require that consent of the
co-owners must be first secured before bringing an action for Do not affect the substance or Affect or relate the substance
ejectment. form or essence of the thing
If the case does not prosper: In relation to the right of a co-

Require the consent of all co-
owner, they require the
owners
GR: The other co-owners are NOT bound by the judgment. consent of the majority

CIVIL LAW
6. When a co-owner possessed the property as an Exclusive
Can be exercised by the co- Must be exercised by the co- owner for a period sufficient to acquire it through
owners through others owners themselves prescription. (Acquisitive Prescription)
7. When Co-owners may agree that it be Allotted to one of
them reimbursing the others;
Effect of alteration without the express or implied consent of co- 8. If they cannot agree, may Sell the thing and distribute the
owners proceeds.
A co-owner who makes an alteration without the express or NOTE: The right to ask for partition CANNOT be waived or renounced
implied consent of the others shall: (LDP) permanently. Such waiver or renunciation is void.
1. Lose what he has spent; Prescription

2. Be obliged to Demolish the improvements done; and
3. Pay for the loss and damages the community property or GR: As long as the co-owner expressly or impliedly recognizes the
other co-owners may have suffered. co-ownership, prescription cannot run in favor of or against him.
NOTE: Estoppel will operate against the co-owners who were aware of the Reason:Possession of a co-owner is like that of a trustee and shall
execution of the acts of alteration, but did not object thereto. They are not be regarded as adverse to the other co-owners but in fact is
deemed to have given their implied consent (3 Manresa 469-470). beneficial to all of them. Acts considered adverse to strangers may
not be considered adverse insofar as co-owners are concerned
Conversion (Salvador v. CA, G.R. No. 109910, Apr. 5, 1995).
It refers to the act of using or disposing of anothers property XPN: Co-owner's possession may be deemed adverse to the cestui
without lawful authority to do so in a manner different from that que trust or the other co-owners provided the following elements
with which a property is held by the trustees to whom the owner must concur:
had entrusted the same. It is not necessary that the use for which
the property is given be directly to the advantage of the person 1. That he has performed unequivocal acts of repudiation
misappropriating or converting the property of another (People v. amounting to an ouster of the cestui que trust or the other
Carballo, 17136-CR, November 17, 1976). co-owners;
2. That such positive acts of repudiation have been made known
RIGHT TO PARTITION to the cestui que trust or the other co-owners; and
3. That the evidence thereon must be clear and convincing
Rights of co-owners as to the ideal share of each (FARTS) (Salvador v. CA, G.R. No. 109910, Apr. 5, 1995).
1. Each has Full ownership of his part and of his share of the NOTE: Prescription begins to run from the time of repudiation.
fruits and benefits;
2. Right to Alienate, dispose or encumber; Example of acts of repudiation: filing of an action to:
3. Right to Renounce part of his interest to reimburse necessary 1. Quiet title; or
expenses incurred by another co-owner; 2. Recovery of ownership.
4. Right to enter into Transaction affecting his ideal share;
XPN to XPN: Constructive trusts can prescribe. Express trust
NOTE: The transaction affects only his ideal share not that of the other cannot prescribe as long as the relationship between trustor
co-owners. and trustee is recognized (Paras, 2008).
5. Right to Substitute another person in its enjoyment, except Q: The two lots owned by Alipio were inherited by his 9 children,
when personal rights are involved. including Maria, upon his death. Pastor, Marias husband, filed a
complaint for quieting of title and annulment of documents
NOTE: Personal rights or jus in personam is the power belonging to against the spouses Yabo, alleging that he owned a total of 8
one person to demand from another, as a definite passive subject- shares of the subject lots, having purchased the shares of 7 of
debtor, the fulfillment of a prestation to give, to do, or not to do Alipio's children and inherited the share of his wife, Maria, and
(Paras, 2008).
that he occupied, cultivated, and possessed continuously, openly,
peacefully, and exclusively the parcels of land. He prayed that he
Right to demand partition be declared the absolute owner of 8/9 of the lots. His co-heirs
then instituted an action to partition the lots. Did Pastor acquire
GR: Every co-owner has the right to demand partition. by prescription the shares of his other co-heirs or co-owners?
XPNs: (EAS-PAUL) A: No. The only act which may be deemed as repudiation by Pastor
1. When partition would render the thing Unserviceable; or of the co-ownership over the lots is his filing of an action to quiet
2. When the thing is essentially Indivisible; title. The period of prescription started to run only from this
3. When partition is prohibited by Law by reason of their origin repudiation. However, this was tolled when his co-heirs, instituted
or juridical nature- ex. party walls and fences; an action for partition of the lots. Hence, the adverse possession by
4. When the co-owners Agree to keep the property undivided Pastor being for only about 6 months would not vest in him
for a period of time but not more than 10 yrs; exclusive ownership of his wife's estate, and absent acquisitive
5. When partition is Prohibited by the transferor (donor / prescription of ownership, laches and prescription of the action for
testator) but not more than 20 yrs; partition will not lie in favor of Pastor (Salvador v. CA, G.R. No.
109910, Apr. 5, 1995).
NOTE: 10 years ordinary prescription, 30 years extra-ordinary
partition.

PROPERTY
Notice of the proposed partition to creditors and/or assignees Necessary expenses, useful expenses, and expenses of pure
luxury distinguished
The law does not require that a notification be given but
Necessary expenses are those made for the preservation of the
1. If notice is given- It is their duty to appear to concur /oppose, thing, or those without which the thing would deteriorate or be
otherwise creditors claims are deemed waived. lost, or those that augment the income of the things upon which
2. If no notice is given- creditors and/or assignees may still are expended, or those incurred for cultivation, production,
question the partition made. upkeep, etc. (Mendoza v De Guzman, 52 Phil. 171).
NOTE: Third persons who have rights attached to the community property Useful expenses incurred for the preservation of the realty in order
before its partition, shall retain such rights even after the partition of the that it may produce the natural, industrial, and civil fruits it
property. The protection granted by law applies to both real and personal ordinarily produce (Marcelino v. Miguel, 53 OG 5650).
rights (Pineda, p. 254).
Ornamental expenses add value to the thing only for certain
persons in view of their particular whims, neither essential for
Impugning partition already implemented
preservation nor useful to everybody in general.
GR: A partition already executed or implemented CANNOT be
Acts of preservation
impugned.
Acts of preservation may be made in the property of the co-owners
XPNs:
at the will of one of the co-owners, but he must, if practicable, first
1. In case of fraud, regardless of notification and opposition;
notify the others of the necessity of such repairs.
2. In case of partition was made over their objection even in
absence of fraud (Article 497, NCC)
Acts requiring the majority consent of the co-owners (IME)
Remedies available to co-owners where the co-owned property
1. Management
cannot be physically divided without rendering it useless or
2. Enjoyment
unserviceable
3. Improvement or embellishment
1. Agree on the allotment of the entire property to one of them
Remedy of the minority who opposes the decision of the majority
who in turn will indemnify the others for their respective
in co-ownership
interests; or
2. Sell the property and distribute the proceeds to the co-
Minority may appeal to the court against the majoritys decision if
owners (Pineda, p.252).
the same is seriously prejudicial.
Rights of co-owners that are not affected by partition (MRS-P)
There is no majority unless the resolution is approved by the co-
owners who represent the controlling interest in the object of the
co-ownership (Art. 492, par. 2, NCC).
1. Rights of:
a. Mortgage; WAIVER
b. Servitude;
c. Any other Real rights existing before partition. A co-owner may opt not to contribute to the expenses for the
preservation of the property
2. Personal rights pertaining to third persons against the co-
ownership (Art. 499, NCC) GR: Yes, by renouncing his undivided interest equal to the amount
of contribution.
Illustration: A, B and C where co-owners of parcel of land
mortgaged to M. If A, B, and C should physically partition the XPN: If the waiver or renunciation is prejudicial to the co-
property, the mortgage in Ms favor still covers all the three lots, ownership, otherwise he cannot exempt himself from the
which, together, formerly constituted one single parcel. If A alone contribution (Art. 488, NCC)
had contracted an unsecured obligation, he would of course be the
only one responsible (Paras, p. 376). NOTE: The value of the property at the time of the renunciation will be the
basis of the portion to be renounced.
Rights of third persons in case of partition
Failure or refusal of a co-owner to contribute pro rata to his share
1. The partition of a thing owned in common shall not prejudice in expenses NOT tantamount to renunciation
third persons, who shall retain the rights of mortgage,
servitude or nay other real rights belonging to them before There must be an express renunciation, otherwise he is required to
the division was made; reimburse the others for the expenses they incurred.
2. Personal rights pertaining to them against the co-ownership
shall also remain in force, notwithstanding the partition. Effect of renunciation
RIGHT TO CONTRIBUTIONS FOR EXPENSES It is in effect a dacion en pago since there is a change in the object
of the obligation (i.e. from sum of money to interest in the co-
Expenses which the co-owners can be compelled to contribute ownership). Consequently, the consent of the other co-owners is
necessary.
Only necessary expenses. Useful expenses and those for pure
luxury are not included. NOTE: Dacion en pago is a juridical concept whereby a debtor pays off his
obligations to the creditor by the conveyance of ownership of his property as
an accepted equivalent of performance or payment. The end result may be
the same, but the concept is entirely different from that of a purchase
(Damicog v. Desquitada, CV 43611, October 3, 1983).

CIVIL LAW
2. A sale of the entire property by one co-owner without the
Consent of unpaid creditor consent of the other co-owners is valid. However, it will only
affect the interest or share in the undivided property of the
Renunciation CANNOT be made without the consent of any unpaid co-owner who sold the same.
creditor. This is because it is in effect a novation by substitution. It
will prejudice the rights of the unpaid creditor. 3. The proper action in cases like this is not for the nullification
of the sale or the recovery of possession of the thing owned
NOTE: Novation by substitution is the substitution of the person of the in common from the third person who substituted the co-
debtor. owner or co-owners who alienated their shares, but the
division of the common property or that is, an action for
RIGHT OF REDEMPTION OF CO-OWNERS SHARE
partition under Rule 69 of the Revised Rules of Court (Acabal
v. Acabal, G.R. No. 148376, March 31, 2005).
Shares that a co-owner may redeem
TERMINATION/EXTINGUISHMENT
The shares of all or any other co-owner if sold to a third person.
Extinguishment of Co-ownership (CALSTEP)
If two or more co-owners want to redeem
1. Consolidation or merger in one co-owner;
They may do so in proportion to the shares they respectively have.
2. Acquisitive prescription in favor of a third person or a co-
owner who repudiates;
Effect of redemption by a co-owner
3. Loss or destruction of thing co-owned;
4. Sale of thing co-owned;
Redemption of the whole property by a co-owner does not vest in
5. Termination of period agreed upon;
him sole ownership over said property. Redemption within the
6. Expropriation;
period prescribed by law will inure to the benefit of all co-owners.
7. Judicial or extra-judicial Partition.
Hence, it will not put an end to existing co-ownership (Mariano v.
CA, GR. No. 101522, May 28, 1993).
EFFECT OF PARTITION
Q: Fortunato, his siblings and mother are co-owners of a parcel of
1. It confers upon the co-owner exclusive title over the property
land. Lumayno purchased the shares of Fortunatos co-owners.
adjudicated to him (Art. 1091, NCC);
When Fortunato died, his wife claimed that she has the right of
2. Possession of the co-owner over the property adjudicated to
redemption over the shares previously sold by the co-owners to
him shall be deemed exclusive for the period during which
Lumayno because they have not formally subdivided the
the co-possession lasted (Art. 543, NCC). In other words, it is
property. However, although the lot had not yet been formally
deemed continuous.
subdivided, still, the particular portions belonging to the co-
owners had already been ascertained. In fact the co-owners took
RIGHTS AGAINST INDIVIDUAL
possession of their respective parts. Can Fortunatos wife be
CO-OWNERS IN CASE OF PARTITION
entitled to right of legal redemption?
Obligations of co-owners upon partition (WARD)
A: No, she is no longer entitled to the right of legal redemption
under Art. 1632 of the NCC. As legal redemption is intended to
1. Mutual Accounting for benefits received, fruits and other
minimize co-ownership, once the property is subdivided and
benefits
distributed among the co-owners the community ceases to exist
2. Mutual Reimbursements for expenses
and there is no more reason to sustain any right of legal
3. Indemnity for Damages caused by reason of negligence/fraud
redemption. The exercise of this right presupposes the existence of
4. Reciprocal Warranty for defects of title and quality of the
a co-ownership at the time the conveyance is made by a co-owner
portion assigned to the co-owner (Art. 500-501, NCC)
and when it is demanded by the other co-owners. Even an oral
agreement of partition is valid and binding upon the parties (Vda.
PARTITION IN CASE CO-OWNERS CANNOT AGREE
de Ape v. CA, G.R. No. 133638, Apr. 15, 2005).
Q: How is partition effected?
Q: Villaner, upon death of his wife, sold the conjugal property to
Leonardo. Villaners 8 children, as co-owners of the property, now
A:
claim that the sale does not bind them as they did not consent to
1. By agreement between the parties; or
such undertaking.
2. By judicial proceedings (Art. 496, NCC)
1. Is the sale binding on the children?
2. What is the status of the sale? Is it valid, void or voidable?
Rule in case the co-owners cannot agree in the partition
3. What is the remedy of the other heirs in this case?
If realty is involved, an action for partition (under Rule 69 of the
A:
Rules of Court) against the co-owners may be filed. In case of
1. No. While a co-owner has the right to freely sell and dispose
personality and actual partition could not be made, it may be sold
of his undivided interest, nevertheless, as a co-owner, he
under the discretion of the court and the proceeds be divided
cannot alienate the shares of his other co-owners. The
among the owners after deductingthe necessary expenses
disposition made by Villaner affects only his share pro
indiviso, and the transferee gets only what corresponds to his Rule in case the co-owners cannot agree as to the partition of a
grantor's share in the partition of the property owned in thing which is essentially indivisible
common. The property being conjugal, Villaner's interest in it
is the undivided one-half portion. When his wife died, her 1. Firstly, the property may be allotted to one of the co-owners,
rights to the other half was vested to her heirs including who shall indemnify the other;
Villaner and their 8 legitimate children. 2. Otherwise, it shall be sold, and the proceeds distributed (Art.
498, NCC).

PROPERTY
POSSESSION Possession v. Occupation
CHARACTERISTICS POSSESSION OCCUPATION

Apply to properties whether with Applies only to property
Possession or without an owner without an owner
Possession does not confer Occupation confers
It is the holding of a thing or the enjoyment of a right (Art. 523, ownership ownership
NCC) There can be possession without There can be no occupation
ownership without ownership
Requisites of possession (PAP)
Person declared as the owner of a certain property may still not
1. Possession in fact or holding or control of a thing or right; be entitled to its possession
2. Animus possidendi or the deliberate intention to possess;
3. Possession by virtue of ones own right Possession and ownership are distinct legal concepts. Ownership
confers certain rights to the owner among which are the right to
Right to Possession v. Right of Possession enjoy the thing owned and the right to exclude other persons from
possession thereof. On the other hand, possession is defined as the
Right to Possession is an incident or attribute of ownership over a holding of a thing or the enjoyment of a right. Literally, to possess
thing. It is also known as jus possidendi, and attribute of means to actually and physically occupy a thing with or without a
ownership. On the other hand, Right of Possession is an right. Thus a person may be declared an owner but not entitled to
independent right, separate from ownership. It is also known as jus possession (Heirs of Roman Soriano v. CA, GR No. 128177, August
possessiones. 15, 2001).
Degrees of possession (NJJS) NOTE: Possession is merely one of the attributes ownership (Jus Possidendi).
1. Possession with No right or title- Possessor knows that his
possession is wrongful, ACQUISITION OF POSSESSION
2. With Juridical title - Possession peaceably acquired and will
not ripen into full ownership as long as there is no Ways of acquiring possession (FAMS)
repudiation of the concept under which property is held.
3. With Just title or title sufficient to transfer ownership, but not 1. By Material occupation/exercise of a right
from the true owner - Ripens to full ownership by the lapse of 2. By Subjection of the thing/right to our will
time. 3. By proper Acts and legal Formalities established for acquiring
4. With a title in fee Simple - Springs from ownership; highest such right (Art. 531, NCC)
degree of possession.
Essential elements of possession
Classes of possession (OVAL-OH-GBC)
1. In ones Own name Possessor claims the thing for himself 1. Corpus refers to the existence of the thing and its holding;
2. Voluntary By virtue of an agreement and
3. In the name of Another Held by the possessor for another; 2. Animus refers to the intent to possess the thing.
agent, subject to authority and ratification; if not authorized,
negotiorum gestio If the possession is acquired by a stranger
4. Legal By virtue of law; e.g. possession in behalf of
incapacitated Where possession is acquired not by an agent or representative
5. In the Concept of an owner (en concepto de dueno) but by a stranger without agency, possession is not acquired until
Possessor, by his actions, is believed by others as the owner, the act of the agent or representative is ratified (Art. 532, NCC).
whether he is in good or bad faith
6. In the concept of a Holder Possessor holds it merely to keep Acts which do not give rise to possession.(FATV)
or enjoy it, the ownership pertaining to another; ex. 1. Force or intimidation as long as there is a possessor who
usufructuary objects thereto. (Art. 536, NCC)
2. Acts executed clandestinely and without the knowledge of
NOTE: None of these holders may assert a claim of ownership for the possessor which means that:
himself over the thing but they may be considered as possessors in a. Acts are not public; and
the concept of an owner, or under a claim of ownership, with respect b. Unknown to the owner or possessor
to the right they respectively exercise over the thing.
3. Mere Tolerance by the owner or the lawful possessor.
7. Possession in Good faith 4. Acts executed by Violence. (Art 537, NCC)
8. Possession in Bad faith
Only the possession acquired and enjoyed in the concept of owner
NOTE: Only personal knowledge of the flaw in ones title or mode of can serve as a title for acquiring dominion. (Art. 540, NCC)
acquisition can make him possessor in bad faith. It is not transmissible
even to an heir. EFFECTS OF POSSESSION
Possession in good faith ceases from the moment defects in his title POSSESSOR IN GOOD FAITH
are made known to the possessor.
Possessor in good faith
9. Constructive possession- does not mean that a man has to
have his feet on every square meter of ground. A possessor is in good faithwhen he is not aware that there exists
in his title or mode of acquisition any flaw which invalidates it. (Art.
526, NCC)

CIVIL LAW
Requisites in order to be considered a possessor in good faith time of possession
As to expenses:
1. Ostensible title or mode of acquisition (Necessary expenses)
2. Vice or defect in the title Right of reimbursement and Right of reimbursement and
3. Possessor is ignorant of the vice or defect and must have an retention retention
honest belief that the thing belongs to him. (Useful expenses)
Right of removal No right of removal
Cessation of possession in good faith (Ornamental Expenses)
Reimbursement at owners
Possession in good faith ceasesfrom the moment defects in his title option, however, removal can
are made known to the possessor. No reimbursement
be effected provided no injury
is incurred
This interruption of good faith may take place
As to liability in case of deterioration or loss
1. At the date of summons or
No liability, unless due to his Always liable for deterioration
2. That of the answer if the date of summons does not appear
fault/negligence or loss
at the date
RIGHT TO PENDING FRUITS
Effect of cessation of possession in good faith
Q: When are fruits considered received?
Possessor is now considered as a possessor in bad faith and he may
be required to pay rent or in case vacate the property, in both
A:
cases he is required to pay damages to the lawful owner or
possessor of the property.
1. Natural and industrial fruits- from the time they are gathered
or severed
Q: Jose offered to sell his lot to Rosario which the latter accepted.
2. Civil fruits - from the time of their accrual and not their actual
They executed a document containing the sale. Later, Rosario
receipt (Art. 544, NCC).
sought the execution of the formal deed of sale, but Jose could
not continue the sale because he sold the lot to Emma with
Q: What if there are ungathered natural or industrial fruits at the
whom he executed a formal deed of sale. Informed that the sale
time good faith ceases?
in favor of Emma was not registered, Rosario registered her
adverse claim. Later, Emma registered her deed of sale and a TCT
A: The possessor shall share in the expenses of cultivation, net
was issued to her but with Rosarios adverse claim. Emma then
harvest, and charges in proportion to the time of possession (Art
took possession of the lot.
545, NCC)
a.) Who has a better right to the land?
Options of the owner in case there are pending fruits at the time
b.) Is Emma entitled to the improvements she introduced in the
good faith ceases
lot?
1. To pay the possessor in good faith indemnity for his
A:
cultivation expenses and charges and his share in the net
harvest; or
a.) Rosario. To merit the protection of Art 1544 (double sale) it is
2. To allow him to finish the cultivation and gathering of the
essential that the buyer of the realty must act in good faith in
growing fruits.
registering his deed of sale. Rosarios prior purchase of the
land was made in good faith; she was the only buyer at that
NOTE: If the possessor refuses, for any reason, to finish the cultivation and
time. Her good faith did not cease after Jose told him of the gathering,he forfeits the right to be indemnified in any other manner. (Art.
second sale to Emma. Because of that information, Rosario 545, par. 3, NCC)
wanted an audience with Emma but was snubbed by the
latter. In order to protect her right, Rosario registered her RIGHT TO BE REIMBURSED
adverse claim. Said recording is deemed to be in good faith
and emphasize Emmas bad faith (Carbonell v.CA G.R. No. L- NECESSARY AND USEFUL EXPENSES
29972, January 26, 1976).
b.) No. Emmas rights to the improvements she introduced are Necessary expenses
governed by Arts. 546 and 547 (necessary and useful expense
made by possessor in good faith). These provisions seem to Necessary expenses are expenses incurred to preserve the
imply that the possessor in bad faith has neither the right of property, without which, said property will physically deteriorate
retention of useful improvements nor the right to demand or be lost.
refund for useful expenses (Carbonell v.CA G.R. No. L-29972,
January 26, 1976). Persons entitled for reimbursement of necessary expenses
Rights of a possessor Every possessor, whether the possessor is in good faith or bad faith
is entitled to reimbursement for necessary expenses.
GOOD FAITH BAD FAITH
As to fruits received NOTE: However, only the possessor in good faith may retain the thing until
Reimburse fruits received or he has been reimbursed (Art. 546, NCC).
Entitled while possession is in
which lawful possessor would
good faith Useful expenses
have received
As to pending fruits
Useful expensesare those which increase the value or productivity
Liable to the lawful possessor No right to such pending fruits
of the property.
for expenses of cultivation and
shall share in net harvest to

PROPERTY
Persons entitled for reimbursement of useful expenses Liabilities of possessor in bad faith regarding fruits
Only a possessor in good faith with the same right of retention as 1. As to fruits already received or gathered:
in necessary expenses has the right to be refunded for useful Return the fruits if still existing or pay their value if
expenses(Art. 546, NCC). already consumed or spent,
Pay the value of the fruits which the legitimate
NOTE: The person who has defeated him in the possession has the option of possessor could have received were it not for his
refunding the amount of the expenses or of paying the increase in value
dispossession, but deducting the expenses for
which the thing may have acquired by reason thereof (Art. 546, NCC).
cultivation, gathering and harvesting to prevent unjust
Effect of voluntary surrender of property enrichment on the part of the latter.
2. As to growing, pending or ungathered fruits:

Thevoluntary surrender of property is a waiver of the possessors
right of retention but his right to be refunded may still be enforced, No right whatsoever on the pending, growing or
unless he also waived the same. ungathered fruits,
Not entitled to be reimbursed for expenses for
Removal of useful improvements introduced by the possessor cultivation.
Only a possessor in good faith is allowed to remove the useful 3. As additional liability:
improvements he introduced provided that the useful Pay for damages
improvements can be removed without damage to the principal
thing(Art. 547, NCC). Requisites to constitute possession whether in good faith or in
bad faith
NOTE: However, this right of removal is subordinate to the owners right to
keep the improvements himself by paying the expenses incurred or the 1. Possessor has a title/mode of acquisition;
concomitant increase in the value of the property caused by the 2. There is a flaw or defect in said title/mode;
improvements. 3. The possessor is aware or unaware of the flaw or defect.
EXPENSES FOR PURE LUXURY
Effect of mistake upon a doubtful questions or difficult question
of law on possession
Luxurious expenses
Mistake upon a doubtful questions or difficult question of law may
Luxurious expensesare expenses incurred for improvements
be the basis of possession in good faith provided such ignorance is
introduced for pure luxury or mere pleasure.
not gross and therefore inexcusable. It is true that ignorance of
the law excuses no one but error in the application of the law, in
Q: Are luxurious expenses refundable?
the legal solutions arising from such application, and the
interpretation of doubtful doctrine can still make a person
A: No, even if the possessor is in good faith.
ignorance of the law may be based on an error of fact (Paras, 2008)
NOTE: But he may remove the luxurious improvements if the principal thing
suffers no injury thereby, and if his successor in the possession does not NOTE: Mistake upon a doubtful or difficult question of law refers to the
prefer to refund the amount expended (Art. 548, NCC). honest error in the application or interpretation of doubtful or conflicting
legal provisions/doctrines, and not to the ignorance of the law (Art. 526, par.
3, NCC).
POSSESSOR IN BAD FAITH
Q When Dolorico died, his guardian Ortiz continued the
Possessor in bad faith cultivation and possession of the property, without filing any
application to acquire title. In the homestead application,
A possessor is a possessor in bad faithwhen he is aware that there Dolorico named Martin, as his heir and successor in interest.
exists in his title or mode of acquisition any flaw which invalidates Martin later relinquished his rights in favor of Quirino his
it. grandson and requested the Director of Lands to cancel the
homestead application which was granted. Quirino filed his sales
NOTE: Only personal knowledge of the flaw in ones title or mode of applications and the said property was awarded to him being the
acquisition can make him a possessor in bad faith.
only bidder. Is Ortiz entitled to right of retention?
Q: When is good or bad faith material or immaterial? A: Yes. A possessor in good faith has the right of retention of the
property until he has been fully reimbursed for all the necessary
A: It is important in connection with the and useful expenses made by him on the property. Its object is to
1. Receipt of fruits, guarantee the reimbursement for the expenses, such as those for
2. Indemnity for expenses, and
the preservation of the property, or for the enhancement of its
3. Acquisition of ownership by prescription. utility or productivity. It permits the actual possessor to remain in
possession while he has not been reimbursed by the person who
It becomes immaterial when the right to recover is exercised (Art.
defeated him in the possession for those necessary expenses and
539, NCC). useful improvements made by him on the thing possessed (Ortiz v.
Kayanan, G.R. No. L-32974, July 30, 1979).
Rule when two or more persons claim possession over the same
property
GR: Possession cannot be recognized in two different personalities.
XPN: In case of co-possession when there is no conflict.

CIVIL LAW
Possession of movable property acquired in good faith
Criteria in case there is a dispute of possession of 2 or more
persons (A2DE) GR: Doctrine of irrevindicability - The possession of movable
property acquired in good faith is equivalent to title.
1. Present/Actual possessor shall be preferred
2. If there are 2 possessors, the one longer in possession NOTE: This is merely presumptive as it can be defeated by the true owner
3. If the Dates of possession are the same, the one with a title (Art. 559, NCC).
If all of the above are Equal, the fact of possession shall be XPNs:
judicially determined, and in the meantime, the thing shall be 1. When the owner has lost; or
placed in judicial deposit (Art. 538, NCC). 2. Has been unlawfully deprived of a movable.
In which case the possessor cannot retain the thing as against
LOSS OR UNLAWFUL DEPRIVATION OF A MOVABLE the owner, who may recover it without paying any indemnity
Lost thing XPN to the XPNs: Where movable is acquired in good faith at
a public sale, the owner must reimburse to recover (Art. 559
A lost thing is one previously under the lawful possession and par. 2, NCC).
control of a person but is now without any possessor.
Q: Using a falsified manager's check, Justine, as the buyer, was
NOTE: An abandoned property is not considered as a lost thing (Pineda, able to take delivery of a second hand car which she had just
1999).
bought from United Car Sales. Inc. The sale was registered with
the Land Transportation Office. A week later, the United Car Sales
Duty of a finder of a lost movable learned that the check had been dishonored, but by that time,
Justine was nowhere to be seen. It turned out that Justine had
Whoever finds a lost movable, which is not a treasure, must return sold the car to Jerico, the present possessor who knew nothing
it to its previous possessor. If the latter is unknown, the finder shall about the falsified check. In a suit filed by United Car Sales. Inc.
immediately deposit it with the mayor of the city or municipality against Jerico for recovery of the car, United Car Sales alleges it
where the finding has taken place. had been unlawfully deprived of its property through fraud and
should, consequently, be allowed to recover it without having to
NOTE: The mayor in turn must publicly announce the finding of the property
for two consecutive weeks.
reimburse the defendant for the price the latter had paid. Should
the suit prosper? (1998 Bar Question)
Authorized public auction of lost movable
A: Yes, the suit should prosper because the criminal act of estafa
If the movable cannot be kept without deterioration, or without should be deemed to come within the meaning of unlawful
expenses which considerably diminish its value, it shall be sold at deprivation under Art. 559, NCC, as without it United Car Sales
public auction eight days after the publication. would not have parted with the possession of its car.
NOTE: The possession of movable property acquired in good faith is

Awarding of the lost movable to the finder equivalent to a title. Nevertheless, one who has lost any movable or has
been unlawfully deprived thereof, may recover it from the person in
If the owner or previous possessor did not appear after 6 months possession of the same (Art. 559, NCC).
from the publication, the thing found or its value or proceeds if
there was a sale, shall be awarded to the finder. The finder, IN CONCEPT OF OWNER, HOLDER, IN ONES OWN NAME, IN
however, shall pay for the expenses incurred for the publication NAME OF ANOTHER
(Art. 719, NCC).
RIGHTS OF THE POSSESSOR
Duty of the owner who appeared
Rights of a possessor (RPR)
1. Give a reward to the finder equivalent to one-tenth (1/10) of
the sum or of the price of the thing found (Art. 720, NCC). 1. To be Respected in his possession
2. Reimburse to the finder for the latters expenses incurred for 2. To be Protected in said possession by legal means
the preservation of the thing (Art. 546, NCC) and expenses 3. To secure in an action for forcible entry the proper writ to
spent for the location of the owner Restore him in his possession (Art. 539, NCC)
3. Reimburse the expenses for publication if there was a public
auction sale (Pineda, 1999). Q: During his lifetime, Velasco acquired Lot A from spouses
Sacluti and Obial evidenced by a deed of sale. In 1987, spouses
FINDER OF LOST MOVABLE Padilla entered the said property as trustees by virtue of a deed
of sale executed by the Rural Bank. The Padillas averred that the
Rule regarding the right of a possessor who acquires a movable Solomon spouses owned the property which was identified as Lot
claimed by another B. However, it was proved during trial that the land occupied by
spouses Padilla was Lot A in the name of Velasco, whereas the
If the possessor is in: land sold by the bank to the spouses Padilla was Lot B. The heirs
1. Bad faith - no right of Velasco demanded that spouses Padilla vacate the property,
2. Good faith- presumed ownership. It is equivalent to title. but they refused. Thus, the heirs filed a complaint for accion
publiciana.
NOTE: Requisites:
a. Possession in good faith 1. Who has the better right of possession?
b. Owner has voluntarily parted with the possession of the thing; 2. Has the action already prescribed?
and
c. Possessor is in the concept of an owner.

PROPERTY
A:
1. The heirs of Velasco has the better right.Accion publiciana, Rights of a possessor with regard to expenses for pure luxury
or for recovery of the right to possess is an action filed in the
RTC to determine the better right to possession of realty GOOD FAITH BAD FAITH
independently of the title. The objective of the plaintiffs in
Right of removal, Provided: Same rights, but liable only for
accion publiciana is to recover possession only, not
1. Without injury to principal the value of the ornaments at
ownership. Lot A was the subject of a cadastral case. The OCT
thing; the time he enters into
was issued to Sacluti and Obial who sold the same to
2. Successor in possession possession, in case he prefers to
Artemio. From the date of sale, until Artemios death, he was
does not prefer to refund retain
in continuous possession of the land.
amount expended.
2. No. The remedy of accion publiciana prescribes after the
lapse of ten years. In the present case, the action was filed Other rights of possessor
with the RTC in 1991. Spouses Padilla dispossessed the heirs
of Velasco of the property in 1987. At the time of the filing of With respect to GOOD FAITH BAD FAITH
the complaint, only 4 years had elapsed from the time of On
Charged to owner Charged to owner
dispossession. The real right of possession is not lost till after Taxes capital
the lapse of 10 years (Spouses Padilla v. Velasco, G.R. No. and On Charged to
Charged to owner
169956, January 19, 2009). Charges fruits possessor
Charges Pro rata Charge to owner
Presumptions in favor of a possessor (GCENCE) Possessor must
return value of fruits
1. Good faith already received as
2. Continuity of initial good faith Possessor is well as value of fruits
Gathered or
3. Enjoyment in the same character in which possession was entitled to the which the owner or
severed fruits
acquired until the contrary is proved fruits legitimate possessor
4. Non-interruption in favor of the present possessor should be entitled
5. Continuous possession by the one who recovers possession (does not apply to
of which he was wrongfully deprived possessor in BF)
6. Extension of possession of real property to all movables Cultivation Possessor is not
Possessor is entitled
contained therein. expenses of entitled to be
to be reimbursed
gathered fruits reimbursed
Rights of a possessor as to the necessary expenses Share pro-rata
between
GOOD FAITH BAD FAITH possessor and
Pending or Owner is entitled to
owner of
1. Right to refund; Right to refund ungathered fruits the fruits
expenses, net
2. Right of retention;
harvest, and
NOTE: During his possession, he is not obliged to charges
pay rent nor damages in case he refuses to vacate indemnity to
the premises. possessor in pro
rata: (owners
Reason why there is no right of retention in case of bad faith. Production option)
expenses of a. money No indemnity
This serves as punishment for his bad faith. pending fruits b. allowing full
cultivation and
Right of removal in necessary expenses gathering of all
fruits
There is NO right of removal of necessary expenseswhether in Improvements no No
No reimbursement
good faith or bad faith. Necessary expenses affect the existence or longer existing reimbursement
substance of the property itself. Liable if acting
Liability for with fraudulent
NOTE: Improvements be so incorporated to the principal thing that their accidental loss or intent or Liable in every case
separation must necessarily reduce the value of the thing not curable by deterioration negligence, after
ordinary repairs.
summons
Inure to the
Rights of a possessor with regard to useful expenses Improvements due Inure to the owner or
owner or lawful
to time or nature lawful possessor
possessor
If the possessor is in good faith:
NOTE: A possessor is protected regardless of the manner of acquisition.
1. Right to refund
2. Right of retention until paid Q: May the owner of a property eject the possessor forcibly
3. Right of removal, provided: without court intervention?
a. Without damage to the principal thing
b. Subject to the superior right of the prevailing party to A: No. The owner must resort to the courts and cannot forcibly
keep the improvements by paying the expenses or the eject a possessor (Bago v. Garcia, No. 2587, January 8, 1906).
increase in value of the thing
If the possessor is in bad faith, he is not entitled for reimbursement

for useful expenses.

CIVIL LAW
LOSS/TERMINATION v. Tangible;
vi. Intangible.
Possession is lost through (PRADA) c. Temporary duration;
d. Purpose: to enjoy the benefits and derive all advantages
1. Possession of another subject to the provisions of Art. 537, if from the object as a consequence of normal use or
a person is not in possession for more than one year but less exploitation.
than 10 years he losses possession de fact. This means that
he can no longer bring an action of forcible entry or unlawful 2. Natural that which ordinarily is present, but a contrary
detainer, since the prescriptive period is one year for such stipulation can eliminate it because it is not essential.
actions. But he may still institute an accion publiciana to a. The obligation of conserving or preserving the form and
recover possession de jure, possession as a legal right or the substance (value) of the thing.
real right of possession (Paras, p. 548). b. Transmissible
NOTE: Acts merely tolerated, and those executed clandestinely and 3. Accidental those which may be present or absent
without the knowledge of the possessor of a thing, or by violence, do depending upon the stipulation of parties
not affect possession (Art. 537,NCC). a. Whether it be pure or a conditional usufruct
b. The number of years it will exist
2. Abandonment c. Whether it is in favor of one person or several, etc.
NOTE: Abandonment involves a voluntary renunciation of all rights
over a thing
Obligation to preserve the form and substance of the thing in
usufruct
Requisites
a. The abandoner must have been a possessor in the GR: The usufructuary is bound to preserve the form and substance
concept of owner (either an owner or mere possessor of the thing in usufruct.
may respectively abandon either ownership or
possession) XPN: In case of an abnormal usufruct, whereby the law or the will
b. The abandoner must have the capacity to renounce or of the parties may allow the modification of the substance of the
to alienate ( for abandonment is the repudiation of thing.
property right)
c. There must be physical relinquishment of the thing or Q: Chayong owned a parcel of land which she mortgaged to
object Michael. Upon the OCT was an annotation of usufructuary rights
d. There must be no spes recuperandi (expectation to in favor of Cheddy. Is Michael obliged to investigate Chayongs
recover) and no more animus revertendi ( intention to title?
return or get back) (Paras, pp. 344-345)
A: No. The annotation is not sufficient cause to require Michael to
3. Recovery of the thing by the legitimate owner investigate Chayongs title because the latters ownership over the
4. Destruction or total loss of the thing a thing is lost when it property remains unimpaired despite such encumbrance. Only the
perishes or goes out of commerce, or disappears in such a jus utendi and jus fruendi over the property are transferred to the
way that its existence is unknown, or it cannot be recovered usufructuary. The owner of the property maintains the jus
(Art. 1189, NCC). disponendi or the power to alienate, encumber, transform, and
5. Assignment - complete transmission of the thing/right to even destroy the same. (Hemedes v. CA, G.R. Nos. 107132 and
another by any lawful manner. 108472, October 08, 1999)
USUFRUCT Usufruct v. Lease
CHARACTERISTICS BASIS USUFRUCT LEASE

Real right only if, as in the case
Usufruct of a lease over real property,
Nature of the Always a real
the lease is registered, or is for
Usufruct is the right of a person called usufructuary, to enjoy the right right
more than one year, otherwise
property of another called the owner, with the obligation of it is a personal right
returning it at the designated time and preserving its form and
May not be the owner, as in
substance, unless the title constituting it or the law provides Creator of Owner or his
the case of a sub-lessor or a
otherwise (Pineda, 2009). Right agent
usufructuary
NOTE: A usufruct can be constituted in favor of a town, corporation or By contract, by way of
association, but it cannot be for more than 50 years. exception by law (as in the
By law,
case of an implied new lease,
Characteristics of usufruct (ENA) contract,
or when a builder has built in
will of testator
Origin good faith on the land of
1. Essential Those without which it cannot be termed as or
another a building, when the
usufruct: by
land is considerably worth
prescription
more in value than the
a. Real right (whether registered in the registry of property building.
or not);
b. Constituted on property. Extent of All fruits, uses Only those particular or
i. Real Enjoyment and benefits specific use.
ii. Personal; A passive
An active owner who makes
iii. Consumable; Cause owner who
the lessee enjoy
iv. Non-consumable; allows the

PROPERTY
usufructuary RIGHTS AND OBLIGATIONS OF USUFRUCTUARY

to enjoy the
object of Rights of the usufructuary as to the thing and its fruits (RISERI-CR)
usufruct 1. To Receive the fruits of the property in usufruct and half of
Usufructuary the hidden treasure he accidentally finds on the property
pays for (Arts. 566, 438, NCC)
ordinary 2. To enjoy any Increase which the thing in usufruct may acquire
repairs and through accession (Art. 571, NCC)
Repairs and Lessee is not obliged to pay for 3. To personally Enjoy the thing or lease it to another (Arts. 572-
pays for
Taxes repairs/taxes 577, NCC) generally for the same or shorter period as the
annual
charges and usufruct
taxes on the 4. To make such Improvements or expenses on the property he
fruits may deem proper and to remove the improvements provided
no damage is caused to the property (Art. 579, NCC)
5. To Set-off the improvements he may have made on the
KINDS OF USUFRUCT property against any damage to the same (Art. 580, NCC)
6. To Retain the thing until he is reimbursed for advances for
Kinds of usufruct (ONES-E ) extraordinary expenses and taxes on the capital (Art. 612,
1. As to Origin: NCC)
a. Legal Created by law such as usufruct of the parents 7. To Collect reimbursements from the owner for indispensable
over the property of their unemancipated children extra ordinary repairs, taxes on the capital he advanced, and
b. Voluntary Created by will of the parties either by act damages caused to him
inter vivos (e.g. donation) or by act mortis causa (e.g. in 8. To Remove improvements made by him if the same will not
a last will and testament) injure the property
c. Mixed (or prescriptive) Created by both law and act of
the person (e.g. acquired by prescription: I possessed in Q: 120-hectares of land from the NHA property were reserved for
good faith a parcel of land which really belonged to the site of the National Government Center. 7 hectares from
another. Still in good faith, I gave in my will to X, the which were withdrawn from the operation. These revoked lands
naked ownership of land and to Y, the usufruct. In due were reserved for the Manila Seedling Bank Foundation, Inc.
time, Y may acquire the ownership of the usufruct by (MSBF). However, MSBF occupied approximately 16 hectares and
acquisitive prescription.) (Paras, p. 572) leased a portion thereof to Bulacan Garden Corporation (BGC).
BGC occupies 4,590 sqm. Implementing such revocation, NHA
2. As to Number of beneficiary ordered BGC to vacate its occupied area. BGC then filed a
a. Simple If only one usufructuary enjoys the usufruct complaint for injunction. Has BGC any right over the leased
b. Multiple If several usufructuaries enjoy the usufruct premises?
i. Simultaneous at the same time.
ii. Successive one after the other. A:A usufructuary may lease the object held in usufruct. The owner
of the property must respect the lease entered into by the
3. As to Extent of object: usufructuary so long as the usufruct exists. MSBF was given a
a. Total constituted on the whole thing usufruct over only a 7-hectare area. NHA cannot evict BGC if the
b. Partial constituted only on a part 4,590 square meter portion MSBF leased to BGC is within the 7-
hectare area held in usufruct by MSBF. However, the NHA has the
4. As to Subject matter: right to evict BGC if BGC occupied a portion outside of the 7-
a. Over things hectare area covered by MSBF's usufructuary rights (NHA v. CA,
i. Normal (or perfect or regular) Involves non G.R. No. 148830, Apr. 13, 2005).
consumable things where the form and substance
are preserved Rights of the usufructuary as to the usufruct itself (ARC)
ii. Abnormal (or imperfect or irregular) Involves
consumable things 1. To Alienate or mortgage the right of usufruct (Art. 572, NCC)
b. Over rights Involves intangible property; rights must 2. In a usufruct to Recover property/real right, to bring the
not be personal or intransmissible in character so action and to oblige the owner thereof to give him the proper
present or future support cannot be an object of authority and the necessary proof to bring the action (Art.
usufruct. 578, NCC)
3. In a usufruct of part of a Common property, to exercise all the
5. As to Effectivity or extinguishment: rights pertaining to the co-owner with respect to the
administration and collection of fruits or interests.
a. Pure no term or condition
b. With a term there is a period which may be either Exercise acts of ownership by a usufructuary
suspensive or resolutory
i. ex die from a certain day GR: A usufructuary cannot exercise acts of ownership such as
ii. in diem up to a certain day alienation or conveyance.
iii. ex die in diem from a certain day up to a certain
day. XPNs: When what is to be alienated or conveyed is a: (CIA)
c. Conditional subject to a condition which may be either 1. Consumable
suspensive or resolutory. 2. Property Intended for sale;
3. Property which has been Appraised when delivered.
NOTE: If it has not yet been appraised or if it is not a consumable: return the
same quality (mutuum)

CIVIL LAW
Rights of the usufructuary as to advances and damages Liability of a usufructuary
To right to be:(ITD) The usufructuary may be liable for the damages suffered by the
1. Reimbursed for Indispensable extraordinary repairs made by naked owner on account of fraud committed by him or through his
him negligence.
NOTE: The reimbursement shall be in the amount equal to the However, the usufructuary is not liable for deterioration due to:
increase in value of the property (Art. 594, NCC) 1. Wear and tear
2. A fortuitous event
2. Reimbursed for Taxes on the capital advanced by him (Art.
597, par. 2, NCC) Rights and obligations of the usufructuary with respect to
3. Indemnified for Damages caused by usufructuary to the consumable things
naked owner (Art. 581, NCC)
The usufructuary shall have the right to make use of the
Rights of a usufructuary on pending natural and industrial fruits consumable thing. At the termination of the usufruct, the
usufructuary has the obligation to:
Fruits 1. If the thing has been appraised, pay its appraised value;
Rights of the usufructuary
Growing: 2. If the thing has not been appraised:
At the a. Return the same quantity and quality; or
Not bound to refund to the owner the expenses of b. Pay its current price at such termination.
beginning of
cultivation and production
the usufruct
Offsetting of damages and improvements introduced by the
At the Belong to the owner but he is bound to reimburse
usufructuary
termination the usufructuary of the ordinary cultivation
of the expenses (Art. 545, NCC) out of the fruits received
If the damages exceed the value of the improvements, the
usufruct (Art. 443, NCC)
usufructuary is liable for the difference as indemnity.
NOTE: Civil fruits accrue daily, stock dividends and cash dividends are
If the improvements exceed the amount of damages, the
considered civil fruits.
usufructuary may remove the portion of the improvements
representing the excess in value if it can be done without injury;
When the expenses of cultivation and production exceeds the
otherwise, the excess in value accrues to the owner.
proceeds of the growing fruits
Q: Why do improvements accrue to the owner?
If the expenses exceed the proceeds of the growing fruits,the
owner has no obligation to reimburse the difference (Art. 567,
A: Because there is no indemnity for improvements.
NCC).
Obligations of the usufructuary
Lease, Alienation and Encumbrance of the property subject to
usufruct
1. Before the usufruct
a. Make an inventory
The usufructuary, not being the owner of the thing subject to
b. Give security
usufruct, cannot alienate, pledge or mortgage the thing itself.
2. During the usufruct
However, the usufurctuary may lease it to another alienate, pledge
a. Take care of property
or mortgage his right of usufruct, even by gratuitous title; but all
b. Replace the young of animals that die or are lost or
the contracts he may enter into as such usufructuary shall
become prey when the usufruct is constituted on a
terminate upon the expiration of the usufruct, saving leases of
flock or herd of livestock;
rural lands, which shall be considered as subsisting during the
c. Make ordinary repairs
agricultural year (Art. 572, NCC).
d. Notify the owner of urgent extra-ordinary repairs
e. Permit works & improvements by the naked owner not
Transfer of the Usufruct
prejudicial to the usufruct
f. Pay annual taxes and charges on the fruits
The transferee can enjoy the rights transferred to him by the
g. Pay interest on taxes on capital paid by the naked
usufructuary until the expiration of the usufruct. Transfer of
owner
usufructuary rights, gratuitous or onerous, is co-terminous with the
h. Pay debts when usufruct is constituted on the whole
term of usufruct.
patrimony
i. Secure the naked owners/court's approval to collect
When the thing subject to usufruct is mortgaged by the naked
credits in certain cases
owner
j. Notify the owner of any prejudicial act committed by 3rd
persons
If the thing subject of usufruct is mortgaged by the owner, the
k. Pay for court expenses and costs
usufructuary has no obligation to pay mortgage. But if the same is
attached, the owner becomes liable for whatever is lost by the
3. At the termination
usufructuary.
a. Return the thing in usufruct to the naked owner unless
there is a right of retention
b. Pay legal interest for the time that the usufruct lasts
c. Indemnify the naked owner for any losses due to his
negligence or of his transferees

PROPERTY
NOTE: If the animals all perish w/o fault but due to contagious Ordinary repairs
disease/uncommon event deliver remains saved. If the young of animals
perished in part due to accident, usufruct continues on remaining portion. If It includessuch as are required by the wear and tear due to the
the usufruct is constituted on sterile animals, they are considered as if
fungible and have the obligation to replace same kind and quality.
natural use of the thing and are indispensable for its preservation
(Art. 592, NCC).
Effects of failure to post a bond or security NOTE:
GR: Usufructuary has no liability when the thing deteriorates due to wear
1. The owner shall have the following options: and tear. He is obliged to return the thing in such state.
a. Receivership of realty; XPN: when there is fraud or negligence
b. Sale of movables;
c. Deposit of securities; or Extraordinary repairs
d. Investment of money; or
e. Retention of the property as administrator. It includes:
1. Those required by the wear and tear due to the natural use of
2. The net product shall be delivered to the usufructuary; the thing but not indispensable for its preservation.
3. The usufructuary cannot collect credit due or make 2. Those required by the deterioration of or damage to the thing
investments of the capital without the consent of the owner caused by exceptional circumstances and are indispensable
or of the court until the bond is given. for its preservation.
Effects of failure to give security Liability for extraordinary repairs
1. On the rights of the naked owner The liability for extraordinary repairs depends on who made the
a. May deliver the property to the usufructuary extraordinary repairs (Art. 594, NCC).
b. May choose retention of the property as administrator
c. May demand receivership or administration of the real 1. If made by the owner - he can make them but to his expense
property, sale of movable, conversion or deposit of and he shall have the right to demand from the usufructuary
credit instruments or investment of cash or profits the payment of legal interest on the amount expended during
the duration of the usufruct.
2. On the rights of the usufructuary 2. If made by the usufructuary
a. Cannot posses the property until he gives security
b. Cannot administer property GR: The usufructuary may make them but he is not entitled
c. Cannot collect credits that have matured nor invest to indemnity because they are not needed for the
them except the court or naked owner consents preservation of the thing.
d. May alienate his right to usufruct.
XPN:He shall have the right to demand the payment of the
Exemption of usufructuary from the obligation to give security increase in value at the termination of the usufruct provided
that:
Usufructuary may be exempt from the obligation to give security 1. He notified the owner of the urgency of the repairs
when (SIR): 2. The owner failed to make repairs notwithstanding such
notification
1. No one will be Injured by the lack of the bond; 3. The repair is necessary for the preservation of the
2. The donor (or parent) Reserved the usufruct of the property property.
donated;
3. The usufruct is Subject to caucion juratoria where: Right of retention of the usufructuary
a. The usufructuary: takes an oath to take care of the
things and restore them to its previous state before the The usufructuary has a right of retention even after the
usufruct is constituted. termination of the usufruct until he is reimbursed for the increase
b. The property subject to such cannot be alienated or in value of the property caused by extraordinary repairs for
encumbered or leased. preservation.
Caucion juratoria by virtue of a promise under oath Determination of increase in value
The usufructuary, being unable to file the required bond or The increase in value is the difference between the value of the
security, may file a verified petition in the proper court asking for property before the repairs were made and the value after the
the delivery of the house and furniture necessary for himself and repairs have been made.
his family so that he and his family be allowed to live in a house
included in the usufruct and retain it until the termination of the RIGHTS OF THE OWNER
usufruct without any bond or security.
Rights of a naked owner and the limitations imposed upon him
The same rule shall be observed with respect to implements, tools
and other movable property necessary for an industry or vocation RIGHTS LIMITATIONS
in which he is engaged (Art. 587). Alienation Can alienate the thing in usufruct
Alteration Cannot alter the form and substance
Right to proceeds Cannot do anything prejudicial to the
Enjoyment
usufructuary
After the security has been given by the usufructuary shall have a Can construct any works and make any
right to all the proceeds and benefits from the day on which he Construction and improvement provided it does not
should have commenced to receive them (Art. 588, NCC). Improvement diminish the value or the usufruct or
prejudice the rights of the usufructuary.

CIVIL LAW
Effect of the death of the naked owner on the usufruct 7. over the Entire patrimony (Art. 598, NCC)
8. things which Gradually deteriorate (Art. 573, NCC)
It does not terminate the usufruct. His rights are transmitted to his 9. Consumable property (Art. 574, NCC)
heirs.
EXTINCTION/TERMINATION
Expropriation of the property
Usufruct is extinguished by: (PLDT-ERM)
In case the usufruct is expropriated for public use,the owner is 1. Acquisitive Prescription
obliged to:
1. Either replace it; or NOTE: The use by a third person and not the non-use by the
2. Pay legal interest to usufructuary of the net proceeds of the usufructuary
same.
2. Total Loss of the thing
Loss of the thing subject to usufruct
NOTE: If the loss is only partial, the usufruct continues with the
remaining part.
When a part of the thing subject of the usufruct is lost, the
remaining part shall continue to be held in usufruct.
3. Death of the usufructuary; unless a contrary intention
appears, since a usufruct is constituted essentially as a
When a usufruct is constituted on an immovable where a building
lifetime benefit for the usufructuary or in consideration of his
is erected, and the building is destroyed, the usufructuary will have
person
the right to make use of the land and materials.
4. Termination of right of the person constituting the usufruct
5. Expiration of the period or fulfilment of the resolutory
In case an insurance covering the object of usufruct was obtained,
condition
the proceeds will be shared by both the owner and the
6. Renunciation by the usufructuary.
usufructuary If both of them paid premium.
NOTE: It partakes the nature of a condonation or donation, it must
If it was only the owner who paid, then proceeds will go to him comply with the forms of donation.Renunciation of usufructuarys
alone. rights is NOT an assignment of right.It is really abandonment by the
usufructuary of his right and does not require the consent of the
Improper use of the thing by the usufructuary naked owner but it is subject to the rights of creditors.
The owner may demand the delivery of and administration of the 7. Merger of the usufruct and ownership in the same person
thing with responsibility to deliver net fruits to usufructuary. who becomes the absolute owner thereof (Art. 1275, NCC).
Q: On 1 January 1980, Minerva, the owner of a building granted EASEMENTS

Petronila a usufruct over the property until 01 June 1998 when
Manuel, a son of Petronila, would have reached his 3oth birthday. CHARACTERISTICS
Manuel, however, died on 1 June 1990 when he was only 26 years
old. Easement or servitude
Minerva notified Petronila that the usufruct had been It is an encumbrance imposed upon an immovable for the benefit
extinguished by the death of Manuel and demanded that the of:
latter vacate the premises and deliver the same to the former. 1. Another immovable belonging to a different owner; or
Petronila refused to vacate the place on the ground that the 2. A community or one or more persons to whom the
usufruct in her favor would expire only on 1 June 1998 when encumbered estate does not belong by virtue of which the
Manuel would have reached his 30th birthday and that the death owner is obliged to abstain from doing or to permit a certain
of Manuel before his 30th birthday did not extinguish the thing to be done on his estate (Arts. 613- 614, NCC).
usufruct. Whose contention should be accepted? (1997 Bar
Question) Dominant Estate v. Servient Estate
A: Petronilas contention is correct. Under Article 606 of the Civil DOMINANT ESTATE SERVIENT ESTATE
Code, a usufruct granted for the time that may elapse before a That property or estate which
Immovable in favor of which,
third person reaches a certain age shall subsist for the number of is subject to the dominant
the easement is established
years specified even if the third person should die unless there is estate
an express stipulation in the contract that states otherwise. Upon which an obligation
Which the right belongs
rests.
In the case at bar, there is no express stipulation that the
consideration for the usufruct is the existence of Petronilas son. Q: Can there be an easement over another easement? Explain.
Thus, the general rule and not the exception should apply in this (1995 Bar Question)
case.
A: There can be no easement over another easement for the
Special usufructs reason that an easement may be constituted only on a corporeal
immovable property. An easement, although it is real right over an
The following usufructs can be considered as special usufructs: immovable, is not a corporeal right.
1. Pension or income (Art. 570, NCC)
2. Property owned in common (Art. 582, NCC)
3. Cattle (livestock) (Art. 591, NCC)
4. On Vineyards and woodland (Arts 575-576, NCC)
5. Right of action (Art. 578, NCC)
6. Mortgaged property (Art. 600, NCC)

PROPERTY
Easement v. Servitude Q: Can there be an easement over a usufruct?
EASEMENT SERVITUDE A: There can be no easement over a usufruct. Since an easement

may be constituted only on a corporeal immovable property, no
An English law term Used in civil law countries
easement may be constituted on a usufruct which is not a
Real Real or personal corporeal right.
The right enjoyed Burden imposed upon another
Q: Can there be a usufruct over an easement?
Characteristics of easement (NICE LIAR)
A: There can be no usufruct over an easement. While a usufruct
may be created over a right, such right must have an existence of
1. Is a right limited by the Needs of the dominant owner or
its own independent of the property. A servitude cannot be the
estate, without possession;
object of a usufruct because it has no existence independent of the
2. Is Inseparable from the estate to which it is attached - cannot
property to which it attaches.
be alienated independently of the estate (Art. 617, NCC);
3. Cannot consist in the doing of an act unless the act is
Easement v. Lease
accessory in relation to a real easement;
4. Involves 2 neighboring Estates: the dominant estate to which
the right belongs and the servient estate upon which an BASIS Easement Lease
obligation rests; Real right whether Real right only when
5. Is a Limitation on the servient owners rights of ownership; registered or not registered OR when
Nature
6. Is Indivisible- not affected by the division of the estate (whether real or the lease exceeds 1
between two or more persons (Art. 618, NCC); personal) yr.
7. It is enjoyed over Another immovable never on ones own Where Only on real properties Real or personal
property; constituted
8. Is a Real right but will affect third persons only when
There is limited right to Limited right to both
registered. Limitations on the use of real property possession and use
the use of right of another but w/o right of anothers
Essential qualities of easements of possession property
1. Incorporeal; Covers all fruits and Generally covers

Scope and
uses as a rule only a particular or
2. Imposed upon corporeal property; Uses
specific use
3. Confer no right to a participation in the profits arising from it;
4. Imposed for the benefit of corporeal property; Can be created only by The lessor may or
5. Has 2 distinct tenements: dominant and servient estate; the owner, or by a duly may not be the
6. Cause must be perpetual. Who may authorized agent, acting owner as when
create in behalf of the owner there is a sub-lease
Q: What is meant by easement established only on an or when the lessor is
only a usufructuary
immovable?
May be created by: GR: only by
A: The term immovable must be understood in its common and a. Law contract;
not in its legal sense. b. Contract
c. last will or XPN: by law as in the
Easement v. Usufruct d. Prescription case of an implied
new lease, or when
How it is
a builder has built in
BASIS EASEMENT USUFRUCT created
GF on the land of
Constituted on On real property Real or personal another a building,
when the land is
Limited to a
considerably worth
particular or specific Includes all uses and
Use granted more in value than
use of the servient fruits the building
estate
The owner is more or The owner or lessor
Involves a right of less passive, and he is more or less active
As to right of Non-possessing right possession in an Passive or
allows the usufructuary
possession over an immovable immovable or Active Owner
to enjoy the thing given
movable in usufruct
Not extinguished by Extinguished by Who has the Usufructuary has the Lessee generally has
As to effect of death death of dominant death of duty to make duty to make the no duty to pay for
owner usufructuary repairs ordinary repairs repairs
Real right whether Real right whether Who bears Usufructuary pays for Lessee generally
Nature of right payment of the annual charges and pays no taxes
or not registered or not registered
taxes and taxes and on the fruits
As to transmissibility Transmissible Transmissible
charges on the
Cannot be property
May be constituted
constituted on an Usufructuary may lease The lessee cannot
in favor, or, Limitation on
How it may be easement but it may the property to another constitute a usufruct
burdening, a piece the use of the
constituted be constituted on on the property
of land held in property
the land burdened leased
usufruct
by an easement

CIVIL LAW
Doctrine of apparent sign Rights of the servient owner (RMC)
Easements are inseparable from the estate to which they actively 1. Retain the ownership of the portion of the estate on which
or passively pertain. The existence of apparent sign under Art. 624 easement is imposed
is equivalent to a title. It is as if there is an implied contract 2. Make use of the easement unless there is an agreement to
between the two new owners that the easement should be the contrary (Art. 628 par. 2, NCC).
constituted, since no one objected to the continued existence of 3. Change the place or manner of the use of the easement,
the windows. provided it be equally convenient (Art. 629, par. 2, NCC).
NOTE: It is understood that there is an exterior sign contrary to the Obligations or limitations imposed on the servient owner (IC)
easement of party wall whenever:
1. There is a window or opening in the dividing wall of buildings
2. Entire wall is built within the boundaries of one of the estates
1. He cannot Impair the use of the easement.
3. The dividing wall bears the burden of the binding beams, floors and 2. He must Contribute to the necessary expenses in case he uses
roof frame of one of the buildings, but not those of the others the easement, unless otherwise agreed upon (Art. 628 par. 2,
4. The lands enclosed by fences or live hedges adjoin others which are NCC).
not enclosed
CLASSIFICATIONS OF EASEMENT
In all these cases, ownership is deemed to belong exclusively to the owner of
the property which has in its favor the presumption based on any of these
signs.
Classifications of easements
1. As to recipient of the benefit
Acknowledgement of an easement in one who owns property a. Real (or Predial) The easement is in favor of another
immovable.
An acknowledgement of the easement is an admission that the b. Personal The easement is in favor of a community, or
property belongs to another (BOMEDCO v. Heirs of Valdez, G.R. No. of one or more persons to whom the encumbered
124669). estate does not belong (easement of right of way for
passage of livestock).
How easement is acquired
2. As to purpose or nature of limitation
1. Prescription of 10 years a. Positive One which impose upon the servient estate
2. By deed of recognition the obligation of allowing something to be done or of
3. By final judgment doing it himself.
4. By apparent sign established by the owner of two adjoining b. Negative That which prohibits the owner of the
estates servient estate from doing something which he could
5. By title lawfully do if the easement did not exist
PARTIES TO AN EASEMENT 3. As to the manner of exercised

a. Continuous Their use may or may not be incessant
Parties to an easement
NOTE: For acquisitive prescription, the easement of aqueduct
and easement of light and view are considered continuous.
1. Dominant estate Refers to the immovable for which the
easement was established. b. Discontinuous used at intervals and depend upon the
2. Servient estate The estate which provides the service or acts of man.
benefit.
4. As to whether their existence is indicated
Rights of the dominant owner (MARE) a. Apparent Made known and continually kept in view by
external signs that reveal the use and enjoyment of the
1. Exercise all rights necessary for the use of the easement (Art. same
625, NCC) b. Non-apparent They show no external indication of
2. Make on the servient estate all works necessary for the use their existence.
and preservation of the servitude (Art. 627 par. 1, NCC)
3. Renounce the easement if he desires to exempt from 5. As to the right given
contributing necessary expenses (Art. 628, NCC) a. Right to partially use the servient estate
4. Ask for mandatory injunction to prevent impairment of his b. Right to get specific materials or objects from the
right (Resolme v. Lazo, 27 Phil 416). servient estate
c. Right to participate in ownership
Obligations of the dominant owner (CAN C) d. Right to impede or prevent the neighboring estate from
performing a specific act of ownership.
1. He cannot Alter the easement or render it more burdensome
(Art. 627 par. 1, NCC). 6. As to source
2. He shall Notify the servient owner of works necessary for the a. Legal Those created by law for public use or private
use and preservation of the servitude (Art. 627 par. 2, NCC). interests.
3. He must Choose the most convenient time and manner of b. Voluntary - Constituted by will or agreement of the
making the necessary works as to cause the least parties or by testator.
inconvenience to the servient owner. c. Mixed Created partly by agreement and partly by law.
4. If there are several dominant estates he must Contribute to
the necessary expenses in proportion to the benefits derived 7. As to the duty of the servient owner:
from the works (Art. 628 par. 1, NCC). a. Positive Imposes upon the owner of the servient
estate the obligation of allowing something to be done
or doing it himself.

PROPERTY
LEGAL EASEMENT
e.g. right of way - imposes the duty to allow the use of
said way. Legal easement
b. Negative Prohibits the owner of the servient estate Legal Easementis an easement established by law for public use or
from doing something which he could lawfully do if the for the interest of private persons.
easement did not exist.
Public Legal Easement
e.g. Easement of light and view where the owner is
prohibited from obstructing the passage of light. Public Legal Easement is for public or communal use.
MODES OF ACQUIRING EASEMENTS Private Legal Easement
How compulsory easements are acquired (FART-P) Private Legal Easement is for the interest of private persons or for
private use.
1. By Title All easements:
a. Continuous and apparent (Art. 620, NCC) Kinds of legal easements: (WIND PLW)
b. Continuous non-apparent (Art. 622, NCC)
c. discontinuous, whether apparent or non-apparent 1. Easement relating to Waters
(Art. 622, NCC) 2. Easement relating to right of Way
2. By Prescription of ten years continuous and apparent (Art. 3. Intermediate distances and works for certain construction
620, NCC) and plantings
3. By deed of Recognition 4. Easement against Nuisance
4. By Final judgment 5. Drainage of Building
5. By Apparent sign established by the owner of the two 6. Easement of Party wall
adjoining estates 7. Easement of Light and view
Computation of prescriptive period EASEMENTS RELATING TO WATERS
a. Positive easement - The period is counted from the day when WATERS
the owner of the dominant estate begins to exercise it
b. Negative easement-From the day a notarial prohibition is Different easements relating to waters: (DRAW BN)
made on the servient estate
1. Natural drainage (Art. 637, NCC)
VOLUNTARY EASEMENT 2. Drainage of Buildings (Art. 674, NCC)
3. Easement on Riparian banks for navigation, floatage,
Voluntary easement fishing, salvage, and tow path (Art. 638, NCC)
4. Easement of a Dam (Arts. 639, 647, NCC)
An easement is voluntary when it is established by the will of the 5. Easement for drawing Water or for watering animals (Arts.
owners. 640-641, NCC)
6. Easement of Aqueduct (Arts. 642- 636, NCC)
Persons who may constitute voluntary easement
NATURAL DRAINAGE
Voluntary easements may be constituted by the owner possessing
capacity to encumber property. If there are various owners, all Scope of easement of natural drainage
must consent; but consent once given is not revocable.
Lower estates are obliged to receive the waters which naturally
Q: For whose favor are voluntary easements established? and without the intervention of man descend from higher estates,
A: as well as the stones or earth which they carry with them (Art. 637,
1. Predial servitudes: NCC).
a. For the owner of the dominant estate
b. For any other person having any juridical relation with Limitations of the easement of natural drainage
the dominant estate, if the owner ratifies it.
2. Personal servitudes: for anyone capacitated to accept. 1. Dominant owner must not increase the burden but he may
erect works to avoid erosion.
Q: How are voluntary easements created and what are the 2. The servient owner must not impede the descent of water
governing rules for such? (but may regulate it).
A: Prescription of easement of natural drainage

1. If created by title (contract, will, etc.), the title governs.
2. If acquired by prescription, it is governed by the manner or The easement of natural drainage prescribes by non-use for 10
form of possession. years (Paras, 2008).
NOTE: In both cases, the Civil Code will only apply suppletorily. Indemnity in easement of natural drainage
Art. 637 of the New Civil Code, which provides for the easement of
natural drainage, does not speak of any indemnity. It follows that
no indemnity s required as long as the conditions laid down in the
article are complied with (Paras, 2008).

CIVIL LAW
EASEMENT FOR DRAWING WATER OR FOR WATERING ANIMALS EASEMENT OF RIGHT OF WAY
NOTE: This is a combined easement for drawing of water and right of way. Easement of right of way
Requisites for easement for watering cattle Easement of right of way is the right to demand that the owner of
an estate surrounded by other estates be allowed to pass thru the
1. It must be imposed for reasons of public use neighbouring estates after payment of proper indemnity.
2. It must be in favor of a town or village indemnity must be
paid Right of way
NOTE: The right to make the water flow thru or under intervening or It may refer either to the easement itself, or simply, to the strip of
lower estates
land over which passage can be done (Paras, 2008).
Requisites for drawing water or for watering of animals
Q: Can easement of right of way be acquired by prescription?
1. Owner of the dominant estate has the capacity to dispose of
A:No, because it is discontinuous or intermittent (Ronquillo, et al.
the water;
v. Roco, GR No. L-10619, February 28, 1958).
2. The water is sufficient for the use intended
3. Proposed right of way is the most convenient and the least
Q: What kind of servitude in favor of the government is a private
onerous to third persons.
owner required to recognize?
4. Pay indemnity to the owner of the servient estate (Art. 643,
NCC)
A: The only servitude which he is required to recognize in favor of
the government is:
EASEMENT OF AQUEDUCT
1. The easement of a public highway,
2. Private way established by law, or
Easement of aqueduct
3. Any government canal or lateral that has been pre-existing at
the time of the registration of the land.
The easement of aqueduct, for legal purposes, is considered
continuous and apparent even though the flow of water may not NOTE: If the easement is not pre-existing and is sought to be imposed only
be continuous or its use depends upon the needs of the dominant after the land has been registered under the LR Act, proper expropriation
estate or upon a schedule of alternate days or hours (Art. 646, proceedings should be had, and just compensation paid to the registered
NCC). owner (Eslaban v. Vda De Onorio, G.R. No. 146062).
It is an easement which gives right to make water flow thru Requisites for easement on right of way (POON-D)
intervening estates in order that one may make use of said water.
However, unlike the easement of for drawing water or for watering 1. The easement must be established at the point least
animals, the existence of this easement does not necessarily Prejudicial to the servient estate
includes the easement of aqueduct. 2. Claimant must be an Owner of enclosed immovable or with
real right
Requisites for easement of aqueduct 3. There must be no adequate Outlet to a public highway
4. The right of way must be absolutely Necessary not mere
1. Indemnity must be paid to the owners of intervening estates convenience
and to the owners of lower estates upon which waters may 5. The isolation must not be Due to the claimants own act
filter or descend. 6. There must be payment of proper Indemnity.
NOTE: The amount usually depends on duration and inconvenience Least prejudicial to the servient estate
caused
Least prejudicial in determining the right of waymeans it is the
2. If for private interests, the easement cannot be imposed on shortest way and the one which will cause the least damage to the
existing buildings, courtyards, annexes, out-houses, orchards property to the servient estate in favor of the dominant estate.
or gardens but can be on other things, like road, provided no
injury is caused to said properties Q: What if the property is not the shortest way and will not cause
the least damage to the servient estate?
3. There must be a proof of:
a. That the owner of the dominant estate can dispose of A: The way which will cause the least damage should be used even
the water if it will not be the shortest.
b. That the water is sufficient for the use which it is
intended The easement of right of way shall be established at the point least
c. That the proposed course is the most convenient and prejudicial to the servient estate and where the distance from the
least onerous to third persons and the servient estate dominant estate to a public highway is the shortest. In case of
d. That a proper administrative permission has been conflict, the criterion of least prejudice prevails over the criterion
obtained (Paras, 2008) of shortest distance
Right of the owner of the servient estate to fence Q: The coconut farm of Federico is surrounded by the lands of
Romulo. Federico seeks a right of way through a portion of the
The easement of aqueduct does not prevent the owner of the land of Romulo to bring his coconut products to the market. He
servient estate from closing or fencing it, or from building over the has chosen a point where he will pass through a housing project
aqueduct in such manner as not to cause the owner of the of Romulo. The latter wants him to pass another way which is
dominant estate any damage, or render necessary repairs and 1km longer. Who should prevail? (2000 Bar Question)
cleanings impossible (Art. 645, NCC).

PROPERTY
A:Romulo will prevail. Under Art. 650, the easement of right of Liability for repairs and taxes
way shall be established at the point least prejudicial to the
servient estate and where the distance from the dominant estate 1. As to repairs, the dominant owner is liable for necessary
to a public highway is the shortest. In case of conflict, the criterion repairs.
of least prejudice prevails over the criterion of shortest distance. 2. As to proportionate share of the taxes, it shall be reimbursed
Since the route chosen by Federico will prejudice the housing by said owner to the proprietor of the servient estate. This
project of Romulo, Romulo has the right to demand that Federico applies only to permanent easements (Art. 654, NCC).
pass another way even though it will be longer.
Special causes of extinguishment of right of way
Q: Spouses dela Cruz are occupants of a parcel of land located at
the back of Ramiscals property. They use as their pathway, to 1. The opening of a public road, or
and from the nearest public highway from their property, a long 2. Joining the dominant tenement to another which has an exit
strip of land owned by Ramiscal. They also enclosed such strip of to a public road.
land with a gate, fence, and roof. Ramiscal demanded that the
spouses demolish the same. The spouses refused. Are the NOTE: Said extinguishment is NOT automatic. There must be a demand for
spouses entitled to a right of way? extinguishment coupled with tender of indemnity by the servient owner.
A: No. There is no voluntary nor legal easement established. The Q: Emma bought a parcel of land from Equitable-PCI Bank, which
spouses failed to show that they entered into an agreement with acquired the same from Felisa, the original owner. Thereafter,
Ramiscal to use the pathway. Art 649 provides that the easement Emma discovered that Felisa had granted a right of way over the
of right of way is not compulsory if the isolation of the immovable land in favor of the land of Georgina, which had no outlet to
is due to the proprietors own acts. Mere convenience for the apublic highway, but the easment was not annotated when the
dominant estate is not enough to serve as its basis. There should servient estate was registered under the Torrens system. Emma
be no other adequate outlet to a public highway. Also, under Art. then filed a complaint for cancellation of the right of way, on the
649, it is the owner or any person who by virtue of a real right may ground that it had been extinguished by such failure to annotate.
cultivate or use any immovable surrounded by other immovable How would you decide the controversy? (2001 Bar Question)
pertaining to other persons, who is entitled to demand a right of
way through the neighboring estates. Here, the spouses fell short A: The complaint for cancellation of easement of right of way
of proving that they are the owners of the supposed dominant must fail. The failure to annotate the easement upon the title of
estate (Eslaban v. Vda De Onorio, G.R. No. 146062). the servient estate is not among the grounds for extinguishing an
easement under Art. 631 of the NCC. Under Art 617, easements are
Q: David owns a subdivision which does not have an access to the inseparable from the estate to which they actively or passively
highway. When he applied for a license to establish the belong. Once it attaches, it can only be extinguished under Art 631,
subdivision, he represented that he will purchase a rice field and they exist even if they are not stated or annotated as an
located between his land and the highway, and develop it into an encumbrance on the Torrens title of the servient estate.
access road. However, when the license was granted, he did not
buy the rice field, which remained unutilized. Instead, he chose to EASEMENT OF PARTY WALL
connect his subdivision with the neighboring subdivision of
Nestor, which has an access to the highway. When Nestor and Party wall
David failed to arrive at an agreement as to compensation, Nestor
built a wall across the road connecting with Davids subdivision. Is Party wallis a common wall which separates two estates, built by
David entitled to an easement of right of way through the common agreement at the dividing line such that it occupies a
subdivision of Nestor which he claims to be the most adequate portion of both estates on equal parts. It is a kind of compulsory
and practical outlet to the highway? co-ownership.
A: No, David is not entitled to the right of way being claimed. The Easement of party wall v. Co-ownership
isolation of his subdivision was due to his own act or omission
because he did not develop an access road to the rice fields which PARTY WALL CO-OWNERSHIP
he was supposed to purchase according to his own representation Shares of co-owners cannot be Can be divided physically; a co-
when he applied for a license to establish the subdivision (Floro v. physically segregated but they owner cannot point to any
Llenado, 244 SCRA 713). can be physically identified definite portion of the property
belonging to him
Determination of proper indemnity to the servient estate
No limitation as to use of the None of the co-owners may use
If the passage is: party wall for exclusive benefit the community property for his
a. Continuous and permanent - the indemnity consists of the of a party exclusive benefit because he
value of the land occupied plus the amount of damages would be invading on the rights
caused to the servient estate. of the others
b. Temporary indemnity consists in the payment of the Any owner may free himself Partial renunciation is allowed
damage caused from contributing to the cost of
repairs and construction of a
Measurement for the easement of right of way party wall by renouncing ALL his
rights
The width of the easement shall be that which is sufficient for the
needs of the dominant estate (Art. 651, NCC).
Q: Can a dominant owner demand a driveway for his automobile?
A: Yes, due to necessity of motor vehicles in the present age.

CIVIL LAW
Presumptions (juris tantum) of existence of a party wall 5. He shall be obliged to reconstruct the wall at his expense if
necessary for the wall to bear the increased height and if
1. In adjoining walls of building, up to common elevation additional thickness is required, he shall provide the space
2. In dividing walls of gardens and yards (urban) therefore from his own land.
3. In dividing fences, walls and live hedges of rural tenements
4. In ditches or drains between tenements EASEMENT OF LIGHT AND VIEW
Rebuttal of presumption Easement of Light
1. Title Easement of light (jus luminum)is the right to admit light from
2. By contrary proof neighboring estate by virtue of the opening of a window or the
3. By signs contrary to the existence of the servitude (Arts. 660 making of certain openings.
& 661, NCC)
Easement of view
NOTE: If the signs are contradictory, they cancel each other.
Easement of view (jus prospectus)is the right to make openings or
Exterior signs negating the existence of a party wall windows to enjoy the view thru the estate of another and the
power to prevent all constructions or works which could obstruct
1. Whenever in the dividing wall of buildings there is a window such view or make the same difficult.
or opening;
2. Whenever the dividing wall is, one side, straight and plumb NOTE: It necessarily includes easement of light.
on all its facement, and on the other, it has similar conditions
on the upper part, but the lower part slants or projects Modes of acquisition of easement of light and view
outwards;
3. Whenever the entire wall is built within the boundaries of 1. By title
one of the estates; 2. By prescription
4. Whenever the dividing wall bears the burden of the binding
beams, floors and roof frame of one of the buildings, but not Prescriptive period for acquisition of easement of light and view
those of the others;
5. Whenever the dividing wall between courtyards, gardens, 10 years
and tenements is constructed in such way that the coping
sheds the water upon only one of the etates; Reckoning point of the prescriptive period
6. Whenever the dividing wall, being built of masonry, has
stepping stones which remain at certain intervals project The reckoning point depends on whether the easement is positive
from the surface on one side only, but not on the other or negative which, in turn, is dependent on where the opening is
7. Whenever lands inclosed by fences or live hedges adjoin made if it is made:
others which are not inclosed (Art. 660, NCC);
8. Whenever the earth or dirt removed to open the ditch or to 1. On ones own wall and the wall does not extend over the
clean it is only on one side thereof (Art. 661, NCC). property of another The easement is negative.
Cost of repairs and construction of party walls Commencement of Period of prescription - starts from the
time formal prohibition is made.
It is borne by the part-owners. They are obliged to contribute in
proportion to their respective interests. Reason:The owner merely exercises his right of dominion and
not of an easement. Negative easement is not automatically
Refusal of the owner to contribute to the cost of repairs and vested as formal prohibition is a pre-requisite.
construction of party walls
2. Thru a party wall or on ones own wall which extends over
GR: Any owner may free himself from the obligation to contribute the neighboring estate The easement is positive.
by renouncing his rights in the party wall.
Commencement of Period of prescription starts from the
XPN: When the party wall actually supports his building, he cannot time the window is opened.
refuse to contribute for the expenses or repair and construction
(Art. 662, NCC). Reason: owner of the neighboring estate who has a right to
close it up allows an encumbrance on his property.
XPN to XPN: If the owner renounces his part-ownership of
the wall, in this case he shall bear the expenses of repairs and Openings at height of ceiling joists
work necessary to prevent any damage which demolition may
cause to the party wall (Art. 663, NCC). The owner of a wall which is not a party wall may make an opening
to admit light and air, but not view, subject to the ff:
Increase of height of party wall by the owner
1. The size must not be more than 30 square centimeters
An owner may increase the height of a party wall provided that he 2. The opening must be at the height of the ceiling joists or
must: immediately under the ceiling
3. There must be an iron grating imbedded in the wall
1. Do so at his own expense; 4. There must be wire a screen.
2. Pay for any damage caused even if it is temporary;
3. He must bear the cost of maintaining the portion added;
4. He must pay the increased cost of preservation of the wall
(Art. 664, NCC);

PROPERTY
Restrictions as to easement of views: 8. Resolution of the right of grantor to create the easement (as
when the vendor a retro redeems the land)
1. Direct Views: the distance of 2 meters between the wall and 9. Expropriation of the servient estate
the boundary must be observed 10. Waiver by the dominant owner gathered from positive acts
2. Oblique Views: (walls perpendicular or at an angle to the
boundary line) must not be 60 cm to the nearest edge of the NUISANCE
window.
Nuisance
NOTE: Any stipulation to the contrary is void (Art. 673, NCC).
A nuisance is any act, omission, establishment, business, condition
Q: What if the wall upon which an opening is made, becomes a of property, or anything else which:
party wall? 1. Injures or endangers the health or safety of others; or
2. Annoys or offends the senses; or
A: A part-owner can order the closure of the opening. No part- 3. Shocks, defies or disregards decency or morality; or
owner may make an opening thru a party wall without the consent 4. Obstructs or interferes with the free passage of any public
of the others. highway or street, or any body of water; or
5. Hinders or impairs the use of property (Art. 694,NCC).
NOTE: If the wall becomes a party wall the part-owner can close the window
unless there is a stipulation to the contrary (Art. 669, NCC). Nuisance v. Trespass
Q: Does non-observance of the distances provided in Art. 670 give
Nuisance Trespass
rise to prescription?
Use of ones own property Direct infringement of anothers
A: No, this refers to a negative easement as the window is thru a which causes injury to another right or property
wall of the dominant estate. Injury is consequential Injury is direct and immediate
NOTE: No windows, apertures, balconies, or other similar projections which
afford a direct view upon or towards an adjoining land or tenement can be Kinds of nuisance
made, without leaving a distance of two meters between the wall in which
they are made and such contiguous property. Neither can side or oblique 1. As to the number of persons affected:
views upon or towards such conterminous property be had, unless there be a. Public (or common) One that affects a community or
a distance of 60 cm. The non observance of these distances does not give neighborhood or any considerable number of persons
rise to prescription (Art. 670, NCC).
although the extent of the annoyance, danger or
damage upon individuals may be unequal. (Suarez,
Extinguishment of easement of light and view
2011, 223)
b. Private Is one which affects an individual or few
The easement is extinguished:
persons only.
1. By Merger
2. When the easement can no longer be used
2. Other classification:
3. Expiration of the term (if temporary) or fulfillment of the
a. Nuisance Per Se That kind of nuisance which is always
condition (if conditional)
a nuisance. By its nature, it is always a nuisance all the
4. Renunciation of the owner of the dominant estate of the
time under any circumstances regardless of location or
redemption agreed upon
surroundings.
5. Non-user for 10 years
b. Nuisance Per Accidens That kind of nuisance by reason
of location, surrounding or in a manner it is conducted
LATERAL AND SUBJACENT SUPPORT
or managed.
c. Temporary That kind which if properly attended does
Stipulation or testamentary provision allowing excavations
not constitute a nuisance.
d. Permanent That kind which by nature of structure
Any stipulation or testamentary provision allowing excavations that
creates a permanent inconvenience.
cause danger to an adjacent land or building shall be void (Art. 685,
e. Continuing That kind which by its nature will continue
NCC).
to exist indefinitely unless abated
f. Intermittent That kind which recurs off and on may be
Q: What should be done first before making an excavation?
discontinued anytime.
g. Attractive Nuisance One who maintains on his
A: Any proprietor who intends to make any excavation shall notify
premises dangerous instrumentalities or appliances of a
all owners of adjacent lands.
character likely to attract children in play, and who fails
to exercise ordinary care to prevent children from
EXTINGUISHMENT OF EASEMENTS
playing therewith or resorting thereto, is liable to a child
of tender years who is injured thereby, even if the child
Easements are extinguished by (MARINE-CREW)
is technically a trespasser in the premises.
1. Merger of ownership of the dominant and servient owner
2. Annulment of the title to the servitude
3. Redemption agreed upon
4. Impossibility to use the easement
5. Non-user : 10 years
6. Expiration of the term or fulfilment of the resolutory
condition
7. Bad Condition when either or both estates fall into such a
condition that the easement could not be used

CIVIL LAW
Nuisance per se v. Nuisance per accidens Q: Is a swimming pool an attractive nuisance?
PER SE PER ACCIDENS A:

As a matter of law As a matter of fact
Depends upon its location and GR: A swimming pool or water tank is not an attractive nuisance,
Need only be proved in any surroundings, the manner of its for while it is attractive, it is merely an imitation of the work of
locality conduct or other nature. Hence, if small children are drowned in an attractive water
circumstances tank of another, the owner is not liable even if there be no guards
May be abated only with in the premises (Hidalgo Enterprises v. Balandan, et. al, L-3422 Jun.
reasonable notice to the 13, 1952).
May be summarily abated
person alleged to be
under the law of necessity XPN: Swimming pool with dangerous slides
maintaining or doing such
nuisance
NOTE: The doctrine of attractive nuisance does not generally apply to bodies
of water, artificial as well as natural in the absence of some unusual
Easement against nuisance condition or artificial other than the mere water and its location.
Easement against nuisance is established by Art. 682 683. It is PUBLIC NUISANCE AND PRIVATE NUISANCE
intended to prohibit the proprietor or possessor of a building or
land from committing nuisance therein through noise, jarring, Remedies against public nuisances
offensive odor, smoke, heat, dust, water, glare, and other causes
(Gonzalez-Decano, 2010) 1. Prosecution under the RPC or any local ordinance; or
2. Civil action; or
ATTRACTIVE NUISANCE 3. Abatement, without judicial proceeding (Article 699 , NCC).
Attractive nuisance Remedies against private nuisances
Attractive nuisance is a condition or appliance in question although 1. Civil action

in danger is apparent to those of age, is so enticing and alluring to 2. Abatement, without judicial proceedings (Art. 705, NCC).
children of tender years as induce them to approach, get on or use
it and this attractiveness is an implied invitation to children NOTE: Any person injured by a private nuisance may abate it by removing, or
(Hidalgo Enterprises, Inc. v.Balandan, 91 Phil 488). if necessary, by destroying the thing which constitutes the nuisance, without
committing a breach of the peace or doing unnecessary injury. However, it is
indispensable that the procedure for extrajudicial abatement of a public
The attractiveness of the premises or of the dangerous
nuisance by a private person be followed (Art. 707, NCC).
instrumentality to children of tender years is to be considered as
an implied invitation, which takes the children who accepted it out
Extra-judicial abatement
of the category of a trespasser and puts them in the category of
invitees, towards whom the owner of the premises or
Requisites of extra-judicial abatement (BAR VID)
instrumentality owes the duty of ordinary care
1. The nuisance must be specially Injurious to the person
NOTE: Nature has created streams, lakes and pools which attract children.
affected.
Lurking in their waters is always the danger of drowning. Against this danger 2. No Breach of peace or unnecessary injury must be committed
children are early instructed so that they are sufficiently presumed to know 3. Demand must first be made upon the owner or possessor of
the danger; and if the owner of private property creates an artificial pool on the property to abate the nuisance.
his own property, merely duplicating the work of nature without adding any 4. Demand is Rejected
new danger, he is not liable because of having created an "attractive 5. Abatement is Approved by the district health officer and
nuisance." (Hidalgo Enterprises, Inc. v.Balandan, 91 Phil 488). executed with the assistance of the local police, and
6. Value of destruction does not exceed P3,000
Doctrine of attractive nuisance
NOTE: The private person or a public official extrajudicially abating a
One who maintains on his estate or premises an attractive nuisance is liable for damages to the owner of the thing abated, if he causes
nuisance without exercising due care to prevent children from unnecessary injury or if an alleged nuisance is later declared by courts to be
playing therewith or resorting thereto, is liable to a child of tender not a real nuisance.
years who is injured thereby, even if the child is technically a
trespasser in the premises (Jarco Marketing Corp. v. CA, 117 SCAD The right to question the existence of a nuisance DOES NOT prescribe; it is
imprescriptible.
818, 321 SCRA 375, 1991).
MODES OF ACQUIRING OWNERSHIP
Basis for liability
Mode v. Title
The attractiveness is an invitation to children. Safeguards to
prevent danger must therefore be set up. MODE TITLE
Elements of attractive nuisance Serves merely to give the

Directly and immediately
occasion for its acquisition or
produces a real right
1. It must be attractive existence
2. Dangerous to children of tender years. Cause Means
Proximate cause Remote cause
Essence of the right which is to Means whereby that essence is
be created or transmitted transmitted

PROPERTY
Modes of acquiring ownership (OLD TIPS) 4. Abandoned movables
1. Occupation Acquisition of ownership over a wild animal by occupation?

2. Law
3. Donation Wild animals are considered res nullius when not yet captured.
4. Tradition After its capture, animals that escaped become res nullius again.
5. Intellectual creation
6. Prescription Q: When can land be the object of occupation?
7. Succession
A: It depends.
NOTE: 1. If without an owner, it pertains to the State. (Regalian
Doctrine)
1. Original Those which do not arise or depend upon any pre-existing
2. If abandoned and the property is private, it can be the object
right or title of another person, i.e. Occupation, Intellectual Creation,
Acquisitive Prescription
of occupation.
2. Derivative Are those which arise or depend upon a pre-existing or 3. And if the land does not belong to anyone is presumed to be
preceding right or title of another person, i.e. Law, Donation, public.
Succession mortis cause, tradition (delivery)
DONATION
OCCUPATION
DEFINITION
Occupation
Donation
Occupation is the acquisition of ownership by seizing corporeal
thing that have no owner, made with the intention of acquiring Donation is an act of pure liberality whereby a person disposes
them, and accomplished according to legal rules (Paras, 2008). gratuitously of a thing or right in favor of another who accepts it
(Art. 725, NCC).
Requisites of occupation (WISCS)
Requisites of donation (ACID)
1. There must be Seizure of a thing,
2. Which must be a Corporeal personal property, 1. Donor must have Capacity to make the donation
3. Which must be Susceptible of appropriation by nature 2. He must have donative Intent (animus donandi)
4. The thing must be Without an owner 3. There must be Delivery
5. There must be an Intention to appropriate. 4. Donee must Accept or consent to the donation during the
lifetime of the donor and of the donee in case of donation
Occupation v. Possession inter vivos (Art. 746, NCC); whereas in case of donation mortis
causa, acceptance is made after donors death because they
BASIS OCCUPATION POSSESSION partake of a will (Art. 728, NCC)
As regards Merely raises the
Essential features or elements of a true donation
acquisition of presumption of
Mode of acquiring
ownership ownership when
ownership 1. Alienation of property by the donor during his lifetime, which
exercised in the
is accepted
concept of owner
2. Irrevocability by the donor of the donation
As to property Involves only 3. Animus Donandi (donative intent)
involved corporeal personal Any kind of property 4. Consequent impoverishment of the donor (diminution of
property his assets)
As regards Requires that the
The property may be Donations of the same thing to different donees
ownership of the object be without an
owned by somebody
thing by another owner
These are governed by provisions on double sale as set forth in Art.
As regards the There must be an May be had in the
1544 (Art. 744, NCC).
intent to acquire intent to acquire concept of a mere
ownership holder
NOTE: If the same thing should have been sold to different vendees, the
As regards May not take place ownership shall be transferred to the person who may have first taken
May exist w/o possession thereof in good faith, if it should be movable property. Should it
possession w/o some form of
occupation be immovable property, the ownership shall belong to the person acquiring
possession
it who in good faith first recorded it in the Registry of Property. Should there
As to period Short duration Generally longer be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person
As to leading to Cannot lead to
May lead to another who presents the oldest title, provided there is good faith (Art. 1544, NCC).
another mode of another mode of
mode- prescription
acquisition acquisition
CHARACTERISTICS
Things susceptible of occupation EXTENT TO WHICH DONOR MAY DONATE PROPERTY
1. Things that are without an owner res nullius; abandoned Extent of donation
NOTE: Stolen property cannot be subject of occupation
It may comprehend all the present property of the donor, or part
thereof, provided he reserves, in full ownership or in usufruct,
2. Animals that are the object of hunting and fishing
sufficient means for the support of himself, and of all relatives
3. Hidden treasure

CIVIL LAW
who, at the time of the acceptance of the donation, are by law d. Onerous donations
entitled to be supported by the donor (Art. 750, NCC). 2. As to perfection or extinguishment:
a. Pure
Future properties as subject of donation b. With a condition
c. With a term
Future properties cannot be subject of donations. Donations 3. According to effectivity:
cannot comprehend future properties. a. Inter vivos (Art. 729, Civil Code)
b. Mortis Causa (Art. 728, Civil Code)
NOTE: Future property means anything which the donor cannot dispose of at c. Propter Nuptias
the time of the donation (Art. 751, NCC).
Kinds of donation according to motive or cause
Donation of future inheritance or the inchoate right to inherit
PURPOSE FORM
Future inheritance or the inchoate right to inherit cannot be Simple
donated because it is future property. Same to that of forms in
Pure liberality
donations
Q: May a property, the acquisition of which is subject to
Remuneratory (1st kind)
suspensive condition, be donated?
To reward past services
Same to that of forms in
provided the services do not
A: Yes, because once the condition is fulfilled, it retroacts to the donations
constitute a demandable debt.
day the contract is constituted (Art. 1187, par. 1, NCC).
Remuneratory (2nd kind)
Donation of ownership and usufruct 1. Reward future services; or 1. Onerous same form of
2. Because of future charges that of contracts
Ownership and usufruct of a property may be donated to different or burdens, when the 2. Gratuitous same form
persons separately. However, all the donees are however required value of said services, of that of donations
to be living at the time of donation (Art. 756, NCC). burdens, or charges is less
than the value of the
Limitation on the amount that can be donated donation.
1. If the donor has forced heirs he cannot give or receive by Onerous
donation more than what he can give or receive by will. Burdens, charges or services
Same as that of contracts
2. If the donor has no forced heirs, donation may include all are equal in value to that of the
present property provided he reserves in full ownership or in donation.
usufruct:
a. The amount necessary to support him and those Kinds of donation according to perfection or extinguishment
relatives entitled to support from him.
b. Property sufficient to pay the donors debt contracted 1. Pure donation Is one which is not subject to any condition
prior to the donation. 2. Conditional Is one wherein the donor imposes on the donee
a condition dependent on the happening of a future event or
RESERVATIONS AND REVERSIONS past event unknown to the parties.
3. With a Term Is one wherein the donor imposes on the
Effect if the donor violates the requirement for reservation under donee a condition dependent upon the happening of a future
Art. 750 and certain event.
A donation where the donor did not reserve property or assets for DONATION INTER VIVOS
himself in full ownership or in usufruct sufficient for his support
and all relatives legally dependent upon him, is not void. It is Limitations imposed by law in making donations inter vivos (RFM)
merely reducible to the extent that the support to himself and his
relatives is impaired or prejudiced (Pineda, 1999). 1. Donor must Reserve sufficient means for his support and for
his relatives who are entitled to be supported by him (Art.
Reversion in donation 750, NCC)
2. Donation cannot comprehend Future property except
It is a condition established in the deed of donation which has for donations between future husband and wife (See Art. 84 FC).
its effect the restoration or return of the property donated to the 3. No person may give by way of donation More than he may
donor or his estate or in favor of other persons who must be living give by will
at the time of the donation for any cause or circumstances (Art.
757, NCC). DONATION MORTIS CAUSA
NOTE: If the reversion is in favor of other persons who are not all living at Donation mortis causa
the time of the donation, the reversion stipulated shall be void, but the
donation shall remain valid. These are donations which are to take effect upon the death of the
donor.
KINDS
NOTE: It partakes of the nature of testamentary provisions and governed by
Kinds of donation the rules on succession (Art. 728, NCC).
1. According to motive or cause:

a. Simple
b. Remuneratory (1st kind)
c. Remuneratory (2nd kind): Conditional or Modal
donations

PROPERTY
Donation inter vivos v. Donation mortis causa
The condition does not destroy the nature of the act as a donation
BASIS INTER VIVOS MORTIS CAUSA inter vivos, unless a contrary intention appears (Art. 730, NCC)
Takes effect during
As to when it the lifetime of the Takes effect upon Modal Donation
takes effect donor, independently donors death
of the his death Modal donationis a donation subject to burdens or charges
In contemplation of (Pineda, 1999).
As to cause donors death without
Cause is donors pure FORMALITIES REQUIRED
or intention to dispose of
generosity
consideration the thing in case of
survival HOW MADE AND ACCEPTED
On Valid if donor survives
Void if donor survives Persons who must accept the donation
predecease the done
Always revocable at
Generally irrevocable Acceptance may be made by the donee himself or thru an agent
On any time and for any
except for grounds with special power of attorney; otherwise, donation shall be void
revocability reason before the
provided for by law (Art. 745, NCC).
donors death
Must comply with the
On Must comply with the Reason for the need for an acceptance
formalities of
formalities formalities of a will
donations
On when Because the donee may not want to accept the donors liberality or
Acceptance during if donation is onerous, he may not agree with the burden imposed.
acceptance is After donors death
donors lifetime
made
Donations made to incapacitated persons
On when
Property retained by
property is Property completely
the donor while he is Donations made to incapacitated persons shall be void, though
conveyed to conveyed to the done
still alive simulated under the guise of another contract or through a person
the done
who is interposed (Art. 743, NCC).
On tax
Donors tax Estate tax
payable
Persons who must accept the donation made in favor of a minor
ONEROUS DONATION
If the donation is pure and simple and does not require written
acceptance, the minors can accept the donation by themselves.
Onerous Donation
If the donation needs written acceptance, it may be accepted by
Onerous donationis a donation given for which the donor received
their guardian or legal representatives .
a valuable consideration which is the equivalent of the property so
donated.
Persons who must accept the donation made to conceived and
unborn children
Kinds of onerous donations
Donations made to conceived and unborn children may be
1. Totally onerous when the burden is equal to or greater than
accepted by those who would legally represent them if they were
the value of the property donated
already born (Art. 742, NCC).
2. Partially onerous when the burden is lesser than the value
of the donation. (Pineda Property, 1999)
PERFECTION
Laws that apply to onerous donations
Perfection of donation
1. Totally onerous rules on contracts
Donation is perfected from the moment the donor knows of the
2. Partially onerous
acceptance by the donee (Art. 734, NCC).
a. Portion exceeding the value of the burden simple
donations
DIFFERENCES BETWEEN FORMALITIES FOR DONATION OF
b. Portion equivalent to the burden law on contracts
REAL, PERSONAL PROPERTIES
(Pineda, 1999)
Formalities required for donation
SIMPLE, MODAL, CONDITIONAL
1. As regards movable property:
Simple Donation
a. With simultaneous delivery of property donated:
i. For P 5,000 or less May be oral/written
Simple donationis one which is not subject to any condition.
ii. For more than P 5,000 Written in public or
private document
Conditional Donation
b. Without simultaneous delivery:
i. The donation and acceptance must be written in a
A conditional donationis one wherein the donor imposes on the
public or private instrument (Statute of Frauds),
donee a condition dependent on the happening of a future event
regardless of value. Otherwise, donation is
or past event unknown to the parties.
unenforceable
Effect if a suspensive condition may take place beyond the
2. As regards immovable property:
natural expectation of life of the donor
a. Must be in a public instrument specifying

CIVIL LAW
i. The property donated and NOTE: But he is not liable for debts in excess of the value of
ii. The burdens assumed by the donee donation received, unless the contrary is intended.
b. Acceptance may be made:
i. In the same instrument or 2. Where there is no stipulation regarding the payment of
ii. In another public instrument, notified to the donor debts: (Art. 759, NCC)
in authentic form, and noted in both deeds. a. Donee is generally not liable to pay donors debts
Otherwise, donation is void. b. Donee is responsible only if donation has been made in
fraud of creditors.
QUALIFICATIONS OF DONOR, DONEE
NOTE: The presumption that the donations was made in fraud
of creditors arises when the donor has not left sufficient assets
Donor to pay his debts, at the time of donation.
Any person who has capacity to contract and capacity to dispose of c. The done shall not be liable beyond the value of
his property may make a donation (Art. 735, NCC). donation received.
Reason for the need for capacity to contract DOUBLE DONATIONS
Because a donation inter vivos is contractual in nature and is a Double donation
mode of alienation of property.
There is double donation when the same thing has been donated
Q: When is the possession of capacity to contract by the donor to two or more persons.
determined?
Rule in case of a double donations
A: His capacity shall be determined as of the time of the making of
donation (Art. 737, NCC). The rule on double sale under Article 1544 shall be applicable:
1. Movable Owner who is first to possess in good faith
NOTE: Making of donation shall be construed to mean perfection.
2. Immovable
a. First to register in good faith
Donees
b. No inscription, first to possess in good faith
c. No inscription & no possession in good faith Person
All those who are not specially disqualified by law.
who presents oldest title in good faith
Q: May an unborn child be a donee or a donor?
EXCESSIVE/INOFFICIOUS
A: An unborn child may be a donee but not a donor.
Rule in case of an excessive or in officious donation
As a donee, donations made to conceived and unborn children may
1. A donor may not donate more than what he can give by will.
be accepted by those persons who would legally represent them if
If he donates more than what he cannot give by will, the
they were already born (Art. 742, NCC).
donation will become excessive and to insist on it, the
NOTE: If the conceived child did not become a person, the donation is null
legitimism of the compulsory heirs will be impaired.
and void. An unborn child cannot be a donor because it is essential for a Legitimism is reserved for the compulsory heirs and the same
person to be able to make a donation, he must have full civil capacity. cannot be impaired or disposed of by the testator.
2. The donee cannot receive by way of donation more than
EFFECTS OF DONATION/LIMITATIONS what he may receive by will. If the donee can receive by
donation (devise or legacy) more than what the testator is
IN GENERAL allowed by law to give, the donation is inofficious and it may
be suppressed totally or reduced as to its excess.
Rights and actions the donee acquires
IN FRAUD OF CREDITORS
The donee is subrogated to the rights and actions which in case of
eviction would pertain to the donor. Remedy in case of donations executed in fraud of creditors
Liability of donors for eviction of hidden defects The creditors may rescind the donation to the extent of their
credits. The action is known as accion pauliana.
1. If the donation is simple or remunerative, donor is not liable
for eviction or hidden defects because the donation is NOTE: If the donor did not reserved enough assets to pay his creditors whom
gratuitous, unless the donor acted in bad faith. he owned before the donation, the donation is presumed to be in fraud of
creditors.
2. If the donation is onerous, the donor is liable on his warranty
against eviction and hidden defects but only to the extent of VOID DONATIONS
the burden.
Donations prohibited by law
Rules regarding the liability of the donee to pay the debts of
donor Donations made: (LAW SCRA POP)
1. Where donor imposes obligation upon the donee, (Art. 758, 1. By individuals, associations or corporations not permitted by
NCC) the donee is liable: Law to make donations;
a. To pay only debts previously contracted; 2. By persons guilty of Adultery or concubinage at the time of
b. For debts subsequently contracted only when there is donation;
an agreement to that effect; 3. By a Ward to the guardian before the approval of accounts;

PROPERTY
4. By Spouses to each other during the marriage or to persons Revocation or reduction is NOT automatic.
of whom the other spouse is a presumptive heir.
5. Between persons found guilty of the same Criminal offense in The emergence of the circumstances enumerated in Art. 760 do
consideration thereof; not automatically revoke or reduce the donation. The revocation or
6. To Relatives of such priest, etc. within the 4th degree, or to reduction is authorized only if the amount or value of the property
the church to which such priest belongs; donated exceeds the disposable free portion.
7. To an Attesting witness to the execution of donation, if there
is any, or to the spouse, parents or children or anyone Q: For purposes of prescription of action, what is the rule in case
claiming under them; of concurrence of two or more grounds for revocation or
8. To the Priest who heard the confession of the donor during reduction?
the latters last illness, or the minister of the gospel who
extended spiritual aid to him during the same period; A: In the event that two or more causes are present, the earliest
9. To a public Officer or his/her spouse, descendants or among them shall be the starting point in the reckoning of the
ascendants in consideration of his/her office; period of prescription of the action.
10. To a Physician, surgeon, nurse, health officer or druggist who
took care of the donor during his/her last illness; Execution of a donation subject to a condition
REVOCATION OR REDUCTION A donor may execute a donation subject to a condition, the non-
fulfilment of which authorizes the donor to go to court to seek its
GROUNDS FOR REVOCATION AND REDUCTION revocation (not reduction).
Grounds for revocation of donation Note: The word condition should be understood in its broad sense and not
in its strict legal sense. It means charges or burdens imposed by the donor.
1. Under Art. 760
a. Birth of a donors child or children (legitimate, Revocation of donation in a conditional donation
legitimated, or illegitimate) after the donation, even
though born after his death. A donor cannot revoke a conditional donation unilaterally, that is,
b. Appearance of a donors child who is missing and without going to court, even if the donee had breached any of the
thought to be dead by the donor obligations imposed in the donation. A Judicial action is essential if
c. Subsequent adoption by the donor of a minor child. the donee refuses to return the property, or pay its value to the
donor, or to latters heirs or assigns. However, the action must be
2. Under Art. 764 When the donee fails to comply with any of filed within the prescriptive period fixed buy law, otherwise, it will
the conditions which the donor imposed upon the donee. be barred (Ongsiaco v. Ongsiaco, 101 Phil 1196).
3. Under Art. 765 by reason of ingratitude Q: Can the creditors of the deceased file an action for reduction
a. If the donee should commit some offense against the of inofficious donation?
person, the honor or the property of the donor, or of his
wife or children under his parental authority A: No. Only compulsory heirs or their heirs and successors in
b. If the donee imputes to the donor any criminal offense, interest may sue for reduction of inofficious donations. The
or any act involving moral turpitude, even though he remedy of the creditor is to sue, during the lifetime of the donor,
should prove it, unless the crime or act has been for the annulment of inofficious donation made in fraud of
committed against the donee himself, his wife or creditors (Art. 1387); or they can go against the estate of the
children under his authority deceased and not against the donees.
c. If he unduly refuses him support when the donee is
legally or morally bound to give support to the donor EFFECTS OF REVOCATION OR REDUCTION OF DONATION
NOTE: The list of grounds for revocation by reason of ingratitude Obligations of the donee upon the revocation or reduction of
under Art. 765 is exclusive donation
Grounds for reduction of donation 1. Return the thing or the object of the donation
2. If the property had already been alienated and could not be
The same grounds for revocation under Art. 760. The donation recovered anymore, its value shall be paid to the donor. The
shall be reduced insofar as it exceeds the portion that may be value shall be the price of the property estimated at the time
freely disposed of by will, taking into account the whole estate of of the perfection of the donation
the donor at the time of the birth, appearance, or adoption of a 3. If the property had been mortgaged, the donor may pay the
child (Art. 761, NCC). mortgage obligations, subject to reimbursement by the
donee (Art. 762, NCC).
Revocation of perfected donations
Obligation of the donee to return the fruits
Once a donation is perfected, it cannot be revoked without the
consent of the donee except on grounds provided by law (Arts. 1. If due to non-compliance with any condition imposed on the
760, 764, 765, NCC). donation fruits acquired after non-compliance shall be
returned
2. If due to causes stated under Art. 760, ingratitude, or
inofficious donations fruits acquired from the time the
complaint is filed shall be returned (Art. 768, NCC)

CIVIL LAW
PRESCRIPTION
NOTE: Donations must be charged only against the disposable free portion.
If its amount exceeds the same, the excess is void for being inofficious
Period of prescription of action for revocation or reduction of (Pineda, 1999)
donation
Status of an inofficious donation
PRESCIPTIVE RECKONING PERIOD
PERIOD During the lifetime of the donor, the inofficious donation is
Birth of child 4 years From the birth of the effective since the excessiveness of the donation can only be
first child determined after the donors death.
Legitimation 4 years From Birth of the
legitimated child, not NOTE: Consequently, the donee is entitled to the fruits of the property
from the date of donated during the lifetime of the donor (Art. 771, NCC).
marriage of the
parents Q: May an heir waive his right during the lifetime of the donor to
Recognition of an 4 years From the date the file an action for suppression or reduction of an inofficious
illegitimate child recognition of the donation?
child by any means
enumerated in Article A:No. Such waiver, in whatever form it is extended, is void (Art.
712 of the Family 772, NCC).
Code
Adoption 4 years From the date of INGRATITUDE
filing of the original
petition for adoption, Q: Are there any other grounds for revocation of donation by
provided a decree of reason of ingratitude other than those enumerated under Art.
adoption is issued 765?
thereafter
Appearance of a 4 years From the date an A: None. The grounds under Art. 765 are exclusive.
child believed to be information was
dead received as to the Q: Suppose the husband of the donee had maligned the donor, is
existence or survival there a ground for revocation by reason of ingratitude?
of the child believed
to be dead A: None. The act must be imputable to the donee himself and not
Non-compliance 4 years From the non- to another. (Pineda, 1999, p. 593)
with any condition compliance with the
imposed condition Mortgages and Alienations effected before the notation of the
action for revocation
Act of ingratitude 1 year From the time the
donor had learned of If there are mortgages and alienations effected before the notation
the donees act of of the complaint for revocation in the Registry of Property, such
ingratitude, provided alienations and mortgages shall remain valid and must be
it was possible for respected (Art. 766, NCC).
him to file an action.
NOTE: Alienations and mortgages after the registration of the pendency of
Q: What if the donor dies within the four-year prescriptive the complaint shall be void.
period?
Remedy of the donor
A: The right of action to revoke or reduce is transmitted to his heirs If the property is already transferred in the name of the buyer or
(Pineda, 1999). mortgagee, the remedy of the donor is to recover the value of the
property determined as of the time of the donation (Art. 767, NCC).
INOFFICIOUS DONATIONS
Waiver of Actions to revoke donations
Inofficious Donations The donor CANNOT make a renunciation of actions to revoke in
advance. Such waiver is void. However, the donor may renounce
A donation is inofficious or excessive when its amount impairs the an action to revoke if the act of ingratitude had already been done.
legitimes of the compulsory heirs.
SUMMARY OF THE RULES ON REDUCTION OF DONATIONS
TIME OF FILING OF THE ACTION TRANSMISSIBILITY OF ACTION EXTENT OF REDUCTION RIGHTS TO THE FRUITS
1. Failure of the donor to reserve sufficient means for support (Art. 750, NCC)
Not transmissible
Any time by the donor or by
NOTE: the duty to give and right to Donation reduced to extent Donee is entitled to the fruits as
relatives entitled to support
receive support are personal (Art. necessary to provide support owner of the property donated
during the donors lifetime (Art. 195, FC) (Art. 750, NCC) (Art. 441, NCC)
750, NCC)

PROPERTY
2. Inofficiousness for being in excess of what the donor can give by will (Art. 750, 771, NCC)
Donation effective during the

Transmissible to donors heirs as
donors lifetime subject to
Within 5 years after the donors donation shall be reduced as Donee appropriates fruits (Art.
reduction only upon his death
death (Art. 771, 1149, NCC) regards the excess at donors 441, NCC)
with regard to the excess (Art.
death (Art. 771, NCC)
771, NCC)
3. Birth, appearance or adoption of a child (Art. 760, NCC)
[Same as in #1 Revocation] Donee appropriates fruits not

affected by reduction (Art. 441,
[Same as in #1 Revocation] [Same as in #1 Reduction]
W/in 4 years from birth of 1st NCC). When donation is revoked
child, legitimation (recognition), for any of the cause mentioned
To children & descendants of Donation reduced to extent
adoption, judicial declaration of in article 760, the donee shall
donor upon his death necessary to provide support
filiation or receipt of info of not return the fruits except from
(Art. 763, 2, NCC) (Art. 750, NCC)
existence of the child believed the filing of the complaint (Art.
to be dead. (Art. 763, NCC) 768, NCC).
4. Fraud against creditors (Art. 759, NCC)
Fruits shall be returned in case

Within 4 years from perfection Property returned for the
donee acted in bad faith; if
of donation or from knowledge To creditors heirs or successors- benefit of creditors subject to
impossible to return, indemnify
by the creditor of the donation in-interest (Art. 1178, NCC) the rights of innocent 3rd
the donors creditor for
(Art. 1389, NCC) persons (Art. 1387, NCC)
damages (Art. 1388, NCC)
MODES OF EXTINGUISHING OWNERSHIP Kinds of prescription
Modes of extinguishing ownership 1. Acquisitive prescription - One acquires ownership and other
real rights through the lapse of time in the manner and under
1. Absolute All persons are affected the conditions laid down by law.
a. Physical loss or destruction a. Ordinary Requires the possession of things in good
b. Legal loss or destruction (when it goes out of commerce faith and with a just title for the time fixed by law;
of man) b. Extraordinary Does not require good faith or just title
but possession for a period longer than ordinary
2. Relative Only for certain persons for others may acquire acquisitive prescription
their ownership
a. Law 2. Extinctive prescription Loss of property rights or actions
b. Succession through the possession by another of a thing for the period
c. Tradition as a consequence of certain contracts provided by law or failure to bring the necessary action to
d. Donation enforce ones right with in the period fixed by law.
e. Abandonment
f. Destruction of the prior title or right Acquisitive v. Extinctive prescription
i.e. expropriation , rescission, annulment, fulfillment of
a resolutory condition) BASIS ACQUISITIVE EXTINCTIVE
g. Prescription (Paras, p. 779) Requires possession Inaction of the owner of
by a claimant who is possession or neglect of
De facto case of eminent domain How acquired
not the owner his right to bring an
action
It is an expropriation resulting from the actions of nature as in a
case where land becomes part of the sea. In this case, the owner Applicable to Applicable to all kinds of
loses his property in favor of the state without any compensation. Rights covered ownership and other rights whether real or
real rights personal
PRESCRIPTION Vests ownership and Produces the extinction
other real rights in of rights or bars a right of
DEFINITION the occupant action
Results in the Results in the loss of a
Prescription acquisition of real or personal right or
Effect
ownership or other bars the cause of action
One acquires ownership and other real rights through the lapse of real rights in a person to enforce the right
time in the manner and under the conditions laid down by law. In as well as the loss of
the same way, rights and actions are lost by prescription (Art. 1106, said ownership or real
NCC). rights in another
Can be proven under Should be affirmatively
How proved the general issue pleaded and proved to
without its being bar the action or claim of

CIVIL LAW
affirmatively pleaded the adverse party 7. Possession must satisfy the full period required by law
(Pineda, 2009)
Relationship between One does not look to the
the occupant and the act of the possessor but
ORDINARY
land in terms of to the neglect of the
Relationship by
possession is capable owner
owner and Ordinary prescription requires possession of things in good faith
of producing legal
possessor and with just title for the time fixed by law.
consequences; it is
the possessor who is
GOOD FAITH
the actor
Possessor in good faith
Persons who may acquire by prescription (PSM)
A person is a possessor in good faith if he is not aware of the
1. Persons who are capable of acquiring property by other legal existence of any flaw or defect in his title or mode of acquisition
modes which invalidates it (Art. 526 in relation to Art. 1128) and has
2. State reasonable belief that the person from whom he received the thing
3. Minors Through his guardians was the owner thereof, and could transmit his ownership (Art.
1127, NCC).
Persons against whom prescription runs (MAPJ)
Existence of good faith
1. Minors and other incapacitated persons who have parents,
guardians or other legal representatives. It must exist not only from the beginning but throughout the entire
2. Absentees who have administrators. period of possession fixed by law. (Pineda, 2009)
3. Persons living abroad who have managers or administrators
4. Juridical persons, except the state and its subdivision JUST TITLE
Prescription does not run against (SPG) Just title
1. Between Spouses, even though there be a separation of Just title means that the possessor obtained the possession of the
property agreed upon in the marriage settlements or by property through one of the modes recognized by law for acquiring
judicial decree. ownership but the transferor or grantor was not the owner of the
2. Between Parents and children, during the minority or insanity property or he has no power to transmit the right. (Art. 1129, NCC)
of the latter.
3. Between Guardian and ward during the continuance of the NOTE: Just title is never presumed, it must be proved (Art. 1130, NCC).
guardianship
True title
Subject of prescription (PP)
A true title isone which actually exists and is not just a pretended
1. Private property one.
2. Patrimonial property of the state
NOTE: An absolutely simulated or fictitious title is void and cannot be a basis
NOTE: Patrimonial property of the state is the property it owns but which is for ordinary prescription (Pineda, 2009).
not devoted to public use, public service, or the development of national
wealth. It is wealth owned by the state in its private, as distinguished from Valid title
its public, capacity (Paras, 2008).
A valid title isa title which is sufficient to transmit ownership of the
ACQUISITIVE property or right being conveyed had the transferor or grantor
been the real owner thereof.
CHARACTERISTICS
EXTRAORDINARY
Basis of acquisitive prescription
Extraordinary Prescription
It is based on the assertion of a usurper of an adverse right for such
a long period of time, uncontested by the true owner of the right, Extraordinary prescriptionoccurs where the possessor is in bad
as to give rise to the presumption that the latter has given up such faith. It does not require good faith or just title but possession for a
right in favor of the former (Tolentino, Civil Code, Vol. IV, p. 2). period longer than ordinary acquisitive prescription (Pineda, 2009).
Basic requirements of prescription as a mode of acquiring Prescription of ownership of personal property

ownership
Uninterrupted possession for 8 years, without need of any other
1. Actual possession of a property, which is susceptible of condition (Art. 1132, NCC).
prescription
2. Possession must be in the concept of an owner and not that Prescription of ownership and other real rights over immovables
of a mere holder (Art. 1118, NCC)
3. Possession must be public or open (Art. 1118, NCC) They prescribe through uninterrupted adverse possession for 30
4. Possession must be peaceful (Art. 1118, NCC) years, without need of title or of good faith (Art. 1137, NCC).
5. Possession must be continuous and not interrupted (Art.
1118, NCC)
6. Possession must be adverse, that is, exclusive and not merely
tolerated

PROPERTY
Requisites of extraordinary prescription (CLAS G) the co-ownership, and the co-owners are apprised of the claim of
adverse and exclusive ownership. In this case, the respondents
1. Capacity of the possessor to acquire by prescription; never possessed the lot, much less asserted their claim thereto
2. Susceptibility of object to prescription; until 1999 when they filed the complaint for partition. In contrast,
3. Adverse possession of the character prescribed by law; Flores took possession of the lot after Emilios death and exercised
4. Lapse of time required by law; acts of dominion thereon- tilling and cultivating the land,
introducing improvements, and enjoying the produce thereof. The
REQUISITES statutory period of prescription commenced in 1960 when Flores,
who had neither title nor good faith, secured a tax declaration in
Basic requirements of prescription as a mode of acquiring his name and may, therefore, be said to have adversely claimed
ownership ownership of the lot. On said date, respondents were also deemed
to have become aware of the adverse claim. Floress possession
1. Capacity to acquire by prescription; thus ripened into ownership through acquisitive prescription after
2. A thing capable of acquisition by prescription; the lapse of 30 years (Heirs of Restar v. Heirs of Cichon, G.R. No.
3. Possession of the thing under certain conditions; and 161720, November 22, 2005).
4. Lapse of time provided by law
Q: Sixto, owner of a parcel of land, died. He was survived by his
NOTE: The first two requisites apply to both ordinary and extraordinary wife and 3 children. The subject land was donated by his wife to
prescription, but the last two requisites vary for each kind. Silverio, who immediately entered into possession of the land,
built a fence around it, constructed a residential house, declared
PERIOD it for tax purposes and paid the taxes thereon, and resided there
until his death. After 45 years from the time of donation, Soledad,
Periods as regards prescription as a mode of acquisition of one of Sixtos children, filed a complaint for recovery of
ownership ownership, and possession against Silverio. Who is the rightful
owner of the land?
1. Movables
a. 4 years- good faith A:By extraordinary acquisitive prescription, Silverio became the
b. 8 years- bad faith rightful owner of the land. In extraordinary prescription ownership
and other real rights over immovable property are acquired
2. Immovables through uninterrupted adverse possession thereof for 30 years
a. 10 years- good faith without need of title or of good faith.
b. 30 years- bad faith
When Soledad filed the case, Silverio was in possession of the land
Rules for the computation of time necessary for prescription for 45 years counted from the time of the donation. This is more
than the required 30 years of uninterrupted adverse possession
1. The present possessor may complete the period necessary for without just title and good faith. Such possession was public,
prescription by tacking his possession to that of his grantor or adverse and in the concept of an owner. He declared the land for
predecessor in interest. taxation purposes and religiously paid the realty taxes thereon.
2. It is presumed that the present possessor who was also the Together with his actual possession of the land, these tax
possessor at a previous time, has continued to be in declarations constitute strong evidence of ownership of the land
possession during the intervening time, unless there is proof occupied by him (Calicdan v. Cendea, G.R. No. 155080, February
to the contrary. 5, 2004).
3. The first day shall be excluded and the last day included (Art
1138, NCC). Q: Anthony bought a piece of untitled agricultural land from Bert.
Bert, in turn, acquired the property by forging Carlos signature in
WHAT CANNOT BE REQUIRED BY ACQUISITIVE PRESCRIPTION a deed of sale over the property. Carlo had been in possession of
the property for 8 years, declared it for tax purposes, and
Properties not subject to prescription religiously paid all taxes due on the property. Anthony is not
aware of the defect in Berts title, but has been in actual physical
The following cannot be subject of prescription (PRIM) possession of the property from the time he bought it from Bert,
1. Public domain; who had never been in possession. Anthony has since then been
2. Registered land; in possession of the property for 1 year.
3. Intransmissible rights;
4. Movables possessed through a crime; 1. Can Anthony acquire ownership of the property by
acquisitive prescription? How many more years does he
Q: Emilio died, leaving 8 children. In 1960, His eldest child, Flores, have to possess it to acquire ownership?
took possession of and cultivated the land, caused the 2. If Carlo is able to legally recover his property, can he require
cancellation of the tax declaration in Emilios name covering a Anthony to account for all the fruits he has harvested from
parcel of land and caused the issuance of another in his own the property while in possession?
name. The co-heirs of Flores discovered the cancellation. Upon 3. If there are standing crops on the property when Carlo
Flores death, the heirs of his sisters together with his surviving recovers possession, can Carlo appropriate them? (2008 Bar
sisters filed a complaint in 1999 against the heirs of Flores for Question)
partition of the lot and declaration of nullity of the documents. A:
Did the heirs of Flores acquire ownership over the lot by 1. Yes, Anthony can acquire ownership of the property by
extraordinary acquisitive prescription? ordinary acquisitive prescription which requires just title and
good faith (Art. 1117, NCC). There was just title because a
A: Yes. While the action to demand partition of a co-owned deed of sale was issued in his favor even though it was
property does not prescribe, a co-owner may acquire ownership forged, which fact he was not aware of. He needs to possess
thereof by prescription, where there exists a clear repudiation of the land in good faith and in the concept of owner for a total

CIVIL LAW
of 10 years in order to acquire ownership. Since Anthony title if plaintiff is in
possessed the land for only one year, he has not completed possession
the 10-year period. Even if Anthony tacks the 8-year period of
Void contracts Applies to both action and defense.
possession by Carlo who in the deed of sale is supposed to be
his grantor or predecessor in interest, the period is still short
NOTE: However, an action to annul a voidable
of ten years. contract prescribes after 4 years
2. Since Anthony is a possessor in good faith, Anthony cannot be
made to account for the fruits he gathered before he was Action to demand
served with summons. A possessor in good faith is entitled to partition
As long as the co-ownership is recognized
the fruits received before the possession was legally NOTE:
expressly or impliedly (Art. 494, NCC)
interrupted by the service of summons (Art. 544, NCC). After Distinguished from
Anthony was served with summons, he became a possessor laches
in bad faith and a builder, planter, sower in bad faith. He can Property of public Right of reversion or reconveyance to the
also be made to account for the fruits but he may deduct dominion State of the public properties registered and
expenses for the production gathering and preservation of which are not capable of private
the fruits (Art. 443, NCC). appropriation or private acquisition does not
3. The value of the standing crops must be prorated depending prescribe
upon the period of possession and the period of growing and
producing the fruits. Anthony is entitled to a part of the net NOTE: In contrast, where private property is taken
harvest and a part of the expenses of cultivation in by the Government for public use without first
acquiring title thereto either through expropriation
proportion to his period of possession. However, Carlo may
or negotiated sale , the owners action to recover
allow Anthony to gather these growing fruits as an indemnity the land or the value thereof does not prescribe.
for the expenses of cultivation. If Anthony refuses to accept
this concession, he shall lose the right to indemnity under Art.
PRESCRIPTION OR LIMITATION OF ACTIONS
443 (Art. 545, par. 3, NCC).
Prescriptive periods of actions specified under the Civil Code
EXTINCTIVE
Extinctive Prescription ACTIONS PRESCRIPTIVE PERIOD

8 years (good faith)or 4 years
Extinctive prescription refers to the time within which an action (bad faith) from the time the
may be brought, or some act done, to preserve a right (Pineda, Recover Movables possession is lost (Art. 1140,
2009). Pineda Succession and
Prescription, p. 666, 2009)
Basis of extinctive prescription 30 years (Recover ownership)
(Art. 1141)
It based on the probability, born of experience, that the alleged 10 years (Recover real right of
Recover Immovables
right which accrued in the past never existed or has already been possession) (Art. 555 (4),Pineda
extinguished; or if it exists, the inconvenience caused by the lapse Succession and Prescription, p.
of time should be borne by the party negligent in the assertion of 667, 2009)
his right (Tolentino, Civil Code of the Philippines, Vol. IV, p. 2). 10 years from default of
Mortgage Action
mortgagor (Art. 1142)
NO PRESCRIPTION APPLICABLE Based on written contract
By Offender When it is possessed through a crime such as

NOTE: If contract is oral or 10 years
robbery, theft, or estafa.
quasi, prescriptive period is 6
NOTE: The person who cannot invoke the right of years (Art. 1145)
prescription is the offender or person who Based on obligation created by 10 years from the time the right
committed the crime or offense, not a subsequent law of action accrues
transferee who did not participate in the crime or 10 years from the day judgment
offense, unless the latter knew the criminal nature
Based on judgment became final and executory (Art.
of the acquisition of the property by the transferor.
(Art. 1133; Pineda, 2009) 1144)
Based upon an injury to the 4 years
Registered Lands 1. An action to recover a registered land rights of plaintiff
(P.D. 1529) by the owner
Based on quasi-delicts 4 years (Art. 1146)
2. Right to petition for the issuance for
Forcible entry and detainer 1 year
the issuance of a Writ of Possession
Defamation 1 year (Art. 1147)
filed by the applicant for registered
land All other actions not specified 5 years (Art. 1149)
NOTE: Similarly, an action to recover possession of a

registered land never prescribes.
1. Action legal to
demand a right of
way Imprescriptible
2. To abate a
nuisance
Action to quiet Imprescriptible

OBLIGATIONS
OBLIGATIONS DIFFERENT KINDS OF PRESTATION
A juridical necessity to give, to do, or not to do(Art. 1156, NCC). BASIS OBLIGATION OBLIGATION OBLIGATION
TO GIVE TO DO NOT TO DO
A juridical relation whereby a person (creditor) may demand from Covers the
another (debtor) the observance of a determinative conduct rendering of
(giving, doing, or not doing), and in case of breach, may demand As to what Consists in the
works or Refraining from
satisfaction from the assets of the latter (Arias Ramos). the delivery of a
services doing certain
obligation thing to the
whether acts
Art. 1156 refers only to civil obligations which are enforceable in consists of creditor
physical or
court when breached. It does not cover natural obligations (Arts. mental
1423-1430, NCC) because these are obligations that cannot be
enforced in court being based merely on equity and natural law e.g. Contract
e.g. Sale, e.g. Negative
and not on positive law (Pineda, 2000). for professional
deposit, easement,
services like
Examples pledge, restraining order
NOTE:There is no particular form to make obligations binding, except in painting,
donation, or injunction
certain rare cases (Tolentino, 2002). modeling,
antichresis (Pineda, 2000)
singing, etc.
ELEMENTS OF AN OBLIGATION
Requisites of a valid prestation
The following are the elements of an obligation (JAPO):
1. Possible, physically and juridically;
1. Juridical tie or vinculum juris or efficient cause - The efficient 2. Determinate, or at least determinable according to pre-
cause by virtue of which the debtor becomes bound to established elements or criteria; and
perform the prestation (Pineda, 2000). 3. Has a possible equivalent in money (Tolentino, 1999).
NOTE: The vinculum juris is established by: CLASSIFICATION OF OBLIGATIONS

1. Law (e.g. husband and wife in relation to their obligation to give
support)
2. Bilateral acts (e.g. contracts)
From the viewpoint of:
3. Unilateral acts (e.g. crimes, quasi-delicts) (Tolentino, 1999) 1. Creation
a. Legal imposed by law (Art. 1158, NCC)
2. Active subject [creditor (CR) or obligee] - The person b. Conventional established by the agreement of the
demanding the performance of the obligation. It is he in parties like contracts
whose favor the obligation is constituted, established or 2. Nature
created (Pineda, 2000). a. Personal (to do; not to do)
3. Passive subject [debtor (DR) or obligor] - The one bound to b. Real (to give)
perform the prestation to give, to do, or not to do 3. Object
(Pineda,2000). a. Determinate / specific - particularly designated or
physically segregated from all others of the same class
NOTE: When there is a right, there is a corresponding obligation. Right b. Genericdesignated merely by its class or genus
is the active aspect while obligation is the passive aspect. Thus, it is c. Limited generic generic objects confined to a
said that the concepts of credit and debt are two distinct aspects of particular class or source(e.g. an obligation to deliver
unitary concept of obligation (Pineda, 2000). one of my horses) (Tolentino, 2002)
4. Performance
4. Object or prestation - The subject matter of the obligation a. Positive- to give; to do
which has a corresponding economic value or susceptible of b. Negative not to do;
pecuniary substitution in case of noncompliance. It is a 5. Person obliged
conduct that may consist of giving, doing, or not doing a. Unilateral only one party is bound
something (Pineda, 2000). b. Bilateral both parties are bound
NOTE: In order to be valid, the object must be: NOTE: A bilateral obligation may be reciprocal or non-
1. Licit or lawful; reciprocal. Reciprocal obligations are those which arise from the
2. Possible, physically & judicially; same cause, wherein each party is a debtor and a creditor of the
3. Determinate or determinable; and other, such that the performance of one is conditioned upon
4. Pecuniary value or possible equivalent in money. the simultaneous fulfillment of the other.
Absence of any of the first three (licit, possible and/or determinate)

makes the object void.
6. Existence of burden or condition
a. Pure not burdened with any condition or term. It is
immediately demandable (Art. 1179, NCC)
b. Conditional subject to a condition which may be
suspensive (happening of which shall give rise to the
obligation) or resolutory (happening of which
terminates the obligation) (Art. 1181, NCC)
7. Character of responsibility or liability
a. Joint each debtor is liable only for a part of the whole
liability and to each creditor shall belong only a part of
the correlative rights (8 Manresa 194; Art. 1207, NCC)
b. Solidary debtor is answerable for the whole of the
obligation without prejudice to his right to collect from
his co-debtors the latters shares in the obligation (Art.
1207, NCC)

CIVIL LAW
8. Susceptibility of partial fulfillment 1. Support given to unrecognized illegitimate children by their
a. Divisible obligation is susceptible of partial putative parents, including support given to illegitimate
performance (Art. 1223, NCC; Art. 1224, NCC) children by the putative parents despite judgment denying
b. Indivisible obligation is not susceptible of partial their recognition;
performance (Art. 1225, NCC) 2. Interest voluntarily paid for the use of money even if no
9. Right to choose and substitution interest is agreed upon in writing may be considered as a
a. Alternative obligor may choose to completely perform natural obligation (Art. 1956, NCC; 1960, NCC);
one out of the several prestations (Art. 1199, NCC) 3. Support given to relatives for whom the law made no
b. Facultative only one prestation has been agreed upon, provisions for their support; and
but the obligor may render one in substitution of the 4. Indemnification given to a woman seduced, although the
first one (Art. 1206, NCC) seducer was acquitted of the charge of seduction.
10. Imposition of penalty
a. Simple there is no penalty imposed for violation of the Q: A borrowed P 1, 000 from B which amount B failed to collect.
terms thereof (Art. 1226, NCC) After the debt had prescribed, A voluntarily paid B who accepted
b. Obligation with penalty obligation which imposes a the payment. After a few months, being in need of money, A
penalty for violation of the terms thereof (Art. 1226, demanded the return of the money on the ground that there was
NCC; Pineda, 2000) a wrong payment, the debt having already prescribed. B refused
11. Sanction to return the amount paid. May A succeed in collecting if he sues
a. Civil gives a right of action to compel their B in court? Reason out your answer (1970 Bar Examinations)
performance
b. Natural not based on positive law but on equity and A: A will not succeed in collecting the P 1,000 if he sues B in court.
natural law; does not grant a right of action to enforce The case is expressly covered by Art. 1424 of the New Civil Code
their performance, but after voluntary fulfillment by the which declares that when a right to sue upon a civil obligation has
obligor, they authorize retention of what has been lapsed by extinctive prescription, the obligor who voluntarily
delivered rendered by reason thereof. performs the contract cannot recover what he has delivered or the
c. Moral cannot be enforced by action but are binding value of the service he has rendered.
on the party who makes it in conscience and natural
law. Because of extinctive prescription, the obligation of A to pay his
debt of P 1,000 to B became a natural obligation. While it is true
NATURAL OBLIGATIONS that a natural obligation cannot be enforced by court action,
nevertheless, after voluntary fulfillment by the obligor, under the
Natural obligations law, the obligee is authorized to retain what has been paid by
reason thereof (Jurado, 2009).
Natural obligation, not being based on positive law but on equity
and natural law, do not grant a right of action to enforce their Effect of partial performance
performance, but after voluntary fulfillment by the obligor, they
authorize the retention of what has been delivered or rendered by If only a part of the natural obligation has been fulfilled, such
reason thereof (Art. 1423, NCC). cannot be later on recovered. The obligation is converted into a
civil one (if it is legally susceptible of confirmation or ratification).
NOTE: They are real obligations to which the law denies an action, but which
the debtor may perform voluntarily. However, if the fulfilled portion is not susceptible of confirmation
or ratification, this portion can be the basis of a cause of action for
Conditions for natural obligations to arise recovery of what has been delivered because it has not been
converted into legal obligation (Pineda, 2000).
1. The obligation is not prohibited by law or contrary to morals
and good customs. Natural obligation v. Civil obligation
2. There must be a previous juridical relationship between two
persons but due to certain intervening circumstances, it lost BASIS NATURAL
its legal enforceability leaving its fulfillment entirely to the CIVIL OBLIGATION
OBLIGATION
free will or discretion of the supposed debtor (Pineda, 2000). Based on law,
As to the source of Based on equity contracts, quasi-
Examples of natural obligations the obligation and natural law contracts, delicts,
and quasi-delicts
1. Performance even after the civil obligation has prescribed Cannot be enforced
(Art. 1424, NCC); As to the in court because Can be enforced in
2. Reimbursement of a third person for a debt that has availability of the obligee has no court because the
prescribed (Art. 1425, NCC); enforcement of the right of action to obligee has a right
3. Restitution by minor of the thing or price after annulment of obligation in courts compel its of action
contract (Art. 1426, NCC); performance
4. Delivery by minor of money or fungible thing in fulfillment of
obligation (Art. 1427, NCC);
5. Performance after action to enforce civil obligation has failed
(Art. 1428, NCC);
6. Payment by the heir of a debt exceeding the value of
property he inherited (Art. 1429, NCC); and
7. Payment of legacy after will has been declared void (Art.
1430, NCC).
The enumeration is not exclusive. The following also constitute

natural obligations:

OBLIGATIONS
Conversion of natural obligation to civil obligation
Sources Obligations Perfection Examples
Natural obligations may be converted into civil obligations by acts From the time
of novation. Thus a prescribed debt is turned into civil obligation designated by the law Pay taxes,
Law ex lege
when the debtor renounces the defense of prescription or by creating or regulating render
signing a document recognizing such with a promise to pay the them. support
debt at some future time. The natural obligation becomes a valid GR:From the time of
cause for a civil obligation after it has been affirmed or ratified the perfection of the
anew by the debtor (Pineda, 2009). contract (i.e. meeting
of the minds)
Compliance with a natural obligation is discretionary. If a person
chose to fulfill, he cannot recover what he delivered in compliance XPNs:
therewith. Fulfillment puts the debtor into estoppel from 1. When the parties
recovering what had been paid or delivered (Pineda,2009). made stipulation on
the right of the
Natural obligation v. Moral obligation creditor to the
Contracts ex contractu
fruits of the thing
BASIS NATURAL MORAL 2. When the
OBLIGATION OBLIGATION obligation is subject
Juridical tie to a suspensive
previously existed condition or period, Contract
between the parties it arises upon of sale
As to the presence but because of fulfillment of the
No juridical tie
of juridical tie certain intervening condition or
causes they cannot expiration of the
be enforced in period.
courts Return
Voluntary Performance is a money
As to the fulfillment by the pure act of liberality Quasi- ex quasi- paid by
performance of the debtor is a legal which springs from contracts contractu mistake or
obligation fulfillment with blood relation or which is
legal effect affection not due
As to the Duty of a
Within the domain Within the domain
applicability of the killer to
of the law of morals
law ex maleficio indemnify
Delicts
Performance does or ex delicto the heirs
As to the effect of When fulfilled From the time
not produce legal of his
the performance of produce legal designated by the law
effects victim
the obigation effects creating or regulating
Obligation
them.
of the
CIVIL OBLIGATIONS possessor
of an
ex quasi
Sources of obligations (LCQ-DQ) animal to
Quasi- maleficio or
pay for
delict ex quasi-
1. Law the
delicto
2. Contracts damage
3. Quasi-contracts which it
4. Delict may have
5. Quasi-delict caused
This enumeration is exclusive. No obligation exists if its source is OBLIGATION EX LEGE

not one of those enumerated in Article 1157 (Navales v. Rias, 8
Phil. 508). Obligation ex lege
Obligations derived from law are not presumed.
Only those expressly determined in the Code or in special laws are

demandable and shall be regulated by the precepts of the law
which establishes them and as to what has not been foreseen by
the provisions of Book IV of NCC (Art. 1158, NCC).
NOTE: If there is conflict between the NCC and a special law, the latter
prevails unless the contrary has been expressly stipulated in the NCC (Art.
18, NCC; Paras, 2008).

CIVIL LAW
Characteristics of a legal obligation OBLIGATION EX QUASI - CONTRACTU
1. Does not need the consent of the obligor; Quasi-contract

2. Must be expressly set forth in the law creating it and not
merely presumed; and A juridical relation arising from lawful, voluntary and unilateral acts
3. In order that the law may be a source of obligation, it should based on the principle that no one shall be unjustly enriched or
be the creator of the obligation itself (Art. 1158, NCC). benefited at the expense of another (Art. 2142, NCC).
Determining whether an obligation arises from law or from some Characteristics of a quasi-contract
other source
1. It must be lawful
According to Manresa, when the law establishes the obligation and 2. It must be voluntary
the act or condition upon which it is based is nothing more than a 3. It must be unilateral (Pineda, 2000)
factor for determining the moment when it becomes demandable,
then the law itself is the source of the obligation; however, when Presumptive consent
the law merely recognizes or acknowledges the existence of an
obligation generated by an act which may constitute a contract, Since a quasi-contract is a unilateral contract created by the sole
quasi-contract, criminal offense or quasi-delict and its only purpose act(s) of the gestor, there is no express consent given by the other
is to regulate such obligation, then the act itself is the source of the party. The consent needed in a contract is provided by law through
obligation and not the law. presumption (Pineda, 2000).
Thus, if A loses a certain amount to B in a game of chance, Principal forms of quasi-contracts

according to Art. 2014 of the NCC, the former may recover his loss
from the latter, with legal interest from the time he paid the 1. Negotiorum gestio (inofficious manager) Arises when a
amount lost. It is evident that the source of the obligation of B to person voluntarily takes charge of the management of the
refund A the amount which he had won from the latter is the law business or property of another without any power from the
itself (Leung Ben v. OBrien, 38 Phil 182). The same can be said with latter (Art. 2144, NCC).
regard to obligation of the spouses to support each other, the 2. Solutio indebiti (unjust enrichment) Takes place when a
obligation of the employers under the Workers Compensation Act, person received something from another without any right to
the obligations of the owners of the dominant and servient estates demand for it, and the thing was unduly delivered to him
in legal easements and others scattered in the NCC and in special through mistake (Art. 2154, NCC).
laws (Jurado, 2009).
NOTE: The delivery must not be through liberality or some other
OBLIGATION EX CONTRACTU cause.
Requisites of a contractual obligation Rule in case of excess of payment of interest
1. It must contain all the essential requisites of a contract (Art. If the borrower pays interest when there has been no stipulation
1318, NCC). therefor, the provisions of the Code concerning solutio indebiti, or
2. It must not be contrary to law, morals, good customs, public natural obligations, shall be applied, as the case may be.
order, and public policy(Art. 1306, NCC).
If the payment of interest is made out of mistake, solutio indebiti
Rules governing the obligations arising from contracts applies; hence, the amount must be returned to the debtor. If the
payment was made after the obligation to pay interest has already
GR: These obligations arising from contracts shall be governed prescribed, natural obligation applies; hence, the creditor is
primarily by the stipulations, clauses, terms and conditions of the authorized to retain the amount paid.
parties agreements.
*For further discussion on quasi contracts, please see the discussion of quasi
XPN: Contracts with prestations that are unconscionable or contract on Credit Transactions
unreasonable (Pineda, 2009).
OBLIGATIONS EX DELICTO
Binding force of obligation ex contractu
Delict
Obligations arising from contracts have the force of law between
the parties and should be complied with in good faith (Art. 1159, An act or omission punishable under the law.
NCC).
Basis
Compliance in good faith
Art. 100 of the Revised Penal Code provides: Every person
Performance in accordance with the stipulation, clauses, terms and criminally liable for a felony is also civilly liable.
conditions of the contract (Pineda, 2000).
NOTE:
GR: A crime has two aspects:
GR: Neither party may unilaterally evade his obligation in the 1. Offense against the state because of the disturbance of the social
contract. order; and
2. Offense against the private person
XPNs: Unilateral evasion is allowed when the:
1. Contract authorizes such evasion XPNs: Crimes of treason, rebellion, espionage, contempt and others wherein
2. Other party assents thereto no civil liability arises on the part of the offender either because there are no
damages to be compensated or there is no private person injured by the
crime (Reyes, 2008).

OBLIGATIONS
Scope of civil liability (IRR) 3. If the action for quasi-delict is instituted after 4 years, it is
deemed prescribed(Afialda v.Hisole, 85 Phil 67).
1. Restitution 4. When the injury suffered by a person is the result of a
2. Reparation for damage caused fortuitous event without human intervention.
3. Indemnity for consequential damages (Art. 104, RPC) 5. If there is no damage or injury caused to another(Walter A.
Smith & Co. v. Cadwallader Gibson Lumber Company, 55 Phil
Implied institution of the civil action in a criminal case 517).
GR: When a criminal action is instituted, the civil action for the Delict v. Quasi-delict
recovery of the civil liability arising from the offense charged shall
be deemed instituted with the criminal action (Rule 111, Sec. 1, BASIS DELICT QUASI-DELICT
RRC). Presence of criminal
As to the kind of or malicious intent Only negligence
XPNs: When the offended party: intent present or criminal
1. Waives the civil action negligence
2. Reserves the right to institute it separately As to the whether
3. Institutes the civil action prior to the criminal action (Rule private or public Concerned with Concerned with
111, Sec. 1, RRC) interest is public interest private interest
concerned
Acquittal in criminal case Generally, the act
or omission gives The act or omission
GR: The acquittal of the accused in criminal case on the ground of As to the kind of
rise to two gives rise only to a
reasonable doubt does not preclude the filing of a subsequent civil liability arises
liabilities: criminal civil liability
action and only preponderance of evidence is required to prove and civil liability
the case. Criminal liability is
As to availability of The civil liability can
not subject to a
XPNs: When the acquittal is on the basis that: a compromise be compromised
compromise
1. The accused did not commit the crime charged; or Guilt may be
2. There is a declaration in the decision of acquittal that no As to the quantum Guilt must be
proved by
negligence can be attributed to the accused and that the fact of evidence is proved beyond
preponderance of
from which the civil action might arise did not exist (Art. 29, required reasonable doubt
evidence
NCC).
NOTE: Inasmuch as civil liability co-exists with criminal responsibility in
OBLIGATIONS EX QUASI DELICTO negligence cases, the offended party has the option between an action for
enforcement of civil liability based on culpa criminal under Article 100 of the
Quasi-delict or tort Revised Penal Code and an action for recovery of damages based on culpa
aquiliana under Article 2177.
An act or omission arising from fault or negligence which causes
* For further discussion on quasi delict, see the discussion of quasi-delict on
damage to another, there being no pre-existing contractual torts and damage.
relations between the parties (Art. 2176, NCC).
Culpa contractual, Culpa aquiliana, Culpa criminal, distinguished
NOTE: A single act or omission may give rise to two or more causes of action.
Thus, an act or omission may give rise to an action based on delict, quasi-
delict or contract. BASIS CULPA CULPA CULPA
CONTRACTUAL AQUILIANA CRIMINAL
In negligence cases, prior conduct should be examined, that is, Civil
conduct prior to the injury that resulted, or in proper case, the Negligence,
aggravation thereof. Quasi-Delict,
Contractual Tort, Criminal
Nature
Elements of a quasi-delict(DANC) Negligence Culpa Extra- Negligence
Contractual
1. Negligent or wrongful act or omission;
2. Damage or injury caused to another;
3. Causal relation between such negligence or fault and Proof of guilt
damage; beyond
4. No pre-exisitng contractual relationship between the parties Proof Preponderance Preponderance reasonable
(Article 2176, NCC). needed of evidence of evidence doubt
Instances when Art.2176 is inapplicable

Victim must
1. When there was a pre-existing contractual relation because prove:
the breach of contract is the source of the obligation (Robles Contracting 1. The damage
Prosecution
v. Yap Wing, 41 SCRA 267). party must suffered;
must prove
prove: 2. The
NOTE: However, if the act that breaches the contract is tortuous, the pre- the guilt of
Onus 1. The negligence of
existing contractual relation will not bar the recovery of damages (Singson v. the accused
probandi existence of the defendant;
BPI, G.R. No. L-24837, June 27, 1968) beyond
the contract; 3. The causal
reasonable
2. The breach connection
2. When the fault or negligence is punished by law as a crime, doubt.
thereof. between the
Art. 100 of RPC shall be applicable.
damage and
the negligence.

CIVIL LAW
Estoppel by judgment
Exercise of Estoppel by judgment is a type of estoppel by record. It is the

Exercise of preclusion of a party to a case from denying the facts adjudicated
diligence of a Defenses
extraordinary by a court of competent jurisdiction. It must not be confused with
good father of provided for
Defenses diligence (in res judicata. Estoppel by judgment bars the parties from raising any
a family in the under the
available contracts of question that might have been put in issue and decided in a
selection and Revised
carriage), previous litigation whereas, res judicata makes a judgment
supervision of Penal Code.
Force majeure conclusive between the same parties as to the matter directly
employees.
Existence of adjudged (Philippine National Bank v. Barreto, 52 Phil 818).
There is pre- No pre-
contract No pre-existing
existing existing Estoppel by acceptance of benefits
between the contract
contract contract
parties
It refers to a type of estoppel in pais which arises when a party, by
NOTE: The result in the criminal case, whether acquittal, or conviction is accepting benefits derived from a certain act or transaction,
irrelevant in the independent civil action under the Civil Code (Dionisio intentionally or through culpable negligence, induces another to
v.Alyendia, 102 Phil 443, cited in Mckee v. IAC, 211 SCRA 536) unless the believe certain facts to exit and such other relies and act on such
acquittal is based on the courts declaration that the fact from which the civil belief, as a consequence of which he would be prejudiced if the
action arose did not exist, hence the dismissal of criminal action carries with
former is permitted to deny the existence of such facts (Jurado,
the extinction of the civil liability (Andamo v. IAC, 191 SCRA 204, 90 J.
Fernan).
2009).
Illustration:
ESTOPPEL
Article 1438 provides:
Estoppel
One who has allowed another to assume apparent ownership of personal
An admission or representation rendered conclusive upon the property for the purpose of making any transfer of it, cannot, if he received
person making it, and cannot be denied or disproved as against the the sum for which a pledge has been constituted, set up his own title to
person relying thereon (Art. 1431, NCC). defeat the pledge of the property, made by the other to a pledgee who
received the same in good faith and for value.
Estoppel is effective only between the parties thereto or their

Estoppel by silence or inaction
successors in interest (Art. 1439, NCC).
NOTE: The admission or representation must be plain and clear. Estoppel It refers to a type of estoppel in pais which arises when a party,
cannot be sustained on doubtful or ambiguous inferences. who has a right and opportunity to speak or act ass well as a duty
to do so under the circumstances, intentionally or through culpable
Basis and purpose of estoppel negligence, induces another to believe certain facts to exist and
such other relies and acts on such belief, as a consequence of
Estoppel is based on public policy, fair dealing, good faith and which he would be prejudiced if the former is permitted to deny
justice and its purpose is to forbid one to speak against his own act, the existence of such facts.
representation or commitments to the injury of one who
reasonably relied thereon (Pineda, 2000). Illustration:
Article 1437 provides that:

Kinds of Estoppel
When in a contract between third persons concerning immovable property,
1. Estoppel by deed (technical estoppel) one of them is misled by a person, with respect to the ownership of real
a. Estoppel by deed proper A party signs a document right over the real estate, the latter is precluded from asserting his legal title
which bars him from denying the truth of any material or interest therein, provided all these requisites are present:
facts asserted in it. It applies only between the same 1. There must be fraudulent representation or wrongful concealment of
of facts known to the party estopped;
parties, their privies and cannot be used against
2. The party precluded must intend that the other should act upon the
strangers (Pineda, 2000) facts as misrepresented;
b. Estoppel by record Truth set forth in a record, whether 3. The party misled must have been aware of the true facts; and
judicial or legislative, cannot be denied (Pineda, 2000) 4. The party defrauded must have acted in accordance with the
c. Estoppel by court record - The parties are precluded misrepresentation.
from:
i. Raising questions involving matters which were LACHES
directly adjudged because of the principle of res
judicata - Estoppel by judgment or direct estoppel Laches (stale demands)
by judgment
ii. From raising questions involving matters that have The failure or neglect, for an unreasonable length of time, to do
not been adjudged but could have been placed in that which by exercising due diligence could or should have been
issue and decide in the previous case because of done earlier; its negligence or omission to assert a right within a
their relation to the issues therein - Collateral reasonable time, warranting a presumption that the party entitled
estoppel by judgment (Pineda, 2000). to assert it either has abandoned it or declined to assert it. It is
also known as stale demands (Lim Tay vs. Court of Appeals, 293
2. Estoppel in pais (equitable estoppel) SCRA 634; Pineda, 2000).
a. By conduct or by acceptance of benefits
b. By representation or concealment Basis of the doctrine of laches
c. By silence
d. By omission It is based upon grounds of public policy which requires for the
e. By laches peace of society, discouragement of state claims.

OBLIGATIONS
Elements of Laches (DILC) Obligations of a debtor in an obligation to deliver
1. Delay in asserting complainants right after he had knowledge The obligations of the debtor (in an obligation to deliver) depends
of the defendants conduct and after he has opportunity to upon the kind thing involved:
exercise it;
2. Injury or prejudice to the defendant in the event relief is BASIS SPECIFIC GENERIC
accorded to the complainant (Pineda, 2000).
3. Lack of knowledge or notice on the part of the defendant that Deliver the thing
the complainant would assert the right on which he bases his which is neither of
suit; superior nor inferior
As to what the Deliver the thing
4. Conduct on the part of the defendant or one under whom he quality if quality and
obligation consists agreed upon (Art.
claims, giving rise to the situation complained of; circumstances have
of 1165, NCC)
not been stated by
Q: In 1928, a non-Christian, sold a parcel of land to C, father or the partiies (Art.
the defendant, without executive approval required by Sec. 145 1246, NCC)
of the Administrative Code. Despite the invalidity of the sale, B Take care of the
allowed C to enter, possess and enjoy the land in question thing with the proper
without protest, from 1928 to 1943 when B died. The plaintiffs If the object is
diligence of a good
who are the heirs of B, also remained inactive, taking no step to generic, but the
As to the required father of a family
reinvidicate the property from 1944 to 1962, when the present source is specified or
diligence to be unless the law
suit was commenced in court. Will the suit prosper? Reason. delimited, the
observed requires or parties
obligation is to
stipulate another
A: The suit will not prosper. Even granting plaintiffs proposition preserve the source
standard of care
that no prescription lies against their fathers recorded title, their (Art.1163, NCC)
passivity and inaction for more than 34 years justifies the
Deliver all Delivery of another
defendant in setting up the defense of laches. All of the four (4)
accessions, thing within the
elements of laches are present. As a result, the action of plaintiffs
accessories and fruits same genus as the
must be considered barred (Miguel v. Catalino).
As to what delivery of the thing even thing promised if
comprises of though they may not such thing is
Laches v. Prescription
have been damaged due to lack
mentioned (Art. of care or a general
LACHES PRESCRIPTION 1166, NCC) breach is committed
Concerned with the effect of Concerned with the fact of
delay delay Pay damages in case Pay damages in case
Principally a question of of breach of of breach of
inequity of permitting a claimed It is a matter of time obligation by reason obligation by reason
As to the effect of
to be enforced of delay, fraud, of delay, fraud,
breach of
negligence, negligence,
Not statutory Statutory obligation
contravention of the contravention of the
Applies in equity Applies at law
tenor thereof (Art. tenor thereof (Art.
Based on fixed of time (Pineda,
Not based on fixed of time 1170, NCC) 1170, NCC)
2000)
Obligation is not
NOTE: The doctrine of laches is inapplicable when the claim was filed within Fortuitous event extinguished (genus
As to the effect of
the prescriptive period set forth under the law (Pineda, 2000). extinguishes the nun quam peruit
fortuitous event
obligation genus never
NATURE AND EFFECTS OF OBLIGATIONS perishes)
Types of real obligations Remedies of the creditor in case of failure to deliver the thing due
1. Determinate/specific particularly designated or physically The following are the remedies of the creditor in case of failure to
segregated from all others of the same class. deliver the thing due:
2. Indeterminate/Generic is designated merely by its class or
genus.
SPECIFIC GENERIC
3. Limited generic generic objects confined to a particular class
(e.g. an obligation to deliver one of my horses) (Tolentino, Specific performance
2002) Specific performance (delivery of any thing belonging
to the same species)
Ask that the obligation be
Rescission (action to rescind
complied with at the debtors
under Art. 1380,NCC)
expense
Resolution (action for Resolution or specific
cancellation under Art. 1191, performance, with damages in
NCC) either case (Art. 1191, NCC)
Damages, in both cases (Art. 1170, NCC)
NOTE: May be exclusive or in addition to the above-mentioned remedies

(Pineda, 2000)

CIVIL LAW
NOTE: In an obligation to deliver a specific thing, the creditor has the right to BREACHES OF OBLIGATIONS
demand preservation of the thing, its accessions, accessories, and the fruits.
The creditor is entitled to the fruits and interests from the time the
obligation to deliver the thing arise.
Degree of diligence required
Right of the creditor to the fruits 1. That agreed upon;

2. In the absence of such, that which is required by the law;
The creditor has a right to the fruits of the thing from the time the 3. GR: In the absence of the foregoing, diligence of a good
obligation to deliver it arises. However, he shall acquire no real father of a family
right over it until the same has been delivered to him (Art. 1164,
NCC). XPN: Common carriers requiring extraordinary diligence
(Arts. 1998-2002, NCC)
Delivery of the thing and the fruits
Diligence of a good father of a family
As to when the debtor is obliged to deliver the thing and the fruits
depends on the source of the obligation.When the obligation is: That reasonable diligence which an ordinary prudent person would
1. Based on law, quasi-delict, quasi-contract or crime - the have done under the same circumstances.
specific provisions of the applicable law, shall determine
when the delivery shall be done or effected Forms of breach of obligations
2. Subject to a suspensive condition - the obligation to deliver
arises from the happening of the condition 1. Voluntary debtor is liable for damages if he is guilty of:
3. Subject to a suspensive term or period - the obligation arises a. Default (mora)
from the constitution, creation or perfection of the obligation b. Fraud (dolo)
4. Pure - the obligation to deliver arises from the constitution, c. Negligence (culpa)
creation or perfection of the obligation (Pineda, 2009). d. Breach through contravention of the tenor thereof
(Art. 1170, NCC)
Nature of the right of the creditor with respect to fruits
2. Involuntary debtor is unable to perform the obligation due
1. Before delivery personal right to fortuitous event thus not liable for damages.
2. After delivery real right
Effects of breach of obligation
Principle of balancing of equities in actions for specific
performance If a person obliged to do something fails to do it, or if he does it in
contravention of the tenor of the obligation or what has been
In decreeing specific performance, equity requires not only that poorly done be undone, the same shall be executed at his cost (Art.
the contract be just and equitable in its provisions, but that the 1167, NCC).
consequences of specific performance likewise be just and
equitable. The general rule is that this equitable relief will not be When the obligation consists in not doing, and the obligor does
granted if, under the circumstances of the case, the result of the what has been forbidden him, it shall also be undone at his
specific performance of the contract would be harsh, inequitable, expense (Art.1168, NCC).
and oppressive or result in an unconscionable advantage to the
plaintiff (Agcaoili v. GSIS, G.R. No. 30056, Aug. 30, 1988). Instances where the remedy under Art. 1168 is not available
Types of personal obligations 1. Where the effects of the act which is forbidden are definite in
character even if it is possible for the creditor to ask that
1. Positive - to do the act be undone at the expense of the debtor,
2. Negative - not to do consequences contrary to the object of the obligation will
have been produced which are permanent in character.
Remedies in personal obligations 2. Where it would be physically or legally impossible to undo
what has been undone because of:
1. Positive personal obligations a. The very nature of the act itself;
a. Not purely personal act - To have obligation executed at b. A provision of law; or
debtor's expense plus damages c. Conflicting rights of third persons.
b. Purely personal act - Damages only.
NOTE: In either case, the remedy is to seek recovery for damages (Art.1168,
2. Negative personal obligation To have the prohibited thing NCC).
undone at the expense of the debtor plus damages. However,
if thing cannot be physically or legally undone, only damages DELAY (MORA)
may be demanded (8 Manresa 58).
Delay or default
Specific performance is not a remedy in positive personal
obligations Those obliged to deliver or to do something incur in delay from the
time the obligee (creditor) judicially or extrajudicially demands
If specific performance will be allowed, it will amount to from them the fulfillment of their obligation.
involuntary servitude which is prohibited by the Constitution
(Pineda, 2000). In reciprocal obligations, neither party incurs in delay if the other
does not comply or is not ready to comply in a proper manner with
what is incumbent upon him. From the moment one of the parties
fulfills his obligations, delay by the other begins (Art. 1169, NCC).

OBLIGATIONS
Requisites of delay Non-applicability of mora solvendi
1. Obligation must be due, demandable and liquidated; Mora solvendi does not apply in natural obligations. This is because
2. Debtor fails to perform his positive obligation on the date performance is optional or voluntary on the debtors part. It does
agreed upon; not grant a right of action to enforce their performance.
3. A judicial or extra-judicial demand made by the creditor upon
the debtor to fulfill, perform or comply with his obligation; Mora solvendi does not apply in negative obligations. This is
and because one can never be late in not giving or doing something.
4. Failure of the debtor to comply with such demand.
Instances when demand by the creditor is not necessary in order
Kinds of delay that delay may exist
1. Ordinary delay this is the mere failure to perform an Demand by the creditor shall not be necessary in order that delay
obligation at the stipulated time. may exist:
2. Extraordinary delay or legal delay this delay already equates 1. When the obligation or the law expressly so declares; or
to non-fulfillment of the obligation and arises after the 2. When from the nature and the circumstances of the
extrajudicial or judicial demand has been made upon the obligation it appears that the designation of time when
debtor (Pineda, 2000). the thing is to be delivered or the service is to be
rendered was a controlling motive for the establishment
Kinds of legal delay or default of the contract; or
3. When demand would be useless, as when the obligor
1. Mora solvendi default on the part of the debtor/obligor has rendered it beyond his power to perform (Art. 1169,
a. Ex re default in real obligations (to give) par. 2 NCC).
b. Ex personae default in personal obligations (to do)
2. Mora accipiendi default on the part of the creditor/obligee Q: A borrowed P2,000 from B on December 1, 1956. He
3. Compensatio morae default on the part of both the debtor executed a promissory note promising to pay the indebtedness
and creditor in reciprocal obligations on December 1, 1958. Upon the arrival of the designated date for
payment, is demand necessary in order that A shall incur in
Causes of cessation of the effects of mora delay?
1. Renunciation (express/implied); or A: Yes. In order that the first exception provided for in Art. 1169 of
2. Prescription. the NCC can be applied, it is indispensable that the obligation or
the law should expressly add that the obligor shall incur in delay if
Q. American Express Card failed to approve Xs credit card he fails to fulfill the obligation upon the arrival of the designated
purchases which urged the latter to commence a complaint for date or that upon the arrival of such date demand shall not be
moral and exemplary damages before the RTC against American necessary (Bayala v. Silang Traffic Co., 73 Phil. 557).
Express. He said that he and his family experienced
inconvenience and humiliation due to the delays in credit Effects of mora solvendi
authorization during his vation trip in Amsterdam and in the
United States. RTC rendered a decision in favor of Pantaleon. CA 1. Debtor may be liable for damages or interests; and
reversed the award of damages in favor of X, holding that
American Express had not breached its obligations to X, as the NOTE: The interest begins to run from the filing of the complaint when
purchase deviated from X's established charge purchase pattern. there is no extrajudicial demand.
Did American Express commit a breach of its obligations to X?
2. When the obligation has for its object a determinate thing,
A. Yes.Generally, the relationship between a credit card provider the debtor may bear the risk of loss of the thing even if the
and its cardholders is that of creditor-debtor, with the card loss is due to fortuitous event.
company as the creditor extending loans and credit to the 3. Rescission or resolution
cardholder, who as debtor is obliged to repay the creditor. One
hour appears to be patently unreasonable length of time to Debtors liability may be mitigated even if he is guilty of delay
approve or disapprove a credit card purchase. The culpable failure
of AmEx herein is not the failure to timely approve petitioners If the debtor can prove that loss would nevertheless transpire even
purchase, but the more elemental failure to timely act on the if he had not been in default, the court may equitably mitigate his
same, whether favorably or unfavorably (Pantaleon vs. American liability (Art. 2215 (4), NCC; Pineda, 2000).
Express, G.R. No. 174269, May 8, 2009).
MORA ACCIPIENDI
MORA SOLVENDI
Requisites
Requisites
1. Offer of performance by a capacitated debtor;
1. Obligation pertains to the debtor; 2. Offer must be to comply with the prestation as it should be
2. Obligation is determinate, due and demandable, and performed; and
liquidated; 3. Refusal of the creditor without just cause.
3. Obligation has not been performed on its maturity date;
4. There is judicial or extrajudicial demand by the creditor;
5. Failure of the debtor to comply with such demand.

CIVIL LAW
Effects of mora accipiendi Kinds of fraud
1. Responsibility of debtor is limited to fraud and gross Basis Fraud in the Fraud in the
negligence performance perfection
2. Debtor is exempted from risk of loss of thing; creditor bears It occurs after the It occurs before or
risk of loss valid execution of simultaneous with
3. Expenses by debtor for preservation of thing after delay is the contract. It is the creation or
chargeable to creditor Time of occurrence employed in the perfection of the
4. If the obligation bears interest, debtor does not have to pay it performance of a obligation;
from time of delay pre-existing
5. Creditor liable for damages obligation;
6. Debtor may relieve himself of obligation by consigning the Consent is free and Consent is vitiated
thing not vitiated; by serious
Consent
deception or
COMPENSATIO MORAE misrepresentation;
It is not a ground It is a ground for
Reciprocal obligations Effect for annulment of annulment of the
the contract; contract;
Obligations created and established at the same time, out of the Action for damages Action for
same cause and which results in the mutual relationship between Remedy only. annulment with
the parties. damages.
Delay in reciprocal obligations Classes of fraud in the perfection
In reciprocal obligations, one party incurs in delay from the 1. Dolo causante (casual fraud) - This is the essential cause of
moment the other party fulfills his obligation, while he himself the consent without which the party would not have agreed
does not comply or is not ready to comply in a proper manner with to enter into the contract (Art. 1338, Civil Code).
what is incumbent upon him. 2. Dolo incidente(incidental fraud) - This is the kind of fraud
which is not the efficient cause for the giving of the consent
In reciprocal obligations, demand is only necessary in order for a to the contract, as it refers merely to an incident therein and,
party to incur delay when the respective obligations are to be which even if not present, the contracting party would have
performed on separate dates. still agreed to the contract.
Effect of non-compliance of both parties in reciprocal obligations Dolo causante v. Dolo incidente
If neither party complies with his prestation, default of one Basis Dolo causante Dolo incidente
compensates for the default of the other. It is the efficient It is not the efficient
cause to the giving cause for the giving
Rules on Compensatio Morae Nature
of consent to the of consent to the
contract; contract;
1. Unilateral obligations
It renders the It does not affect
Effect contract voidable; the validity of the
GR: Default or delay begins from extrajudicial or judicial
contract;
demand mere expiration of the period fixed is not enough
Annulment with Contract remains
in order that debtor may incur delay.
damages. valid. Remedy is
Remedy
claim for damages
XPNs:
only.
a. The obligation or the law expressly so dictates;
b. Time is of the essence;
Fraud as mentioned in Article 1171
c. Demand would be useless, as debtor has rendered it
beyond his power to perform; or
It is incidental fraud or fraud in the performance of the obligation
d. Debtor has acknowledged that he is in default.
and not the fraud in the execution of the contract or causal fraud.
It is the intentional evasion of the normal fulfillment of the
2. Reciprocal obligations
obligation (Pineda, 2000).
GR: Fulfillment by both parties should be simultaneous.
Waiver of action arising from future fraud
XPN: When different dates for the performance of obligation
With respect to fraud that has already been committed, the law
is fixed by the parties.
does not prohibit renunciation of the action for damages based on
the same. However, the law prohibits any waiver of an action for
FRAUD
future fraud since the same is contrary to law and public policy.
Waiver for future fraud is void (Art. 1171, NCC).
Fraud
NOTE: Waiver of past fraud is valid since such can be deemed an act of
It is an intentional evasion of the faithful performance of the generosity. What is renounced is the effect of fraud, particularly the right to
obligation (8 Manresa 72). It is also known as deceit or dolo. indemnity.

OBLIGATIONS
Remedies of the defrauded party Contributory negligence of the creditor
1. Specific performance (Art. 1233, NCC) GR: It reduces or mitigates the damages which he can recover.
2. Resolution of the contract (Art. 1191, NCC)
3. Damages, in either case XPN: If the negligent act or omission of the creditor is the
proximate cause of the event which led to the damage or injury
NEGLIGENCE complained of, he cannot recover
Negligence Kinds of negligence or culpa
The fault or negligence of the obligor consists in the omission of 1. Culpa contractual (contractual negligence) negligence which
that diligence which is required by the nature of the obligation and results from the breach of contract
corresponds with the circumstances of the persons, of the time 2. Culpa aquiliana (civil negligence or tort or quasi-delict) acts or
and the place. When negligence shows bad faith, the provisions of omissions that cause damage to another, there being no
Art. 1171 and 2201, paragraph 2, shall apply. contractual relation between the parties (Art. 2176, NCC).
3. Culpa criminal (criminal negligence) those which results in
If the law or contract does not state the diligence which is to be the commission of a crime or a delict
observed in the performance, that which expected of a good father
of a family shall be required (Art. 1173, NCC). BASIS CULPA CULPA CULPA
CONTRACTUAL AQUILIANA CRIMINAL
Test of negligence (CONTRACT) (QUASI-DELICT) (DELICT)
Negligence is Negligence is Negligence is
The test by which we can determine the existence of negligence in merely an substantive and substantive
Existence of
a particular case may be stated as follows: Did the defendant in incident in the independent and
negligence
doing the alleged negligent act use the reasonable care and caution performance of independent
which an ordinarily prudent person would have used in the same an obligation
There is always There is no pre- There is no
situation? If not, then he is guilty of negligence. The law here in
Contractual a pre-existing existing pre-existing
effect adopts the standard supposed to be supplied by the
relations contractual contractual contractual
imaginary conduct of the discreet pater familias of the Roman Law
relation relation relation
(Picart v. Smith, 37 Phil 809). The source of The source of The source of
obligation of obligation is obligation is
Fraud v. Negligence defendant to defendants an act or
Source of
pay damages is negligence itself omission
obligation
BASIS FRAUD NEGLIGENCE the breach or punishable by
non-fulfillment law
There is no
of the contract
As to the intention There is deliberate deliberate intention
Proof of the The negligence Accused shall
to cause damage intention to cause to cause damage or existence of the of the be presumed
damage injury even if the act contract and of defendant must innocent until
was done voluntarily its breach or be proved the contrary is
Proof of
As to the non-fulfillment proved
Liability cannot be Liability may be negligence
mitigation of is sufficient beyond
mitigated mitigated prima facie to reasonable
liability
warrant doubt
GR: Waiver for recovery
future negligence Defense of
may be allowed in Defense of
good father
As to the waiver of certain cases good father of
of a familyin
a family in the
future fraud the selection
selection &
Waiver for future XPN:Nature of the & supervision
supervision of
fraud is void obligation or public Defense of of the
the employees
policy requires good father of employees is
is not a proper
extraordinary a familyin the not a proper
complete
diligence (e.g. selection & defense
Defense defense though
common carrier) supervision of
available it may mitigate
the employees The
damages.
is a proper and employees
complete guilt is
NOTE: When negligence is so gross that it amounts to wanton attitude on Respondeat
defense automatically
the part of the debtor or such negligence shows bad faith, the laws in case of superior or
the
fraud shall apply. command
employers
responsibility or
civil guilt, if
Effect of good faith or bad faith of the obligor the master and
the former is
servant rule
insolvent
If the obligor acted in good faith, he is responsible for the natural Proof of guilt
and probable consequences of the breach of contract and which Preponderance Preponderance beyond
the parties have reasonably foreseen at the time of the Proof needed
of evidence of evidence reasonable
constitution of the obligation. doubt
If the obligor is guilty of fraud, bad faith, malice or wanton attitude,

he shall be responsible for all damages which may be reasonably
attributed to the non-performance of the obligation.

CIVIL LAW
CONTRAVENTION OF TENOR OF OBLIGATION (VIOLATIO) Act of God v. Act of Man
The act of contravening the tenor or terms or conditions of the ACT OF GOD ACT OF MAN
contract. It is also known as violatio, i.e. failure of common Fortuitous event Force majeure
carrier to take its passenger to their destination safely (Pineda, Event which is absolutely Event caused by the legitimate
2000). independent of human or illegitimate acts of persons
intervention other than the obligor
Under Art.1170, the phrase in any manner contravene the tenor i.e. earthquakes, storms, floods, i.e. armed invasion, robbery,
of the obligation includes any illicit act which impairs the strict and epidemics war (Pineda, 2000)
faithful fulfillment of the obligation, or every kind of defective
performance. Such violation of the terms of contract is excused in NOTE: There is no essential difference between fortuitous event and force
proper cases by fortuitous events. majuere; they both refer to causes independent of the will of the obligor
(Tolentino, 2002).
FORTUITOUS EVENT
Q: MIAA entered into a compromise agreement with ALA. MIAA
Fortuitous event failed to pay within the period stipulated. Thus, ALA filed a
motion for execution to enforce its claim. MIAA filed a comment
An occurrence or happening which could not be foreseen, or even and attributed the delays to its being a government agency and
if foreseen, is inevitable (Art. 1174, NCC). the Christmas rush. Is the delay of payment a fortuitous event?
Requisites A: No. The act-of-God doctrine requires all human agencies to be

excluded from creating the cause of the mischief. Such doctrine
1. Cause of breach is independent of the will of the debtor; cannot be invoked to protect a person who has failed to take steps
2. The event is unforeseeable or unavoidable; to forestall the possible adverse consequences of loss or injury.
3. Occurrence renders it absolutely impossible for the debtor to Since the delay in payment in the present case was partly a result
fulfill his obligation in a normal manner - impossibility must of human participation - whether from active intervention or
be absolute not partial, otherwise not force majeure; and neglect - the whole occurrence was humanized and was therefore
4. Debtor is free from any participation in the aggravation of the outside the ambit of a caso fortuito.
injury to the creditor.
First, processing claims against the government are certainly not
The fortuitous event must not only be the proximate cause but it only foreseeable and expectable, but also dependent upon the
must also be the only and sole cause. Contributory negligence of human will. Second, the Christmas season is not a caso fortuito,
the debtor renders him liable despite the fortuitous event (Pineda, but a regularly occurring event. Third, the occurrence of the
2000). Christmas season did not at all render impossible the normal
fulfillment of the obligation.
If the negligence was the proximate cause, the obligation is not
extinguished. It is converted into a monetary obligation for Fourth, MIAA cannot argue that it is free from any participation in
damages the delay. It should have laid out on the compromise table the
problems that would be caused by a deadline falling during the
Difficulty to foresee Christmas season. Furthermore, it should have explained to ALA
the process involved for the payment of ALAs claim (MIAA v. Ala
The mere difficulty to foresee the happening is not impossibility to Industries Corp., G.R. No. 147349, Feb. 13, 2004).
foresee the same (Republic v. Luzon Stevedoring Corp., G.R. No. L-
21749, Sept. 29, 1967). Effects of fortuitous events
Liability for loss due to fortuitous event 1. On determinate obligation The obligation is extinguished
2. On generic obligation The obligation is not extinguished
GR: There is no liability for loss in case of fortuitous event. (genus nun quam peruit genus never perishes)
XPNs: (LaNS-PCBaG) Q: Kristina brought her diamond ring to a jewelry shop for
1. Law cleaning. The jewelry shop undertook to return the ring by
2. Nature of the obligation requires the assumption of risk February 1, 1999. When the said date arrived, the jewelry shop
3. Stipulation informed Kristina that the job was not yet finished. They asked
4. The debtor is guilty of dolo, malice or bad faith, has Promised her to return five days later. On February 6, 1999, Kristina went to
the same thing to two or more persons who does not have the shop to claim the ring, but she was informed that the same
the same interest (Art. 1165, NCC). was stolen by a thief who entered the shop the night before.
5. The debtor Contributed to the loss (Tan v. Inchausti & Co., Kristina filed an action for damages against the jewelry shop
G.R. No. L-6472, Mar. 7, 1912) which put up the defense of force majeure. Will the action
6. The possessor is in Bad faith (Art. 552, NCC) prosper or not? (2000 Bar Question)
7. The obligor is Guilty of fraud, negligence or delay or if he
contravened the tenor of the obligation (Juan Nakpil v. United A: Yes. The action will prosper. Since the defendant was already in
Construction Co., Inc. v. CA, G.R. No. L-47851, Apr. 15, 1988) default for not having delivered the ring when delivery was
demanded by plaintiff at due date, the defendant is liable for the
loss of the thing and even when the loss was due to force majeure.
The defendant who is obliged to deliver incurred delay from the

time the plaintiff extrajudicially demands the fulfillment of the
obligation (Art. 1169, NCC). The defendant shall be held liable for
the loss of the thing even it was due to fortuitous event.

OBLIGATIONS
Q: AB Corp. entered into a contract with XY Corp. whereby the 2. Accion subrogatoria (subrogatory action) An indirect action
former agreed to construct the research and laboratory facilities brought in the name of the debtor by the creditor to enforce
of the latter. Under the terms of the contract, AB Corp. agreed to the formers rights except:
complete the facility in 18 months, at the total contract price of a. Personal rights of the debtor
P10 million. XY Corp. paid 50% of the total contract price, the b. Rights inherent in the person of the debtor
balance to be paid upon completion of the work. The work c. Properties exempt from execution (e.g .family home)
started immediately, but AB Corp. later experienced work 3. Accion pauliana (rescissory action) An action to impugn or
slippage because of labor unrest in his company. AB Corp.s assail the acts done or contracts entered into by the debtor in
employees claimed that they are not being paid on time; hence, fraud of his creditor.
the work slowed down. As of the 17th month, work was only 45%
completed. AB Corp. asked for extension of time, claiming that its NOTE: Resort to the remedies must be in the order stated above (Art. 1177,
labor problems is a case of fortuitous event, but this was denied NCC).
by XY Corp. When it became certain that the construction could
not be finished on time, XY Corp. sent written notice cancelling Q: Sacramento Steel Corporation (SSC) is a business entity
the contract and requiring AB Corp. to immediately vacate the manufacturing and producing steel and steel products. It entered
premises. into a credit agreement with respondent International Exchange
Bank (IEB). As security for its obligations, SSC executed 5 separate
a. Can the labor unrest be considered a fortuitous event? deeds of chattel mortgage constituted over various equipment
b. Q: Can XY Corp. unilaterally and immediately cancel the found in its steel manufacturing plant.
contract?
c. Q: Must AB Corp. return the 50% down payment? (2008 Bar Subsequently, SSC defaulted in the payment of its obligations.
Question) IEBs demand for payment went unheeded. Meanwhile,
Metropolitan Bank and Trust Company (Metro Bank) filed a
A: motion for intervention as a creditor of SSC. It contends that the
a) No. Labor unrest is not a fortuitous event that will excuse AB mortgage contracts between IEB and SSC were entered into to
Corp. from complying with its obligation of constructing the defraud the latters creditors. Thus, it prayed for the rescission of
research and laboratory facilities of XY Corp. The labor the chattel mortgaged executed by SSC in favor of IEB. Will the
unrest, which may even be attributed in large part to AB action to rescind the mortgage prosper?
Corp. itself, is not the direct cause of non-compliance by AB
Corp. It is independent of its obligation. It is similar to the A: No.Jurisprudence is clear that the following successive measures
failure of a DBP borrower to pay her loan just because her must be taken by a creditor before he may bring an action for
plantation suffered losses due to the cadang-cadang disease. rescission of an allegedly fraudulent contract: (1) exhaust the
It does not excuse compliance with the obligation (DBP v. properties of the debtor through levying by attachment and
Vda. De Moll).AB Corp. could have anticipated the labor execution upon all the property of the debtor, except such as are
unrest which was caused by delays in paying the laborers exempt by law from execution; (2) exercise all the rights and
wages. The company could have hired additional laborers to actions of the debtor, save those personal to him (accion
make up for the work slowdown. subrogatoria); and (3) seek rescission of the contracts executed by
the debtor in fraud of their rights (accion pauliana). It is thus
b) Yes, XY Corp. may unilaterally cancel the obligation but this is apparent that an action to rescind, or an accion pauliana, must be
subject to the risk that the cancellation of the reciprocal of last resort, availed of only after the creditor has exhausted all
obligation being challenged in court and if AB Corp. succeeds, the properties of the debtor not exempt from execution or after all
then XY Corp. will be declared in default and be liable for other legal remedies have been exhausted and have been proven
damages. futile (Metropolitan Bank and Trust Company v. International
Exchange Bank, G.R. No. 176008, August 10, 2011).
c) No, under the principle of quantum meruit, AB Corp. had the
right to retain payment corresponding to his percentage of Q: While the case was pending, Felix donated his parcels of land
accomplishment less the amount of damages suffered by XY in favor of his children. Judgment was rendered against Felix.
Corp. because of the delay or default. When the sheriff, accompanied by counsel of Philam, sought to
enforce the alias writ of execution, they discovered that Felix no
REMEDIES longer had any property and that he had conveyed the subject
properties to his children. Thus, Philam filed an accion pauliana
In case of breach of obligation, the following are the remedies for rescission of the donations. Felix countered that an action for
available: rescission of the donation had already prescribed since the time
1. Specific performance, or substituted performance by a third of prescription has to run from the date of registration. Has the
person in case of an obligation to deliver a generic thing, and action filed by Philam prescribed?
in obligations to do, unless it is a purely personal act; or
2. Rescission (or resolution in reciprocal obligations); A:No. Philam only learned about the unlawful conveyances made
3. Damages, in any case; by Felix more than four years after the donations were effected,
4. Subsidiary remedies of creditors: when its counsel accompanied the sheriff to Butuan City to attach
a. Accion subrogatoria the properties. There they found that he no longer had any
b. Accion pauliana properties in his name. It was only then that Philam's action for
c. Accion directa rescission of the deeds of donation accrued because then it could
be said that Philam had exhausted all legal means to satisfy the
SPECIFIC PERFORMANCE trial court's judgment in its favor. Since Philam filed its complaint
for accion pauliana against petitioners barely a month from its
Remedies in connection with specific performance discovery that Felix had no other property to satisfy the judgment
award against him, its action for rescission of the subject deeds
1. Exhaustion of the properties of the debtor (not exempt from clearly had not yet prescribed(Khe Hong Cheng v. CA,G.R. No.
attachment under the law) 144169, Mar. 28, 2000).

CIVIL LAW
NOTE: The debtor is liable with all his property, present and future, for the of 2 condominium units to Seneca upon its completion. Seneca
fulfillment of his obligations, subject to the exemptions provided by law (De filed a complaint for rescission of the offsetting against Vermen
Leon, 2003). alleging that the latter had stopped issuing purchase orders of
Substitute performance construction materials without valid reason, thus resulting in the
stoppage of deliveries of construction materials on its part, in
It is a remedy of the creditor in case of non-performance by the violation of the Offsetting Agreement. Can the agreement be
debtor where another party performs the obligation or the same is rescinded?
performed at the expense of the debtor.
A: Yes, because the provisions of the offsetting agreement are
Applicability of substitute performance reciprocal in nature. Article 1191 of the Civil Code provides the
remedy of rescission (more appropriately, the term is "resolution")
1. Positive personal obligation: in case of reciprocal obligations, where one of the obligors fails to
a. If not purely personal Substitute performance; the comply with that is incumbent upon him.
obligation shall be executed at debtors cost if he fails to
do it (Art. 1167). The question of whether a breach of contract is substantial
b. Purely personal No substitute performance may be depends upon the attendant circumstances. Seneca did not fail to
demanded because of the personal qualifications taken fulfill its obligation in the offsetting agreement. The discontinuance
into consideration. The only remedy is damages. of delivery of construction materials to Vermen stemmed from the
2. Real obligation: failure of Vermen to send purchase orders to Seneca. Vermen
a. Generic thing Substitute performance; delivery may would never have been able to fulfill its obligation in allowing
be made by a person other than the debtor since the Seneca to exercise the option to transfer from Phase I to Phase II,
object is merely designated by its class or genus. The as the construction of Phase II has ceased and the subject
creditor may ask that the obligation be complied with at condominium units will never be available. The impossibility of
the expense of the debtor (Art. 1165, NCC). fulfillment of the obligation on the part of Vermen necessitates
b. Specific thing Specific performance may be resolution of the contract, for indeed, the non-fulfillment of the
demanded, that is, the creditor may compel the debtor obligation aforementioned constitutes substantial breach of the
to make the delivery. agreement (Vermen Realty Development Corp. v. CA and Seneca
Hardware Co., Inc., G.R. No. 101762, July 6, 1993).
RESCISSION(RESOLUTION)
Q: Ong and spouses Robles executed an "agreement of purchase
Rescission (Article 1191, NCC) and sale" of 2 parcels of land. Pursuant to the contract they
executed, Ong partially paid the spouses the by depositing it with
It refers to the cancellation of the contract or reciprocal obligation the bank. Subsequently, Ong deposited sums of money with the
in case of breach on the part of one, which breach is violative of BPI in accordance with their stipulation that Ong pay the loan of
the reciprocity between the parties. This is properly called the spouse with BPI. To answer for Ongs balance, he issued 4
resolution. post-dated checks which were dishonored. Ong failed to replace
NOTE: The rescission under Art. 1380 is rescission based on lesion or fraud
the checks and to pay the loan in full. Can the contract entered
upon creditors. into by Ong and the spouses be rescinded?
Applicability A: No. The agreement of the parties in this case may be set aside,
but not because of a breach on the part of Ong for failure to
Rescission or resolution is applicable in reciprocal obligations, since complete payment of the purchase price. Rather, his failure to do
it is implied therein. so brought about a situation which prevented the obligation of the
spouses to convey title from acquiring an obligatory force.
Characteristics of the right to rescind
The agreement of purchase and sale shows that it is in the nature
1. Can be demanded only if plaintiff is ready, willing and able to of a contract to sell. Ongs failure to complete payment of the
comply with his own obligation and defendant is not; purchase price is a non-fulfillment of the condition of full payment
2. Not absolute; which rendered the contract to sell ineffective and without force
3. Needs judicial approval in the absence of a stipulation and effect. The breach contemplated in Article 1191 is the obligors
allowing for extra-judicial rescission, in cases of non- failure to comply with an obligation. In this case, Ongs failure to
reciprocal obligations; pay is not even a breach but merely an event which prevents the
4. Subject to judicial review if availed of extra-judicially; vendors obligation to convey title from acquiring binding force.
5. May be waived expressly or impliedly; and
6. Implied to exist in reciprocal obligations therefore need not NOTE: In a contract to sell, the payment of the purchase price is a positive
suspensive condition, the failure of which is not a breach, casual or serious,
be expressly stipulated upon. but a situation that prevents the obligation of the vendor to convey title
from acquiring an obligatory force (Ong v. CA, G.R. No. 97347, July 6, 1999).
Fulfillment or rescission of the obligation
DAMAGES
GR: The injured party can only choose either fulfillment or
rescission of the obligation, and not both. Liability for damages
XPN: If fulfillment has become impossible, Article 1191 allows the Those liable under Art. 1170 shall pay damages only if aside from
injured party to seek rescission even after he has chosen the breach of contract, prejudice or damage was caused (Berg v.
fulfillment. (Ayson-Simon v. Adamos,G.R. No. L-39378, Aug. 28 Teus, G.R. No. L-6450, Oct 30, 1954).
1984)
NOTE: If action is brought for specific performance, damages sought must be
Q: Vermen and Seneca entered into an "offsetting agreement", asked in the same action; otherwise the damages are deemed waived
where Seneca is obliged to deliver construction materials to (Daywalt v. Augusitinian Corp, 39 Phil 567).
Vermen, who is obliged to pay Seneca and to deliver possession

OBLIGATIONS
Kinds of damages (MENTAL) SUBSIDIARY REMEDIES: ACCION DIRECTA
1. Moral Accion directa

2. Exemplary
3. Nominal The right of a person to go directly against another who is not a
4. Temperate privy to the contract. (Arts. 1652, 1608, 1729, 1893, NCC)
5. Actual
6. Liquidated NOTE:
1) Art. 1652 subsidiary liability of sublessee for the rent.
2) Art. 1608 right of sellers a retro to redeem property from persons
SUBSIDIARY REMEDIES: ACCION SUBROGATORIA
other than the buyer a retro.
3) Art. 1729 subsidiary liability of owners to laborers and material men.
Accion subrogatoria 4) Art. 1893 the principal may sue the substitute of the agent with
respect to the obligations which the substitute has contracted under
An action whereby the creditor, whose claim has not been fully the substitution.
satisfied, may go after the debtors (third persons) of the
defendant-debtor. KINDS OF CIVIL OBLIGATION: PURE AND CONDITIONAL
OBLIGATION
Accion subrogatoria is different and distinct from active subjective
subrogation governed by Articles 1300 to 1304. In the latter, there Pure obligation
is change of creditors whereas in the former there is no change of
creditors; the creditor merely acts in the name and for the account An obligation whose performance does not depend upon a future
of the debtor after exhausting the assets of the latter but not or uncertain event, or upon a past event or upon a past event
enough to satisfy the claims of the creditor. unknown to the parties, demandable at once (Art. 1179, NCC).
Requisites (IPNI) The most distinctive characteristic of a pure obligation is its

immediate demand-ability. This quality, however, must not be
1. The debtors assets must be Insufficient to satisfy claims understood in such a way as to lead to absurd interpretations
against him; which would literally require the obligor or debtor to comply
2. The creditor must have Pursued all properties of the debtor immediately with his obligation. A distinction must be made
subject to execution; between:
3. The right of action must Not be purely personal; and 1. The immediate demandability of the obligation; and
4. The debtor whose right of action is exercised must be 2. Its performance or fulfillment by the obligor or debtor.
Indebted to the creditor. Although the obligee or creditor can demand the
performance of the obligation immediately, the quality of
Effects of subrogatory action immediate demandability is not infringed or violated when a
reasonable period is granted for performance (Jurado, 2009,
1. The creditor may exercise the subrogatory action in behalf of citing Manresa).
the debtor not only up to the amount of his credit but in its
totality. Conditional obligation
NOTE: The excess (if any) must be returned to the debtor. An obligation subject to a condition and the effectivity of which is
subordinated to the fulfillment or non-fulfillment of a future and
2. The bringing of action does not entitle the creditor to uncertain event, or upon a past event unknown to the parties
preference. (Pineda,2000).
3. The defendant (the debtor of the debtor) may avail himself of
all defenses available against the creditor. Condition
SUBSIDIARY REMEDIES: ACCION PAULIANA An uncertain event which wields an influence on a legal
relationship (Manresa).
Accion pauliana
A condition may be defined as a future and uncertain event upon
An action where the creditor files an action in court for the which an obligation (Escriche Dictiornary). From this definition, it is
rescission of acts or contracts entered into by the debtor designed evident that it has two requisites: first, futurity; and second,
to defraud the former. uncertainty.
NOTE: When the creditor could not collect in any manner, accion pauliana Q: Can an uncertain but past event be considered a condition
may be resorted by him to rescind a fraudulent alienation of property
(Regalado, v. Luchsinger and Co., 5 Phil 625). A: The answer must be qualified. It must be noted that the event
itself can never constitute a condition because in order to be
Requisites
classified as a condition, the requisites of futurity and uncertainty
are required. Neither can it constitute a term or period because in
1. Defendant must be indebted to plaintiff;
order to be classified as a term or period, the requisites of futurity
2. The fraudulent act performed by the debtor subsequent to
and certainty are required. But the proof or ascertainment of the
the contract gives advantage to another;
fact or event, as distinguished from the fact or event itself may
3. The creditor is prejudiced by such act;
either constitute a a condition or a term depending upon the
4. The creditor must have pursued all properties of the debtor
circumstances of each case (Jurado, 2009).
subject to execution; and
5. The creditor has no other legal remedy.

CIVIL LAW
Constructive fulfillment of a condition 2. Personal obligations- the court determines the retroactive
effect of the condition fulfilled (Art. 1187, NCC)
The condition shall be deemed fulfilled when the obligor
voluntarily prevents its fulfillment (Art. 1186, NCC). Rights of the parties before the fulfillment of the condition
Q: Ramon, the judicial administrator of the estate of Juan, found 1. Creditor May bring the appropriate actions for the
out that Rodriguez had enlarged the area of the land which he preservation of his right (Art. 1188, NCC), such as:
purchased from Juan before his death. Thus, Ramon demanded a. Action for prohibition/restraining the alienation of the
Rodriguez to vacate the portion allegedly encroached by him. thing pending the happening of the suspensive
Rodriguez refused and contested there was indeed a conditional condition
sale with the balance of the purchase price payable within five b. Petition for the annotation of the creditors right with
years from the execution of the deed of sale. Ramon then filed an the proper registry
action for recovery of possession of the disputed lot. Is the c. Action to demand security if the debtor has become
contract of sale a conditional one? insolvent
d. Action to set aside alienations made by the debtor in
A: No. The stipulation that the "payment of the full consideration fraud of creditors
based on a survey shall be due and payable in 5 years from the e. Action against adverse possessors to interrupt the
execution of a formal deed of sale" is not a condition which affects running of prescriptive period.
the efficacy of the contract of sale. It merely provides the manner 2. Debtor May recover what, during the same time, he has
by which the full consideration is to be computed and the time paid by mistake in case of a suspensive condition (Art. 1188,
within which the same is to be paid. But it does not affect in any NCC).
manner the effectivity of the contract (Heirs of San Andres v.
Rodriguez, G.R. No. 135634, May 31, 2000). Effect of loss, deterioration and improvement in an obligation to
deliver a determinate thing subject to a suspensive condition
Period v. Condition
BASIS WITH DEBTORS WITHOUT
BASIS PERIOD CONDITION FAULT DEBTORS FAULT
May refer to past Debtor pays Obligation
As to time Refers to the future event unknown to Loss
damages extinguished
the parties Creditor may
It will happen at an choose between
exact date or at an May or may not rescission of
As to fulfillment
indefinite time, but happen obligation or Impairment borne
is definite to arrive Deterioration
fulfillment (with by creditor
May give rise to an indemnity for
No effect upon the obligation damages in either
The effect of its
existence of the (suspensive) or the case)
happening to the
obligation but only cessation of one
obligation 1. By the things nature or through time
in its demandability already existing
(resolutory) inure to the benefit of the creditor
Improvement 2. At the debtors expense debtor shall
NOTE: Period refers to a future and certain event while condition refers to a have no right other than that granted
future and uncertain event. to a usufructuary
Suspensive condition
NOTE: The abovementioned do not apply to indeterminate or generic things
A condition the fulfillment of which will give rise to the acquisition on the basis of the maxim Genus nun quam peruit (genus never perishes).
of a right. While the condition has not arrived yet, in the
meantime, the rights and obligations of the parties are suspended. Requisites for the application of Art.1189
NOTE: In suspensive condition or condition precedent, the efficacy or the 1. Must be a real obligation;
obligatory force is subordinated to the happening of a future and uncertain 2. Object of the obligation is a specific thing;
event; if the suspensive condition does not take place the parties would 3. Obligation is subject to a suspensive condition;
stand as if the conditional obligation never existed (Gaite v. Fonacier, 2 SCRA 4. The condition is fulfilled; and
830; Cheng v. Genato, 300 SCRA 722; Pineda, 2000).
5. There is loss, deterioration or improvement of the thing
during the pendency of the happening of the condition.
Effects of fulfillment of the suspensive condition
NOTE: The same conditions apply to an obligor in obligations subject to a
1. Real obligations resolutory condition. In such cases, the third requisite must read, subject to
a resolutory condition.
GR: Retroacts to the day of the constitution of the obligation.
Positive suspensive condition
XPNs: There is no retroactive effect with respect to the fruits
and interest: A condition which requires a positive act on the part of the obligor
a. In reciprocal obligations, the fruits and interests shall be that gives rise to the acquisition of rights. In case of a contract to
deemed to have been mutually compensated; sell, the obligation to deliver the subject properties becomes
b. In unilateral obligations, the debtor appropriates the demandable only upon the happening of the positive suspensive
fruits and interest received before the fulfillment of the condition (payment of full purchase price). Without full payment,
condition unless contrary to the intention of the parties there can be no breach of contract to speak of because the seller
(Art. 1187, NCC) has no obligation yet to turn over the title (Reyes v. Tuparan, G.R.
No. 188064, June 1, 2011).

OBLIGATIONS
Resolutory condition the buyers non-payment of the price is a negative resolutory
condition. In such case, the seller has lost and cannot recover the
A condition where the rights already acquired are lost upon ownership of the property unless he takes action to set aside the
fulfillment of the condition. It is also known as condition contract of sale (Heirs of Atienza v. Espidol, G.R. No. 180665,
subsequent. August 11, 2010).
Effects of fulfillment of resolutory condition Potestative Condition
1. Real obligations: A condition which depends upon the will of one of the contracting
a. The parties shall return to each other what they have parties (Art. 1182, NCC).
received (mutual restitution).
b. Obligation is extinguished. Effects of potestative conditions upon the obligation
c. In case of loss, deterioration or improvement of the
thing, Art. 1189, with respect to the debtor, shall be If the condition is potestative in the sense that its fulfillment
applied to the party who is bound to return (Art. 1190, depends exclusively upon the will of the debtor, and the same is
NCC). suspensive, both the condition and obligation are VOID. However,
2. Personal obligations the courts shall determine, in each if the condition is a pre-existing one or the condition is resolutory,
case, the retroactive effect of the condition that has been only the condition is void, leaving the obligation itself valid because
complied with(Art. 1187, NCC; Art. 1190, NCC). what is left to the sole will of the debtor is not the existence or the
fulfillment of the obligation but merely its extinguishment.
Suspensive condition v. Resolutory condition
If the condition us potestative in the sense that its fulfillment
BASIS SUSPENSIVE RESOLUTORY depends exclusively upon the will of the creditor, the obligation
CONDITION CONDITION shall be valid. This is so because the provision of the first sentence
Obligation arises or Obligation is of Art. 1182 extends only to conditions which are potestative to
Effect of fulfilment the obligor or debtor. Besides, the creditor is naturally interested
becomes effective extinguished
If not fulfilled, no If not fulfilled, in the fulfillment of the condition since it is only by such fulfillment
Effect of non- that the obligation arises or becomes effective (Jurado, 2009 citing
juridical relation is juridical relation is
fulfillment Art. 1181, NCC and Manresa).
created consolidated
Rights are not yet
acquired, but there Rights are already Casual Condition
When rights are is hope or vested, but subject
acquired expectancy that to the threat or It is the performance or the fulfillment of the condition which
they will soon be danger of extinction depends upon chance and/or the will of a third person.
acquired
Mixed Condition
Q: The late Don Lopez, Sr., who was then a member of the Board
of Trustees of CPU, executed a deed of donation in favor of the It is the performance or fulfillment of the condition which depends
latter involving a parcel of land subject to the condition that it partly upon the will of a party to the obligation and partly upon
shall be utilized for the establishment and use of a medical chance and or the will of a third person.
college. However, the heirs of Don Lopez, Sr., filed an action for
annulment of the donation, reconveyance and damages against NOTE: Casual and mixed conditions are valid, unlike purely potestative
conditions.
CPU alleging that CPU did not comply with the conditions of the
donation. Are the conditions imposed resolutory or suspensive?
Q: Suppose that the debtor executed a promissory note
promising to pay his obligation to the creditor ass soon as he has
A: Under Art. 1181 of the Civil Code, on conditional obligations, the
received funds derived from the sale of his property in a certain
acquisition of rights, as well as the extinguishment or loss of those
place, is the condition potestative or mixed?
already acquired, shall depend upon the happening of the event
which constitutes the condition. Thus, when a person donates land
A: According to the SC in the case of Hermosa v. Longara, 93 Phil.
to another on the condition that the latter would build upon the
971, the condition is mixed because its fulfillment depends not
land a school, the condition imposed was not a condition
only upon the will of the debtor but also upon the concurrence of
precedent or a suspensive condition but resolutory. It is not correct
other factors, such as the acceptability of the price and other
to say that the school house (or the establishment and use of a
conditions of the sale, ass well ass the presence of a buyer, ready,
medical college in this case) had to be constructed before the
able and willing to purchase the property.
donation became effective, that is, before the donee could become
the owner of the land, otherwise, it would be invading the property
Impossible Conditions
rights of the donor. The donation had to be valid before the
fulfillment of the condition. If there was no fulfillment or
GR: Impossible conditions annul the obligation which depends
compliance with the condition, the donation may now be revoked
upon the parties but not of a third person.
and all rights which the donee may have acquired under it shall be
deemed lost and extinguished(Central Philippine University v. CA,
XPNs:
G.R. No. 112127, July 17, 1995).
1. Pre-existing obligation
2. Obligation is Divisible
Negative resolutory condition
3. In simple or remuneratory Donations
4. In case of conditions Not to do an impossible thing
An act, which if not done, would give rise to a cause of action
5. In Testamentary dispositions
against the obligor. It contemplates a situation where rights are
already acquired but subject to an obligation, the non-fulfillment of NOTE: In the foregoing, the obligations remain valid, only the condition is
which does not affect the rights already acquired but merely gives void and deemed to have not been imposed. It is applicable only to
a cause of action in favor of the other party. In a contract of sale, obligations not to do and gratuitous obligations.

CIVIL LAW
Other types of conditions Benefit of the period
1. Positive involves the doing of an act GR: Whenever in an obligation a period is designated, it is
2. Negative involves the omission of an act presumed to have been established for the benefit of both the
3. Divisible is susceptible of partial performance creditor and the debtor
4. Indivisible is not susceptible of partial performance
5. Conjunctive there are several conditions in an obligation all XPN: When it appears from the tenor of the period or other
of which must be performed circumstances that it was established for the benefit of one of the
6. Alternative there are several conditions in an obligation but parties (Art.1196, NCC).
only one must be performed
7. Possible is capable of fulfillment according to the nature, Effect of the term/period
law, public policy or good customs
8. Impossible is not capable of fulfillment according to nature, 1. When it is for the benefit of the creditor Creditor may
law, public policy or good customs (Art. 1183, NCC) demand the performance of the obligation at any time but
the debtor cannot compel him to accept payment before the
KINDS OF CIVIL OBLIGATION: OBLIGATIONS WITH A PERIOD expiration of the period (e.g. on demand)
2. When it is for the benefit of the debtor Debtor may oppose
Obligation with a period or a term any premature demand on the part of the creditor for
performance of the obligation, or if he so desires, he may
Obligations for whose fulfillment a day certain has been fixed, shall renounce the benefit of the period by performing his
be demandable only when that day comes(Art. 1193, NCC). obligation in advance (Manresa).
Term or period Effect of a fortuitous event to an obligation with a period
A certain length of time which determines the effectivity or the It only relieves the contracting parties from the fulfillment of their
extinguishment of the obligations. respective obligation during the term or period.
Requisites of a valid period or term Instances where the court may fix the period
1. Future 1. If the obligation does not fix a period, but from its nature and
2. Certain circumstances it can be inferred that a period was intended
3. Possible, legally and physically (Paras, 2008) by the parties.
2. If the duration of the period depends upon the will of the
Day certain debtor.
3. In case of reciprocal obligations, when there is a just cause for
It is understood to be that which must necessarily come, although fixing the period.
it may not be known when. 4. If the debtor binds himself when his means permit him to do
so.
Kinds of terms or periods
NOTE: Once fixed by the courts, the period cannot be changed by the
1. Ex die this is a term or period with suspensive effect. The parties.
obligation begins only from a day certain, in other words
upon the arrival of the period. Instances where the debtor loses his right to make use of the
2. In diem a period or term with a resolutory effect. Up to a period
certain extent, the obligation remains valid, but upon the
arrival of said period, the obligation terminates. 1. When after the obligation has been contracted he becomes
3. Legal a period granted under the provisions of the law. insolvent, unless he gives a guaranty or security for the debt;
4. Conventional or voluntary period agreed upon or stipulated 2. When he does not furnish to the creditor the Guaranties or
by the parties. securities which he has promised;
5. Judicial the period or term fixed by the courts for the 3. When by his own acts he has Impaired said guaranties or
performance of an obligation or for its termination. securities after their establishment, and when through a
6. Definite the exact date or time is known and given. fortuitous event they disappear, unless he immediately gives
7. Indefinite something that will surely happen but the date of new ones or equally satisfactory;
happening is unknown. 4. When the debtor Violates any undertaking, in consideration
of which the creditor agreed to the period;
I will pay when my means permit me to do so. 5. When the debtor attempts to Abscond (Art. 1198, NCC).
When the debtor binds himself to pay when his means permit him If the time of payment is not fixed, the court must fix the same
to do so, the obligation is deemed with a period (Art. 1180, NCC). before any action for collection may be entertained, unless, the
This is valid because it is not the payment itself that is dependent prior action of fixing the term or period will be a formality and will
upon the will of the debtor, but the moment of payment. serve no purpose but delay.
As the time of payment is not fixed, the court must fix the same
before any action for collection may be entertained, unless, the
prior action of fixing the term or period will only be a formality and
will serve no purpose but delay (Tiglao v. Manila Railroad Co., 98
Phil. 181).

OBLIGATIONS
KINDS OF CIVIL OBLIGATION: ALTERNATIVE OBLIGATION / Facultative obligation
FACULTATIVE OBLIGATION
It is one where the debtor, who has a reserved right to choose
Alternative obligation another prestation or thing, is bound to perform one of the several
prestations due or to deliver a thing as substitute for the principal.
It is one where the debtor is alternatively bound by different
prestations but the complete performance of one of them is
sufficient to extinguish the obligation.
Facultative obligations v. Alternative obligations
BASIS FACULTATIVE OBLIGATIONS ALTERNATIVE OBLIGATIONS

Number of prestation Only one object is due Several objects are due
May be complied with by substitution of one May be complied with by fulfilling any of
Manner of compliance
that is due those alternately due
GR: Choice pertain to debtor
Right to choose Choice pertains only to debtor
XPN: Expressly granted to creditor or third
person
Fortuitous loss of all prestation will extinguish
Effect of fortuitous loss Fortuitous loss extinguishes the obligation
the obligation
Culpable loss obliges the debtor to deliver
Culpable loss of any object due will give rise to
Effect of culpable loss substitute prestation without liability to
liability to debtor
debtor
The creditor shall have the right of indemnity
When substitution has been made and for damages when, through the fault of the
communicated to the creditor, the obligor is debtor, all the things which are alternatively
Liability of the debtor
liable for the loss of the thing on account of the object of the obligation have been lost or
delay, negligence or fraud the compliance of the obligation has become
impossible.
If one prestation is void, the others that are
If principal obligation is void, the creditor
Void prestation free from any vices of consent preserve the
cannot compel delivery of the substitute
validity of the obligation
If there is impossibility to deliver the principal If some prestations are impossible to perform
thing or prestation, the obligation is except one - this one must be delivered.
Impossibility of prestation
extinguished, even if the substitute obligation If all prestations are impossible to perform,
is valid the obligation is extinguished
Loss of the substitute before the substitution
Where the choice is given to the creditor, the
is made through the fault of the debtor
Loss of substitute loss of the alternative through the fault of the
doesnt make him liable
debtor renders him liable for damages
Right to choose prestation in an alternative obligation When alternative obligation becomes a simple obligation
1. When the debtor has communicated the choice to the
GR: The right of choice belongs to the debtor creditor.
2. When debtor loses the right of choice among the prestations
XPN: unless it has been expressly given to the creditor (Art. 1200, whereby the debtor is alternatively bound, only one is
NCC). practicable (Art. 1202, NCC).
3. When the choice has been expressly given to the creditor and
Limitations on debtors right to choose his choice has been communicated to the debtor.
1. The debtor must absolutely perform the prestation chosen. NOTE: The choice made by the debtor does not require the concurrence of
He cannot compel the creditor to receive part of one and part the creditor. Otherwise, it would destroy the very nature of the right to
select given to the debtor.
of the other undertaking.
2. The debtor shall have no right to choose those prestation
which are impossible, unlawful or which could not have been Impossibility of choice due to creditors acts
the object of the obligation (Art. 1200, NCC).
3. The debtor shall lose the right to choice when among the When choice is rendered impossible through the creditors fault,
prestation whereby he is alternatively bound, only one is the debtor may bring an action to rescind the contract with
practicable (Art. 1202, NCC). damages (Art. 1203, NCC).
Effectivity of the choice in alternative obligations
The choice made takes effect only upon communication of the

choice to the other party and from such time the obligation ceases
to be alternative (Art. 1201, NCC; Art. 1205, NCC).
NOTE: The notice of selection or choice may be in any form provided it is

sufficient to make the other party know that the election has been made
(Tolentino, 2002).

CIVIL LAW
Effects of loss of objects in alternative obligations creditor to the are several, is entitled right to demand from
fulfillment of only to a any of the debtors,
DUE TO FORTUITOUS the obligation proportionate part of the payment or
DUE TO DEBTORS FAULT
EVENT the credit fulfillment of the
Choice Belongs to Debtor entire obligation
Creditor shall have a right (Tolentino, 1999)
to be indemnified for
damages based on the Character of an obligation
Debtor released from
All are lost value of the last thing
the obligation
which disappeared/ last GR: When two or more creditors or two or more debtors concur in
service which became one and the same obligation, the presumption is that the
impossible obligation is joint.
Debtor shall deliver that
Debtor shall deliver XPNs: The obligation shall only be solidary when: (LEN-CJ)
Some but which he shall choose
that which he shall 1. Law requires solidarity;
not all are from among the
choose from among 2. Expressly stipulated that there is solidarity;
lost remainder without
the remainder 3. Nature of the obligation requires solidarity;
damages
Only one 4. Charge or condition is imposed upon heirs or legatees and
Deliver that which remains the will expressly makes the charge or condition in solidum
remains
Choice Belongs to Creditor (Manresa); or
Creditor may claim the 5. Solidary responsibility is imputed by a final Judgment upon
Debtor released from price/value of any of several defendants (Gutierrez v. Gutierrez, 56 Phil 177).
All are lost
the obligation them with indemnity for
damages Q: Chua bought and imported to the Philippines dicalcium
Creditor may claim any of phosphate. When the cargo arrived at the Port of Manila, it was
Creditor may choose those subsisting OR he discovered that some were in apparent bad condition. Thus, Chua
Some but from among the may choose any of those filed with Smith Bell, and Co., Inc. (claiming agent of First
not all are remainder or that were lost, but it is the Insurance Co.) a formal statement of claim for the loss. No
lost which remains if only price/value of with right settlement of the claim having been made, Chua then filed an
one subsists to damages that can be action. Is Smith, Bell, and Co., solidarily liable upon a marine
claimed insurance policy with its disclosed foreign principal?
Deliver that which remains. In case of fault of
Only one A: No. Article 1207 of the Civil Code clearly provides that "there is a
debtor, creditor has a right to indemnity for
remains solidary liability only when the obligation expressly so states, or
damages
when the law or the nature of the obligation requires solidarity."
The well-entrenched rule is that solidary obligation cannot lightly
KINDS OF CIVIL OBLIGATIONS: JOINT AND SOLIDARY
OBLIGATIONS be inferred. It must be positively and clearly expressed (Smith, Bell
& Co., Inc. v. CA, G.R. No. 110668, Feb. 6, 1997).
Joint obligations
Q: The labor arbiter rendered a decision, the fallo of which states
the following respondents as liable, namely: FCMC, Sicat,
One where the credit or debt shall be presumed to be divided into
as many equal shares as there are creditors or debtors, the credit Gonzales, Chiu Chin Gin, Lo Kuan Chin, and INIMACO. INIMACO
or debts being considered distinct from one another (Art. 1208, questions the execution, alleging that the alias writ of execution
altered and changed the tenor of the decision by changing their
NCC). Each debtor is liable only for a proportionate part of the debt
and each creditor to his proportionate share to the credit. liability from joint to solidary, by the insertion of the words
"AND/OR". Is the liability of INIMACO pursuant to the decision of
Solidary obligations the labor arbiter solidary or not?
A:INIMACO's liability is not solidary but merely joint. Well-

It is where each of the debtors obliges to pay the entire obligation
while each one of the creditors has the right to demand from any entrenched is the rule that solidary obligation cannot lightly be
of the debtors, the payment or fulfillment of the entire obligation inferred. There is a solidary liability only when the obligation
expressly so states, when the law so provides or when the nature
(Art. 1207, NCC; Pineda, 2000).
of the obligation so requires. In the dispositive portion of the labor
arbiter, the word "solidary" does not appear. The said fallo
Joint obligation v. Solidary obligation
expressly states the following respondents therein as liable,
namely: Filipinas Carbon Mining Corporation, Sicat, Gonzales, Chiu
SOLIDARY
JOINT OBLIGATION Chin Gin, Lo Kuan Chin, and INIMACO. Nor can it be inferred
OBLIGATION
therefrom that the liability of the six respondents in the case below
is solidary, thus their liability should merely be joint (INIMACO v.
Not presumed. Must
NLRC, G.R. No. 101723, May 11, 2000).
be expressly
stipulated by the
Presumed by law parties, or when the
(Art. 1208, NCC) law or the nature of
Presumption by
the obligation
law
requires solidarity.
(Art. 1207, NCC)
Liability of each Proportionate part of Obliged to pay the

debtor the entire debt entire obligation
Right of the Each creditor, if there Each creditor has the

OBLIGATIONS
Consequences of a joint obligation Kinds of solidary obligation
1. Each debtor is liable only for a proportionate part of the 1. Passive solidarity on the part of the debtors
entire debt 2. Active solidarity on the part of the creditors
2. Each creditor, if there are several, is entitled only to a 3. Mixed solidarity on both sides
proportionate part of the credit
3. The demand made by one creditor upon one debtor, NOTE: Example of words that connote solidary obligation: a) joint and
produces effects of default only as between them several; b) in solidum; c) individually and collectively; d) each will pay the
4. Interruption of prescription caused by the demand made by whole value; e) I promise to pay and there are two or more signatures
one creditor upon one debtor, will NOT benefit the co-
creditors or the co-debtors Solidarity v. Indivisibility
5. Insolvency of a debtor will not increase the liability of his co-
debtor BASIS SOLIDARITY INDIVISIBILITY
6. Vices of each obligation emanating from a particular debtor Refers to the
Refers to the
or creditor will not affect the others As to the kind of vinculum existing
prestation or object
7. In indivisible or joint obligation, the defense of res judicata of unity it refers to between the
of the contract
one does not extend to the others. subjects or parties
As to the
Requires the Does not require
JOINT INDIVISIBLE OBLIGATIONS requirement of
plurality of parties plurality of subjects
plurality of parties
or subjects or parties
Joint indivisible obligations or subjects
In case of breach, it
The obligation is joint because the parties are merely In case of breach, is converted to one
proportionately liable. It is indivisible because the object or subject the liability of the of indemnity for
matter is not physically divisible into different parts. In other solidary debtors damages and the
words, it is joint as to liabilities of the debtors or rights of the As to the effect of although converted indivisibility of the
creditors but indivisible as to compliance (De Leon, 2010). breach into one of the obligation is
indemnity for terminated and so
A joint indivisible obligation gives rise to indemnity for damages damages remains each debtor is liable
from the time anyone of the debtors does not comply with his solidary only for his part of
undertaking. The debtors who may have been ready to fufill their the indemnity
promises shall not contribute to the indemnity beyond the Death of solidary
corresponding portion of the price of the thing or of the value of debtor terminates
Heirs of the debtor
the service in which the obligation consists (Art. 1224, NCC). the solidarity, the
As to the effect of remain bound to
tie or vinculum
death of a party perform the same
Effects of different permutations of joint indivisible obligations being
prestation
intransmissible to
1. If there are two or more debtors, compliance with the the heirs
obligation requires the concurrence of all the debtors,
although each for his own share. The obligation can be Rules in solidary obligations
enforced only by preceding against all of the debtors.
2. If there are two or more creditors, the concurrence or 1. Anyone of the solidary creditors may collect or demand
collective act of all the creditors, although each of his own payment of the whole obligation; there is mutual agency
share, is also necessary for the enforcement of the obligation. among solidary debtors (Arts. 1214, 1215, NCC).
3. Each credit is distinct from one another; therefore a joint 2. Any of the solidary debtor may be required to pay the whole
debtor cannot be required to pay for the share of another obligation; there is mutual guaranty among solidary debtors
with debtor, although he may pay if he wants to. (Arts. 1216, 1217, 1222, NCC).
4. In case of insolvency of one of the debtors, the others shall 3. Each one of solidary creditors may do whatever maybe useful
not be liable for his shares. To hold otherwise would destroy to the others, but not anything prejudicial to them (Art. 1212,
the joint character of the obligation (Art. 1209, NCC). NCC); however, any novation, compensation, confusion or
remission of debt made by any solidary creditors or with any
Effect of breach of a joint indivisible obligation by one debtor of the solidary debtors shall extinguish the obligation without
prejudice to his liability for the shares of other solidary
If one of the joint debtors fails to comply with his undertaking, and creditors (Art. 1215, NCC; Art.1219,NCC).
the obligation can no longer be fulfilled or performed, it will then
be converted into one of indemnity for damages. Innocent joint Q: Joey, Jovy and Jojo are solidary debtors under a loan obligation
debtor shall not contribute to the indemnity beyond his of P300,000.00 which has fallen due. The creditor has, however,
corresponding share of the obligation. condoned Jojo's entire share in the debt. Since Jovy has become
insolvent, the creditor makes a demand on Joey to pay the debt.
SOLIDARY OBLIGATIONS a. How much, if any, may Joey be compelled to pay?
b. To what extent, if at all, can Jojo be compelled by Joey to
Solidary obligation contribute to such payment? (1998 Bar Question)
Each one of the debtors is obliged to pay the entire obligation, and A:
each one of the creditors has the right to demand from any of the a) Joey can be compelled to pay only the remaining balance of
debtors the payment or fulfillment of the entire obligation. P200, 000, in view of the remission of Jojos share by the
creditor (Art. 1219, NCC).
b) Jojo can be compelled by Joey to contribute P50,000. When
one of the solidary debtors cannot, because of his insolvency,
reimburse his share to the debtor paying the obligation, such

CIVIL LAW
share shall be borne by all his co-debtors, in proportion to the divided into parts and as divided, its value is impaired
debt of each (par. 3, Art. 1217, NCC). disproportionately, that thing is indivisible (Pineda, 2000).
Since the insolvent debtor's share which Joey paid was P100, Obligations that are deemed indivisible
000, and there are only two remaining debtors - namely Joey
and Jojo - these two shall share equally the burden of 1. Obligations to give definite things
reimbursement. Jojo may thus be compelled by Joey to 2. Those which are not susceptible of partial performance
contribute P50, 000. 3. Even the object or service may be physically divisible, an
obligation is indivisible if so provided (i) by law or (i) intended
To whom payment should be made in a solidary obligation by the parties (Art. 1225, NCC).
GR: To any of the solidary creditors. NOTE: A pledge or mortgage is one and indivisible by provision of law, and
the rules apply even if the obligation is joint and not solidary (Art. 2089,
NCC).
XPN: If demand, judicial or extra-judicial, has been made by one of
the creditors, payment should be made to him(Art. 1214).
Obligations that are deemed divisible
In cases of solidary creditors, one may act for all
When the object of the obligation involves:
Each one of the solidary creditors may execute acts which may be a. Certain number of days of work;
useful or beneficial to the others, but he may not do anything b. Accomplishment of work by metrical unit;
which may be prejudicial to them (Art. 1212, NCC). c. Analogous things which are by their nature susceptible of
partial performance (Art. 1225, NCC)
NOTE: Prejudicial acts may still have valid legal effects, but the performing
creditor shall be liable to his co-creditors (Pineda, 2000). Effect of illegality of a part of a contract
Effects of assignment of rights in a solidary obligation 1. Divisible contract illegal part is void and unenforceable.
Legal part is valid and enforceable (Art. 1420).
GR: Solidary creditor cannot assign his right because it is 2. Indivisible contract entire contract is indivisible and
predicated upon mutual confidence, meaning personal unenforceable.
qualification of each creditor had been taken into consideration
when the obligation was constituted (Art. 1213, NCC). Partial performance in indivisible obligation
XPNs: It is tantamount to non-performance (Pineda, 2000).

1. Assignment to co-creditor; or
2. Assignment is with consent of co-creditor. KINDS OF CIVIL OBLIGATIONS: OBLIGATIONS WITH A PENAL
CLAUSE
KINDS OF CIVIL OBLIGATIONS: DIVISIBLE AND INDIVISIBLE
OBLIGATIONS Obligations with a penal clause
Divisible obligations An obligation with a penal clause is one with an accessory

undertaking by virtue of which the obligor assumes a greater
Those which have as their object a prestation which is susceptible liability in case of breach of he obligations (Jurado, 2009, citing
of partial performance with the essence of the obligation being Manresa).
changed.
Penal clause
Indivisible obligations
An accessory obligation or undertaking to assure greater
Those which have as their object a prestation which is not responsibility in case of breach.
susceptible of partial performance, because otherwise the essence
of the obligation will be changed. The obligation is clearly NOTE: Proof of actual damages suffered by the creditor is not necessary in
order that the penalty may be demanded (Art. 1228, NCC).
indivisible because the performance of the contract cannot be
done in parts, otherwise, the value of what is transferred is
Kinds of penalties
diminished (Nazareno v. CA, G.R. No. 138842, October 18, 2000).
1. As to origin
Divisible v. Indivisible obligations
a. Legal - It is legal when it is constituted by law;
b. Conventional - It is constituted by agreement of the
DIVISIBLE INDIVISIBLE parties.
Non-susceptibility to be
performed partially 2. As to purpose
Susceptibility of an obligation to
Partial performance is a. Compensatory - It is compensatory when it is
be performed partially
tantamount to non- established for the purpose of indemnifying the
performance damages suffered by the obligee or creditor in case of
breach of the obligation.
Test of divisibility b. Punitive - It is punitive when it is established for the
purpose of punishing the obligor or debtor in case of
Whether or not the prestation is susceptible of partial breach of the obligation.
performance, not in the sense of performance in separate or
divided parts, but in the sense of the possibility of realizing the 3. As to effect
purpose which the obligation seeks to obtain. If a thing could be a. Subsidiary - It is subsidiary when only the penalty may
be demanded in case of breach of the obligation;

OBLIGATIONS
b. Joint - It is joint when the injured party may demand the Mutual desistance as another mode of extinguishing obligations
enforcement of both the penalty and the principal
obligation. Mutual agreement of the parties to extinguish the obligation. It is a
concept derived from the principle that since mutual agreement
Q: Can the debtor just choose penalty over non-fulfillment? can create a contract, mutual disagreement by the parties can
likewise cause its extinguishment (Saura v. Development Bank of
A: GR: The debtor cannot exempt himself from the performance of the Phils., G.R. No. 24968, Apr. 27, 1972).
the obligation by paying the penalty (Art. 1227, NCC).
PAYMENT OR PERFORMANCE
XPN: When the right has been expressly reserved to the debtor
(Art. 1227, NCC). Payment
Creditor cannot demand both the fulfillment of the principal Payment is the fulfilment of the prestation due, a fulfilment that
obligation and the penalty extinguishes the obligation by the realization of the purposes for
which it is constituted (Tolentino, 2002).
GR: The creditor cannot demand the fulfillment of the obligation
and the satisfaction of the penalty at the same time (Art. 1227, Payment may consist not only in the delivery of money but also the
NCC). giving of a thing (other than money), the doing of an act, or not
doing of an act (Art. 1232, NCC).
XPNs:
1. When the right has been clearly granted to him; Characteristics of payment
2. If the creditor has decided to require the fulfillment of the
obligation, the performance thereof should become 1. Integrity the payment of the obligation must be completely
impossible without his fault, the penalty may be made
enforced(Art. 1227, NCC). 2. Identity the payment of the obligation must consist the
performance of the very thing due
Effect of incorporating a penal clause in an obligation 3. Indivisibility the payment of the obligation must be in its
entirety
GR: The penalty fixed by the parties is a compensation or
substitute for damages in case of breach. Integrity
XPNs: Damages shall still be paid even if there is a penal clause if: GR: Payment or Performance must be complete (Art. 1233, NCC)
1. There is a stipulation to the contrary
2. The debtor refuses to pay the agreed penalty XPNs:
3. The debtor is guilty of fraud in the fulfillment of the 1. Substantial performance performed in good faith (Art. 1234,
obligation (Art. 1126, NCC). NCC)
2. When the obligee accepts the performance, knowing its
NOTE: The nullity of the penal clause does not carry with it that of the incompleteness or irregularity and without expressing any
principal obligation but the nullity of the principal obligation carries with it protest or objection (Art. 1235, NCC)
that of the penal clause (Art. 1230, NCC).
3. Debt is partly liquidated and partly unliquidated, but the
liquidated part of the debt must be paid in full.
Instances where penalty may be reduced by the courts (PIU)
Substantial Performance Doctrine
1. Partial performance of the obligation
2. Irregular performance of the obligation
It provides the rule that if a good-faith attempt to perform does
3. Penalty is Unconscionable even if there has been no
not precisely meet the terms of an agreement or statutory
performance.
requirements, the performance will still be considered complete if
the essential purpose is accomplished(Blacks Law Dictionary, 9th
EXTINGUISHMENT OF OBLIGATIONS
edition, 2009).
Modes of extinguishment of an obligation
Requisites for Substantial Performance Doctrine
Principal Modes (PaLoCoN)
1. Attempt in good-faith to comply with obligation
1. Payment or performance
2. Slight deviation of the obligation or omission or defect of the
2. Loss of the thing due
performance is technical and unimportant (Tolentino, 2002).
3. Condonation or remission of debt
4. Confusion or merger
Identity of the thing
5. Compensation
6. Novation (Art. 1231, NCC)
GR: Thing paid must be the very thing due and cannot be another
thing even if of the same or more quality and value.
Other Modes (PARF)
7. Annulment
XPNs:
8. Rescission
1. Dation in payment
9. Fulfillment of a resolutory condition
2. Novation of the obligation
10. Prescription (Art. 1231, NCC)
3. Obligation is facultative
NOTE: The enumeration is not exclusive.
NOTE: In an obligation to do or not to do, an act or forbearance cannot be
substituted by another act or forbearance against the obligees will.

CIVIL LAW
Indivisibility debtor's consent. But the payment is in any case valid as to the creditor who
has accepted it (Art. 1238, NCC).
GR: Debtor cannot be compelled by the creditor to perform
obligation in parts and neither can the debtor compel the creditor Person to whom payment is made
to accept obligation in parts.
Persons entitled to receive the payment:
XPNs: When: 1. The person in whose favor the obligation has been
1. Partial performance has been agreed upon constituted
2. Part of the obligation is liquidated and part is unliquidated 2. his successor in interest, or
3. To require the debtor to perform in full is impractical 3. any person authorized to receive it (Art. 1240, NCC).
The acceptance by a creditor of a partial payment is not an Payment to an unauthorized person

abandonment of its demand for full payment. When creditors
receive partial payment, they are not ipso facto deemed to have GR: Payment to an unauthorized person is not a valid payment
abandoned their prior demand for full payment. (Art. 1241, NCC).
To imply that creditors accept partial payment as complete XPNs:

performance of their obligation, their acceptance must be made 1. Payment to an incapacitated person if:
under circumstances that indicate their intention to consider the a. He kept the thing delivered, or
performance complete and to renounce their claim arising from b. It has been beneficial to him (Art. 1241, NCC)
the defect. 2. Payment to a third person insofar as it redounded to the
benefit of the creditor
NOTE: While Article 1248 of the Civil Code states that creditors cannot be
compelled to accept partial payments, it does not prohibit them from Benefit to the creditor need not be proved: (RRE)
accepting such payments (Selegna Management and Development Corp. v. a. If after the payment, the third person acquires the
UCPB, G.R. No. 165662, May 30, 2006). creditors Rights;
b. If the creditor Ratifies the payment to the third
Requisites of a valid payment (P3AD) person;
c. If by the creditors conduct, the debtor has been led to
1. Person who pays believe that the third person had authority to receive
2. Person to whom payment is made the payment (Estoppel) (Art. 1241, NCC).
3. Propriety of the time, place, and manner of payment 3. Payment in good faith to the possessor of credit (Art. 1242,
4. Acceptance by the creditor NCC)
5. Delivery of the full amount or the full performance of the
prestation NOTE: Payment made to the creditor by the debtor after the latter has
been judicially ordered to retain the debt shall not be valid (Art. 1243,
Person who pays NCC).
The following persons may effect payment and compel the creditor Consent of the debtor is necessary when the third person does
to accept the payment: not intend to be reimbursed
1. Debtor himself
2. His heirs and assigns Payment made by a third person who does not intend to be
3. His agents and representatives reimbursed by the debtor is deemed to be a donation which
4. Third persons who have a material interest in the fulfilment requires the debtors consent. But the payment is in any case valid
of the obligation to the creditor who has accepted it (Art. 1238, NCC).
Payment made by third persons SPECIAL FORMS OF PAYMENT
GR: The creditor is not bound to accept payment or performance Dation in Payment
by a third person. Alienation by the debtor of a particular property in favor of his
creditor, with the latters consent, for the satisfaction of the
XPNs: formers money obligation to the latter, with the effect of
1. When made by a third person who has interest in the extinguishing the said money obligation (Pineda, 2000)
fulfillment of the obligation Application of Payment
2. Contrary stipulation (Art. 1236, NCC) Designation of the particular debt being paid by the debtor who
has two or more debts or obligations of the same kind in favor of
Rights of a third person who made the payment the same creditor to whom the payment is made (Pineda, 2000)
Payment by Cession
1. If the payment was made with knowledge and consent of the Debtor cedes his property to his creditors so the latter may sell the
debtor: same and the proceeds realized applied to the debts of the debtor
a. Can recover entire amount paid (absolute (Pineda, 2000)
reimbursement) Tender of Payment
b. Can be subrogated to all rights of the creditor. Voluntary act of the debtor whereby he offers to the creditor for
2. If the payment was made with without knowledge or against acceptance the immediate performance of the formers obligation
the will of the debtor can recover only insofar as payment to the latter (Pineda, 2000)
has been beneficial to the debtor (right of conditional Consignation
reimbursement) Act of depositing the object of the obligation with the court or
competent authority after the creditor has unjustifiably refused to
NOTE: Payment made by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires the
accept the same or is not in a position to accept it due to certain
reasons or circumstances (Pineda, 2000)

OBLIGATIONS
DATION IN PAYMENT Assignment of credit
Dation in payment (dacion en pago) An agreement by virtue of which the owner of a credit, known as
the assignor, by a legal cause, such as sale, dation in payment,
The delivery and transmission of ownership of a thing by the exchange or donation, and without the consent of the debtor,
debtor to the creditor as an accepted equivalent of the transfers his credit and accessory rights to another, known as the
performance of the obligation. The property given may consist not assignee, who acquires the power to enforce it to the same extent
only of a thing but also of a real right (Tolentino, 2002). as the assignor could enforce it against the debtor. It may be in the
form of sale, but at times it may constitute a dation in payment,
NOTE: The undertaking partakes of the nature of sale, that is, the creditor is such as when a debtor, in order to obtain a release from his debt,
really buying the thing or property of the debtor, payment for which is to be assigns to his creditor a credit he has against a third person. As a
charged against the debtors debt. As such, the essential elements of a
dation in payment, the assignment of credit operates as a mode of
contract of sale, namely, consent, object certain, and cause or consideration
must be present.
extinguishing the obligation; the delivery and transmission of
ownership of a thing (in this case, the credit due from a third
Elements of dation in payment person) by the debtor to the creditor is accepted as the equivalent
of the performance of the obligation.
1. Existence of a money obligation
2. Alienation to the creditor of a property by the debtor with FORM OF PAYMENT
the consent of the former
3. Satisfaction of the money obligation of the debtor 1. Payment in cash all monetary obligations shall be settled in
Philippine currency. However, the parties may agree that the
Q: Lopez obtained a loan in the amount of P20, 000.00 from the obligation be settled in another currency at the time of
Prudential Bank. He executed a surety bond in which he, as payment (Sec. 1, R.A. 8183).
principal, and PHILAMGEN as surety, bound themselves jointly 2. Payment in check or other negotiable instrument not
and severally for the payment of the sum. He also executed a considered payment, they are not considered legal tender
deed of assignment of 4,000 shares of the Baguio Military and may be refused by the creditor except when:
Institution in favor of PHILAMGEN. Is the stock assignment made a. the document has been encashed; or
by Lopez dation in payment or pledge? b. it has been impaired through the fault of the creditor.
A: The stock assignment constitutes a pledge and not a dacion en PAYMENT IN CASH
pago. Dation in payment is the delivery and transmission of
ownership of a thing by the debtor to the creditor as an accepted Legal Tender
equivalent of the performance of the obligation. Lopezs loan has
not yet matured when he "alienated" his 4,000 shares of stock to Legal Tender means such currency which in a given jurisdiction can
Philamgen. Lopez's obligation would arise only when he would be used for the payment of debts, public and private, and which
default in the payment of the principal obligation which is the loan cannot be refused by the creditor(Tolentino, 2002).
and Philamgen had to pay for it. Since it is contrary to the nature
and concept of dation in payment, the same could not have been The legal tender covers all notes and coins issued by the Bangko
constituted when the stock assignment was executed. In case of Sentral ng Pilipinas and guaranteed by the Republic of the
doubt as to whether a transaction is a pledge or a dation in Philippines. The amount of coins that may be accepted as legal
payment, the presumption is in favor of pledge, the latter being the tender are:
lesser transmission of rights and interests (Lopez v. CA, G.R. No. L- a. 1-Peso, 5-Pesos, 10-Pesos coins in amount not exceeding
33157, June 29, 1982). P1,000.00
b. 25 centavos or less in amount not exceeding P100.00 (BSP
Q: Cebu Asiancars Inc., with the conformity of the lessor, used the Circular No. 537, Series of 2006, July 18, 2005).
leased premises as a collateral to secure payment of a loan which
Asiancars may obtain from any bank, provided that the proceeds Q: Northwest Airlines, through its Japan Branch, entered into an
of the loan shall be used solely for the construction of a building International Passenger Sales Agency Agreement with CF Sharp,
which, upon the termination of the lease or the voluntary authorizing the latter to sell its air transport tickets. CF Sharp
surrender of the leased premises before the expiration of the failed to remit the proceeds of the ticket sales, thus, Northwest
contract, shall automatically become the property of the lessor. Airlines filed a collection suit before the Tokyo District Court
Meeting financial difficulties and incurring an outstanding which rendered judgment ordering CF Sharp to pay 83,158,195
balance on the loan, Asiancars conveyed ownership of the Yen and damages for the delay at the rate of 6% per annum.
building on the leased premises to MBTC, by way of "dacion en Unable to execute the decision in Japan, Northwest Airlines filed
pago."Is the dacion en pago by Asiancars in favor of MBTC valid? a case to enforce said foreign judgment with the RTC of Manila.
What is the rate of exchange that should be applied for the
A:Yes. MBTC was a purchaser in good faith. MBTC had no payment of the amount?
knowledge of the stipulation in the lease contract. Although the
same lease was registered and duly annotated, MBTC was charged A: The repeal of R.A. 529 by R.A. 8183 has the effect of removing
with constructive knowledge only of the fact of lease of the land the prohibition on the stipulation of currency other than Philippine
and not of the specific provision stipulating transfer of ownership currency, such that obligations or transactions may now be paid in
of the building to the Jaymes upon termination of the lease. While the currency agreed upon by the parties. Just like R.A. 529,
the alienation was in violation of the stipulation in the lease however, the new law does not provide for the applicable rate of
contract between the Jaymes and Asiancars, MBTCs own rights exchange for the conversion of foreign currency-incurred
could not be prejudiced by Asiancars actions unknown to MBTC. obligations in their peso equivalent. It follows, therefore, that the
Thus, the transfer of the building in favor of MBTC was valid and jurisprudence established in R.A. 529 regarding the rate of
binding (Jayme v. CA, G.R. No. 128669, Oct. 4, 2002). conversion remains applicable. Thus, in Asia World Recruitment,
Inc. v. National Labor Relations Commission, the SC, applying R.A.
8183, sustained the ruling of the NLRC that obligations in foreign
currency may be discharged in Philippine currency based on the

CIVIL LAW
prevailing rate at the time of payment. It is just and fair to 3. All debts are due and demandable. Except:
preserve the real value of the foreign exchange- incurred obligation (1) When there is stipulation to the contrary;
to the date of its payment. (2) The application is made by the party for whose
benefit the term has been constituted (par. 1, Art. 1252,
PAYMENT BY NEGOTIABLE INSTRUMENT NCC)
4. The payment made by the debtor is not sufficient to cover or
Rule on tender payment as to checks settle all debts (Pineda, 2009)
A check does not constitute a legal tender, and that a creditor may Right of the debtor in the application of payments
validly refuse it. However, this does not prevent a creditor from
accepting a check as payment the creditor has the option and the The law grants to the debtor a preferential right to choose the debt
discretion of refusing or accepting it (Far East Bank & Trust to which his payment is to be applied. But the right of the debtor is
Company vs. Diaz Realty, Inc, G.R. No. 138588, 2001). not absolute; he cannot impair the rights granted by law to the
creditor (Tolentino, 2002).
Q: Diaz & Company obtained a loan from Pacific Banking Corp
which was secured by a real estate mortgage over two parcels of Debtors failure to ascertain which debt his payment is to be
land owned by the plaintiff Diaz Realty. ABC rented an office applied
space in the building constructed on the properties covered by
the mortgage contract. The parties then agreed that the monthly The right of the debtor to choose to which debt his payment will be
rentals shall be paid directly to the mortgagee for the lessor's applied against may be transferred to the creditor when he fails to
account, either to partly or fully pay off the aforesaid mortgage make the application and subsequently he accepts a receipt from
indebtedness. Thereafter, FEBTC purchased the credit of Diaz & the creditor evidencing the latters choice of application. Under
Company in favor of PaBC, but it was only after 2 years that Diaz this circumstance, the debtor cannot complain of the application
was informed about it. Diaz asked the FEBTC to make an made by the creditor unless there be a cause for invalidating such
accounting of the monthly rental payments made by Allied Bank. act.
Diaz tendered to FEBTC the amount of P1,450,000.00 through an
Interbank check, in order to prevent the imposition of additional NOTE: The debtor has the preferential right to choose which debt of the
interests, penalties and surcharges on its loan but FEBTC did not several debts shall be due (Art. 1252, NCC).
accept it as payment, instead, Diaz was asked to deposit the
amount with the FEBTCs Davao City Branch Office. Was there a Legal application of payment
valid tender of payment?
If both the creditor and the debtor failed to exercise the right of
A: Yes.True, jurisprudence holds that, in general, a check does not application of payment, legal application (the law makes the
constitute legal tender, and that a creditor may validly refuse it. It application) of payment will be now govern.
must be emphasized, however, that this dictum does not prevent a
creditor from accepting a check as payment. In other words, the Rules on legal application of payment
creditor has the option and the discretion of refusing or accepting it
(FEBTC v. Diaz Realty Inc., G.R. No. 138588, Aug. 23, 2001). The payment should be applied to the more onerous debts:
1. When a person is bound as principal in one obligation and as
Burden of proving payment in an action for sum of money surety in another, the former is more onerous.
2. When there are various debts, the oldest ones are more
The party who pleads payment as a defense has the burden of burdensome.
proving that such payment has, in fact, been made. 3. Where one bears interest and the other does not, even if the
latter is the older obligation, the former is considered more
EXTRAORDINARY INFALTION OR DEFLATION onerous.
4. Where there is an encumbrance, the debt with a guaranty is
In case an extraordinary inflation or deflation of the currency more onerous than that without security.
stipulated should supervene, the value of the currency at the time 5. With respect to indemnity for damages, the debt which is
of the establishment of the obligation shall be the basis of subject to the general rules on damages is less burdensome
payment, unless there is an agreement to the contrary (Art. 1250, than that in which there is a penal clause.
NCC). 6. The liquidated debt is more burdensome than the
unliquidated one.
NOTE: It applies only to contractual obligations, it cannot be applied to 7. An obligation in which the debtor is in default is more
obligations arising from torts. This rule only applies when there is an official onerous than one in which he is not (Tolentino, 2002).
pronouncement or declaration of the existence of an extraordinary inflation
or deflation. NOTE: If the debts happen to be of same nature and burden, the
payment shall be applied proportionately.
APPLICATION OF PAYMENTS
PAYMENT BY CESSION
Application of Payments
Circumstances evidencing payment by cession
The designation of the debt to which the payment must be applied
when the debtor has several obligations of the same kind in favor Debtor abandons all of his property for the benefit of his creditors
of the same creditor (Art. 1252, NCC). in order that from the proceeds thereof, the latter may obtain
payment of credits.
Requisites
NOTE: It presupposes insolvency of the debtor. All the debtors creditors
must be involved and the consent of the latter must be obtained.
1. There is only one debtor and creditor
2. The debtor owes the creditor two or more debts which are of
the same kind or identical nature (e.g. both debts are money
obligations obtained on different dates)

OBLIGATIONS
Dation in payment v. Payment in cession Requisites of consignation (VP-CPAS)
DATION IN PAYMENT PAYMENT IN CESSION 1. Valid existing debt which is already due;
Number of creditors 2. Prior valid tender of payment except when prior tender of
Maybe one creditor Plurality of creditors payment is dispensable
Financial condition of the debtor 3. Creditor unjustly refuses the tender of payment
Not necessarily in state of Debtor must be partially or 4. Prior notice of consignation given to persons interested in the
financial difficulty relatively insolvent fulfillment of the obligation
Object
NOTE: For reasons of equity, substantial compliance with the
Thing delivered is considered as Universality or property of
requirement of notice is enough (De Mesa v. CA, G.R. Nos. 106467-68,
equivalent of performance debtor is what is ceded 1999).
Extent of the extinguishment
Payment extinguishes 5. Amount or thing is deposited at the disposal of judicial
obligation to the extent of the Merely releases debtor for net authority
value of the thing delivered as proceeds of things ceded or 6. Subsequent notice of the fact of consignation to persons
agreed upon, proved or implied assigned, unless there is interested in the fulfillment of the obligation.
from the conduct of the contrary intention
creditor Effectivity of consignation as payment
Ownership
Ownership is transferred to CR GR: Consignation shall produce effects of payment only if there is a
Ownership is not transferred
upon delivery valid tender of payment.
Novation
An act of novation Not an act of novation XPNs: When: (ARTIT)
Presumption of insolvency 1. Creditor is Absent or unknown, or doesnt appear at place of
Does not presuppose payment
Presupposes insolvency 2. Creditor Refuses to issue a receipt without just cause
insolvency
3. Title of the obligation has been lost
TENDER OF PAYMENT AND CONSIGNATION 4. Creditor is Incapacitated to receive payment at the time it is
due
Tender of Payment 5. Two or more persons claim the right to collect (Art. 1256,
NCC)
The definitive act of offering to the creditor what is due him
together with the demand that the creditor accept the same NOTE: The expenses of consignation, when properly made, shall be charged
against the creditor (Art. 1259, NCC).
(FEBTC v. Diaz Realty Inc., G.R. No. 138588, Aug. 23, 2001).
Right of the debtor to withdraw the thing deposited
Voluntary act of the debtor whereby he offers to the creditor for
acceptance the immediate performance of the formers obligation
Before the creditor has accepted the consignation, or before a
to the latter (Pineda, 2000).
judicial declaration that the consignation has been properly made,
the debtor may withdraw the thing or the sum deposited, allowing
Tender of payment is the manifestation by debtors of their desire
the obligation to remain in force (Art. 1260, NCC).
to comply with or to pay their obligation (Sps. Benos v. Sps.
Lawilao, G.R. No. 172259, Dec. 5, 2006).
NOTE: If, the consignation having been made, the creditor should authorize
the debtor to withdraw the same, he shall lose every preference which he
NOTE: If the creditor refuses the tender of payment without just cause, the may have over the thing. The co-debtors, guarantors and sureties shall be
debtors are discharged from the obligation by the consignation of the sum released (Art. 1261, NCC).
due (Sps. Benos v. Sps. Lawilao, G.R. No. 172259, Dec. 5, 2006).
Tender of Payment v. Consignation
There must be a fusion of intent, ability and capability to make
good such offer, which must be absolute and must cover the
TENDER OF PAYMENT CONSIGNATION
amount due (FEBTC v. Diaz Realty Inc., G.R. No. 138588, Aug. 23,
Nature
2001).
Principal or consummating act
Antecedent of consignation or
Consignation for the extinguishment of the
preliminary act to consignation
obligation
Act of depositing the object of the obligation with the court or Effect
competent authority after the creditor has unjustifiably refused to It does not by itself extinguish It extinguishes the obligation
accept the same or is not in a position to accept it due to certain the obligation when declared valid
reasons or circumstances (Pineda, 2000). Character
Judicial for it requires the filing
Consignation shall be made by depositing the things due at the Extrajudicial of a complaint in court (Pineda,
disposal of judicial authority, before whom tender of payment shall 2000)
be proved, in proper case, and the announcement of the
consignation in other cases (Art. 1258, NCC). Q: In an ejectment case, X refused to vacate the land alleging that
Y had sold to him the additional area, the payment of which
NOTE: Once the consignation has been duly made, the debtor may ask the would be effected five years after the execution of a formal deed
judge to order the cancellation of the obligation (Art. 1260, NCC). of sale. However, the parties failed to execute a deed of sale.
During the pendency of the action, X deposited the payment for
the addition to the lot with the court. Is there a valid
consignation?

CIVIL LAW
A: No. Under Art. 1257 of the Civil Code, consignation is proper a. Law provides otherwise (Art. 1262, NCC)
only in cases where an existing obligation is due. In this case, the b. Nature of the obligation requires the Assumption of risk
contracting parties agreed that full payment of purchase price shall (Ibid)
be due and payable within 5 years from the execution of a formal c. Stipulation to the contrary (Ibid)
deed of sale. At the time Rodriguez deposited the amount in court, d. Debtor Contributed to the loss (Ibid)
no formal deed of sale had yet been executed by the parties, and, e. Loss the of the thing occurs after the debtor incurred in
therefore, the 5-year period during which the purchase price Delay (Ibid)
should be paid had not commenced. In short, the purchase price f. When debtor Promised to deliver the same thing to two
was not yet due and payable (Heirs of San Andres v. Rodriguez, G.R. or more persons who do not have the same interest
No. 135634, May 31, 2000). (Art. 1165, NCC)
g. When the debt of a certain and determinate thing
Q: Under a pacto de retro sale, X sold to Y his lot and the building proceeds from a Criminal offense (Art. 1268, NCC)
erected thereon. They agreed that half of the consideration shall h. When the obligation is Generic (Art. 1263, NCC)
be paid to the bank to pay off the loan of X. After paying the first
installment, Y, instead of paying the loan to the bank, 2. Generic obligation to give:
restructured it twice. Eventually, the loan became due and
demandable. Thus, X paid the bank. On the same day, Y also went GR: The obligation is not extinguished because a generic thing
to the bank and offered to pay the loan, but the bank refused to never perishes (genus nun guam perit)(Art. 1263, NCC).
accept the payment.
XPNs:
Y then filed an action for consignation without notifying X. Is a. In case of generic obligations whose object is a
there a valid consignation by Y of the balance of the contract particular class or group with specific or determinate
price? qualities (delimited generic obligation)
b. In case the generic thing has already been segregated or
A: No. Y filed the petition for consignation against the bank set aside, in which case, it has become specific.
without notifying the X, resulting to the formers failure to prove
the payment of the balance of the purchase price and 3. An obligation to do the obligation is extinguished when the
consignation. In fact, even before the filing of the consignation prestation becomes legally or physically impossible without
case, Y never notified the X of their offer to pay (Sps. Benos v. the fault of the obligor (Art. 1266, NCC).
Sps.Lawilao, G.R. No. 172259, Dec. 5, 2006).
Types of impossibility to perform an obligation to do
Q: Because of Ligayas refusal to accept several tenders of
payment and notices of consignation given by OSSA in its desire 1. Legal impossibility act stipulated to be performed is
to comply with its obligation to pay on installments, OSSA subsequently prohibited by law.
brought a complaint for consignation against Ligaya before the 2. Physical impossibility act stipulated could not be physically
RTC. The RTC allowed OSSA, among others, to deposit with it,by performed by the obligor due to reasons subsequent to the
way of consignation, all future quarterly installments without execution of the contract(Pineda, 2000).
need of formal tenders of payment and service of notices of
consignation. NOTE: The impossibility must be after the constitution of the
Ligaya assails the validity of the consignation on the ground that obligation. If it was before, there is nothing to extinguish.
there was no notice to her regarding OSSA's consignation of the
amounts corresponding to certain installments. Is Ligaya correct? Effect of partial loss
A:No. The motion and the subsequent court order served on Ligaya 1. Due to the fault or negligence of the debtor Creditor has the
in the consignation proceedings sufficiently served as notice to right to demand the rescission of the obligation or to demand
Ligaya of OSSA's willingness to pay the quarterly installments and specific performance, plus damages, in either case.
the consignation of such payments with the court. For reasons of 2. Due to fortuitous event:
equity, the procedural requirements of consignation are deemed a. Substantial loss obligation is extinguished.
substantially complied with in the present case (De Mesa v. CA, b. Unsubstantial loss the creditor shall deliver the thing
G.R. Nos. 106467-68, Oct. 19, 1999). promised in its impaired condition (Art. 1264, NCC).
LOSS OF THE THING DUE Effect when the thing is lost in the possession of the debtor
GR: It is presumed that loss is due to debtors fault.
When a thing is considered lost (DOPE) XPN: Presumption shall not apply in case loss is due to earthquake,
flood, storm or other natural calamity (Art. 1262, NCC)
1. It Disappears in such a way that its existence is unknown;
2. It goes Out of commerce; XPN to the XPN: Debtor still liable even if loss is due to
3. It Perishes; or fortuitous event when:
4. Its Existence is unknown or if known, it cannot be recovered. 1. Debtor incurred in delay; or
2. Debtor promised to deliver the thing to two or more
Effect of loss of the thing/object of the obligation persons with different interests (par. 3, Art. 1165, NCC)
If the obligation is a: Rebus sic stantibus
1. Determinate obligation to give: A principle in international law which means that an agreement is
valid only if the same conditions prevailing at time of contracting
GR: The obligation is extinguished when the object of the continue to exist at the time of performance. It is the basis of the
obligation is lost or destroyed (Art. 1262, NCC). principle of unforeseen difficulty of service (Art. 1267, NCC).
XPNs: (LAS-CD-PCG) NOTE: Principle of unforeseen events applies when the service has become
so difficult as to be manifestly beyond the contemplation of the parties, the

OBLIGATIONS
obligor may also be released therefrom in whole or in part (Art. 1267). CONFUSION OR MERGER OF RIGHTS
However, this principle cannot be applied absolutely in contractual relations
since parties are presumed to have assumed the risk of unfavorable Confusion or Merger of rights
developments (Pineda, 2000).
There is a confusion when there is a meeting in one person of the

Requisites in order to relieve the debtor from his obligation, in
qualities of a creditor and debtor of the same obligation (Sanchez
whole or in part, based on unforeseen difficulty of fulfillment
Roman).
1. Event or change in circumstance could not have been
Requisites of confusion or merger of rights
foreseen at the time of the execution of the contract
2. Such event makes the performance extremely difficult but
1. Merger in the same person of the characters of both a
not impossible
creditor and debtor (Art. 1275, NCC);
3. The event must not be due to the act of any of the parties
2. Must take place in the persons of a principal creditor and a
4. The contract is for a future prestation (Tolentino, 2002).
principal debtor(Art. 1276, NCC); and
3. Merger is definite and complete.
Debt which proceeds from a criminal offense
Effect of confusion or merger of rights
GR: Debtor shall not be exempted from the payment of his
obligation regardless of the cause of the loss
The creditor and debtor becomes the same person involving the
same obligation. Hence, the obligation is extinguished (Art. 1275,
XPN: The thing having been offered by debtor to the person who
NCC).
should receive it, the latter refused without justification to accept
it (Art. 1268, NCC).
There can be partial confusion
NOTE: Offer referred in Art. 1268 is different from consignation; the former
refers to extinguishment of obligation through loss while the latter refers to It will be definite and complete up to the extent of the concurrent
the payment of the obligation. amount or value, but the remaining obligation subsists (Pineda,
2000).
CONDONATION OR REMISSION OF DEBT
Effect of confusion or merger in relation to the guarantors
Condonation
1. Merger which takes place in the person of the principal
An act of liberality by virtue of which the creditor, without debtor or principal creditor benefits the guarantors. The
receiving any price or equivalent, renounces the enforcement of contract of guaranty is extinguished.
the obligation, as a result of which it is extinguished in its entirety 2. Confusion which takes place in the person of any of the
or in that part or aspect of the same to which the condonation or guarantors does not extinguish the obligation (Art. 1276,
remission refers (Pineda, 2000). NCC).
Requisites of condonation (GAIDE) Effect of confusion or merger in one debtor or creditor in a joint
obligation
1. Must be Gratuitous;
2. Acceptance by the debtor; GR: Joint obligation is not extinguished since confusion is not
3. Must not be Inofficious; definite and complete with regard to the entire obligation. A part
4. Formalities provided by law on Donations must be complied of the obligation still remains outstanding.
with if condonation is express; and
5. An Existing demandable debt. XPN: Obligation is extinguished with respect only to the share
corresponding to the DR or CR concerned. In effect, there is only
Effect of the remission of the principal debt with respect to the partial extinguishment of the entire obligation (Art. 1277, NCC;
accessory obligation and vice versa Pineda, 2000).
The renunciation of the principal debt shall extinguish the Effect of confusion or merger in one debtor or creditor in a
accessory but the waiver of the latter shall leave the former in solidary obligation
force (Art. 1273, NCC).
If a solidary debtor had paid the entire obligation, the obligation is
NOTE: It is presumed that the accessory obligation of pledge has been totally extinguished without prejudice to the rights of the solidary
remitted when the thing pledged, after its delivery to the creditor, is found debtor who paid, to proceed against his solidary co- debtors for the
in the possession of the debtor, or of a third person who owns the thing (Art. latters individual contribution or liability (Pineda, Obligations and
1274, NCC).
Contracts, 2000 ed, p. 282).
Effect of inofficious condonation
It may be totally revoked or reduced depending on whether or not

it is totally or only partly inofficious (Pineda, 2000).
Acceptance by the debtor
The acceptance by the debtor is required. There can be no

unilateral condonation. This is because condonation or remission is
an act of liberality. It is a donation of an existing credit, considered
a property right, in favor of the debtor, it is required that the DR
gives his consent thereto by making an acceptance. If there is no
acceptance, there is no condonation (Pineda, 2009).

CIVIL LAW
Revocation of confusion or merger of rights
BASIS COMPENSATION PAYMENT
If the act which created the confusion is revoked for some causes A mode of
such as rescission of contracts, or nullity of the will or contract, the extinguishing to the
confusion or merger is also revoked. The subject obligation is concurrent amount,
revived in the same condition as it was before the confusion. Payment means not
the obligations of
only delivery of
those persons who
NOTE: During such interregnum, the running of the period of prescription of Definition money but also
in their own right
the obligation is suspended (Pineda, 2000). performance of an
are reciprocally
obligation
debtors and
COMPENSATION
creditors of each
other
Compensation
Capacity of parties
It is a mode of extinguishing obligations that take place when two not necessary Debtor must have
persons, in their own right, are creditors and debtors of each other capacity to dispose
As to the necessity
(Art. 1278, NCC). Reason: of the thing paid;
of the capacity of
Compensation creditor must have
the parties
It is the offsetting of the respective obligation of two persons who operates by law, capacity to receive
stand as principal creditors and debtors of each other, with the not by the act of payment
effect of extinguishing their obligations to their concurrent the parties
amount. The performance
As the susceptibility There can be partial must be complete
Requisites of compensation (PriSDue-LiDeCoP) of partial extinguishment of and indivisible
extinguishment the obligation unless waived by
1. Each one of the obligors must be bound Principally, and that the creditor
he be at the same time a principal creditor of the other Legal compensation
except guarantor who may set up compensation as regards takes place by Takes effect by the
As to the operation
what the creditor may owe the principal (Art. 1279, 1280, operation of law act of the parties
of extinguishing
NCC); without and involves
the obligation
2. Both debts consist in sum of money, or if the things due are simultaneous delivery or action
consumable, they be of the Same kind and also of the same delivery
quality if the latter has been stated; It is not necessary
Parties must be
3. Both debts are Due; As to the that the parties be
mutually debtors
4. Both debts are Liquidated and Demandable; relationship of the mutually debtors
and creditors of
5. Neither debt must be retained in a Controversy commenced parties and creditors of
each other
by third person and communicated in due time to the debtor each other
(neither debt is garnished) (Art. 1279, NCC); and
6. Compensation must not be Prohibited by law(Art. 1290, NCC). Compensation v. Confusion
When all the requisites mentioned in Art. 1279 of the Civil Code COMPENSATION CONFUSION
are present, compensation takes effect by operation of law, and (Arts. 1278-1279) (Arts. 1275-1277)
extinguishes both debts to the concurrent amount, even though Two persons who are mutual
One person where qualities of
the creditors and debtors are not aware of the compensation (Art. debtors and creditors of each
debtor and creditor are merged
1290, NCC). other
At least two obligations One obligation
Q: X, who has a savings deposit with Y Bank in the sum of
PI,000,000.00, incurs a loan obligation with the said bank in the Compensation v. Counterclaim or Set-off
sum of P800,000.00 which has become due. When X tries to
withdraw his deposit, Y Bank allows only P200,000.00 to be COUNTERCLAIM /
COMPENSATION
withdrawn, less service charges, claiming that compensation has SET-OFF
extinguished its obligation under the savings account to the Need not to be pleaded; takes
concurrent amount of X's debt. X contends that compensation is place by operation of law and
improper when one of the debts, as here, arises from a contract extinguishes reciprocally the It must be pleaded to be
of deposit. Assuming that the promissory note signed by X to two debts as soon as they exist effectual
evidence the loan does not provide for compensation between simultaneously, to the amount
said loan and his savings deposit, who is correct? (1998 Bar of their respective sums.
Question) Generally, both debts must be Does not require that debts are
liquidated liquidated
A: Y bank is correct. All the requisites of Art. 1279, Civil Code are Judicial compensation provided
present. Compensation shall take place when two persons are Legal or conventional that the requirements of Rules
reciprocally creditor and debtor of each other. In this connection, it compensation governed by the of Court, particularly on
has been held that the relation existing between a depositor and a Civil Code Counterclaims and/or Cross-
bank is that of creditor and debtor. As a general rule, a bank has a claims are observed.
right of set off of the deposits in its hands for the payment of any
indebtedness to it on the part of a depositor" (Gullas v. PNB, GR
No. L-43191, November 13, 1935). Hence, compensation took place
between the mutual obligations of X and Y bank.
Compensation v. Payment

OBLIGATIONS
Debts or obligations not subject to compensation Effectivity of conventional compensation
1. Debts or obligations arising from contracts of depositum (Art. Compensation to become effective:
1287, NCC) GR: The mutual debts must be both due (Art. 1279, NCC)
2. Debts arising from obligations of a depositary (Ibid).
3. Debts arising from obligations of a baileee in commodatum XPN: The parties may agree that their mutual debts be
(Ibid) compensated even if the same are not yet due (Art. 1282,
4. Claims for support due by gratuitous title (Ibid) NCC).
5. Obligations arising from criminal offenses (Art. 1288, NCC)
6. Certain obligations in favor of government (e.g. taxes, fees, Judicial compensation
duties, and others of a similar nature)
If one of the parties to a suit over an obligation has a claim for
NOTE: Compensation takes place by operation of law, even though the debts damages against the other, the former may set it off by proving his
may be payable at different places, but there shall be an indemnity for right to said damages and the amount thereof (Art. 1283, NCC).
expenses of exchange or transportation to the place of payment(Art. 1286,
NCC).
All the requisites mentioned in Art. 1279 must be present, except
that at the time of filing the pleading, the claim need not be
KINDS OF COMPENSATION
liquidated. The liquidation must be made in the proceedings.
Kinds of compensation
Facultative compensation
1. Legal compensation by operation of law
One of the parties has a choice of claiming or opposing the
2. Conventional by agreement of the parties
compensation but waives his objection thereto such as an
3. Judicial(set-off) by judgment of the court when there is a
obligation of such party is with a period for his benefit alone and
counterclaim duly pleaded, and the compensation decreed
he renounces the period to make the obligation become due.
4. Facultative may be claimed or opposed by one of the
parties.
Facultative compensation is unilateral and does not require mutual
agreement; voluntary or conventional compensation requires
Q: De Leon sold and delivered to Silahis various merchandise. Due
mutual consent.
to Silahis' default, De Leon filed a complaint for the collection of
said accounts. Silahis asserts, as affirmative defense, a debit
Example: X owes Y P100,000 demandable and due on Apr. 1, 2012.
memo as unrealized profit for a supposed commission that Silahis
Y owes X P100,000 demandable and due on or before Apr. 15,
should have received from De Leon. Was there legal
2012. Y, who was given the benefit of the term, may claim
compensation?
compensation on April 1, 2012. On the other hand, X, who
demands compensation, can be properly opposed by Y because Y
A: None. Silahis admits the validity of its outstanding accounts with
could not be made to pay until Apr. 15, 2012.
De Leon. But whether De Leon is liable to pay Silahis a commission
on the subject sale to Dole is disputed. This circumstance prevents
Q: Eduardo was granted a loan by XYZ Bank for the purpose of
legal compensation from taking place (Silahis Marketing Corp. v.
improving a building which XYZ leased from him. Eduardo
IAC, G. R. No. L-74027, Dec. 7, 1989).
executed the promissory note in favor of the bank, with his friend
NOTE: Compensation is not proper where the claim of the person asserting
Ricardo as cosignatory. In the PN, they both acknowledged that
the set-off against the other is not clear or liquidated; compensation cannot they are individually and collectively liable and waived the
extend to unliquidated, disputed claim existing from breach of contract need for prior demand. To secure the PN, Ricardo executed a real
(Silahis Marketing Corp. v. IAC, G. R. No. L-74027, Dec. 7, 1989). estate mortgage on his own property. When Eduardo defaulted
on the PN, XYZ stopped payment of rentals on the building on the
Q: Atty. Laquihon, in behalf of Pacweld, filed a pleading ground that legal compensation had set in. Since there was still a
addressed to MPCC titled motion to direct payment of attorney's balance due on the PN after applying the rentals, XYZ foreclosed
fee, invoking a decision wherein MPCC was adjudged to pay the real estate mortgage over Ricardos property. Ricardo
Pacweld the sum of P10,000.00 as attorney's fees. MPCC filed an opposed the foreclosure on the ground that he is only a co-
opposition stating that the said amount is set-off by a like sum of signatory; that no demand was made upon him for payment, and
P10,000.00, collectible in its favor from Pacweld also by way of assuming he is liable, his liability should not go beyond half of the
attorney's fees which MPCC recovered from the same CFI of balance of the loan. Further, Ricardo said that when the bank
Manila in another civil case. Was there legal compensation? invoked compensation between the rentals and the amount of
the loan, it amounted to a new contract or novation, and had the
A: Yes. MPCC and Pacweld were creditors and debtors of each effect of extinguishing the security since he did not give his
other, their debts to each other consisting in final and executory consent (as owner of the property under the real estate
judgments of the CFI in two separate cases. The two obligations, mortgage) thereto.
therefore, respectively offset each other, compensation having
taken effect by operation of law and extinguished both debts to a. Can XYZ Bank validly assert legal compensation?
the concurrent amount of P10,000.00, pursuant to the provisions b. Can Ricardos property be foreclosed to pay the full
of Arts. 1278, 1279 and 1290 of the Civil Code, since all the balance of the loan?
requisites provided in Art. 1279 of the said Code for automatic c. Does Ricardo have basis under the Civil Code for
compensation "even though the creditors and debtors are not claiming that the original contract was novated? (2008
aware of the compensation" were present (Mindanao Portland Bar Question)
Cement Corp. v. CA,G.R. No. L-62169, Feb. 28, 1983).
A:
Conventional compensation a) No. XYZ Bank may validly assert the partial compensation of
both debts, but it should be facultative compensation
It is one thattakes place by agreement of the parties. because not all of the five requisites of legal compensation
are present (Art. 1279). The payment of the rentals by XYZ

CIVIL LAW
Bank is not yet due, but the principal obligation of loan where GR: ineffectual; useless act since there is nothing more to
both Eduardo and Ricardo are bound solidarily and therefore assign
any of them is bound principally to pay the entire loan, is due
and demandable without need of demand. XYZ Bank may XPN:when the assignment was made with the consent of the
declare its obligation to pay rentals as already due and debtor.
demand payment from any of the two debtors.
NOTE: Such consent operates as a waiver of the rights to
b) No, because there was no prior demand on Ricardo, depriving compensation.
him of the right to reasonably block the foreclosure by
payment. The waiver of prior demand in the PN is against XPN TO THE XPN: at the time he gave his consent, he
public policy and violates the right to due process. Without reserved his right to the compensation.
demand, there is no default and the foreclosure is null and
void. Since the mortgage, insofar as Ricardo is concerned is 2. Before compensation took place
not violated, a requirement under Act 3135 for a valid a. With the consent of the debtor compensation cannot
foreclosure of real estate mortgage is absent. be set up except when the right to compensation is
reserved.
In the case of DBP v. Licuanan, it was held that: the issue of b. With the knowledge but without consent of the debtor
whether demand was made before the foreclosure was compensation can be set up regarding debts previous
effected is essential. If demand was made and duly received to the cession or assignment but not subsequent ones.
by the respondents and the latter still did not pay, then they c. Without the knowledge of debtor - can set up
were already in default and foreclosure was proper. compensation as a defense for all debts maturing prior
However, if demand was not made, then the loans had not to his knowledge of the assignment.
yet become due and demandable. This meant that the
respondents had not defaulted in their payment and the NOVATION
foreclosure was premature.
c) None of the three kinds of novation is applicable. There is no Novation
objective novation, whether express or implied, because
there is no change in the object or principal conditions of the It is the substitution or change of an obligation by another,
obligation. There is no substitution of debtors, either. resulting in its extinguishment or modification, either by changing
Compensation is considered as abbreviated or simplified the object or principal conditions, or by substituting another in the
payment and since Ricardo bound himself solidarily with place of the debtor or by subrogating a third person to the rights of
Eduardo, any facultative compensation which occurs does not the creditor (Pineda, 2000).
result in partial legal subrogation. Neither Eduardo nor
Ricardo is a third person interested in the obligation under Requisites of novation (OIC SN)
Art. 1302.
1. Valid Old obligation
Obligations subject to facultative compensation 2. Intent to extinguish or to modify the old obligation
3. Capacity and consent of all the parties to the new obligation
When one of the debts arises from: (except in case of expromission where the old debtor does
1. Depositum not participate)
2. Obligations of a depositary 4. Substantial difference of the old and new obligation on
3. Obligations in commudatum every point incompatible with each other (implied novation)
4. Support 5. Valid New obligation
GR: Claim of support due to gratuitous title Presumption of Novation
XPN: Future support. Novation is never presumed, it must be proven as a fact either by:
1. Explicit declaration if it be so declared in unequivocal
5. Civil liability from a crime terms; or
2. Material incompatibility that the old and the new
NOTE: Art. 1288 prohibits compensation if one of the debts consists in obligations be on every point incompatible with each
civil liability arising from a penal offense. However, the victim is other(Art. 1292, NCC).
allowed to claim compensation.
Two-fold functions of novation
If one or both debts are rescissible or voidable
1. It extinguishes the old obligation; and
When one or both debts are recissible or voidable, they may be 2. Creates a new obligation in lieu of the old one.
compensated against each other before they are judicially
rescinded or avoided (Art. 1284, NCC).
If the prescriptive period had already lapsed, there is automatic

compensation and the same will not be disturbed anymore.
Whereas, if the debt is rescinded or annulled, compensation shall
be restitution of what each party had received before the
rescission or annulment.
Effects of assignment on compensation of debts
1. After the compensation took place

OBLIGATIONS
Kinds of novation Requisites of delegacion
1. As to essence 1. Substitution is upon the initiative or proposal of the old

a. Objective or real novation changing the object or debtor himself by proposing to the creditor the entry of
principal conditions of the obligation (Art. 1291, NCC). another (third person) as the new debtor who will replace
b. Subjective or personal novation change of the parties. him in payment of the obligation.
i. Substituting the person of the debtor (passive 2. The creditor accepts and the new debtor agrees to the
novation) may be made without the knowledge proposal of the old debtor.
of or against the will of the latter, but not without 3. The old debtor is released from the obligation with the
the consent of the creditor. consent of the creditor.
a) Delegacion the substitution is initiated by
the old debtor himself (delegante) by Insolvency of the new debtor in delegacion
convincing another person (delegado) to
take his place and to pay his obligation to GR: Insolvency of the new debtor (delegado), who has been
the creditor. proposed by the original debtor (delegante) and accepted by the
b) Expromission the substitution of the old creditor (delegatario), shall not revive the action of the latter
debtor by a new debtor is upon the against the original obligor(Art. 1295, NCC).
initiative or proposal of a third person.
XPNs: Original debtor shall be held liable:
NOTE: If it is the creditor who initiated the change of debtor, 1. Insolvency was already existing and of public knowledge, or
it is considered expromission known to the debtor (Art. 1295, NCC);
2. Insolvency of the new debtor was already existing and known
ii. Subrogating a third person to the rights of the to the original debtor at the time of the delegation of the
creditor (active novation) debt to the new debtor(Art. 1295, NCC).
c. Mixed combination of the objective and subjective
novation. Requisites of expromission
2. As to form of their constitution 1. Substitution is upon the initiative or proposal of a third
a. Express the parties declared in unequivocal terms that person who will step into the shoes of the debtor;
the obligation is extinguished by the new obligation. 2. Creditor must give his consent to the proposal of the third
b. Implied no express declaration that the old obligation person.
is extinguished by the new one.The old and new 3. Old debtor must be released from the obligation with the
obligation is incompatible on every material point (Art. consent of the creditor.
1292, NCC).
Insolvency of the new debtor in expromission
3. As to extent of their effects
a. Total or extinctive obligation is originally extinguished. If substitution is without the knowledge or against the will of the
b. Partial or modificatory original obligation is not debtor, the new debtors insolvency or nonfulfillment of the
extinguished but merely modified. obligation shall not give rise to any liability on the part of the
original debtor (Art. 1294, NCC).
4. As to their origin
a. Legal novation by operation of law (Art. 1300 and NOTE: If the old debtor gave his consent and the new debtor could not fulfill
1302, NCC) the obligation, the old debtor should be liable for the payment of his original
b. Conventional novation by agreement of the parties obligation.
(Art. 1300 and 1301, NCC)
5. As to presence of absence of conditio

a. Pure new obligation is not subject to a condition
b. Conditional when the creation of the new obligation is
subject to a condition.
Rights of the new debtor
1. With the debtors consent right of reimbursement and

subrogation.
2. Without the consent of the old debtor or against his will
right to beneficial reimbursement.
Consent of the creditor
The consent of the creditor is mandatory both in delegacion and

expromission(Art. 1293, NCC).It may be express or implied from his
acts but not from his mere acceptance of payment by a third party,
for there is no true transfer of debt.
NOTE: Creditors consent or acceptance of the substitution of the old debtor

by a new one may be given at anytime and in any form while the agreement
of the debtor subsists (Asia Banking Corp. v. Elser, 54 Phil. 994).

CIVIL LAW
SUMMARY A: Yes. Novation, as a mode of extinguishing obligations, may be
Delegacion Expromission done in two ways: by explicit declaration, or by material
Person who incompatibility.
initiated the Old debtor Third person
substitution There is no doubt that the upgrading was a novation of the original
It may be express or implied from his acts agreement covering the first credit card issued to Danilo Alto,
Consent of the basically since it was committed with the intent of cancelling and
but not from his mere acceptance of
creditor replacing the said card. However, the novation did not serve to
payment by a third party.
With or without the release Jeanette from her surety obligations because in the surety
With the consent of undertaking she expressly waived discharge in case of change or
knowledge of the
Consent of the old the old debtor novation in the agreement governing the use of the first credit card
debtor or against
debtor (since he initiated (Molino v. Security Diners International Corp., G.R. No. 136780,
the will of the old
the substitution) Aug. 16, 2001).
debtor
Consent is needed
Consent of third but it need not be Effects of novation
Consent is needed
person given
simultaneously 1. Extinguishment of principal also extinguishes the accessory,
Intention of Released from the obligation with the except:
substitution consent of the creditor a. Mortgagor, pledgor, surety or guarantor agrees to be
With the debtors bound by the new obligation (Tolentino, 1999).
consent right of b. Stipulation made in favor of a third person such as
reimbursement and stipulation pour atrui (Art. 1311), unless beneficiary
subrogation consents to the novation (Art. 1296, NCC).
With the debtors
Rights of the new consent right of 2. If old obligation is:
Without the
debtor reimbursement and a. Void novation is void (Art. 1298, NCC)
consent of the old
subrogation b. Voidable novation is valid provided that the
debtor or against
his will right to annulment may be claimed only by the debtor or when
beneficial ratification validates acts (Art. 1298, NCC).
reimbursement c. If the old obligation was subject to a suspensive or
Shall not revive the resolutory condition, the new obligation shall be under
With the debtors the same condition, unless it is otherwise stipulated
action of the latter
consent - If the old (Art. 1299, NCC).
against the original
debtor gave his 3. If old obligation is conditional and the new obligation is pure:
obligor
consent and the a. if resolutory and it occurred old obligation already
new debtor could extinguished; no new obligation since nothing to
Original debtor shall
not fulfill the novate.
be held liable:
obligation, the old b. if suspensive and it did not occur it is as if there is no
1. Insolvency was
debtor should be obligation; thus, there is nothing to novate
already existing
liable for the 4. If the new obligation is:
and of public
payment of his a. Void original one shall subsist, unless the parties
Insolvency or knowledge, or
original obligation. intended that the former relation should be
nonfulfillment of known to the
the obligation of debtor extinguished in any event (Art. 1297, NCC).
Without the b. Voidable novation can take place, except when such
the new debtor 2. Insolvency of
consent of the old new obligation is annulled. In such case, old obligation
the new debtor
debtor or against shall subsist.
was already
his will the new c. Pure obligation conditions of old obligation deemed
existing and
debtors insolvency attached to the new, unless otherwise stipulated
known to the
or nonfulfillment of (Tolentino, 1999)
original debtor
the obligation shall d. Conditional obligation:
at the time of
not give rise to any i. if resolutory valid until the happening of the
the delegation
liability on the part condition (Art. 1181, NCC)
of the debt to
of the original ii. if suspensive and did not materialize no novation,
the new
debtor. old obligation is enforced (Art. 1181, NCC)
debtor.
Q: Will a contract of suretyship, which is secondary to a principal
Q: SDIC issued to Danilo a Diners Card (credit card) with Jeannete
obligation, be extinguished when novation occurs?
as his surety. Danilo used this card and initially paid his
obligations to SDIC. Thereafter, Danilo wrote SDIC a letter
A:It depends. A surety is released from its obligation when there is
requesting it to upgrade his Regular Diners Club Card to a
a material alteration of the principal contract in connection with
Diamond (Edition) one. As a requirement of SDIC, Danilo secured
which the bond is given, such as a change which imposes a new
from Jeanette her approval and the latter obliged. Danilo's
obligation on the promising party, or which takes away some
request was granted and he was issued a Diamond (Edition)
obligation already imposed, or one which changes the legal effect
Diners Club Card. Danilo had incurred credit charged plus
of the original contract and not merely its form (Philippine Charter
appropriate interest and service charge. However, he defaulted in
Insurance Corporation vs. Petroleum Distributors & Service
the payment of this obligation. Was the upgrading a novation of
Corporation, G.R. No. 180898, April 18, 2012). Furthermore, a
the original agreement governing the use of Danilo Alto's first
surety is not released by a change in the contract, which does not
credit card, as to extinguish that obligation?
have the effect of making its obligation more onerous (Stronghold
Insurance Company, Inc. v. Tokyu Construction Company, G.R. Nos.
158820-21 [2009]). As such, a contract is only extinguished by

novation when there is a material alteration in the principal Conventional subrogation v. Assignment of credit
contract or if it has the effect of making the obligation more
onerous. CONVENTIONAL ASSIGNMENT OF
SUBROGATION CREDITS OR RIGHTS
Subrogation Governing law Art. 1300-1304 Art. 1624-1627
Effect The transfer of the
It is the active subjective novation characterized by the transfer to credit or right does
a third person of all rights appertaining to the creditor in the not extinguish or
transaction concerned including the right to proceed against the It extinguishes the
modify the
guarantors or possessors of mortgages and similar others subject original obligation
obligation. The
to any applicable legal provision or any stipulation agreed upon by and creates a new
transferee becomes
the parties in conventional subrogation. one
the new creditor for
the same
NOTE: Whoever pays on behalf of the debtor without the knowledge or obligation.
against the will of the latter, cannot compel the creditor to subrogate him in
Need for consent of The consent of the
his rights, such as those arising from a mortgage, guaranty, or penalty (Art.
1237, NCC). debtor debtor is not
necessary.
The consent of the
Kinds of subrogation Notification is
debtor is necessary
enough for the
(Art. 1301, NCC).
1. As to their creation validity of the
a. Legal subrogation constituted by virtue of a law (Art. assignment (Art.
1300, NCC; Art. 1302, NCC) 1626, NCC).
b. Voluntary or conventional subrogation created by the Effectivity Begins from the Begins from
parties by their voluntary agreement (Art. 1300, NCC) moment of notification of the
subrogation debtor
NOTE: Conventional subrogation of a third person requires the Curability of defect The defect in the The defect in the
consent of the original parties and of the third person. (Art. 1301, or vice old obligation may credit or rights is
NCC) be cured such that not cured by its
the new obligation mere assignment to
2. As to their extent becomes valid a third person
a. Total subrogation credits or rights of the creditor in Defense Debtor cannot set
the transaction are totally transferred to the third The debtor can still
up a defense
person. set up the defense
against the new
b. Partial subrogation only part of the credit or rights of (available against
creditor which he
the creditor in the transaction are transferred to the the old creditor)
could have availed
third person. against the new
himself of against
creditor
the old creditor
NOTE: A creditor, to whom partial payment has been made, may
exercise his right for the remainder and he shall be preferred to the
NOTE: In the law of subrogation, active subjective novation is stricter than
person who has been subrogated in his place in virtue of the partial
passive subjective novation. In the latter, the consent of the old debtor is not
payment of the same credit. (Art. 1304, NCC)
even required in expromission.
Presumption of legal subrogation
GR: Legal subrogation is not presumed (Art. 1300, NCC)
XPN: In cases expressly mentioned in the law (Art. 1302, NCC):

1. When a creditor pays another creditor who is preferred, even
without the debtors knowledge;
2. When a third person, not interested in the obligation, pays
with the express or tacit approval of the debtor
3. When, even without the knowledge of the debtor, a person
interested in the fulfillment of the obligation pays, without
prejudice to the effects of confusion as to the latters share
(Art. 1302, NCC)

CIVIL LAW
CONTRACTS b. Stipulation is just part and not the whole

obligations of the contract;
c. Contracting parties must have clearly and
Contract
deliberately conferred a favor upon third person;
d. Third person must have communicated his
The meeting of minds between two persons whereby one binds
acceptance; and
himself, with respect to the other, to give something or to render
e. Neither of the contracting parties bears the legal
some service (Art. 1305, NCC).
representation of the third person (Young v. Court
of Appeals G.R. No. 79518, Jan. 13, 1989).
Obligation v. Contract
3. Third persons coming into possession of the object of the
While a contract is one of the sources of obligations, an obligation
contract creating real rights subject to the provisions of
is the legal tie or relations itself that exists after a contract has
Mortgage Law and the Land Registration Law (Art. 1312,
been entered into.
NCC).
4. Contracts entered into in fraud of creditors (Art. 1313, NCC).
Hence, there can be no contract if there is no obligation. But an
5. When a third person induces a party to violate the contract
obligation may exist without a contract (De Leon, 2003).
(Art. 1314, NCC).
Duty of courts in interpreting contracts NOTE:This tort or wrongful conduct is known as Interference with
contractual relations.
It is not the province of the court to alter a contract by
construction or to make a new contract for the parties. Its duty is Requisites:
confined to the interpretation of the one which they have made for a. Existence of a valid contract;
themselves without regard to its wisdom or folly as the court b. Third person has knowledge of such contract;
cannot supply material stipulations or red into the contract words c. Third person interferes without justification.
which it does not contain (Cuizon v. CA,G.R. No. 102096, August 22,
1996). Q: Fieldmen's Insurance issued, in favor of MYT, a common
carrier, accident insurance policy. 50% of the premium was paid
CHARACTERISTICS OF A CONTRACT by the driver. The policy indicated that the Company will
indemnify the driver of the vehicle or his representatives upon his
The following are the characteristics of a contract(ROMA): death. While the policy was in force, the taxicab driven by Carlito,
met with an accident. Carlito died. MYT and Carlito's parents filed
1. Relativity (Art. 1311, NCC) a complaint against the company to collect the proceeds of the
2. Obligatoriness and consensuality(Art. 1315, NCC) policy. Fieldmens admitted the existence thereof, but pleaded
3. Mutuality (Art. 1308, NCC) lack of cause of action on the part of the parents. Decide.
4. Autonomy (Art. 1306)
A: Carlitos parents who, admittedly, are his sole heirs have a
RELATIVITY OF CONTRACTS direct cause of action against the Company. This is so because
pursuant to the stipulations, the Company will also indemnify third
Principle of relativity or Principle of limited effectivity of parties. The policy under consideration is typical of contracts pour
contracts(2011 Bar Question) autrui, this character being made more manifest by the fact that
the deceased driver paid 50% of the premiums (Coquia v.
GR: Contracts take effect only between the parties or their assigns Fieldmens Insurance Co., Inc.,G.R. No. L-23276, Nov. 29, 1968).
and heirs, except where the rights and obligations arising from the
contract are not transmissible by their nature, by stipulation, or by OBLIGATORY FORCE OF CONTRACTS
provision of law (Art. 1311, NCC).
Obligatory force of contracts
Res inter alios acta aliis neque nocet prodest (a thing done between
others does not harm or benefit others) a contract can only Contracts shall be obligatory, in whatever form they may have
obligate the parties who entered into it, or their successors who been entered into, provided all the essential requisites for validity
assumed their personalities, and that, concomitantly, a contract are present (Art. 1356, NCC).
can neither favor nor prejudice third persons(Vitug, 2006).
The parties are bound from the moment the contracts are
NOTE: With respect to the heir, he shall not be liable beyond the value of the perfected by mere consent not only from the fulfillment of what
property he received from the decedent(Art. 1311, NCC).
has been expressly stipulated but also to all the consequences
which, according to their nature, may be in keeping with good
XPNs:
faith, usage and law (Art. 1315, NCC).
1. Rights and obligations that are not transmissible by their
nature, or by the stipulation or by provisions of law(Art. 1311, NOTE:Obligations arising from contracts have the force of law between the
NCC). contracting parties and should be complied with in good faith (Art. 1159,
2. Stipulation pour autrui (stipulation in favor of a third person) NCC).
benefits clearly and deliberately conferred by parties to a
contract upon third persons (Art. 1311, NCC) and which Q: Villamor borrowed a large amount from Borromeo, for which
stipulation is merely part of a contract entered into by the he mortgaged his property but subsequently defaulted.
parties, neither of whom acted as agents of the third Borromeo pressed him for settlement. The latter instead offered
personand which favor can be demanded by the third person to execute a promissory note containing a promise to pay his
if duly accepted by him before it could be revoked. debt as soon as he is able, even after 10 years and that he waives
his right to prescription. What are the effects of said the
Requisites of stipulation pour atrui: stipulation to the action for collection filed by Borromeo?
a. Stipulation in favor of a third person;

CONTRACTS
A: None. The rule is that a lawful promise made for a lawful Third person may determine the performance of a contract
consideration is not invalid merely because an unlawful promise
was made at the same time and for the same consideration. This The determination of the performance may be left to a third
rule applies although the invalidity is due to violation of a statutory person. However, his decision shall not be binding until it has been
provision, unless the statute expressly or by necessary implication known to both the contracting parties (Art. 1309, NCC). Moreover,
declares the entire contract void. Thus, even with such waiver of the determination made shall not be obligatory if it is evidently
prescription, considering that it was the intent of the parties to inequitable. In such case, the courts shall decide what is equitable
effectuate the terms of the promissory note, there is no legal under the circumstances (Art. 1310, NCC).
obstacle to the action for collection filed by Borromeo (Borromeo
v. CA,G.R. No. L-22962, Sept. 28, 1972). AUTONOMY OF CONTRACTS
NOTE: Where an agreement founded on a legal consideration contains It is the freedom of the parties to contract and to stipulate
several promises, or a promise to do several things, and a part only of the provided the stipulations are not contrary to law, morals, good
things to be done are illegal, the promises which can be separated, or the customs, public order or public policy (Art. 1306, NCC).
promise, so far as it can be separated, from the illegality, may be valid
(Borromeo v. CA,G.R. No. L-22962, Sept. 28, 1972).
NOTE: Courts cannot make for the parties better or more equitable
agreements than they themselves have been satisfied to make, or rewrite
MUTUALITY OF CONTRACTS contracts because they operate harshly or inequitably as to one of the
parties, or alter them for the benefit of one party and to the detriment of
Principle of mutuality of contracts the other, or by construction, relieve one of the parties from terms which he
voluntarily consented to, or impose on him those which he did not (Angel
The contract must bind both contracting parties and its validity or Bautista v. Court of Appeals, G.R. No. 123655, January 19, 2000).
compliance cannot be left to the will of one of them (Art. 1308,
NCC). ESSENTIAL REQUISITES OF A CONTRACT
NOTE: A contract containing a condition whose efficacy or fulfillment is The following are the essential requisites of contracts (COC):
dependent solely on the uncontrolled will of one of the parties is void
(Garcia v. Rita, Gr. No. L-20175, October 30, 1967; PNB v. CA, G.R. No. 1. Consent;
88880, April 30, 1991). 2. Object or subject matter; and
3. Cause or consideration.
However, the termination of the contract does not necessarily require
mutuality, and it can even be validly left to one party by agreement or under
a resolutory facultative condition (Vitug, 2006). CONSENT
Contract of Adhesion Consent
It is a contract in which one of the parties prepares the stipulations It is the manifestation of the meeting of the offer and the
in the form of a ready-made contract, which the other party must acceptance upon the thing and the cause which are to constitute
accept or reject, but not modify, by affixing his signature or his the contract (Art. 1319, NCC).
adhesion thereto; leaving no room for negotiation and depriving
the latter of the opportunity to bargain on equal footing (Norton NOTE: Consent is essential to the existence of a contract; and where it is
wanting, the contract is non-existent.
Resources and Development Corporation v. All Asia Bank
Corporation, G.R. No. 162523, November 25, 2009).
Elements of consent (LM-CR)
Validity of contract of adhesion
1. Legal capacity of the contracting parties;
It is not entirely prohibited since the one who adheres to the NOTE: To form a valid and legal agreement it is necessary that there
contract is, in reality, free to reject it entirely, and if he adheres, he be a party capable of contracting and a party capable of being
gives his consent (Premiere Development Bank v. Central Surety & contracted with. Hence, if any one party to a supposed contract was
Insurance Company, Inc., G.R. No. 176246, February 13,2009). already dead at the time of its execution, such contract is undoubtedly
However, it is void when the weaker party is imposed upon in simulated and false and, therefore, null and void by reason of its
dealing with the dominant bargaining party, and its option is having been made after the death of the party who appears as one of
reduced to the alternative of taking or leaving it, completely the contracting parties therein. The death of a person terminates
contractual capacity (Milagros De Belen Vda. De Cabalu, et. al. v. SPS.
depriving such party of the opportunity to bargain on equal footing Renato Dolores Tabu and Laxamana, G.R. No. 188417, September 24,
(Keppel Cebu Shipyard, Inc. v. Pioneer Insurance and Surety 2012).
Corporation, G.R. Nos. 180880-81, September 25, 2009).
2. Manifestation of the conformity of the contracting parties;
Interpretation of contract of adhesion 3. Parties Conformity to the object, cause, terms and condition
of the contract must be intelligent, spontaneous and free
In interpreting such contracts, however, courts are expected to from all vices of consent; and
observe greater vigilance in order to shield the unwary or weaker 4. The conformity must be Real.
party from deceptive schemes contained in ready-made covenants
(Premiere Development Bank v. Central Surety Insurance Company, Requisites of a valid consent
Inc., G.R. No. 176246, February 13, 2009). In case of doubt which
will cause a great imbalance of rights against one of the parties, the It must be:
contract shall be construed against the party who drafted the same 1. Intelligent, or with an exact notion of the matter to which it
(Magis Young Achievers Learning Center v. Manalo, G.R. No. refers;
178835, February 13,2009).
NOTE:Intelligence in consent is vitiated by error; freedom by violence,
intimidation or undue influence; and spontaneity by fraud.
2. Free; and

CIVIL LAW
3. Spontaneous. NOTE: Offer or acceptance, or both, expressed in electronic form, is valid,
unless otherwise agreed by the parties (electronic contracts).
Elements of a valid offer and acceptance
Period for acceptance
1. Definite unequivocal
2. Intentional 1. Stated fixed period in the offer
3. Complete unconditional a. Must be made within the period given by the offeror.
b. As to withdrawal of the offer:
NOTE: We follow the cognitive theory and not the mailbox theory. Under our GR: It can be made by communicating such
Civil Law, the offer and acceptance concur only when the acceptance has withdrawal at any time before the acceptance is
reached the knowledge of the offeror (actual knowledge), and not at the made
time of sending the acceptance.
XPN: When the option is founded upon a
Requisites of a valid offer consideration (something paid or promised since
partial payment of the purchase price is considered
1. Must be certain (Art. 1345, NCC) as proof of the perfection of the contract)
2. May be made orally or in writing, unless the law prescribes a
particular form 2. No stated period
a. Offer is made to a person present acceptance must be
Q: The husband assumed sole administration of the familys made immediately.
mango plantation since his wife worked abroad. Subsequently, b. Offer is made to a person absent acceptance may be
without his wifes knowledge, the husband entered into an made within such time that, under normal
antichretic transaction with a company, giving it possession and circumstances, an answer can be expected from him.
management of the plantation with power to harvest and sell the
fruits and to apply the proceeds to the payment of a loan he got. Persons incapacitated to give consent(DIM)
What is the standing of the contract? (2011 Bar Question)
1. Deaf-mutes who do not know how to read and write
A: It is considered a continuing offer by the parties; perfected only (illiterates)
upon the wifes acceptance or the courts authorization. 2. Insane or demented persons, unless the contract was entered
NOTE: The person making the offer may fix the time, place and manner of
into during a lucid interval
acceptance, all of which must be complied with. (Art. 1321, NCC) 3. Minors (Art. 1327, NCC) except:
a. Contracts for necessaries (Art. 1489, NCC)
Rules on complex offer b. Contracts by guardians or legal representatives and the
court having jurisdiction had approved the same
1. Offers are interrelated contract is perfected if all the offers c. When there is active misrepresentation on the part of
are accepted the minor (minor is estopped)
2. Offers are not interrelated single acceptance of each offer d. Contracts of deposit with the Postal Savings Bank
results in a perfected contract unless the offeror has made it provided that the minor is over 7 years of age
clear that one is dependent upon the other and acceptance e. Upon reaching age of majority they ratify the same
of both is necessary.
Vices of consent (MIVUF)
Rules on advertisements as offers
1. Mistake
1. Business advertisements not a definite offer, but mere 2. Intimidation
invitation to make an offer, unless it appears otherwise (Art. 3. Violence
1325, NCC). 4. Undue influence
2. Advertisement for bidders simply invitation to make 5. Fraud
proposals and advertiser is not bound to accept the highest
or lowest bidder, unless the contrary appears (Art. 1326, NOTE: A threat to enforce a just or legal claim through a competent
authority does not amount to intimidation nor vitiate consent (Art. 1335,
NCC). NCC).
Grounds that would render the offer ineffective Mistake

1. Death, civil interdiction, insanity or insolvency of either party GR: Mistake as a vice of consent refers to mistake of facts and not
before acceptance is conveyed of law.
2. Express or implied revocation of the offer by the offeree
3. Qualified or conditional acceptance of the offer, which XPN: When mistake of law involves mutual error as to the legal
becomes counter-offer effect of an agreement when the real purpose of the parties is
4. Subject matter becomes illegal or impossible before frustrated (Art. 1334, NCC).
acceptance is communicated
5. Period given to the offerree to signify his acceptance has Requisites:
already lapsed 1. Mistake must be with respect to the legal effect of
the agreement;
Requisites of a valid acceptance 2. It must be mutual; and
3. Real purpose of the parties must have been
1. Must be absolute; a qualified acceptance constitutes a frustrated.
counter-offer (Art. 1319, NCC)
2. No specified form but when the offeror specifies a particular
form, such must be complied with.

CONTRACTS
Kinds of mistakes of fact which vitiate consent Hongkong and Shanghai Banking Corp., G.R. No. L-5496, Feb. 19,
1910).
1. Error in Re (mistake as to object)
a. Error in Corpore (mistake as to the identity of the Requisites of violence
thing)
b. Error in Substantia (mistake as to the substance of the 1. Physical force employed must be serious or irresistible; and
thing) 2. The determining cause for the party upon whom it is
c. Error in Quantitae (mistake as to the quantity of the employed in entering into the contract.
thing)
d. Mistake as to the conditions of the thing, provided NOTE: Violence or intimidation shall annul the obligation, although it may
such conditions have principally moved one or both have been employed by a third person who did not take part in the contract
(Art. 1336, NCC).
parties to enter into the contract
2. Error in Persona (Mistake as to person) Undue influence
Mistake as to the identity or qualifications of one of the There is undue influence when a person takes improper advantage
parties will vitiate consent only when such identity or of his power over the will of another, depriving the latter of a
qualifications have been the principal cause of the contract. reasonable freedom of choice (Art. 1337, NCC).
For mistake (as to the qualification of one of the parties) to
vitiate consent, two requisites must concur: Circumstances to be considered for the existence of undue
a. The mistake must be either with regard to the influence
identity or with regard to the qualification of
one of the contracting parties; and 1. Confidential, family, spiritual and other relations between the
b. The identity or qualification must have been the parties
principal consideration for the celebration of the 2. Mental weakness
contract (The Roman Catholic Church v. 3. Ignorance
ReginoPante, G.R. No. 174118, April 11, 2012) 4. Financial distress (Art. 1337, NCC)
NOTE:The enumeration is not exclusive. Moral dependence, indigence,

Q: Leonardo is the only legitimate child of the late spouses mental weakness, tender age or other handicap are some of the
Tomasina and Balbino. She only finished Grade three and did not circumstances to consider undue influence.
understand English. The Sebastians, on the other hand, are
illegitimate children. She filed an action to declare the nullity of Determination of undue influence
the extrajudicial settlement of the estate of her parents, which
she was made to sign without the contents thereof, which were
in English, explained to her. She claims that her consent was The test to determine whether or not there is undue influence
vitiated because she was deceived into signing the extrajudicial which will invalidate a contract is to determine whether or not the
settlement. Is the extra-judicial settlement of estate of Tomasina influence exerted has so overpowered and subjugated the mind of
valid? the contracting party as to destroy his free agency, making him
express the will of another rather than his own (Jurado,2011).
A:No. When one of the parties is unable to read, or if the contract
is in a language not understood by him, and mistake or fraud is Fraud
alleged, the person enforcing the contract must show that the
terms thereof have been fully explained to the former(Art. 1332). There is fraud when through the insidious words or machinations
Leonardo was not in a position to give her free, voluntary and of one of the contracting parties, the other is induce to enter into a
spontaneous consent without having the document, which was in contract which, without them, he would not have agreed to (Art.
English, explained to her. Therefore, the consent of Leonardo was 1338, NCC).
invalidated by a substantial mistake or error, rendering the
agreement voidable. The extrajudicial partition between the NOTE:Insidious words refers to a deceitful scheme or plot with an evil
Sebastians and Leonardo should be annulled and set aside on the design, or a fraudulent purpose (Pineda, 2000).
ground of mistake(Leonardo v. CA, G.R. No. 125485, Sept. 13,
2004). Kinds of Fraud
Requisites of intimidation (CICU) 1. Fraud in the perfection of the contract

a. Causal fraud (dolo causante)
1. One of the parties is compelled to give his Consent by a b. Incidental fraud (dolo incidente)
reasonable and well-grounded fear of an evil;
2. The evil must be Imminent and grave; 2. Fraud in the performance of an obligation (Art. 1170, NCC)
3. It must be Unjust; and
4. The evil must be the determining Cause for the party upon Requisites:
whom it is employed in entering into the contract(Art. 1335, a. Fraud, insidious words or machinations must have
NCC). been employed by one of the contracting parties;
b. It must have been material and serious;
NOTE: To determine the degree of the intimidation, the age, sex and c. It induced the other party to enter into a contract;
condition of the person shall be borne in mind(Art. 1335, NCC). d. It must be a deliberate intent to deceive or and
induce;
Validity of a contract if consent is reluctant e. Should not have been employed by both
contracting parties or by third persons;
A contract is valid even though one of the parties entered into it f. The victim suffered damage or injury.
against his wishes and desires or even against his better judgment.
Contracts are also valid even though they are entered into by one
of the parties without hope of advantage or profit (Martinez v.

CIVIL LAW
Dolo Causante v. Dolo Incidente 2. Relative (disimulados) The contracting parties conceal their
true agreement; (Art. 1345, NCC) binds the parties to their
DOLO CAUSANTE DOLO INCIDENTE real agreement when it does not prejudice third persons or is
BASIS not intended for any purpose contrary to law, morals, good
(ART. 1338) (ART. 1344)
Gravity of Fraud Serious in character Not serious customs, public order or public policy. Art. 1346) If the
concealed contract is lawful, it is absolutely enforceable,
efficient cause
provided it has all the essential requisites: consent, object,
which induces the Not the efficient
Efficient Cause and cause(Art. 1345, NCC; Art. 1346, NCC).
party to enter into cause
a contract
As to third persons without notice, the apparent contract is
Does not affect the
Effect on the Status Renders the valid for purposes beneficial to them. As to third persons with
validity of the
of the Contract contract voidable notice of the simulation, they acquire no better right to the
contract
simulated contract than the original parties to the same.
Contract remains
Annulment with
Remedies valid. Remedy is NOTE: If the parties state a false cause in the contract to conceal
damages
claim for damages. their real agreement, the contract is only relatively simulated and the
parties are still bound by their real agreement. Hence, where the
Q: Santos lease contract was about to expire but it was extended essential requisites of a contract are present and the simulation
and he continued to occupy the leased premises beyond the refers only to the content or terms of the contract, the agreement is
extended term. Samson offered to buy Santos store and his right absolutely binding and enforceable between the parties and their
successors in interest.
to the lease. Santos stated that the lease contract between him
and the lessor was impliedly renewed and that formal renewal In absolute simulation, there is a colorable contract but it has no
thereof would be made upon the arrival of a certain Tanya substance as the parties have no intention to be bound by it. The
Madrigal, based on the letter to him given by the lessor. When main characteristic of an absolute simulation is that the apparent
Samson occupied the premises, he was forced to vacate for contract is not really desired or intended to produce legal effect or in
Santos failure to renew his lease. He filed an action for damages any way alter the juridical situation of the parties. As a result, an
against Santos for fraud and bad faith claiming that the absolutely simulated or fictitious contract is void, and the parties may
recover from each other what they may have given under the
misrepresentation induced him to purchase the store and the
contract(Heirs of Dr. Mario S. Intac and Angelina Mendoza-Intac v.
leasehold right. Decide. CA, G.R. No. 173211, October 11, 2012).
A: No, Santos was not guilty of fraud nor bad faith in claiming that Q: Tiro is a holder of an ordinary timber license issued by the
there was implied renewal of his contract of lease with his lessor. Bureau of Forestry. He executed a deed of assignment in favor of
The letter given by the lessor led Santos to believe and conclude the Javiers. At the time the said deed of assignment was
that his lease contract was impliedly renewed and that formal executed, Tiro had a pending application for an additional forest
renewal thereof would be made upon the arrival of Tanya concession. Hence, they entered into another agreement.
Madrigal. Thus, from the start, it was known to both parties that,
insofar as the agreement regarding the transfer of Santos Afterwards, the Javiers, now acting as timber license holders by
leasehold right to Samson was concerned, the object thereof virtue of the deed of assignment entered into a forest
relates to a future right. It is a conditional contract, the efficacy of consolidation agreement with other ordinary timber license
which depends upon an expectancy the formal renewal of the holders. For failure of the Javiers to pay the balance due under
lease contract between Santos and lessor. The efficacy of the the two deeds of assignment, Tiro filed an action against them.
contract between the parties was thus made dependent upon the Are the deeds of assignment null and void for total absence of
happening of this suspensive condition (Samson v. CA, G.R. No. consideration and non-fulfillment of the conditions?
108245, Nov. 25, 1994).
A: They are not null and void per se. The parties are to be bound
Acts considered not fraudulent by their real agreement. The contemporaneous and subsequent
acts of Tiro and the Javiers reveal that the cause stated in the first
1. The usual exaggerations in trade and the other party had an deed of assignment is false. It is settled that the previous and
opportunity to know the facts are not themselves fraudulent simultaneous and subsequent acts of the parties are properly
(Art. 1340, NCC); cognizable indicia of their true intention. Where the parties to a
2. A mere expression of an opinion does not signify fraud, contract have given it a practical construction by their conduct as
unless made by an expert and the other party had relied on by acts in partial performance, such construction may be
the formers special knowledge (Art. 1341, NCC); considered by the court in construing the contract, determining its
3. Misrepresentation does not vitiate consent, unless such meaning and ascertaining the mutual intention of the parties at the
misrepresentation has created substantial mistake and the time of contracting. The first deed of assignment is a relatively
same is mutual (Art. 1342, NCC); and simulated contract which states a false cause or consideration, or
4. Misrepresentation made in good faith is not fraudulent but one where the parties conceal their true agreement. A contract
may constitute error (Art. 1337, NCC). with a false consideration is not null and void per se. Under Article
1346 of the Civil Code, a relatively simulated contract, when it does
Simulation of contract not prejudice a third person and is not intended for any purpose
contrary to law, morals, good customs, public order or public policy
It is the declaration of a fictitious will, deliberately made by binds the parties to their real agreement (Javier v. CA, G.R. No. L-
agreement of the parties, in order to produce, for the purposes of 48194, Mar. 15, 1990).
deception, the appearance of a juridical act which does not exist or
is different from that which was executed (Tolentino, 2002).
Kinds of simulation of contract
1. Absolute (simulados) The contracting parties do not intend

to be bound by the contract at all, thus the contract is
void(Art. 1345, NCC; Art. 1346, NCC).

CONTRACTS
OBJECT Kinds of cause
Object 1. Cause of onerous contracts the prestation or promise of a

thing or service by the other.
It is the subject matter of the contract. It can be a thing, right or 2. Cause of remuneratory contracts the service or benefit
service arising from a contract. remunerated.
3. Cause of gratuitous contracts the mere liberality of the
Requisites of an object(DELiCT) donor or benefactor.
4. Accessory identical with cause of principal contract, the
1. Determinate as to kind (even if not determinate, provided it loan which it derived its life and existence (e.g.: mortgage or
is possible to determine the same without the need of a new pledge)
contract);
2. Existing or the potentiality to exist subsequent to the Complementary contracts construed together doctrine
contract;
3. Must be Licit; An accessory contract must be interpreted with its principal
4. Within the Commerce of man; and contract. The provisions must be construed together to arrive at
5. Transmissible. their true meaning. Certain stipulations cannot be segregated and
then made to control. This doctrine closely adheres to the spirit of
NOTE: The most evident and fundamental requisite in order that a thing, Art. 1374 of the Civil Code which states that the various
right or service may be the object of a contract, is that it should be in stipulations of a contract shall be interpreted together, attributing
existence at the moment of the celebration of the contract, or at least, it can to the doubtful ones that sense which may result from all of them
exist subsequently or in the future. taken jointly (Spouses Rigor v. Consolidated Orix Leasing and
Finance Corporation, G.R. No. 136423. August 20, 2002).
Object of contracts
Cause v. Motive
GR: All things or services may be the object of contracts.
BASIS CAUSE MOTIVE
XPNs:
As to proximate Direct and most
1. Things outside the commerce of men (Art. 1347, NCC); Indirect or remote
reason in a proximate reason
2. Intransmissible rights; reasons
contract of a contract
3. Future inheritance, except in cases expressly authorized by
As to the kind of Objective and Psychological or
law;
reason in the juridical reason of purely personal
4. Services which are contrary to law, morals, good customs,
contract contract reason
public order or public policy;
Legality or illegality
5. Impossible things or services; and Legality or illegality
As to the legal of motive does not
6. Objects which are not possible of determination as to their of cause affects the
effect to the affect the existence
kind. existence or validity
contract or validity of
of the contract
contract
Exceptions to the rule that no person can enter into a contract
with regard to future inheritance
Cause is always the Motive differs for
1. Under Art. 130 of the Family Code, which allows the future As to the parties same for each each contracting
spouses to give or donate to each other in their marriage contracting party party
settlement their future property to take effect upon the
death of the donor and to the extent laid down by the
provisions of the NCC relating to testamentary succession; Rules relating to cause on contracts
and
2. Under Art. 1080 of the Code, which allows a person to make a 1. Absence of cause Confers no right and produces no legal
partition of his estate among his heirs by an act inter vivos, effect.
provided that the legitime of the compulsory heirs is not 2. Failure of cause - Does not render the contract void
prejudiced (Jurado, 2009). 3. Illegality of cause - Contract is null and void.
4. Falsity of cause Contract is void; unless the parties show
CAUSE that there is another cause which is true and lawful.
5. Lesion or inadequacy of cause Does not invalidate the
Cause contract, unless:
a. there is fraud, mistake, or undue influence;
It is the essential and impelling reason why a party assumes an b. when the parties intended a donation or some other
obligation (Manresa). contract; or
c. in cases specified by law (e.g. contracts entered by
Requisites of a cause guardian when ward suffers lesion of more than 25%
and with court approval, otherwise, if there is no
It must: approval, the contract is void regardless of the amount
1. Exist; of lesion).
2. Be true; and
3. Be licit. Q: May a moral obligation constitute a sufficient cause to support
an onerous contract?
NOTE: Every contract is presumed to have a cause; and such cause of lawful.
A: Where the moral obligation arises wholly from ethical
considerations, unconnected with any civil obligation, and as such
is demandable only in conscience, and not in law, it cannot
constitute a cause to support an onerous contract, but where such

CIVIL LAW
moral obligation is based upon a previous civil obligation which has According to the risks involved:
already been barred by the statute of limitations at the time when 1. Commutative Contracts are those where each of the
the contract is entered into, it constitutes a sufficient cause or parties acquire an equivalent of his prestation and such
consideration to support said contract (Villaroel v. Estrada, 71 Phil. equivalent is pecuniarily appreciable and already
14). determined from the moment of the perfection of the
contract. (e.g. Lease)
KINDS OF CONTRACTS 2. Aleatory Contracts are those which are dependent
upon the happening of an uncertain event, thus,
According to perfection or formation charging the parties with the risk of loss or gain. (e.g.
1. Consensual contracts which are perfected by the mere Insurance)
meeting of the minds of the parties. (Art. 1305) (e.g.
Sale, Lease) According to their names or norms regulating them:
2. Real contracts are those which require for their 1. Nominate Contracts are those which have their own
perfection both the consent of the parties and the name and individuality, and are regulated by provisions
delivery of the object by one party to the other. (e.g. of law. (e.g. Sale)
creation of real rights over immovable property must be 2. Innominate Contracts are those which lack name or
written, deposit and pledge) individuality, and are not regulated by special provisions
3. Solemn contracts contracts which must appear in of law.
writing, such as: (Jurado, 2011)
a. Donations of real estate or of movables if the
value exceeds P5,000; FORMALITY
b. Partnership to which immovables are
contributed; Rules on the form of contracts
c. Contract of antichresis requires the
amount of principal and interest be GR: Form is not required in consensual contracts.
specified;
d. Sale of piece of land or interest therein is XPNs: When the law requires a contract be in writing for its:
through an agent; 1. Validity (formal contracts); or
e. Stipulation to charge interest; 2. Enforceability (under Statute of Frauds).
f. Stipulation limiting common carrier's duty of 3. For the convenience of the parties
extraordinary diligence to ordinary diligence;
g. Chattel mortgage; or NOTE: The parties may compel each other to reduce the verbal agreement
h. Transfer of large cattle (Sec. 22, Act No. into writing.
1147; Art. 1581, NCC);
Formalities required in specific contracts
According to their relation to other contracts:
1. Preparatory Contracts are those which have for their 1. Donations
object the establishment of a condition in law which is a. Personal property- if value exceeds 5,000, the donation
necessary as a preliminary step towards the celebration and acceptance must both be written (Art. 748, NCC).
of another subsequent contract. (e.g. Partnership, b. Real property:
Agency) i. Donation must be in a public instrument,
2. Principal Contracts are those which can subsist specifying therein the property donated and value
independently from other contracts (e.g. Sale, Lease) of charges which donee must satisfy.
3. Accessory Contracts those which can exist only as a ii. Acceptance must be written, either in the same
consequence of, or in relation with, another prior deed of donation or in a separate instrument.
contract. (e.g. Pledge, Mortgage) iii. If acceptance is in a separate instrument, the
donor shall be notified thereof in authentic form,
According to their form: and this step shall be noted in both instruments
1. Common or Informal Contracts are those which (Art. 749, NCC).
require no particular form. (e.g. Loan) 2. Partnership where real property contributed
2. Special or Formal Contracts are those which require a a. There must be a public instrument regarding the
particular form. (e.g. Donations, Chattel Mortgage) partnership;
b. The inventory of the realty must be made, signed by
According to their purpose: the parties and attached to the public instrument (Art.
1. Transfer of Ownership (e.g. Sale) 1773, NCC)
2. Conveyance of Use (e.g. Usufruct, Commodatum) 3. Antichresis - the amount of the principal and interest must be
3. Rendition of Services (e.g. Agency) in writing (Art. 2134, NCC).
4. Agency to sell real property or an interest therein - authority
According to the nature of the vinculum which they produce: of the agent must be in writing (Art. 1874, NCC).
1. Unilateral Contracts are those which give rise to an 5. Stipulation to charge interest - interest must be stipulated in
obligation only to one of the parties. (e.g. writing (Art. 1956, NCC).
Commodatum) 6. Stipulation limiting common carrier's duty of extraordinary
2. Bilateral Contracts are those which give rise to diligence to ordinary diligence:
reciprocal obligations for both parties. (e.g. Sale) a. must be in writing, signed by shipper or owner
b. supported by valuable consideration other than the
According to their cause: service rendered by the comon carrier
1. Onerous (e.g. Sale) c. reasonable, just and not contrary to public policy (Art.
2. Gratuitous (e.g. Commodatum) 1744, NCC).
7. Chattel mortgage - personal property must be recorded in
the Chattel Mortgage Register (Art. 2140, NCC).

CONTRACTS
Contracts which must be in writing to be valid The fundamental distinction between reformation of an instrument
and annulment of a contract is that the first presupposes a
1. Donation of personal property whose value exceeds five perfectly valid contract in which there has been a valid meeting of
thousand pesos (Art. 748, NCC) the donation and the minds of the contracting parties while the second is based on a
acceptance must be in writing defective contract in which there has been no meeting of the
2. Sale of a piece of land or any interest therein through an minds because the consent is vitiated (Jurado, 2010).
agent (Art. 1874, NCC) the authority of the agent shall
appear in writing Basis and nature of the remedy of reformation of instrument
3. Agreements regarding payment of interest in contracts of
loan (Art. 1956, NCC) The remedy of reformation of an instrument is based on the
4. Antichresis (Art. 2134) the amount of the principal and the principle of equity where, to express the true intention of the
interest shall be specified in writing (Jurado, 2011) contracting parties, an instrument already executed is allowed by
law to be reformed. The right of reformation is necessarily an
Contracts which must appear in a public document invasion or limitation of the parol evidence rule, since, when a
writing is reformed, the result is that an oral agreement is by court
1. Donation of real properties (Art. 719, NCC); decree made legally effective. The remedy, being an extraordinary
2. Partnership where immovable property or real rights are one, must be subject to the limitations as may be provided by law.
contributed to the common fund (Arts. 1171 & 1773, NCC); A suit for for reformation of an instrument must be brought within
3. Acts and contracts which have for their object the creation, the period prescribed by law, otherwise, it will be barred by the
transmission, modification or extinguishment of real rights mere lapse of time (Bentir v. Leanda, G.R. 128991, April 12, 2000).
over immovable property; sale of real property or of an
interest therein is governed by Arts. 1403, No. 2, and 1405 Reformation of instruments; when allowed
(Art. 1358 (1), NCC);
4. The cession, repudiation or renunciation of hereditary rights 1. When the mutual mistake of the parties causes the failure of
or of those of the conjugal partnership of gains (Art. 1358 (2), the instrument to disclose their agreement (Art. 1361, NCC).
NCC); 2. When one party was mistaken and the other acted
5. The power to administer property or any other power which fraudulently or inequitably in such a way that the instrument
has for its object an act appearing or which should appear in does not show their true intention, the former may ask for
a public document or should prejudice a third person (Art. the reformation of the instrument (Art. 1362, NCC).
1358 (3), NCC); 3. When one party was mistaken and the other knew or
6. The cession of actions or rights proceeding from an act believed that the instrument did not state their real
appearing in a public document (Art. 1358 (4), NCC). agreement, but concealed that fact from the former (Art.
1363, NCC).
Contracts that must be registered 4. When through the ignorance, lack of skill, negligence or bad
faith on the part of the person drafting the instrument or of
1. Chattel mortgages (Art. 2140, NCC) the clerk or typist, the instrument does not express the true
intention of the parties (Art. 1364, NCC).
NOTE: In accordance with Article 2125 of the Civil Code, an 5. If the parties agree upon the mortgage or pledge of real or
unregistered chattel mortgage is a valid and binding between the personal property, but the instrument states that the
parties because registration is necessary only for the purpose of property is sold absolutely or with a right of repurchase (Art.
binding third persons (Filipinas Marble Corporation v. Intermediate
Appellate Court, G.R. No. L-68010, 1986).
1365, NCC).
2. Sale or transfer of large cattle (Cattle Registration Act) Reformation of instruments; when not allowed
REFORMATION 1. Simple, unconditional donations inter vivos;

2. Wills;
Reformation of instruments 3. When the agreement is void(Art. 1366, NCC);
4. When an action to enforce the instrument is filed (estoppel).
It is a remedy to conform to the real intention of the parties due to
mistake, fraud, inequitable conduct, accident (Art. 1359, NCC). Prescriptive period in reformation of instruments
NOTE: Reformation is based on justice and equity (Pineda, 2000). 10 years from the date of the execution of the instrument
Requisites in reformation of instruments Persons who can ask for the reformation of the instrument
1. Meeting of the minds to the contract It may be ordered at the instance of:
2. True intention is not expressed in the instrument 1. if the mistake is mutual either party or his successors
3. By reason of: (MARFI) in interest; otherwise;
a. Mistake, 2. upon petition of the injured party; or
b. Accident, 3. his heirs and assigns.
c. Relative simulation,
d. Fraud, or Q: Will period to bring an action for reformation run from the
e. Inequitable conduct time the contract became disadvantageous to one party?
f. Clear and convincing proof of MARFI.
A: In reformation of contracts, what is reformed is not the contract
NOTE: When there is no meeting of the minds, the proper remedy is itself, but the instrument embodying the contract. It follows that
annulment and not reformation (Pineda, 2000). whether the contract is disadvantageous or not is irrelevant to
reformation and therefore, cannot be an element in the
determination of the period for prescription of the action to
reform (Pineda, 2000).

CIVIL LAW
DEFECTIVE CONTRACTS
BASIS RESCISSIBLE VOIDABLE UNENFORCEABLE VOID /INEXISTENT

Economic damage or
Entered without authority or in excess Illegality (void) or
lesion to either one of Incapacity of one of
Origin of the thereof; non-compliance with Statute of absence of any of
the parties or to 3rd parties to give consent
defect Frauds; incapacity of both parties to give essential requisites of
persons; declaration or vitiated consent
consent a contract (inexistent)
by law
Necessity of Suffered by either As to the other
Damage/ one of parties or 3rd contracting party - not Not necessary Not necessary
prejudice person necessary
Curable by
Curable Curable Not curable Not Curable
Prescripiton
Valid & legally Valid & legally
Inoperative until ratified; not enforceable in
Legal effect enforceable until enforceable until None
court without proper ratification
judicially rescinded judicially annulled
Rescission or Declaration of nullity
Remedy Annulment of contract Only personal defense
rescissory action of contract
Can be attacked
Nature of action Must be a direct action Direct action needed Indirect attack allowed
directly or indirectly
GR: Contracting party; 3rd persons cannot file
Who can file the
XPN: Defrauded Contracting party Contracting party unless their interest
action
Creditors are directly affected
Susceptibility of Susceptible but not of
Susceptible Susceptible Not Susceptible
ratification ratification proper
Action for recovery; specific performance or Action for declaration
Action for rescission Action for annulment
Susceptibility damages prescribes of nullity or putting of
prescribes after 4 prescribes after 4
prescription (10 years if based on a written contract; 6 defense of nullity does
years years
years if unwritten) not prescribe
Rescissible contracts 2. Payments made in state of insolvency:

a. Plaintiff has no other means to maintain reparation;
These are contracts validly constituted but nevertheless maybe set b. Plaintiff must be able to return whatever he may be
aside due to a particular economic damage or lesion caused to obliged to return due to rescission;
either to one of the parties or to a third person. It may be set aside c. The things must not have been passed to third persons
in whole or in part, or up to the extent of the damage caused (Art. in good faith;
1381, NCC). d. It must be made within 4 yrs.
The following are rescissible contracts: Characteristics of rescissible contract
1. Entered into by persons exercising fiduciary capacity: those 1. It has all the elements of a valid contract;
a. Entered into by guardians whenever the wards whom 2. It has a defect consisting of an injury (generally in the form of
they represent suffer lesion by more than of value of economic damage or lesion, fraud, and alienation of the
the property (Art. 1381(1), NCC); property) to one of the contracting parties or to a third
person,.
NOTE: Contracts entered by a guardian over the property of his 3. It is valid and effective until rescinded;
ward, without court approval is void, not merely rescissible 4. It can be attacked only directly.
regardless of the existence of lesion
5. It is susceptible of convalidation only by prescription (Pineda,
2000)
b. Agreed upon in representation of absentees, if absentee
suffers lesion by more than of value of property (Art. Nature of an action for rescission
1381(2), NCC);
c. Contracts where rescission is based on fraud committed The action for rescission is subsidiary. It cannot be instituted
on creditor and cannot collect the claim due (accion except when the party suffering damage has no other legal means
pauliana) (Art. 1381(3), NCC); to obtain reparation for the same (Art. 1383, NCC). Hence, it must
d. Contracts where the object involved is the subject of be availed of as the last resort, availed only after all legal remedies
litigation; contract entered into by defendant without have been exhausted and proven futile (Khe Hong Cheng v. CA,
knowledge or approval of litigants or judicial authority G.R. No. 144169, March 28, 2001).
(Art. 1381(4), NCC);
e. Payment by an insolvent on debts which are not yet Persons who may institute an action for the rescission of a
due; prejudices the claim of others (Art. 1382, NCC); rescissible contract
f. Provided for by law (Arts. 1526, 1534, 1538, 1539, 1542,
1556, 1560, 1567 & 1659, NCC) The action for rescission may be instituted by the following:
1. The person who is prejudiced, such as the person suffering
the lesion in rescissory actions based on lesion, the creditor
who is defrauded in rescissory actions based on fraud, and
other persons authorized to exercise the same in other
rescissory actions;

CONTRACTS
2. Their representatives; Resolution v. Rescission
3. Their heirs; and
4. Their creditors by virtue of subrogatory action defined in Art. RESOLUTION RESCISSION
1177 of the NCC (Jurado, 2009). (ART. 1191) (ARTICLE 1381)
Both presuppose contracts validly entered into and subsisting and
Prescriptive period of action for rescission both require mutual restitution when proper
Nature
1. Under Art. 1381, no.1 within 4 years from the time the Principal action;
termination of the incapacity of the ward; Subsidiary remedy
Retaliatory in character
2. Under Art. 1381, no. 2- within 4 years from the time the Grounds for Rescission
domicile of the absentee is known; or 5 grounds under Art. 1381.
3. Under Art. 1381, nos. 3 & 4 & Art. 1382 within 4 years from
Non-performance of obligation (lesions or fraud of creditors);
the time of the discovery of fraud. (only ground) Non-performance is not
important
Requisites that must concur before a contract may be rescinded
Applicability
on the ground of lesion
Applies to both unilateral and
Only to reciprocal obligations
Whether the contract is entered into by a guardian in behalf of his reciprocal obligations
ward or by a legal representative in behalf of an absentee, before it Person who can Initiate the Action
can be rescinded on the ground of lesion, it is indispensable that Only the injured party to the Even third persons prejudiced by
the following requisites must concur: contract the contract
1. The contract must be entered into by the guardian in Fixing of Period by the Court
behalf of his ward or by the legal representative in Court may fix a period or grant
behalf of an absentee. extension of time for the
Court cannot grant extension of
2. The ward or absentee suffered lesion of more than 1/4 fulfillment of the obligation
time
of the value of the property which is object of the when there is sufficient reason
contract. to justify such extension
3. The contract must be entered into without judicial Purpose
approval. Reparation for damage or injury,
4. There must be no other legal means for obtaining allowing partial rescission of
reparation for the lesion. contract
5. The person bringing the action must be able to return Cancellation of the contract
(Pineda, Obligations and
whatever he may be obliged to restore. Contracts, 2000 ed., pp. 514-
6. The object of the contract must not be legally in the 515)
possession of a third person who did not act in bad
faith. NOTE:While Article 1191 uses the term rescission, the original term which
was used in the old Civil Code, from which the article was based, was
Requisites before a contract entered into in fraud of the creditors resolution. (Ong v. CA, G.R. No. 97347, July 6, 1999).
may be rescinded
Mutual Restitution
There must be a credit existing prior to the constitution of the said
fraudelent contract; Rescission of contract creates an obligation of mutual restitution of
1. There must be fraud, or at least, the intent to commit the objects of the contract, their fruits, and the price with interest.
fraud to the prejudice of the creditor seeking rescission;
NOTE: Rescission is possible only when the person demanding rescission can
2. The creditor cannot in any legal manner collect his
return whatever he may be obliged to restore. A court of equity will not
credit (subsidiary character of rescission); and rescind a contract unless there is restitution, that is, the parties are restored
3. The object of the contract must not be legally in to the status quo ante (Art. 1385, NCC).
possession of a third person in good faith.
Mutual restitution is not applicable when:
Badges of fraud 1. Creditor did not receive anything from contract; or
2. Thing already in possession of third persons in good
1. Consideration for the conveyance of the property is faith; subject to indemnity only, if there are two or more
inadequate or fictitious; alienations liability of first infractor.
2. Transfer was made by the debtor after a suit has commenced
and during its pending against him Q: Reyes (seller) and Lim (buyer) entered into a contract to sell a
3. Sale upon credit by an insolvent debtor; parcel of land. Harrison Lumber occupied the property as lessee.
4. The presence of evidence of large indebtedness or complete Reyes offered to return the P10 million downpayment to Lim
insolvency of the debtor; because Reyes was having problems in removing the lessee from
5. Transfer of all his property by a debtor when he is financially the property. Lim rejected Reyes offer. Lim learned that Reyes
embarrassed or insolvent; had already sold the property to another.
6. Transfer is made between father and son, where there are
present some or any of the above circumstances; and Both Reyes and Lim are now seeking rescission of the contract to
7. Failure of the vendee to take exclusive possession of the sell. However, Reyes does not want to deposit the 10M to the
property. (Oria v. McMicking, 21 Phil. 243) court because according to him, he has the right to use, possess
and enjoy of the money as its owner before the contract to sell is
rescinded. Is Reyes contention correct?
A:No. There is also no plausible or justifiable reason for Reyes to

object to the deposit of the P10 million downpayment in court. The
contract to sell can no longer be enforced because Reyes himself

CIVIL LAW
subsequently sold the property. Both Lim and Reyes are seeking for
rescission of the contract. By seeking rescission, a seller necessarily NOTE: If both parties are incapacitated to give consent, the contract is
offers to return what he has received from the buyer. Such a seller unenforceable and not merely voidable.
may not take back his offer if the court deems it equitable, to
prevent unjust enrichment and ensure restitution, to put the 2. Those where the consent is vitiated by mistake, violence,
money in judicial deposit. intimidation, undue influence or fraud(Art. 1390, NCC).
NOTE: In this case, it was just, equitable and proper for the trial court to Who may institute action for annulment
order the deposit of the down payment to prevent unjust enrichment by
Reyes at the expense of Lim. Depositing the down payment in court ensure An action for annulment may be instituted by all who are thereby
its restitution to its rightful owner. Lim, on the other hand, has nothing to obliged principally or subsidiarily.
refund, as he has not received anything under the contract to sell(Reyes v.
Lim, Keng and Harrison Lumber, Inc., G.R. No. 134241, Aug. 11, 2003). NOTE: He who has capacity to contract may not invoke the incapacity of the
party with whom he has contracted nor can those who exerted intimidation,
Q: Goldenrod offered to buy a mortgaged property owned by violence or undue influence or employed fraud or caused mistake base their
Barreto Realty to which it paid an earnest money amounting to action upon these flaws of the contract.
P1 million. It was agreed upon that Goldenrod would pay the
outstanding obligations of Barreto Realty with UCPB. However, Effects of annulment of a contract
Goldenrod did not pay UCPB because of the banks denial of its
request for the extension to pay the obligation. Thereafter, 1. If contract not yet consummated parties shall be released
Goldenrod, through its brocker, informed Barreto Realty that it from the obligations arising therefrom.
could not go through with the purchase of the property and also 2. If contract has already been consummated rules provided in
demanded the refund of the earnest money it paid. In the Arts. 1398-1402, shall govern.
absence of a specific stipulation, may the seller of real estate
unilaterally rescind the contract and as a consequence keep the a. Restitution
earnest money to answer for damages in the event the sale fails
due to the fault of the prospective buyer? GR: Mutual restitution. the contracting parties shall
restore to each other things which have been the
A:No. Goldenrod and Barretto Realty did not intend that the subject matter of the contract, with their fruits and the
earnest money or advance payment would be forfeited when the price with its interest except in case provided by law. In
buyer should fail to pay the balance of the price, especially in the an obligation to render services, the value thereof shall
absence of a clear and express agreement thereon. be the basis for damages (Art. 1398, NCC).
Moreover, Goldenrod resorted to extrajudicial rescission of its XPN: No restitution. The party incapacitated is not
agreement with Barretto Realty. Under Article 1385, rescission obliged to make any restitution except insofar as he has
creates the obligation to return the things which were the object of been benefited by the thing or the price received by him
the contract together with their fruits and interest. Therefore, by (Art. 1399, NCC).
virtue of the extrajudicial rescission of the contract to sell by
Goldenrod without opposition from Barretto Realty, which in turn, b. Whenever the person obliged by the decree of
sold the property to other persons, Barretto Realty, had the annulment to return the thing cannot do so because it
obligation to return the earnest money which formed part of the has been lost through his fault, he shall return the fruits
purchase price plus legal interest from the date it received notice received and the value of the thing at the time of the
of rescission. It would be most inequitable if Barretto Realty would loss, with interest from the same date (Art. 1400, NCC).
be allowed to retain the money at the same time appropriate the
proceeds of the second sale made to another(Goldenrod, Inc. v. Causes of extinction of action to annul
CA, G.R. No. 126812, Nov. 24, 1998).
1. Prescription the action for annulment must be commenced
VOIDABLE CONTRACTS within 4 years depending on the ground stated.
Voidable contracts NOTE: If the action has prescribed, the contract can no longer be set
aside (Villanueva v. Villanueva, 91 Phil 43).
Voidable contracts are those where consent is vitiated either by
the incapacity of one of the contracting parties or by mistake, 2. Ratification cleanses the contract of its defects from the
violence, intimidation, undue influence or fraud. These contracts moment it was constituted (Art. 1396, NCC).
are binding, unless they are annulled by a proper action in court. It 3. By loss of the thing which is the object of the contract
is susceptible of ratification (Art. 1390, NCC). through fraud or fault of the person who is entitled to annul
the contract (Art. 1401, NCC).
NOTE: Annulment may be had even if there be no damage to the contracting
parties. NOTE: If the right of action is based upon the incapacity of any one of the
contracting parties, the loss of the thing shall not be an obstacle to the
success of the action, unless it took place through the fraud or fault of the
Characteristics of a voidable contract plaintiff (Art. 1401, NCC).
1. Effective until set aside; Prescriptive period for an annulment of a voidable contract
2. May be assailed only in an action for such purpose;
3. Can be confirmed; and The action for annulment shall be brought within 4 years, reckoned
4. Can be assailed only by the party whose consent was from:
defective or his heirs or assigns. 1. In cases of intimidation, violence or undue influence, from
the time the defect of the consent ceases.
Classes of voidable contracts 2. In case of mistake or fraud, from the time of the discovery of
the same.
1. Those where one of the parties is incapable of giving consent;
and

CONTRACTS
3. And when the action refers to contracts entered into by Voidable contract v. Rescissible contract
minors or other incapacitated persons, from the time the
guardianship ceases(Art. 1391, NCC). BASIS VOIDABLE RESCISSIBLE
As to the kind of
Ratification Defect is intrinsic Defect is external
defect present
The damage or
It is the act or means by virtue of which, efficacy is given to a prejudice suffered
contract which suffers from a vice of curable nullity (Manresa) Vitiated consent by one of the
As to the source of
makes the contract contracting parties
NOTE: Ratification extinguishes the action to annul a voidable contract (Art. defect
voidable. or a third person
1392, NCC).
makes the contract
rescissible.
Requisites of ratification
As to the necessity Damage is Damage / prejudice
of damage immaterial. is material.
1. The contract involved must be voidable;
Annulability of the Rescissibility of the
2. Person ratifying must know the reason for the voidability; As to the source of
contract is based on contract is based on
3. The cause for the voidability must immediately cease after remedy
law. equity.
the ratification;
As to the kind of
4. Ratification must be express or through an act implying a Public interest Private interest
interest the
waiver of the action to annul; and predominates. predominates.
predominates
5. The person ratifying it must be the injured party.
As to the
Susceptible of Not susceptible of
NOTE: Ratification entered into by the incapacitated person may be susceptibility of
ratification. ratification.
effected by the guardian of the incapacitated person (Art. 1394, NCC). ratification
However, this rule does not pertain to a rescissible contract entered As to whether a
into by the guardian in behalf of his ward. sanction or a It is a sanction. It is a remedy.
remedy
Kinds of ratification Only parties to the Third persons who
As to who can avail
contract can assail are affected may
1. Express the desire of the innocent party to convalidate the the remedies
it. file the action
contract, or his waiver or renunciation of his right to annul It is a subsidiary
the contract is clearly manifested verbally or formally in As to the kind of It is a principal
action.
writing (Pineda, 2000) action action.
2. Implied (tacit) it is the knowledge of the reason which (Pineda, 2000)
renders the contract voidable and such reason having ceased,
the person who has a right to invoke it should execute an act UNENFORCEABLE CONTRACTS
which necessarily implies an intention to waive his right (Art.
1393, NCC). Unenforceable contracts
Retroactivity in ratification of contracts Those contracts which cannot be enforced by action or complaint,
unless they have been ratified by the party or parties who did not
GR: Retroactivity applies in ratification of contracts. give consent.
XPN: When the rights of innocent third persons will be prejudiced, Characteristics of unenforceable contract
ratification will not take effect.
1. It cannot be enforced by a proper action in court;
NOTE: Ratification does not require the conformity of the contracting party
2. It may be ratified;
who has no right to bring the action for annulment.
3. It cannot be assailed by third person.
Confirmation v. Recognition
Kinds of unenforceable contracts
CONFIRMATION RECOGNITION
The following contracts are unenforceable unless they are ratified:
It is an act by which a It is an act whereby a defect
1. Those entered into the name of another person by one
voidable contract is cured of of proof is cured such as
who has been given no authority/legal representation or
its vice or defect when an oral contract is put
acted beyond his powers;
into writing or when a
private instrument is NOTE: A contract of sale over a piece of land entered by an agent
converted into a public whose authority is not in writing, even if he acted beyond the scope of
instrument (Luna v. Linatoc, his authority is void, not merely unenforceable (Art. 1874, NCC).
74 Phil. 15)
2. Those that do not comply with the Statute of Frauds;
and
3. Those where both parties are incapable of giving
consent to a contract (Art. 1403, NCC).

CIVIL LAW
Statute of Frauds 8. It does not determine the credibility or weight of evidence. It
merely concerns itself with the admissibility.
The term "Statute of Frauds" [Article 1403, (2)] is descriptive of 9. It does not apply if the claim is that the contract does not
statutes which require certain classes of contracts to be in writing. express the true agreement of the parties(Paras, 2008).
It requires certain contracts enumerated therein to be evidenced
by some note or memorandum subscribed by the party charged or Q: Cenido, as an heir of Aparato and claiming to be the owner of a
by his agent in order to be enforceable. The Statute does not house and lot, filed a complaint for ejectment against spouses
deprive the parties of the right to contract with respect to the Apacionado. On the other hand, spouses Apacionado allege that
matters therein involved, but merely regulates the formalities of they are the owners which are unregistered purchased by them
the contract necessary to render it enforceable. Evidence of the from its previous owner, Aparato. Their claim is anchored on a 1-
agreement cannot be received without the writing or a secondary page typewritten document entitled "Pagpapatunay," executed
evidence of its contents (Swedish Match, AB v. CA, G.R. No. by Aparato. Is the Pagpapatunay entered into by Bonifacio and
128120, Oct. 20, 2004). spouse Apacionado valid and enforceable?
The Statute of Frauds applies only to executory contracts, not to A:Yes, it is valid and enforceable. Generally, contracts are
those that are partially or completely fulfilled. Where a contract of obligatory, in whatever form such contracts may have been
sale is alleged to be consummated, it matters not that neither the entered into, provided all the essential requisites for their validity
receipt for the consideration nor the sale itself was in writing. Oral are present. When, however, the law requires that a contract be in
evidence of the alleged consummated sale is not forbidden by the some form for it to be valid or enforceable, that requirement must
Statute of Frauds and may not be excluded in court (Victoriano v. be complied with.
CA, G.R. No. 87550, Feb. 11, 1991).
The sale of real property should be in writing and subscribed by the
Purpose of the Statute of Frauds party charged for it to be enforceable. The "Pagpapatunay" is in
writing and subscribed by Aparato, hence, it is enforceable under
It is to prevent fraud and perjury in the enforcement of obligations the Statute of Frauds. Not having been subscribed and sworn to
depending for their evidence on the unassisted memory of before a notary public, however, the "Pagpapatunay" is not a
witnesses, by requiring certain enumerated contracts and public document, and therefore does not comply with par. 1, Art.
transactions to be evidenced by a writing signed by the party to be 1358.
charged (Swedish Match, AB v. CA, G.R. No. 128120, Oct. 20, 2004)
Moreover, the requirement of a public document in Article 1358 is
Contracts or agreements covered by the Statute of Frauds not for the validity of the instrument but for its efficacy. Although a
conveyance of land is not made in a public document, it does not
1. An agreement that by its terms is not to be performed within affect the validity of such conveyance. The private conveyance of
a year from the making thereof; the house and lot is therefore valid between Aparato and the
2. A special promise to answer for the debt, default or spouses. For greater efficacy of the contract, convenience of the
miscarriage of another; parties and to bind third persons, respondent spouses have the
3. An agreement made in consideration of marriage, other than right to compel the vendor or his heirs to execute the necessary
a mutual promise to marry; document to properly convey the property (Cenidonv. Spouses
4. An agreement for the sale of goods, chattels or things in Apacionado, G.R. No. 132474, Nov. 19, 1999).
action, at a price not less than 500 pesos, unless the buyer
accepts and receives part of such goods and chattels, or the Unenforceable contract is ratifiable
evidences, or some of them, of such things in action, or pay at
the time some part of the purchase money; but when a sale is 1. A contract entered into in the name of another by one who
made by an auction and entry is made by the auctioneer in has no authority, legal representation or who acted beyond
his sales book, at the time of the sale, of the amount and kind his powers shall be unenforceable, unless it is ratified
of property sold, terms of sale, price, names of the expressly or impliedly, by the person on whose behalf it has
purchasers and person on whose account the sale is made, it been executed, before it is revoked by the other contracting
is a sufficient memorandum; party (Art. 1317, NCC).
5. An agreement for the leasing for a longer period than one 2. Contracts infringing the Statute of Frauds are ratified:
year, or for the sale of real property or of an interest therein; a. by failure to object to the representation of oral
6. A representation as to the credit of a third person(Art. 1403, evidence to prove the same; or
NCC). b. by the acceptance of benefits under them (Art. 1317,
NCC).
NOTE: The enumeration is exclusive. 3. In a contract where both parties are incapable of giving
consent, express or implied ratification by the parents or
Fundamental principles governing Statute of Frauds guardian, as the case may be, of one of the contracting
parties, or one of the contracting parties upon attaining
1. It only applies to executory contracts and not partially or capacity, shall give the contract the same effect as if only one
completely executed. of them is incapacitated. Hence, the contract becomes
2. It cannot apply if the action is neither for damages because of voidable and the rules on voidable contracts should govern.
violation of an agreement nor for the specific performance of
said agreement. If the ratification is made by the parents or guardians as the
3. It is exclusive as it applies only to the agreements or contracts case may be, of both contracting parties, or both of the
enumerated in Art. 1403. contracting parties upon attaining capacity, the contract shall
4. The defense of Statute of Frauds may be waived be validated from the inception (Jurado, 2011).
5. It is a personal defense, it cannot be assailed by third
persons.
6. Contracts infringing the Statute of Frauds are not void; they
are merely unenforceable.
7. It is a Rule of Exclusion as it excludes oral testimony.

CONTRACTS
Two ways of ratifying contracts which infringe the Statute of a. Pactum commisorium the creditor appropriates to
Frauds himself the things given by way of pledge or mortgage
to fulfill the debt
1. Failure to object to the admissibility of parol evidence to b. Pactum de non alienando an agreement prohibiting
support a contract covered by the Statute of Frauds during the owner from alienating the mortgaged immovable
the trial. c. Pactumleonina a stipulation in a partnership
2. Acceptance of benefits when the contract has been partly agreement which excludes one or more partners from
executed because estoppel sets in by accepting performance. any share in the profits or losses
3. Illegal or illicit contracts (e.g. contract to sell marijuana)
VOID/INEXISTENT CONTRACTS
Q: Judie sold one-half of their lot to Guiang under a deed of
Void contracts and Inexistent contracts transfer of rights without the consent and over the objection of
his wife, Gilda and just after the latter left for abroad. When Gilda
In general, void and inexistent contracts may be defined as those returned home and found that only her son, Junie, was staying in
which lack absolutely either in fact and or in law one or some or all their house. She then gathered her other children, Joji and Harriet
of those elements which are essential for its validity. In particular, and went to stay in their house. For staying in their alleged
void contracts are the contracts where all of the requisites property, the spouses Guiang complained before the barangay
prescribed by law for contracts are present, but the cause, object authorities for trespassing.
or purpose is contrary to law, morals, good customs, public order
or public policy, or they are prohibited by law, or they are declared Is the deed of transfer of rights executed by Judie Corpuz and the
by law to be void. In existent contracts, on the other hand, are spouses Guiang void or voidable?
those contract which lack absolutely one or some or all of those
requisites which are essential for validity. A: It is void. Gildas consent to the contract of sale of their conjugal
property was totally inexistent or absent. Thus, said contract
Void contracts are those which have no force and effect from the properly falls within the ambit of Article 124 of the FC.
beginning and which cannot be ratified or validated by lapse of
time (Pineda, 2000). The particular provision in the old Civil Code which provides a
remedy for the wife within 10 years during the marriage to annul
NOTE: The principle of in pari delicto is applicable in cases of void contracts the encumbrance made by the husband was not carried over to the
but not in inexistent contracts. Consequently, void contracts may produce Family Code. It is thus clear that any alienation or encumbrance
effects (Arts. 1411, 1412, NCC), but inexistent contracts do not produce any made after the Family Code took effect by the husband of the
effect whatsoever (Jurado, 2009).
conjugal partnership property without the consent of the wife is
null and void (Spouses Guiangv.CA, G.R. No. 125172, June 26,
Characteristics of void/inexistent contracts
1998).
1. It cannot be ratified (Art. 1409, NCC).
Q: On July 6, 1976, Honorio and Vicente executed a deed of
2. The right to set up the defense of illegality cannot be waived
exchange. Under this instrument, Vicente agreed to convey his
(Art. 1409, NCC).
64.22-square-meter lot to Honorio, in exchange for a 500-square-
3. The action or defense for the declaration of the inexistence of
meter property. The contract was entered into without the
a contract does not prescribe (Art. 1410, NCC).
consent of Honorios wife. Is the deed of exchange null and void?
4. The defense of illegality of contracts is not available to third
persons whose interests are not directly affected(Art. 1421,
A:The deed is valid until and unless annulled. The deed was
NCC).
entered into on July 6, 1976, while the Family Code took effect only
5. A contract which is the direct result of a previous illegal
on August 3, 1998. Laws should be applied prospectively only,
contract is also void and inexistent(Art. 1422, NCC).
unless a legislative intent to give them retroactive effect is
6. GR: They produce no legal effect whatsoever in accordance
expressly declared or is necessarily implied from the language
with the principle quod nullum est nullum producit
used. Hence, the provisions of the Civil Code, not the Family Code
effectum. (Jurado, 2011)
are applicable. According to Article 166 of the Civil Code, the
husband cannot alienate or encumber any real property of the
XPN: In case of pari delicto since it will refuse legal remedy to
conjugal partnership without the wifes consent. This provision,
either party to an illegal agreement and leaves them to where
however, must be read in conjunction with Article 173 of the same
they were. Hence, if a void contract is already executed,
Code. The latter states that an action to annul an alienation or
neither of the parties can recover from each other.
encumbrance may be instituted by the wife during the marriage
and within ten years from the transaction questioned. Hence, the
Kinds of void contracts
lack of consent on her part will not make the husbands alienation
or encumbrance of real property of the conjugal partnership void,
1. Those lacking in essential elements:
but merely voidable (Villarandav. Villaranda, G.R. No. 153447, Feb.
a. Those whose cause, object or purpose is contrary to
23, 2004).
law, morals, good customs, public order or public
policy: illicit cause, or object.
Principle of in pari delicto
b. Those which are absolutely simulated or fictitious: no
cause
When the defect of a void contract consists in the illegality of the
c. Those whose cause or object did not exist at the time
cause or object of the contract, and both of the parties are at fault
of the transaction: no cause or object
or in pari delicto, the law refuses them every remedy and leaves
d. Those whose object is outside the commerce of man:
them where they are. This rule which is embodied in Arts. 1141
no object
and 1142 of the NCC is what is commonly known as the principle in
e. Those which contemplate an impossible service: no
pari delicto.
object
f. Those where the intention of parties relative to
principal object of the contract cannot be ascertained
2. Contracts prohibited by law

CIVIL LAW
Exceptions to the principle of in pari delicto Void contract v. Voidable contract
The exceptions to the principles of pari delicto are the following: BASIS VOID VOIDABLE
1. Payment of money or delivery of property for an illegal Consent is
purpose, where the party who paid or delivered Absence of essential
As to the defect of vitiated or there
repudiates the contract before the purpose has been element/s of a
the contract is incapacity to
accomplished, or before any damage has been caused contract
give consent
to a third person. In such case, the courts may allow As to the status of No effect even if not Valid contract
such party to recover what he has paid or delivered, if the contract set aside until set aside
the public interest will thus be subserved. As to the
2. Payment of money or delivery of property by an susceptibility of Cannot be ratified Can be ratified
incapacitated person. In such case, the courts may allow ratification
such person to recover what he has paid or delivered, if Nullity can be set up
the interest of justice so demands. against any person
3. Agreement or contract which is not illegal per se but is Nullity can be set
As to the effect of asserting right arising
merely prohibited by law, and the prohibition is up only against a
the nullity from it, and his
designed for the protection of the plaintiff. In such case, party thereto
successors in interest
such plaintiff, if public policy is thereby enhanced, may not protected by law
recover what he has paid or delivered. Action to annul
4. Payment of any amount in excess of the maximum price contract
of any article or commodity fixed by law. In such case, As to the Action to declare prescribes in 4
the buyer may recover the excess. prescription of the nullity does not years (Pineda,
5. Contract whereby a laborer undertakes to work longer contract prescribe Obligations and
than the maximum number of hours fixed law. In such Contracts, 2000
case, the laborer may demand for overtime pay. ed, p. 606)
6. Contract whereby a laborer accepts a wage lower than Defense may be
the minimum wage fixed by law. In such case the Defense may be
invoked only by
laborer may demand for the deficiency. availed of by
the parties
anybody, whether he
(those principally
Void contract v. Inexistent contract As to the set-up of is a party to the
and subsidiarily
defense contract or not as
liable) or their
BASIS VOID INEXISTENT long as his interest is
successors in
Those where all the directly affected (Art.
interest and
requisites of a 1421, NCC).
privies
contract are
present, but the Void contract v. Rescissible contract
Those where one or
cause, object or
some of the
As to the presence purpose is contrary BASIS VOID RESCISSIBLE
requisites which are
of requisites of a to law, morals, Defect is in its
essential for validity
contract good customs,
are absolutely effects, either
public order or As to the defect of Defect is inherent in
lacking against one of
public policy or the the contract the contract itself
the parties or a
contract itself is
third person
prohibited or
Nullity is a matter of Based on equity
declared prohibited. As to the source of
law and public and matter of
As to the the defect
Principle of in pari interest private interest
applicability of the Principle of in pari
delicto Produces legal
principle of in pari delicto is applicable. No legal effects even
Is not applicable. As to effect of the effects and
delicto if no action is filed to
contract remains valid if
set it aside
no action is filed
Void contract v. Unenforceable contract
Action to rescind
prescribes within
BASIS VOID UNENFORCEABLE As to the Action to declare its 4 years (Art.
There is contract prescription of the nullity does not 1389; Pineda,
As to the effect of
No contract at all. but which cannot action prescribe (Art. 1410) Obligations and
the contract
be enforced. Contracts, 2000
As to the ed, p. 605)
It is not subject to It is subject to
susceptibility to
ratification. ratification.
ratification
It can be easily
It cannot be
As to the capacity of assailed by third
assailed by third
third persons to persons whose
persons.
assail the contract interests are directly
affected.

CONTRACTS
EFFECT OF CONTRACTS
Contracts take effect only between the parties, and their assigns
and heirs, the latter being liable only to the extent of the property
received from the decedent (Art. 1311, NCC).
Liability of heirs for the obligation contracted by the decedent
The heirs are liable for the obligation contracted by the decedent
when the rights and obligations arising from the contract are
transmissible:
1. By their nature; or
2. By stipulation; or
3. By provision of law (Art. 1311, NCC).
Requisites in order that a third person may demand the

fulfillment of the contract
1. The contracting parties must have clearly and deliberately

conferred a favor upon the third person;
2. The third persons interest or benefit in such fulfillment must
not be merely incidental; and
3. Such third person communicated his acceptance to the
obligor before the stipulations in his favor are revoke.

CIVIL LAW
SALES transfer ownership to C because he was not the owner at the time
of delivery, then C cannot also transfer ownership to D (Tsai v. CA).
DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
Q: Jose, as co-owner, sold the entire land in favor of his minor
Sale daughter, Ida. Alleging that Jose had fraudulently registered it in
his name alone, his sisters, sued him for recovery of 2/3 share of
By the contract of sale, one of the contracting parties obligates the property. Ida did not pay for the land. Is the sale valid?
himself to transfer the ownership of and to deliver a determinate
thing, and the other to pay therefor a price certain in money or its A: No. Jose did not have the right to transfer ownership of the
equivalent (Art. 1458, NCC). entire property to petitioner since 2/3 thereof belonged to his
sisters. Also, Ida could not have given her consent to the contract,
NOTE: Gross inadequacy of price does not affect a contract of sale, except as being a minor at the time. Consent of the contracting parties is
it may indicate a defect in the consent, or that the parties really intended a among the essential requisites of a contract, including one of sale,
donation or some other act or contract (Art. 1470, NCC). absent which there can be no valid contract. Moreover, Ida
admittedly did not pay any centavo for the property, which makes
ELEMENTS OF A CONTRACT OF SALE the sale void. Article 1471 of the Civil Code provides: If the price is
simulated, the sale is void, but the act may be shown to have been
Elements of a contract of sale (ENA) in reality a donation, or some other act or contract (Labagala v.
Santiago,G.R. No. 132305, Dec. 4, 2001).
1. Essential elements for validity:
a. Consent CHARACTERISTICS OF A CONTRACT OF SALE
b. Determinate subject matter
c. Consideration 1. Consensual a sale is perfected by mere consent, manifested
2. Natural elements those that are inherent even in absence by the meeting of the minds as to the offer and
of contrary provision. acceptancethereof on the subject matter, price and terms of
E.g. warranties payment.
3. Accidental elements dependent on parties stipulations; 2. Bilateral the seller will deliver and transfer a determinate
Examples: thing to the buyer and the latter will pay an ascertained price
a. Conditions (or equivalent) therefor.
b. Interest 3. GR: Commutative the thing sold is considered the
c. time & place of payment equivalent of the price paid and the price paid is the
d. penalty equivalent of thething sold.
Consent XPN:Aleatory the consideration is not equivalent of what

has been received in the case of purchase of a lotto ticket. If
Consent is the meeting of the minds to transfer ownership in the ticket wins, the prize is much more than the price of the
exchange for the price. ticket.
Effect and/or consequence of the absence of consent of the 4. Principal its existence does not depend upon the existence
owner in a contract of sale of said property and validity of another contract.
5. Onerous the thing sold is conveyed in consideration of the
GR: The contract of sale is void. One of the essential requirements purchase price, and vice versa.
of a valid contract of sale is the consent of the owner of the 6. Nominate it has a specific name given by law(Pineda, p. 4,
property.The buyer acquires no better title to the goods than the 2010 ed).
seller had. He cannot give what he does not have quod non
habet. A stream cannot rise higher than its source. Formal requirement for the validity of a contract of sale
NOTE: The principle of nemo dat quod non habet pertains to the effect of GR: A contract of sale may be made in writing, or by word of
delivery of the subject matter pursuant to a valid contract of sale, which is at mouth, or partly in writing and partly by word of mouth, or may be
the consummation stage of the contract. It does not pertain to the validity of
inferred from the conduct of the parties (Art. 1483, NCC). Contracts
the contract of sale upon perfection (Villanueva, 2004).
shall be obligatory, in whatever form they have been entered into,
provided all the essential requisites for their validity are present.
XPN:When the owner of the goods is, by his conduct, precluded
from denying the sellers authority to sell (Art. 1505, NCC).
XPNs:
However, it shall not affect the following:
a) If the law requires a document or other special form, the
1) Factors acts, recording laws, or any other provision of
contracting parties may compel each other to observe that
law enabling the apparent owner of the goods to dispose
form (Art. 1357, NCC).
them as if he were the true owner;
b) Under Statute of Frauds, the following contracts must be in
2) Sales made under the order of a court of competent
writing; otherwise, they shall be unenforceable:
jurisdiction;
1. Sale of personal property at a price not less than P500;
3) Sales made pursuant to a special law;
2. Sale of a real property or an interest therein;
4) Purchases made in a merchants store or fairs or markets
3. Sale of property not to be performed within a year from
(Art. 1505, NCC).
the date thereof;
4. When an applicable statute requires that the contract of
Example: A, the seller sold a car owned by B, to C, the buyer. The
sale be in a certain form (Art. 1403, par.2, NCC)
contract of sale is valid since ownership at the time of perfection is
not required. A was able to deliver the car in the absence of the
knowledge of B. Later, C sold the car to D. B now comes to Court to
ask for annulment of the sale made by C to D on the principle of
nemo dat quod non habet. Since, A, the first seller was not able to

SALES
Instances where the Statute of Frauds is not essential for the Instance when a deed of sale considered absolute in nature
enforceability of a contract of sale
A deed of sale is considered absolute in nature where there is
1. When there is a note or memorandum in writing and neither a stipulation in the deed that title to the property sold is
subscribed to by the party or his agent (contains essential reserved in the seller until the full payment of the price, nor one
terms of the contract); giving the vendor the right to unilaterally resolve the contract the
2. When there has been partial performance/execution (seller moment the buyer fails to pay within a fixed period.
delivers with the intent to transfer title/receives price);
3. When there has been failure to object to presentation of Conditional Sale
evidence aliunde as to the existence of a contract without
being in writing and which is covered by the Statute of Frauds; It is conditional where the sale contemplates a contingency, and in
4. When sales are effected through electronic commerce general, where the contract is subject to certain conditions, usually
(Villanueva, p. 192). in the case of the vendee, the full payment of the agreed purchase
price and in the case of the vendor, the fulfillment of certain
NOTE: Rules on forms, and of validity and enforceability of contracts of sale, warranties(De Leon, p. 15).
are strictly kept within the contractual relationship of the seller and buyer
pursuant to the characteristic of relativity of every contract, and do not
necessarily apply to third parties whose rights may be affected by the terms
Conditional salev.Absolute sale
of a sale.
CONDITIONAL SALE ABSOLUTE SALE
KINDS OF CONTRACT OF SALE One where the title to the
One where the seller is
property is not reserved to the
granted the right to
Kinds of Contract of Sale seller or if the seller is not
unilaterally rescind the
granted the right to rescind the
contract predicated on the
As to: contract based on the fulfillment
fulfillment or non-fulfillment,
1. Nature of the subject matter: or non-fulfillment, as the case
as the case may be, of the
a. Sale of real property; may be, of the prescribed
prescribed condition.
b. Sale of personal property condition.
2. Value of the things exchanged:
a. Commutative sale; Effect of the non-performance of the condition or if the condition
b. Aleatory sale did not take place
3. Whether the object is tangible or intangible:
a. Sale of property (tangible or corporeal); Where the obligation of either party to a contract of sale is subject
to any condition which is not performed, such party may refuse to
NOTE: A tangible object is also called chose in possession proceed with the contract or he may waive performance of the
condition. Unlike in a non-fulfillment of a warranty which would
b. Sale of a right (assignment of a right, or a credit or constitute a breach of the contract, the non-happening of the
other intangibles such as copyright, trademark, or condition, although it may extinguish the obligation upon which it
good will); is based, generally does not amount to a breach of a contract of
sale.
NOTE: An intangible object is a chose in action.
Instance when a conditional sale considered an absolute sale
4. Validity or defect of the transaction:
a. Valid A deed of sale is absolute in nature although denominated a
b. Rescissible conditional sale absent such stipulations reserving title to the
c. Voidable vendor until full payment of the purchase price, nor any stipulation
d. Unenforceable giving them the right to unilaterally rescind the contract in case of
e. Void non-payment.
5. Legality of the object:
a. Licit object Q: A contract of sale of a lot stipulates that the "payment of the
b. Illicit object full consideration based on a survey shall be due and payable in 5
6. Presence or absence of conditions: years from the execution of a formal deed of sale". Is this a
a. Absolute conditional contract of sale?
b. Conditional A:No, it is not. The stipulation is not a condition which affects the
7. Wholesale or retail: efficacy of the contract of sale. It merely provides the manner by
a. Wholesale which the full consideration is to be computed and the time within
b. Retail which the same is to be paid. But it does not affect in any manner
8. Proximate inducement for the sale: the effectivity of the contract (Heirs of San Andres v. Rodriguez,
a. Sale by description G.R. No. 135634, May 31, 2000).
b. Sale by sample
c. Sale by description and sample
9. When the price is tendered:
a. Cash sale
b. Sale on installment plan
Absolute Sale
A sale is absolute when no condition is imposed and ownership

passes to the vendee upon delivery of the thing subject of the sale.

CIVIL LAW
DISTINCTIONS OF THE CONTRACT OF SALE WITH OTHER 6. Contract for piece-of-work

CONTRACTS
SALE CONTRACT FOR PIECE-OF-
Sale distinguished from WORK
Manufacturing in the ordinary Manufacturing upon special order
1. Donation course of business of a customer
For the general market Not for the general market, but
SALE DONATION specially for the customer
Onerous Gratuitous/onerous
Consensual Formal contract CONTRACT TO SELL
Law on Sales Law on Donation
Contract to sell
2. Barter
Contract to sell may be defined as a bilateral contract whereby the
prospective seller, while expressly reserving the ownership of the
SALE BARTER
subject property despite delivery thereof to the prospective buyer,
Consideration is giving of Consideration is giving of a binds himself to sell the said property exclusively to the
money as payment thing prospective buyer upon fulfillment of the condition agreed upon,
If consideration consists partly in money & partly by thinglook at that is, full payment of the purchase price (Coronel v. Court of
manifest intention appeals, G.R. no. 103577, October 7, 1996).
If intention is not clear, and If intention is not clear, and the
the value of thing is equal or value of thing is more than Instances when a contract to sell may be resorted to
less than amount of money = amount of money = Barter
Sale 1. Where subject matter is indeterminate
Both are governed by law on sales 2. Sale of future goods except future inheritance
3. Stipulation that deed of sale & corresponding certificate of
3. Agency to Sell sale would be issued only after full payment
SALE AGENCY TO SELL Contract to Sell v. Conditional Contract of Sale

Agent not obliged to pay for price;
Buyer pays for price of CONTRACT TO SELL CONDITIONAL CONTRACT OF
must account for the
object SALE
proceeds of the sale.
Buyer becomes owner of Principal remains the owner even if The prospective seller does not The first element of consent
thing the object delivered to agent as yet agree or consent to is present, although it is
Agent assumes no personal transfer ownership of the conditioned upon the
Seller warrants liabilityas long as within property subject of the happening of a contingent
authority given contract to sell until the event which may or may not
happening of an event, which occur.
May be revoked unilaterally even
Not unilaterally revocable may be the full payment of the
w/o ground
purchase price. What the seller
Seller receives profit Agent not allowed to profit agrees or obliges himself to do
Realcontract Personal contract is to fulfill his promise to sell
the subject property when the
4. Dacion en Pago entire amount of the purchase
price is delivered to him.
SALE DACION EN PAGO Upon the fulfillment of the If the suspensive condition is
Contract where property is alienated to suspensive condition which is fulfilled, the contract of sale
No pre-existing credit the full payment of the is thereby perfected, such
extinguish pre-existing credit/debt
Buyer-seller Novates creditor-debtor relationship into purchase price, ownership will that if there had already been
relationship seller-buyer not automatically transfer to previous delivery of the
the buyer although the property subject of the sale
5. Lease property may have been to the buyer, ownership
previously delivered to thereto automatically
SALE LEASE him. The prospective seller still transfers to the buyer by
Use of thing is for specified has to convey title to the operation of law without any
Obligation to absolutely transfer prospective buyer by entering further act having to be
period only with obligation
ownership of thing into a contract of absolute sale. performed by the seller.
to return
Consideration is the price Consideration is the rental
There being no previous sale of Upon the fulfillment of the
Seller needs to be owner of thing the property, a third person suspensive condition, the
to transfer ownership. buying such property despite sale becomes absolute and
Lessor need not be owner the fulfillment of the this will definitely affect the
NOTE: Lease with option to buy suspensive condition such as sellers title thereto. The
really a contract of sale but the full payment of the second buyer of the property
designated as lease in name. purchase price, cannot be who may have had actual or
deemed a buyer in bad constructive knowledge of
faith. There is no double sale in such defect in the sellers
such case. Title to the property title, or at least was charged
will transfer to the buyer after with the obligation to

SALES
registration because there is discover such defect, cannot for specific performance. Will Ramonas action
no defect in the owner-sellers be a registrant in good prosper?
title per se, but the latter, of faith. Such second buyer
course, may be sued for cannot defeat the first A:
damages by the intending buyers title. In case a title is a) The agreement could not have been a contract to sell
buyer. issued to the second buyer, because the sellers herein made no express reservation of
the first buyer may seek ownership or title to the subject parcel of land. The Coronels
reconveyance of the property had already agreed to sell the house and lot they inherited
subject of the sale. from their father, completely willing to transfer full
(Reyes v. Tuparan, G.R. No. 188064, June 1, 2011; Coronel v. Court ownership of the subject house and lot to the buyer if the
of Appeals, G.R. No. 103577, October 7, 1996). documents were then in order. However, the TCT was then
still in the name of their father, that is why they caused the
Contract of Salev.Contract to sell issuance of a new TCT in their names upon receipt of the
down payment. As soon as the new TCT is issued in their
BASIS CONTRACT OF SALE CONTRACT TO SELL names, they were committed to immediately execute the
Ownership is deed of absolute sale. Only then will the obligation of the
transferred to the buyer Ownership is buyer to pay the remainder of the purchase price arise. This
upon delivery of the transferred upon full suspensive condition was fulfilled. Thus, the conditional
object to him. payment of the contract of sale became obligatory, the only act required for
As regards the consummation thereof being the delivery of the property
purchase price.
transfer of by means of the execution of the deed of absolute sale in a
NOTE: Vendor has lost
ownership public instrument, which they unequivocally committed
and cannot recover NOTE: Prior to full
ownership until and payment, ownership is themselves to do as evidenced by the "Receipt of Down
unless the contract is retained by the seller. Payment." (Coronel, et al. v. CA, G.R. No. 103577, Oct. 7,
resolved or rescinded 1996).
There are two b) Yes. Under Article 1187, the rights and obligations of the
contracts: parties with respect to the perfected contract of sale became
mutually due and demandable as of the time of fulfillment or
1. The contract to sell occurrence of the suspensive condition. Hence, petitioner-
sellers' act of unilaterally and extrajudicially rescinding the
As to There is only one NOTE: Preparatory sale contract of sale cannot be justified, there being no express
numbers of contract executed stipulation authorizing the sellers to extrajudicially rescind
contracts between the seller and 2. The deed of absolute the contract of sale (Coronel, et al. v. CA, G.R. No. 103577,
involved the buyer. sale Oct. 7, 1996).
NOTE: The principal Q: Project Movers Realty and Development Corporation (PMRDC)
contract is executed was indebted to Keppel Bank for P200M. To pay the debt, PMRDC
after full payment of conveyed to the bank 25 properties. Adao occupies one of the
the purchase price. properties conveyed. The bank demanded Adao to vacate the
Full payment of the property but he refused. Hence, an ejectment case was filed
price is a positive against Adao. In his defense, Adao assailed that he had a Contract
Non-payment of the suspensive condition. to Sell entered between PMRDC and Adao. To prove full payment
price is a resolutory of the property, he presented an affidavit. The lower court
condition. Vendor loses NOTE: Failure to fully ordered that Keppel banks should respect the contract to sell
Payment as ownership over the pay the price is not a because when the bank acquired the properties by way of dacion
a condition property and cannot breach but an event en pago, it merely stepped into the shoes of PMRDC. Is Keppel
recover it until and that prevents the bank bound by the contract to sell between PMRDC and Adao?
unless the contract is obligation of the
resolved or rescinded. vendor to convey title A: No.Adaos lone affidavit is self-serving, and cannot be
from becoming considered as substantial evidence. As a general rule, one who
effective. pleads payment has the burden of proving it. Even where the
1. Specific petitioner alleged non-payment, the general rule is that the burden
Remedies Performance 1. Resolution rests on the respondent to prove payment, rather than on the
available 2. Rescission 2. Damages petitioner to prove non-payment (Kepel Bank Phils. Inc., v. Adao,
3. Damages G.R. No. 158227, Oct. 19, 2005).
Q: Having agreed to sell property which they inherited from their Q: Ursal and Spouses Monesets entered into a Contract to Sell
father, which was then still in their fathers name, the Coronels of a house and lot. A downpayment was to be paid by Ursal and
executed a document entitled "Receipt of Down Payment" in subsequently the balance of the price is to be paid every month
favor of Ramona for the purchase of their house and lot, with the until it is fully paid. After 6 months, the monthly installments
condition that Ramona will make a down payment upon were stopped because the spouses did not give Ursal the transfer
execution of the document. The Coronels would then cause the of certificate title. Subsequently, the Spouses Monesets sold the
transfer of the property in the name of Ramona and will execute property to Dr. Canora. The same property was also mortgaged
a deed of absolute sale in favor of Ramona. by the spouses to a rural bank. When the spouses failed to pay
a. Ramona paid the downpayment as agreed. Is there a the rural bank, the bank moved to foreclose the mortgage. Does
perfected contract of sale or a mere contract to sell? Ursal have vested ownership over the property?
b. Instead of executing a deed of Absolute Sale in favor of
Ramona, the Coronels sold the property to Catalina
and unilaterally and extrajudicially rescinded the
contract with Ramona. Ramona then filed a complaint

CIVIL LAW
A: No.In such contract, the prospective seller expressly reserves c. To avoid an indirect violation of the prohibition against donations
the transfer of title to the prospective buyer, until the happening of between spouses under Article 133 of the Civil Code (Medina v.
an event, which in this case is the full payment of the purchase Collector of Internal Revenue, 1 SCRA 302)
price. In this case, the parties not only titled their contract as
Contract to Sell Lot and House but specified in their agreement XPN to XPN:
that the vendor shall only execute a deed of absolute sale on the 1. Where necessaries are sold and delivered to a
date of the final payment by the vendee.Since the contract in this minor or other person without capacity to act, he
case is a contract to sell, the ownership of the property remained must pay a reasonable price therefor.
with the Monesets even after petitioner has paid the down 2. In case of sale between spouses:
payment and took possession of the property. In other words, a. when separation of property was agreed upon
petitioner did not acquire ownership over the subject property as in the marriage settlements; or
she did not pay in full the equal price of the contract to sell (Ursal b. when there has been a judicial separation of
v. Court of Appeals, et. al, G.R. No. 142411, Oct. 14, 2005). property agreed upon between them
Q: Caguiat offered to buy Spouses Herreras lot and subsequently ABSOLUTE INCAPACITY
gave the spouses a partial payment. In turn, the spouses gave
Caguiat the corresponding receipt stating that respondent Persons who are absolutely incapacitated to enter into a contract
promised to pay the balance of the purchase price on or before a of sale
fixed date. Caguiats counsel wrote the spouses informing them
of his readiness to pay the balance of the price and requesting 1. Unemancipated minors (Art. 1327, NCC);
them to prepare the final deed of sale. However, the spouses 2. Insane or demented persons, and deaf-mutes who do not
counsel sent a letterto Caguiat stating that the wife is leaving for know how to write (Art. 1327, NCC)
abroad and that they are cancelling the transaction. The spouses
NOTE: Contracts entered into during intervals by insane or demented
allowed Caguiat to recover the partial payment he paid them. Is
persons are generally valid (Art. 1328, NCC); whereas, those entered into in a
the transaction a contract of sale? state of drunkenness, or during hypnotic spell, are merely voidable
(Art.1328). Contracts entered into by such legally incapacitated persons are
A: No. In this case, the "Receipt for Partial Payment" shows that not void, but merely voidable, subject to annulment or ratification (Art.
1393, NCC).
the true agreement between the parties is a contract to sell. First,
ownership over the property was retained by petitioners and was
Capacitated person CANNOT file an action for annulment using as
not to pass to respondent until full payment of the purchase price.
basis the incapacity of the incapacitated party
In effect, petitioners have the right to rescind unilaterally the
contract the moment respondent fails to pay within the fixed
He is disqualified from alleging the incapacity of the person whom
period. Second, the agreement between the parties was not
he contracts (Art. 1397, NCC);
embodied in a deed of sale. The absence of a formal deed of
conveyance is a strong indication that the parties did not intend
Obligation to make restitution in a defective contract, where such
immediate transfer of ownership, but only a transfer after full
defect consists in the incapacity of a party
payment of the purchase price. Third, petitioners retained
possession of the certificate of title of the lot. This is an additional
GR: The incapacitated person is not obliged to make any
indication that the agreement did not transfer to respondent,
restitution.
either by actual or constructive delivery, ownership of the property
(Spouses Herrera v. Caguiat, G.R. No. 139173, Feb. 28, 2007).
XPN: Insofar as he has been benefited by the thing or price
received by him. (Art. 1399, NCC)
PARTIES TO A CONTRACT OF SALE
RELATIVE INCAPACITY
Parties to a contract of sale
Persons who are relatively incapacitated to enter into a contract
1. Seller one who sells and transfers the thing and ownership to of sale
the buyer
2. Buyer one who buys the thing upon payment of the 1. Spouses (Art. 1490, NCC)
consideration agreed upon 2. Agents, Guardians, Executors and Administrators, Public
Officers and Employees, Court Officers and Employees, and
CAPACITY OF THE PARTIES others specially disqualified by law (Art. 1491, NCC).
Persons who may enter into a contract of sale Status of thefollowingcontracts of sale
GR: Any person who has capacity to contract or enter into 1. That entered into by minors:
obligations, may enter into a contract of sale, whether as party- a. Merely voidable, subject to annulment or ratification
seller or as party-buyer. b. Action for annulment cannot be instituted by the
person who is capacitated since he is disqualified from
XPNs: alleging the incapacity of the person with whom he
1. Minors, insane and demented persons and deaf-mutes who do contracts (with partial restitution in so far as the minor
not know how to write is benefited) where necessaries are sold and delivered
2. Persons under a state of drunkenness or during hypnotic spell to a minor or other person without capacity to act, he
3. Husband and wife - sale by and between spouses must pay a reasonable price (Art. 1489, NCC).
NOTE: Rationale for the prohibition: 2. Sale by & between spouses (Art. 1490, NCC):
a. To prevent a spouse from defrauding his creditors by transferring a. Status of prohibited sales between spouses:
his properties to the other spouse
b. To avoid a situation where the dominant spouse would unduly
take advantage of the weaker spouse GR: Null and void

SALES
ward,
XPN: In case of sale between spouses: Property of the principal or
i. When a separation of property was agreed ward during estate; and
upon in the marriage settlements; or Guardian
period of can be
ii. When there has been a judicial separation of guardianship condoned by
property agreed upon between them the private
parties
b. Contract of sale with 3rd parties: themselves
GR: Under the law on sales, it would seem that a spouse NOTE:
may, without the consent of the other spouse, enter into Contracts
sales transactions in the regular or normal pursuit of their entered by
profession, vocation or trade (in relation with Art. 73, guardian in
Family Code). behalf of ward
are rescissible
XPN: Even when the property regime prevailing was the if ward suffers
conjugal partnership of gains, the Supreme Court held the lesion by
sale by the husband of a conjugal property without the Property of the
Executors and more than
consent of the wife is void, not merely voidable under Art. estate under
administrators of the value of
124 of the Family Code since the resulting contract lack administration
property. Sale
one of the essential elements of full consent (Guiang v. by guardian of
CA, G.R. No. 125172, June 26, 1998). property
belonging to a
3. Between Common Law Spouses - also null and void. ward without
Court
In Calimlim-Canullas v. Fortun, the Court decided that sale approval is
between common law spouses is null and void because Art. void
1490 prohibits sales between spouses to prevent the exercise regardless of
of undue influence by one spouse over the other, as well as the lesion,
to protect the institution of marriage. The prohibition applies hence, cannot
to a couple living as husband and wife without the benefit of be ratified.
marriage, otherwise, the condition of those incurred guilt Property and
would turn out to be better than those in legal union rights in litigation Cannot be
(Calimlim-Canullas v. Fortun, et. al., G.R. No. L-57499, June Court officers or levied upon on ratified
22, 1984). and employees execution before
the court under Reason: It is
But when the registered property has been conveyed their jurisdiction not only a
subsequently to a third-party buyer in good faith and for Void
Others specially private wrong,
value, then reconveyance is no longer available to common- disqualified by but also a
law spouse-seller, since under the Torrens system every law public wrong.
buyer has a right to rely upon the title of his immediate seller Property of the (Villanueva,
(Cruz v. CA, G.R. No. 120122, Nov. 6, 1997). Pubic officers State entrusted Law on Sales,
and employees to them for p. 58)
Persons who has the right to assail the validity of the transaction administration
between spouses
NOTE: Prohibitions are applicable to sales in legal redemption, compromises
The following are the only persons who can question the sale and renunciations.
between spouses:
1. The heirs of either of the spouses who have been Effect of sale in violation of the prohibition
prejudiced; 1. With respect to guardians, agents, executors/administrators,
2. Prior creditors; and the sale shall only be voidable because in such cases only
3. The State when it comes to the payment of the proper private interests are affected defect can be cured by
taxes due on the transactions ratification;
2. With respect to Public officers/employees, justices, judges,
Persons relatively incapacitated to be the vendee in a contract of lawyers, clerks of courts, and those specially disqualified by
sale (AGE-COP) law, the sale shall be null and void since public interest being
involve therein (De Leon, Comments and Cases on Sales and
RELATIVELY Lease, 7th edition, pg 168)
PROPERTIES STATUS
INCAPACITATED RATIFICATION
INVOLVED OF SALE
TO BUY Q: Atty. Leon G. Maquera acquired his clients property as
Property Can be payment for his legal services, then sold it and as a consequence
entrusted to ratified after obtained an unreasonable high fee for handling his clients case.
them for the inhibition Did he validly acquire his clients property?
administration or has ceased
sale A:No. Article 1491 (5) of the New Civil Code prohibits lawyers
Agents
Voidable Reason: the acquisition by assignment of the clients property which is the
XPN: When only wrong subject of the litigation handled by the lawyer. Also, under Article
principal gave his that subsists is 1492, the prohibition extends to sales in legal redemption (In Re:
consent the private Suspension from the Practice of Law in the territory of Guam of
wrong to the Atty. Leon G. Maquera, B.M. No. 793, July 30, 2004).

CIVIL LAW
Q: The stipulation between the lawyer and counsel is as follows, ownership is available but it can be the object of
the attorneys fees of the Atty. X will be of whatever the client certain contracts such as contract for a piece of
might recover from his share in the property subject of the work (Pineda, 2010).
litigation. Is the stipulation valid?
Thing considered as determinate
A: Yes. The stipulation made is one of a contingent fee which is
allowed by the CPE and the CPR. It does not violate the prohibition A thing is determinate when it is particularly designated or
of acquisition of property subject of the litigation by the lawyer physically segregated from all others of the same class. The
provided for in the Civil Code since the prohibition applies only to a requisite that a thing be determinate is satisfied if at the time the
sale or assignment to the lawyer by his client during the pendency contract is entered into, the thing is capable of being made
of the litigation. The transfer actually takes effect after the finality determinate without the necessity of a new or further agreement
of the judgment and not during the pendency of the case. As such between the parties.
it is valid stipulation between the lawyer and client.
When a thing is determinable
SPECIAL DISQUALIFICATIONS
When the thing is capable of being made determinate without the
Persons specially disqualified by law to enter into contracts of necessity of a new or further agreement between the parties (Art.
sale (ALIEN-UnOS) 1460, NCC).
1. ALIENs who are disqualified to purchase private agricultural Q: Rodriguez first purchased a portion of a Lot A consisting of 345
lands (Art. XII Secs. 3 & 7, 1987 Constitution) square meters located in the middle of Lot B, which has a total
2. Unpaid seller having a right of lienor having stopped the area of 854 square meters, from Juan. He then purchased another
goods in transitu,is prohibited from buying the goods either portion of said lot. As shown in the receipt, the late Juan received
directly or indirectly in the resale of the same at P500.00 from Rodriguez as "advance payment for the residential
public/private sale which he may make (Art. 1533 [5], NCC; lot adjoining his previously paid lot on three sides excepting on
Art. 1476 [4], NCC) the frontage. Juans heirs now contests the validity of the
3. The Officer holding the execution or deputycannot become subsequent sale, alleging that the object is not determinate or
a purchaser or be interested directly or indirectly on any determinable. Decide.
purchase at an execution. (Sec. 21 Rule 39, RRC)
4. In Sale by auction, seller cannot bid unless notice has been A:Their contention is without merit. There is no dispute that
given that such sale is subject to a right to bid in behalf of Rodriguez purchased a portion of Lot A consisting of 345 square
the seller (Art. 1476, NCC). meters. This portion is located in the middle of B, which has a total
area of 854 square meters, and is clearly what was referred to in
SALE BY A PERSON HAVING A VOIDABLE TITLE the receipt as the "previously paid lot." Since the lot subsequently
sold to Rodriguez is said to adjoin the "previously paid lot" on three
Effect of a sale made by the seller with voidable title over the sides thereof, the subject lot is capable of being determined
object without the need of any new contract. The fact that the exact area
of these adjoining residential lots is subject to the result of a survey
1. Perfection stage: valid buyer acquires title of goods does not detract from the fact that they are determinate or
2. Consummation stage: valid If the title has not yet been determinable. Concomitantly, the object of the sale is certain and
avoided at the time of sale and the buyer must buy the determinate (Heirs of San Andres v. Rodriguez,G.R. No. 135634,
goods under the following conditions: May 31, 2000).
a. In good faith
NOTE:Where land is sold for a lump sum and not so much per unit of
b. For Value
measure or number, the boundaries of the land stated in the contract
c. Without notice of sellers defect of title determine the effects and scope of the sale, not the area thereof. The
vendors are obligated to deliver all the land included within the boundaries,
regardless of whether the real area should be greater or smaller than that
SUBJECT MATTER recited in the deed. This is particularly true where the area is described as
"humigit kumulang," that is, more or less (Semira v. CA, G.R. No. 76031, Mar.
Requisites of a proper objects of sale 2, 1994).
1. Things Q: Lino entered into a contract to sell with Ramon, undertaking to

a. Determinate or determinable convey to the latter one of the five lots he owns, without
b. Lawful (licit), otherwise contract is void specifying which lot it was, for the price of P1 million. Later, the
c. Should not be impossible (within the commerce of parties could not agree which of five lots he owned Lino
men) undertook to sell to Ramon. What is the standing of the contract?
(2011 Bar Question)
NOTE: From the viewpoint of risk or loss, not until the object has really been
made determinate can we say that the object has been lost, because genus A: It is a void contract since the particular lot sold cannot be
never perishes. determined.
2. Rights
GR: Must be transmissible. KINDS OF OBJECT OF SALE
Example: right of redemption, right of usufruct, sale of credit, right to Objects of Sale
inheritance already assigned, etc.
1. Existing Goods owned/ possessed by seller at the time of
XPN: perfection
a. Future inheritance cannot be the subject of sale
b. Service cannot be the object of sale. They are
not determinate things and no transfer of

SALES
2. Future Goods goods to be manufactured, raised, acquired NOTE: Future inheritance cannot be the subject of sale.
by seller after perfection of the contract or whose acquisition
by seller depends upon a contingency (Art. 1462, NCC) Legal effect of Sale by a Non-Owner
3. Sale of Undivided Interest or Share
a. Sole owner may sell an undivided interest. (Art. 1463, GR: The buyer acquires no better title to the goods than the seller
NCC) Ex. A fraction or percentage of such property had; caveat emptor (buyer beware).
b. Sale of an undivided share in a specific mass of fungible
goods makes the buyer a co-owner of the entire mass in XPNs:
proportion to the amount he bought. (Art. 1464, NCC) 1. Estoppel when the owner of the goods is by his conduct
c. A co-owner cannot sell more than his share (Yturralde v. precluded from denying the sellers authority to sell
CA) 2. When the contrary is provided for in recording laws
4. Sale of Things in Litigation 3. When the sale is made under statutory power of sale or under
a. Sale of things under litigation is rescissible if entered the order of a court of competent jurisdiction
into by the defendant , without the approval of the 4. When the sale is made in a merchants store in accordance
litigants or the court (Art. 1381, NCC) with the Code of Commerce and special laws
5. When a person who is not the owner sells and delivers a thing,
NOTE: If the property involved belongs to a ward and the guardian and subsequently acquired title thereto
enters into a contract involving such property without court 6. When the seller has a voidable title which has not been
approval, the contract is void, not merely rescissible. avoided at the time of the sale
7. Sale by co-owner of the whole property or a definite portion
b. No rescission is allowed where the thing is legally in the thereof
possession of a 3rd person who did not acted in bad 8. Special rights of unpaid seller
faith.
5. Things subject to Resolutory Condition. Instances when the Civil Code recognizes sale of things not
actually or already owned by the seller at the time of sale
Ex. Things acquired under legal or conventional right of redemption, or
subject to reserva troncal(Art. 1465, NCC).
1. Sale of a thing having potential existence (Art.1461, NCC)
2. Sale of future goods (Art. 1462, NCC)
6. Indeterminate Quantity of Subject Matter
3. Contract for the delivery at a certain price of an article, which
NOTE: The fact that the quantity is not determinate shall not be an
the seller in the ordinary course of business manufactures/
obstacle to the existence of the contract provided it is possible to procures for the general market, whether the same is on hand
determine the same without need of a new contract (Art. 1349, NCC). at the time or not (Art. 1467, NCC)
EMPTIO REI SPERATAE EMPTIO SPEI PRICE

Sale of thing having potential Sale of mere hope or
existence expectancy Price
Uncertainty is w/ regard to Uncertainty is w/ regard to
quantity & quality existence of thing Price signifies the sum stipulated as the equivalent of the thing sold
Contract deals w/ present thing and also every incident taken into consideration for the fixing of
Contract deals w/ future thing the price put to the debit of the buyer and agreed to by him
hope or expectancy
Sale is valid even (Villanueva, p. 52).
thoughexpected thing does
Sale is valid only if the expected NOTE: A definite agreement on the manner of payment of the price is an
not come into existence as essential element in the formation of a binding and enforceable contract of
thing will exist.
long as the hope itself validly sale (Co v. CA, G.R. No. 123908, Feb. 9, 1998).
existed. (eg. lotto)
Requisites of Price
NOTE: The presumption is Emptio Rei Speratae
It must be:
SALE BY A PERSON WHO DOES NOT OWN THE THING SOLD 1. Real
2. In money or its equivalent
Sale of a good made by a person who does not own it 3. For valuable consideration
4. Certain or ascertainable at the time of the perfection of the
In the case of sale of property, ownership is not required at the contract
time of perfection in order for the sale to be valid. Ownership is
material only at the time of delivery but only for the purpose of When price is certain
transferring ownership and does not affect the validity of the
contract of sale. This is because validity is determined not at the 1. If there is a stipulation
time of performance but at the time of perfection. If the seller is 2. If it be with reference to another thing certain
still not the owner of the thing subject of the sale at the time of 3. If the determination of the price is left to the judgment of
delivery, then the contract of sale does not become void. It is still specified person(s)
valid. The remedy of the buyer is rescission under Art. 1191 and 4. By reference to certain fact(s) as referred to in Art. 1472
damages. (Art. 1469, NCC)
What the law requires is that the seller has the right to transfer NOTE: If the price is based on estimates, it is uncertain.
ownership at the time the thing sold is delivered. Perfection per se
does not transfer ownership which occurs upon the constructive
delivery of the thing sold. A perfected contract of sale cannot be
challenged on the ground of non-ownership on the part of the
seller at the time of its perfection (Quijada v. CA, 299 SCRA 69).

CIVIL LAW
When price of securities, grains, liquids and things is considered Time contemplated to determine the adequacy or inadequacy of
certain price
1. When the price fixed is that which the thing would have on a In determining the adequacy or inadequacy of the price, the price
definite day, or in a particular exchange or market obtaining at the time of the execution of the contract shall be
2. When the amount is fixed above or below the price of such considered, and not the price obtaining thereafter (Pineda, 2010).
day, or in such exchange or market, provided said amount be
certain (Art. 1472, NCC). Proving inadequacy of price
Fixing of the price CANNOT be left to the discretion of one of the Allegation of inadequacy of price must be proved by sufficient
contracting parties evidence. Without being substantiated with evidence, it is a mere
speculation (Pineda, 2010).
GR: No. The price cannot be fixed unilaterally by one of the
contracting parties. Effect on the Contract of Sale in case of a Breach in the agreed
manner of payment
XPN: If the other party agreed or consented (Art. 1473, NCC).
There is NO effect on the contract of sale in case of breach in the
Effect when the price in unilaterally fixed by one of the agreed manner of payment. It is not the act of payment of price
contracting parties without consent of the other party that determines the validity of a contract of sale. Payment of the
There is no meeting of the minds. The sale is inefficacious (Pineda, price has nothing to do with the perfection of the contract, as it
2010). goes into the performance of the contract. Failure to pay the
consideration is different from lack of consideration. Failure to pay
Effect of Gross Inadequacy of Price such results in a right to demand the fulfillment or cancellation of
the obligation under an existing valid contract. On the other hand,
GR: It does not affect the validity of the sale if it is fixed in good lack of consideration prevents the existence of a valid contract
faith and without fraud (Sps. Bernardo Buenaventura and Consolacion Joaqui v. CA, GR No.
126376, Nov. 20, 2003).
XPN:CoRDS
1. If Consent is vitiated (may be annulled or presumed to WHEN NO PRICE IS AGREED UPON BY THE PARTIES
be equitable mortgage)
2. If the parties intended a Donation or some other act/ Effect of failure to determine the price
contract
3. If the price is so low as to be Shocking to the 1. Where contract is executory ineffective
conscience 2. Where the thing has been delivered to and appropriated by
4. If in the event of Resale, a better price can be obtained the buyer the buyer must pay a reasonable price therefore
Effect if the price is simulated NOTE: The fixing of the price cannot be left to the discretion of one of the
parties. However, if the price fixed by one of the parties is accepted by the
other, the sale is perfected.
GR: Contract of sale is void.
XPN: The act may be shown to have been in reality a donation or Effect when a thing or a part thereof is delivered to the buyer
some other act or contract. although the contract is inefficacious and the latter appropriated
the same
Annulment of sale NOT the remedy in a simulated sale
The buyer must pay the reasonable price for the thing received
It is a well-entrenched rule that where the deed of sale states that (Art. 1474, NCC).
the purchase price has been paid but in fact has never been paid,
the deed of sale is null and void ab initio for lack of consideration. Determination of reasonable price
Moreover, Article 1471 of the Civil Code, provides that if the price
is simulated, the sale is void, which applies to the instant case, Reasonableness of price is a question of fact. Its determination is
since the price purportedly paid as indicated in the contract of sale dependent upon the circumstances of each particular case. The
was simulated for no payment was actually made. Since it was well market value is a good standard in determining the reasonable
established that the Deed of Sale is simulated and, therefore void, price (Pineda, p. 55)
petitioners claim that respondent's cause of action is one for
annulment of contract, which already prescribed, is unavailing, Market value
because only voidable contracts may be annulled. On the other
hand, respondent's defense for the declaration of the Market value is that reasonable sum which a property would
inexistence of the contract does not prescribe (Catindig v. Vda. de command in a fair sale by a man willing but not obliged to sell to
Meneses, Roxas v. Court of Appeals, G.R.No. 165851& G.R. No. another who is willing but not obliged to buy.
165851 , Feb. 2, 2011).
Q: In an action for specific performance with damages, X alleged
Reasonable price that there was an agreement to purchase the lot of Y. As regards
the manner of payment, however, Ys receipts contradicted the
It is considered reasonable price if, generally, the market price at testimony of X. The receipts failed to state the total purchase
the time and place fixed by the contract or by law for the delivery price or prove that full payment was made. For this reason, it was
of the goods. contended that there was no meeting of their minds and there
was no perfected contract of sale. Decide.
A: The question to be determined should not be whether there

was an agreed price, but what that agreed price was. The sellers
could not render invalid a perfected contract of sale by merely

SALES
contradicting the buyers obligation regarding the price, and Effect of rescission on earnest money received
subsequently raising the lack of agreement as to the price(David
v. Tiongson, G.R. No. 108169, Aug. 25, 1999). When the seller seeks to rescind the sale, he is obliged to return
the thing which was the object of the contract along with fruits and
Failure to pay the consideration v. Lack of consideration interest (Art. 1385, NCC).
BASIS FAILURE TO PAY LACK OF Option money v. Earnest money

CONSIDERATION CONSIDERATION
As to Contract is valid because it OPTION MONEY EARNEST MONEY
validity of is the existence of the price Money given as distinct
contract of and not the act of payment consideration for an Forms part of the purchase price
sale of price that determines option contract
the validity of a contract of Applies to a sale not Given only when there is already a
Lack of consideration
sale. yet perfected sale
prevents the
existence of a valid Prospective buyer is not When given, the buyer is bound to
NOTE: Payment of the required to buy. pay the balance.
contract.
price has nothing to do If buyer does not decide to If sale did not materialize, it must
with the perfection of the buy, it cannot be be returned. (Villanueva, p. 87;
contract, but merely goes recovered. Pineda, p.77)
into the performance of
the contract. Q: Bert offers to buy Simeon's property under the following terms
As to Failure to pay the and conditions: P1 million purchase price, 10% option money, the
resultant consideration results in a The contract of sale is balance payable in cash upon the clearance of the property of all
right right to demand the null and void and illegal occupants. The option money is promptly paid and Simeon
fulfillment or cancellation produces no effect clears the property of all illegal occupants in no time at all.
of the obligation under an whatsoever However, when Bert tenders payment of the balance and asks for
existing valid contract. the deed of absolute sale, Simeon suddenly has a change of heart,
claiming that the deal is disadvantageous to him as he has found
out that the property can fetch three times the agreed purchase
OPTION MONEYVIS-A-VIS EARNEST MONEY price. Bert seeks specific performance but Simeon contends that
he has merely given Bert an option to buy and nothing more and
Option money offers to return the option money which Bert refuses to accept.
1. Will Bert's action for specific performance prosper?
It is the distinct consideration in case of an option contract. It does Explain.
not form part of the purchase price hence, it cannot be recovered 2. May Simeon justify his refusal to proceed with the sale
if the buyer did not continue with the sale. by the fact that the deal is financially disadvantageous
to him? Explain. (2002 Bar Question)
An option is not itself a purchase, but merely secures the privilege
to buy. It is not a sale of property but a sale of right to purchase. A:
He does not sell his land; he does not then agree to sell it; but he 1. Bert's action for specific performance will prosper because
does sell something, i.e., the right or privilege to buy at the there was a binding agreement of sale, not just an option
election or option of the other party. Its distinguishing contract. The sale was perfected upon acceptance by Simeon
characteristic is that it imposes no binding obligation on the person of 10% of the agreed price. This amount is in reality an
holding the option, aside from the consideration for the offer earnest money because the agreement states that the
(Limson v. CA, G.R. No. 135929, 2001). balance was to be paid after fulfilling the condition. Under
Art. 1482, it "shall be considered as part of the price and as
Consideration of payment as option money proof of the perfection of the contract." (Topacio v. CA, G.R.
No. 102606, July 3, 1992; Villongco Realty v. Bormaheco, G.R.
Payment is considered option money when it is given as a separate No. L-26872, July 25, 1975).
and distinct consideration from the purchase price. Consideration
in an option contract may be anything or undertaking of value. 2. Simeon cannot justify his refusal to proceed with the sale by
the fact that the deal is financially disadvantageous to him.
Earnest money or arras Having made a bad bargain is not a legal ground for pulling
out of a binding contract of sale, in the absence of some
This is the money given to the seller by the prospective buyer to actionable wrong by the other party (Vales v. Villa, G.R. No.
show that the latter is truly interested in buying the property, and 10028, Dec. 16, 1916), and no such wrong has been
its aim is to bind the bargain (Pineda, p. 75). committed by Bert.
Effect of giving an earnest money Q: Spouses Pangan owned a lot and a two-door apartment. The
wife, Consuelo Pangan agreed to sell the properties to spouses
It is statutory rule that whenever earnest money is given in a Perreras. Consuelo received P20,000 from the respondents as
contract of sale, it shall be considered as part of the price and as earnest money with a receipt that also contained the terms of
proof of the perfection of the contract. It constitutes an advance agreement. Later on, the parties agreed to increase the price
payment and must, therefore be deducted from the total price from P540,000 to P580,000. Spouses Perreras issued two checks in
(Adelfa Properties, Inc. v. CA, 240 SCRA 265). compliance to the new agreement amounting to P200,000
and P250,000. Consuelo, however, refused to accept the
NOTE: Option money may become earnest money if the parties so agree. checks. She justified her refusal by saying that her children, co-
owners of the subject properties, did not agree to sell the
properties. Consuelo offered to return the P20,000 earnest money
to the spouses buyers but the latter rejected it. Hence, Consuelo

CIVIL LAW
filed a complaint for consignation. Spouses Perreras insisted on Rules in the conception stage about the offer
enforcing the agreement, hence they filed an action for specific
performance. In Consuelos answer, she claimed that the contract RULE
became ineffective for lack of the requisite consent from the co- Offer is Prior to acceptance, may be withdrawn at will by
owners, her children. Decide. floated offeror but no authority to modify it
Must be accepted within the period, otherwise,
A:The presence of Consuelos consent and, corollarily, the extinguished at the end of period and may be
existence of a perfected contract between the parties are further With a period
withdrawn at will by offeror but must not be
evidenced by the payment and receipt of P20,000.00, an earnest arbitrary, otherwise, liable for damages
money by the contracting parties common usage. The law on With a Extinguished by happening/ non-happening of
sales, specifically Article 1482 of the Civil Code, provides that condition condition
whenever earnest money is given in a contract of sale, it shall be without
considered as part of the price and proof of the perfection of the Continues to be valid depending upon
period/
contract. Although the presumption is not conclusive, as the circumstances of time, place and person
condition
parties may treat the earnest money differently, there is nothing With a
alleged in the present case that would give rise to a contrary Original offer is extinguished
counter-offer
presumption. In cases where the Court reached a conclusion
contrary to the presumption declared in Article 1482, we found Option contract
that the money initially paid was given to guarantee that the buyer
would not back out from the sale, considering that the parties to An option contract is a contract by which the owner of the
the sale have yet to arrive at a definite agreement as to its terms property agrees with another person that he shall have the right to
that is, a situation where the contract has not yet been buy his property at a fixed price within a certain time. It is binding
perfected. These situations do not obtain in the present case, as upon the promisor if the promise is supported by a consideration
neither of the parties claimed that the P20,000.00 was given distinct from the price. An option contract is likewise a separate
merely as guarantee by the respondents, as vendees, that they and distinct contract from a contract of sale.
would not back out from the sale (Heirs of Pangan v. Spouses
Perreras, G.R. No. 157374, Aug. 27, 2009). Nature of an option contract
FORMATION OF CONTRACT OF SALE It is a preparatory contract in which one party grants to another,
for a fixed period and at a determined price, the privilege to buy or
Three (3) stages involved in the formation of a contract of sale sell, or to decide whether or not to enter into a principal contract.
It binds the party who has given the option not to enter into the
1. Negotiation/Preparatory offer/Policitation principal contract with any other person during the period
2. Perfection designated, and within that period, to enter into such contract with
3. Consummation the one whom the option was granted, if the latter should decide
to use the option. It is a separate and distinct contract.
Policitation
NOTE: If the option is perfected, it does not result in the perfection or
Policitation is defined as an unaccepted unilateral promise to buy consummation of the sale (Diaz, p.7).
or sell. This produces no judicial effect and creates no legal bond.
This is a mere offer, and has not yet been converted into a Period within which to exercise the option
contract. It covers the period from the time the prospective
contracting parties indicate interest in the contract to the time the 1. Within the term stipulated
contract is perfected (Villanueva, p. 6). 2. If there is no stipulation, the court may fix the term
Usually included in a policitation Exercise of an option
Legal matters arising prior to the perfection of the sale, dealing A notice of acceptance must be communicated to offeror even
with concepts of invitation to make offer, offer, acceptance, right without actual payment as long as payment is delivered in the
of first refusal option contract, supply agreement, mutual promises consummation stage provided it still within the period provided.
to buy and sell or contracts to sell, and even agency to sell or
agency to buy (Villanueva, 2009). Effect of a separate consideration in an option contract
Certainty of an offer 1. With separate consideration:

a. Contract is valid
An offer is certain only where there is an offer to sell or an offer b. Offeror cannot withdraw offer until after expiration of
to buy a subject matter and for a price certain having all the the option
essential requisites mandated by law. c. Is subject to rescission and damages but not specific
performance
Acceptance of an offer 2. Without separate consideration:
a. the option contract is not deemed perfected
The acceptance must be absolute and must not qualify the terms b. offer may be withdrawn at any time prior to acceptance
of the offerit must be plain, unequivocal, unconditional and
without variance of any sort from the proposal. NOTE: However, even though the option was not supported by a
consideration, the moment it was accepted, contract of sale is perfected
(Art. 1324, NCC).

SALES
Obligations of the offeror A: The action filed by the lessee, for both rescission of the
offending sale and specific performance of the right of first
refusal which was violated, should prosper. If the right of first
1. Not to offer to any third party the sale of the object of the refusal was violated and the property wa sold to a buyer who was
option during the option period; aware of the existence of such right, the resulting contract is
2. Not to withdraw the offer or option during the option period; rescissible by the person in whose favour the right of first refusal
3. To hold the subject matter for sale to the offeree in the event was given and although no particular price was stated in the
that the latter exercises his option during the option period. covenant granting the right of first refusal, the same price by which
the third-party buyer bought the property shall be deemed to be
Effect of acceptance and withdrawal of the offer the price by which the righ of first refusal shall therefore be
exercisable (Equitorial Realty Development, Inc. v. Mayfair Theater,
If the offer had already been accepted and such acceptance has Inc., 264 SCRA 483).
been communicated before the withdrawal is communicated, the
acceptance creates a perfected contract, even if no consideration NOTE: The offer of the person in whose favor the right of first refusal was
given must conform with the same terms and conditions as those given to the
was as yet paid for the option. In which case, if the offeror does not
offeree.
perform his obligations under the perfected contract, he shall be Q: Andres leased his house to Iris for a period of 2 years, at the
liable for all consequences arising from the breach thereof based rate of P25, 000 monthly, payable annually in advance. The
on any of the available remedies such as specific performance, or contract stipulated that it may be renewed for another 2-year
rescission with damages in both cases. period upon mutual agreement of the parties. The contract also
granted Iris the right of first refusal to purchase the property at
Right of first refusal any time during the lease, if Andres decides to sell the property at
the same price that the property is offered for sale to a third
A right of first refusal is a contractual grant, not of the sale of a party. Twenty-three months after execution of the lease contract,
property, but of the first priority to buy the property in the event Andres sold the house to his mother who is not a third party. Iris
the owner sells the same. filed an action to rescind the sale and to compel Andres to sell the
property to her at the same price. Alternatively, she asked the
NOTE: Where a time is stated in an offer for its acceptance, the offer is
terminated at the expiration of the time given for its acceptance (Pineda,
court to extend the lease for another two years on the same
2010). terms. Can Iris seek rescission of the sale of the property to
Andresmother? (2008 Bar Question)
Instance when the owner offers the sale of the property to a third A: Iris can seek rescission because pursuant to Equatorial Realty
person Co. v. Mayfair Theater rescission is a relief allowed for the
protection of one of the contracting parties and even third persons
Only after the grantee fails to exercise its right under the same from all injury and damage the contract of sale may cause or the
terms and within the period contemplated can the owner validly protection of some incompatible and preferred right.
offer to sell the property to a third person, again under the same Alternative prayer for extension of the lease will NOT prosper
terms as offered to the grantee. (2008 Bar Question)
The extension of the lease should be upon the mutual agreement
Q: NDC and Firestone entered into a contract of lease wherein it of the parties.
is stipulated that Firestone has the right of first refusal to
purchase the leased property "should lessor NDC decide to sell Option contract v. Right of First Refusal
the same. After the rumor that NDC will transfer the lot to PUP,
Firestone instituted an action for specific performance to compel An option contract is a preparatory contract in which one party
NDC to sell the property in its favor. PUP moved to intervene grants to another, for a fixed period and at a determined price, the
arguing that the Memorandum issued by then President Aquino privilege to buy or sell, or to decide whether or not to enter into a
ordered the transfer of the whole NDC compound to the principal contract.
Government, which in turn would convey it in favor of PUP. Can
Firestone exercise its right of first refusal? In a right of first refusal, while the object may be determinate, the
exercise of the right would be dependent not only on the grantors
A: Yes. It is a settled principle in civil law that when a lease contract eventual intention to enter into a binding juridical relation with
contains a right of first refusal, the lessor is under a legal duty to another but also on terms, including the price, that are yet to be
the lessee not to sell to anybody at any price until after he has firmed up (Diaz, p. 54).
made an offer to sell to the latter at a certain price and the lessee
has failed to accept it. The lessee has a right that the lessor's first OPTION CONTRACT RIGHT OF FIRST REFUSAL
offer shall be in his favor (PUP v. CA, G.R. No. 143513, Nov. 14, Principal contract; stands on its Accessory; cannot stand on its
2001). own own
Does not need separate
Needs separate consideration
Q: In a 20-year lease contract over a building, the lessee is consideration
expressly granted a right of first refusal should the lessor decide Subject matter and price must There must be subject matter
to sell both the land and building. However, the lessor sold the be valid but price not important
property to a third person who knew about the lease and in fact Not conditional Conditional
agreed to respect it. Consequently, the lessee brings an action There is no offer to sell, but There is an offer to sell
against both the lessor-seller and the buyer (a) to rescind the sale only an opportunity for the
and (b) to compel specific performance of his right of first refusal buyer to enter into a
in the sense that the lessor should be ordered to execute a deed contract of sale
of absolute sale in favor of the lessee at the same price. The Not subject to specific Subject to specific performance
defendants contend that the plaintiff can neither seek rescission performance
of the sale nor compel specific performance of a "mere" right of
first refusal. Decide the case. (1998 Bar Question)

CIVIL LAW
Necessity it that the right of first refusal be embodied in a written Required Form of Acceptance
contract
It may be express or implied. Acceptance may be evidenced by
The right of first refusal be embodied in a written contract and the some act, or conduct, communicated to the offeror, either in a
grant of such right must be clear and express. formal or an informal manner, that clearly manifest the intention
or determination to accept the offer to buy or sell (Villanueva,
NOTE: It is applicable only to executory contracts and not to contracts which 2009).
are totally or partially performed.
How acceptance is made
If a particular form is required under the Statute of Frauds: sale is valid &
rd
binding between the parties but not to 3 persons.
It is made at the time and place stipulated in the contract. If there
Q: Pozzolanic entered a long-term contract with the National is no stipulation, it shall be made at the time and place of the
Power Corporation (NPC) for the purchase of all fly ash to be delivery of the thing (Art. 1582, NCC).
produced by the latters future power plants. In the contract, NPC
granted Pozzolanic a right of first refusal to purchase the fly ash The buyer is deemed to have accepted the goods
that may be generated in the future. When NPCs two new power
plants started operation, it published an invitation to interested 1. When he communicates to the seller that he has accepted
buyers for the purchase of the fly ash. Pozzolanic sent letters to them
NPC reminding its right of first refusal. NPC deferred its public 2. When the goods have been delivered and he does any act
bidding with the first power plants fly ash but it nevertheless inconsistent with the ownership of the seller
continued with the bidding of the second power plants fly ash. 3. When, after the lapse of reasonable time, he retains the
Pozzolanic filed a complaint, but during the pendency of the case goods without intimating to the seller that he rejected them
NPC decided to likewise dispose the fly ash from the first power (Art. 1585, NCC).
plant without allowing Pozzolanic to exercise its right of first
refusal. Can Pozzolanic exercise its right of first refusal? Rule on refusal to accept the goods by the buyer
A: No. The right of first refusal granted in favour of Pozazolanic is The buyer is not bound to return the goods to the seller and it is
invalid for being contrary to public policy as the same violates the sufficient that he notifies the seller of his refusal in the absence of
requirement of competitive public bidding in the award of a contrary stipulation (Art. 1587, NCC).
government contracts. In this jurisdiction, public bidding is the
NOTE: If the refusal is without just cause, the title passes to the buyer from
established procedure in the grant of government contracts. Thus, the moment the goods are placed at his disposal (Art. 1588, NCC).
respondents right of first refusal cannot take precedence over the
dictates of public policy. The right of first refusal of respondent Rule on the inspection of goods
being invalid, it follows that it has no binding effect. It does not
create an obligation on the part of petitioner to acknowledge the GR: If the goods have not yet been previously examined, the buyer
same (PSALM Corp., vs. Pozzolanic, G.R. No. 183789, Aug. 24, is not deemed to have accepted them until and unless he is given
2011). reasonable time to examine them (Art. 1584, NCC).
Right of first refusal may be waived XPNs:
1. The buyer had reasonable time to inspect the goods but he
Like other rights, the right of first refusal may be waived or when a failed to do so
party entered into a compromise agreement (Diaz, p. 55). 2. Stipulation to the contrary
3. C.O.D. sales
Availment of sublessee of the right of first refusal of the lessee
Effect and/or consequence of a qualified acceptance
GR: No. The sublessee is a stranger to the lessor who is bound to
respect the right of first refusal in favor of the lessee only. It constitutes merely a counter-offer which must in turn be
accepted to give rise to a valid and binding contract (Villanueva,
XPN: When the contract of lease granted the lessee the right to 2009).
assign the lease, the assignee would be entitled to exercise such
right as he steps into the shoes of the original assignee (Villanueva, Perfection of a contract of sale perfected through a letter or a
p. 164, 2009 ed.). telegram
PERFECTION It is perfected only when the offeror has received or has gain
knowledge of the acceptance made by the offeree. Even if the
Perfection of a Contract of Sale buyer has accepted, the seller may still withdraw if he does not
know yet of the buyers acceptance (Pineda, 2010).
GR: It is deemed perfected at the moment there is meeting of
minds upon the thing which is the object of the contract and upon Effect of the parties failure to appear before the notary public
the price (Art.1475, par.1, NCC). who notarized the deed
NOTE: The acceptance of the offer must be absolute. It must be plain,
unequivocal, unconditional and without variance of any sort from the
The non-appearance of the parties before the notary public who
proposal. notarized the deed does not necessarily nullify nor render the
parties' transaction void ab initio. Article 1358, NCC on the
XPN: When the sale is subject to a suspensive condition by virtue necessity of a public document is only for convenience, not for
of law or stipulation. validity or enforceability. Where a contract is not in the form
prescribed by law, the parties can merely compel each other to
observe that form, once the contract has been perfected.

SALES
NOTE: Contracts are obligatory in whatever form they may have been affixing their signatures on the said contract. Such signatures
entered into, provided all essential requisites are present (Penalosa v. show their acceptance of what has been stipulated in the Contract
Santos, G.R. No. 133749, Aug. 23, 2001). to Sell and such acceptance was made known to respondent
corporation when the duplicate copy of the Contract to Sell was
Q: DBP sought to consolidate its ownership with Paragon Paper returned to the latter bearing petitioners' signatures (Rizalino,
Industries, Inc. Medrano, President and General Manager of substituted by his heirs, vs. Paraiso Development Corporation, G.R.
Paragon, was instructed to contact all minority stockholders to No. 157493, February 5, 2007).
convince them to sell their shares to DBP at the price of 65% of
the par value. He was able to contact all except for one who was Perfection of an auction sale
in Singapore. Medrano testified that all have agreed to sell their
shares to DBP. Paragon made proposals to DBP and the sale was A sale by auction is perfected when the auctioneer announces its
approved by a DBP resolution subject to terms and conditions. perfection by the fall of the hammer, or in other customary
However, the required number of shares contained in the manner (Art. 1476, par.2, NCC).
conditions was not delivered by Medrano. Is the sale perfected?
Seller has the right to bid in an auction sale
A: No. DBP imposed several conditions to its acceptance and it is
clear that Medrano indeed tried in good faith to comply with the The seller has the right to bid provided that such right was reserved
conditions given by DBP but unfortunately failed to do so. Hence, and notice was given to that effect (Pineda, p. 53).
there was no birth of a perfected contract of sale between the
parties (DBP v. Medrano and PMO, G.R. No. 167004. Feb. 7, 2011). CONSUMMATION
Q: Licup, through a letter, offered to buy parcels of land to The Consummation stage in a contract of sale
Holy See and Philippine Realty Corporation (PRC). He enclosed a
check for P100,000.00 to close the transaction and accepted the Consummation stage in a contract of sale takes place by the
responsibility of removing informal settlers. Msgr. Cirilos, delivery of the thing together with the payment of the price.
representative of the Holy See and PRC signed the conforme
portion of the letter and accepted the check. A stop-payment NOTE: The ownership of the thing is acquired by the buyer in any of the ways
order was issued by Licup and the latter requested that the titles specified by law or in any manner agreed upon by the parties.
to the land instead be given to SSE. Msgr. Cirilos wrote SSE
requesting to remove the informal settlers, otherwise, the Q: A and PDS Development Corp. executed a contract to sell a
P100,000.00 would be returned. SSE replied with an updated parcel of land. A died without having completed the installment
proposal that they will comply provided that the purchase price on the property. His heirs then took over the contract to sell and
is lowered. The proposal was rejected. The parcel of land was sold assumed his obligations by paying the selling price of the lot from
to another third person. Is there a perfected contract of sale their own funds, and completed the payment. To whom should
between the two parties? the final Deed of Absolute Sale be executed by PDS?
A: No. When Msgr. Cirilos affixed his signature on that letter, he A: Having stepped into the shoes of the deceased with respect to
expressed his conformity to the terms of Licups offer appearing on the said contract, and being the ones who continued to pay the
it. There was meeting of the minds as to the object and installments from their own funds, As heirs became the lawful
consideration of the contract. But when Licup ordered a stop- owners of the said lot in whose favor the deed of absolute sale
payment on his deposit and proposed in his April 26, 1988 letter to should have been executed by vendor PDS (Dawson v. Register of
Msgr. Cirilos that the property be instead transferred to SSE, a Deeds of Quezon City,G.R. No. 120600 Sept. 22, 1998).
subjective novation took place. The proposed substitution of Licup
by SSE opened the negotiation stage for a new contract of sale as
between SSE and the owners (Starbright Sales v. Phil. Realty Corp., OBLIGATIONS OF THE PARTIES
et. al, G.R. No. 177936, Jan. 18, 2012).
Obligations of the Buyer
Q: Petitioners are the co-owners of undivided shares of two
parcels of land. Respondent Paraiso Development Corporation 1. Payment of the price
purchased from them their respective shares except for two
shares. A Contract to Sell was then established, where the GR: Seller is not bound to deliver unless the purchase price is
petitioner affixed their signatures thereon. However, the paid
petitioners decided to withdraw from the said agreement and
along with it the request for the rescission of the contract which XPN: A period of payment has been fixed
they said they never signed. They allege there is inability to
understand the consequences of the contract. Was the contract 2. Accept delivery of thing sold
perfected between the parties?
NOTE: A grace period granted the buyer in case of failure to pay is a
A: It is well-settled that contracts are perfected by mere consent, right not an obligation. Non-payment would still generally require
upon the acceptance by the offeree of the offer made by the judicial or extrajudicial demand before default can arise.
offeror. From that moment, the parties are bound not only to the
fulfillment of what has been expressly stipulated but also to all the Other Obligations of the Buyer
consequences which, according to their nature, may be in keeping
with good faith, usage and law. To produce a contract, the 1. To take care of the goods without the obligation to return,
acceptance must not qualify the terms of the offer. However, the where the goods are delivered to the buyer and he rightfully
acceptance may be express or implied. For a contract to arise, the refuses to accept;
acceptance must be made known to the offeror. Accordingly, the
acceptance can be withdrawn or revoked before it is made known NOTE: The goods in the buyers possession are at the sellers risk.
to the offeror. In the case at bar, the Contract to Sell was 2. To be liable as a depositary if he voluntarily constituted
perfected when the petitioners consented to the sale to the himself as such;
respondent of their shares in the subject parcels of land by

CIVIL LAW
3. To pay interest for the period between delivery of the thing
and the payment of the price in the following cases: Q: Spouses De Leon alleged that they are the owners of a parcel
a. should it have been stipulated; of land which was inherited by the husband from his father. They
b. should the thing sold and delivered produces fruits or engaged the services of Atty. Juan to take care of the documents
income; or of the properties of his parents. The lawyer let them sign
c. should he be in default, from the time of judicial or voluminous documents. After the death of Atty. Juan, some
extra-judicial demand for the payment of the price. documents surfaced and revealed that their properties had been
conveyed by sale or quitclaim to the husband's brothers and
Obligations of the Seller (DDTWTP) sisters and to Atty. Juan and his sisters, when in truth and in fact,
no such conveyances were ever intended by them. His signature
1. Deliver the thing sold; in the deed was forged. The land in question was subsequently
2. Deliver fruits & accessions/accessories accruing from sold to Alcantara by Rodolfo De Leon, one of the brothers. The
perfection of sale; spouses demanded annulment of the document and
3. Transfer the ownership; reconveyance but it was refused. Likewise, Alcantara averred that
4. Warranties; she bought the land in question in good faith and for value. Was
5. Take care of the thing, pending delivery, with proper there a right to transfer ownership of the land?
diligence;
6. Pay for the expenses of the deed of sale unless there is a A:None. It is during the delivery that the law requires the seller to
stipulation to the contrary have the right to transfer ownership of the thing sold. In general, a
perfected contract of sale cannot be challenged on the ground of
Obligation of the Seller in terms of the nature of the subject the sellers non-ownership of the thing sold at the time of the
matter of the sale perfection of the contract. Undisputed is the fact that at the time
of the sale, Rodolfo de Leon was not the owner of the land he
When the subject matter of the sale is a determinate thing, the delivered to petitioner. Thus, the consummation of the contract
seller must deliver the thing to the buyer when compelled by the and the consequent transfer of ownership would depend on
latter. When the subject matter is an indeterminate or generic whether he subsequently acquired ownership of the land. A
thing, the seller may be asked that the obligation be complied with comparison of the genuine signatures of Hermoso de Leon with his
at his expense (Art. 1165, NCC). purported signature on the Deed of Extrajudicial Partition with
Quitclaim will readily reveal that the latter is a forgery (Alcantara-
Sellers obligation in case of delay or promise to deliver the thing Daus v. Spouses De Leon, G.R. No. 149750, June 16, 2003).
to two or more persons who do not have the same interest
TRANSFER OF OWNERSHIP
The seller shall be responsible for any fortuitous event that may
occur until he has delivered the thing (Art. 1165, NCC). Sale by itself DOES NOT transfer ownership
OBLIGATION OF THE SELLER TO TRANSFER OWNERSHIP The most that sale do is to create the obligation to transfer
ownership. It is only a title and not a mode of transferring
Seller need NOT be the owner of the thing at the time of ownership.
perfection of the contract
Mode v. Title
GR: Seller must have the right to transferownership at the time of
delivery or consummation stage. He need not be the owner at the Mode is the legal means by which dominion or ownership is
time of perfection of the contract. created, transferred, or destroyed; title only constitutes the legal
basis by which to affect dominion or ownership (Villanueva, 2009).
XPN: Foreclosure sale wherein the mortgagor should be the
absolute owner. Transfer of ownership
Transfer of ownership by the Seller to the Buyer It is tradition or delivery, which is a consequence of the sale that
transfers ownership.
GR: The ownership of the thing sold is acquired by the vendee from
the moment it is delivered to him in any ways specified in articles Ownership deemed transferred
1497 to 1501. This is the case when the sale is absolute.
The thing shall be understood as delivered, when it is placed in the
XPN: Any other manner signifying an agreement that the control and possession of the vendee.
possession is transferred from vendor to vendee. The sale in this
exception is a conditional one. NOTE: The most that sale do is to create the obligation to transfer
ownership. It is only the title while the mode of transferring ownership is
delivery.
Q: EJ was subjected to a buy-bust operation where police officers
posed to buy 500 pesos worth of S. She was then charged with
Effect of Delivery
a violation of the Dangerous Drugs Act for trafficking drugs. EJ
uses as defense her lack of possession of the object of the sale.
GR: Title /ownership is transferred
Would her contention free her from liability?
XPN: Contrary is stipulated as in the case of:
A:No. Though she was not in possession of the object of sale,
1. Pactum reservatii in domini agreement that ownership will
Article 1459 merely requires that the vendor must have the right to
remain with seller until full payment of price (Contract to sell)
transfer ownership of the object sold at the time of delivery. In the
2. Sale on acceptance/approval
case at bar, though Beth is not the owner, she had the right to
3. Sale on return
dispose of the prohibited drug. Ownership was thereafter acquired
4. There is implied reservation of ownership
upon her delivery to the men in the alley after her payment of the
price (People v. Ganguso, G.R. No. 115430, Nov. 23, 1995). NOTE: Seller bears expenses of delivery.

SALES
Q: Lagrimas Boy borrowed P15,000 from spouses Ramos.
Different kinds of delivery Thereafter, Boy executed a Deed of Absolute Sale with the
Ramoses involving a house and lot. The price agreed upon was
1. Actual thing sold is placed under the control and possession P31,000. It was alleged that Boys debt is to be deducted, so the
of buyer/agent; spouses needed only to pay P16,000. Because the Ramoses were
2. Constructive does not confer physical possession of the not yet in immediate need of the properties, Lagrimas stayed
thing, but by construction of law, is equivalent to acts of real therein. Later on, Lagrimas went to the wife, Erlinda, asking that
delivery. they execute a Kasunduan. In the Kasunduan, it states that the
spouses still had a remaining balance of P16,000 and that interest
Requisites: is to be deducted in favor of the spouses so that would leave a
a. The seller must have control over the thing balance of P8,500. The Kasunduan was notarized, however
b. The buyer must be put under control Erlinda changed her mind upon signing. According to her,
c. There must be intention to deliver the thing for she realized that they already paid P31,000 to Lagrimas when the
purposes of ownership Deed of Sale was executed. When the spouses Ramos already
i. Tradicion Symbolica delivery of certain symbols needed to occupy the land, Lagrimas refused to vacate. She
representing the thing invoked the Kasunduan. Decide.
ii. Tradicion Instrumental delivery of the instrument
of conveyance A: Under Article 1477 of the Civil Code, the ownership of the thing
iii. Traditio Longa Manu Delivery of thing by mere sold shall be transferred to the vendee upon the actual
agreement; when seller points to the property or constructive delivery thereof. In addition, Article 1498 of the
without need of actually delivering Civil Code provides that when the sale is made through a public
iv. Tradicion Brevi Manu the buyer, being already in instrument, as in this case, the execution thereof shall be
possession of the thing sold due to some other equivalent to the delivery of the thing which is the object of the
cause, merely remains in possession after the sale contract, if from the deed the contrary does not appear or cannot
is effected, but now in concept of owner. E.g.From clearly be inferred. In this case, the Deed of Absolute Sale does not
lessee to becoming an owner contain any stipulation against the constructive delivery of the
v. Constitutum Possessorium the seller remains in property to private respondents. In the absence of stipulation to
possession of the property in a different capacity. the contrary, the ownership of the property sold passes to the
E.g. From owner to lessee vendee upon the actual or constructive delivery thereof. The
Deed of Absolute Sale, therefore, supports private respondents
3. Quasi-tradition delivery of rights, credits or incorporeal right of material possession over the subject property (Boy v. Court
property, made by: of Appeals, et. al, G.R. No. 125088, April 14, 2004).
a. Placing titles of ownership in the hands of the buyer;
b. Allowing buyer to make use of rights Q: Asset Privatization (petitioner) entered into an absolute deed
of sale over certain machinery and refrigeration equipment with
4. Tradition by operation of lawExecution of a public T.J. Enterprises (respondent) on an as-is-where-is basis.
instrument is equivalent to delivery. But to be effective, it is Respondent paid the full amount of P84,000.00 as evidenced by a
necessary that the seller have such control over the thing sold receipt. After two days, respondent demanded the delivery of the
that, at the moment of sale, its material delivery could have machinery. The subject properties were located in a compound
been made. under the possession of Creative Lines, Inc. Some time after,
respondent was able to pull out from the petitioners compound
GR: There is presumption of delivery the subject by means of a gate pass issued by the petitioner.
However, during the hauling of the second lot, only nine items
XPN: were pulled out instead of sixteen because Creative Lines
a. Contrary stipulation; employees prevented respondent from hauling the remaining
b. When at the time of execution, subject matter was machinery and equipment. Respondent filed a complaint for
not subject to the control of seller; specific performance and damages against petitioner and
c. Seller has no capacity to deliver at time of Creative Lines. Petitioner argued that upon the execution of the
execution; deed of sale it had complied with its obligation to deliver the
d. Such capacity should subsist for a reasonable time object of the sale since there was no stipulation to the contrary. It
after execution of instrument. further argued that being a sale on an as-is-where-is basis, it was
the duty of respondent to take possession of the property. Is
Delivery deemed effective there a constructive delivery of the subject properties?
Delivery should be coupled with intention of delivering the thing, A: None. As a general rule, when the sale is made through a public
and acceptance on the part of the buyer to give legal effect of the instrument, the execution thereof shall be equivalent to the
act. Without such intention, there is no such tradition. delivery of the thing which is the object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred.
Delivery of incorporeal property And with regard to movable property, its delivery may also be
made by the delivery of the keys of the place or depository where
1. When sale is made through a public instrument (Art. 1498, it is stored or kept. In order for the execution of a public
NCC). instrument to effect tradition, the purchaser must be placed in
2. By placing the titles of ownership in the possession of the control of the thing sold. However, the execution of a public
buyer. instrument only gives rise to a prima facie presumption of delivery.
3. When buyer uses and enjoys the rights pertaining to the Such presumption is destroyed when the delivery is not effected
incorporeal property with the consent of the seller (Art. 1501, because of a legal impediment. It is necessary that the vendor shall
NCC). have control over the thing sold that, at the moment of sale, its
material delivery could have been made. Thus, a person who does
not have actual possession of the thing sold cannot transfer
constructive possession by the execution and delivery of a public

CIVIL LAW
instrument. In this case, there was no constructive delivery of the Kinds of delivery to carrier
machinery and equipment upon the execution of the deed of
absolute sale or upon the issuance of the gate pass since it was not 1. FAS (Free Along Side) when goods are delivered alongside
petitioner but Creative Lines which had actual possession of the the ship, there is already delivery to the buyer
property. The presumption of constructive delivery is not 2. FOB (Free On Board) when goods are delivered at the point
applicable as it has to yield to the reality that the purchaser was of shipment, delivery to carrier by placing the goods on vessel
not placed in possession and control of the property (Asset is delivery to buyer
Privatization Trust v. T.J. Enterprises, G.R. No. 167195, May 8, 3. CIF (Cost, Insurance, Freight)
2009). a. When buyer pays for services of carrier, delivery to
carrier is delivery to buyer, carrier as agent of buyer;
Symbolic delivery by mere execution of the deed of conveyance b. When buyer pays seller the price from the moment
sufficient to convey ownership over property the vessel is at the port of destination, there is already
delivery to buyer
Possession is also transferred along with ownership thereof by 4. COD (Collect On Delivery) the carrier acts for the seller in
virtue of the deed of conveyance. The mere execution of the deed collecting the purchase price, which the buyer must pay to
of conveyance in a public document is equivalent to the delivery of obtain possession of the goods.
the property, prior physical delivery or possession is not legally
required. The deed operates as a formal or symbolic delivery of the Sellers duties after delivery to the carrier
property sold and authorizes the buyer or transferee to use the
document as proof of ownership. Nothing more is required (Sps. 1. To enter on behalf of the buyer into such contract reasonable
Sabio v. International Corporate Bank, Inc. et. at. G.R. No. 132709, under the circumstances;
Sept. 4, 2001). 2. To give notice to the buyer regarding necessity of insuring the
goods.
Q: Spouses Bernal purchased a jeepney from Union Motor to be
paid in installments. They then executed a promissory note and a When the object should be delivered
deed of chattel mortgage in favor of Union Motor which in turn
assigned the same with Jardine Finance. To effectuate the sale as Object should be delivered at:
well as the assignment of the promissory note and chattel 1. Stipulated time
mortgage, the spouses were required to sign documents, one of 2. If there is none, at a reasonable hour.
which was a sales invoice. Although the Spouses have not yet
physically possessed the vehicle, Union Motors agent required Place of delivery
them to sign the receipt as a condition for the delivery of the
vehicle. It was discovered that the said agent stole the vehicle The place of delivery shall be:
even prior to its delivery to the spouses. Was there a transfer of 1. That agreed upon
ownership of the subject vehicle? 2. Place determined by usage of trade
3. Sellers place of business
A:No. The issuance of a sales invoice does not prove transfer of 4. Sellers residence
ownership of the thing sold to the buyer; an invoice is nothing 5. In case of specific goods, where they can be found
more than a detailed statement of the nature, quantity and cost of
the thing sold and has been considered not a bill of sale. Effects of a sale of goods on instalment
The registration certificate signed by the spouses does not 1. Goods must be delivered in full except when stipulated
conclusively prove that constructive delivery was made nor that 2. When not examined by the buyer it is not accepted until
ownership has been transferred to the respondent spouses. Like examined or at least had reasonable time to examine
the receipt and the invoice, the signing of the said documents was
qualified by the fact that it was a requirement of Union Motor for Seller not bound to deliver the thing sold
the sale and financing contract to be approved. In all forms of The seller is not bound to deliver the thing sold:
delivery, it is necessary that the act of delivery, whether 1. If the buyer has not paid the price;
constructive or actual, should be coupled with the intention of 2. No period for payment has been fixed in the contract;
delivering the thing. The act, without the intention, is 3. A period for payment has been fixed in the contract but the
insufficient.Inasmuch as there was neither physical nor buyer has lost the right to make use of the time.
constructive delivery of a determinate thing, (in this case, the
subject motor vehicle) the thing sold remained at the sellers risk. Suspension of payment by the buyer
The Union Motor should therefore bear the loss of the subject
motor vehicle after its agent allegedly stole the same (Union Motor GR:
Corp. v. CA, G.R. No. 117187, July 20, 2001). 1. If he is disturbed in the possession or ownership of the thing
bought
Effect of delivery through a carrier 2. If he has well-grounded fear that his possession or ownership
would be disturbed by a vindicatory action or foreclosure of
GR: Yes, if the seller is authorized. Delivery to carrier is delivery to mortgage.
the buyer.
XPN:
XPN: 1. Seller gives security for the return of the price in a proper
1. A contrary intention appears case;
2. Implied reservation of ownership under Art. 1503, pars 1, 2, 2. A stipulation that notwithstanding any such contingency, the
3. buyer must make payment;
3. Disturbance or danger is caused by the seller;
4. If the disturbance is a mere act of trespass;
5. Upon full payment of the price.

SALES
Necessity of payment of the purchase price to transfer ownership 7. On sale or return The ownership passes to buyer upon
delivery, but he may revest ownership in the seller by
Unless the contract contains a stipulation that ownership of the returning or tendering the goods within the time fixed in the
thing sold shall not pass to the purchaser until he has fully paid the contract or within reasonable time (Art. 1502, NCC).
price, ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof (Diaz, p. Sale on trial, approval or satisfaction
48).
It is a contract in the nature of an option to purchase if the goods
Acceptance of delivery by the buyer of the thing sold prove to be satisfactory, the approval of the buyer being a
condition precedent.
1. Express he communicates to seller that he has accepted
2. Implied Transfer of ownership deemed on a contract of sale on trial,
a. Buyer does not act inconsistent with ownership of seller approval or satisfaction
after delivery
b. Retains the thing without communicating to seller that 1. When buyer signifies approval or acceptance to the seller or
he has rejected does any act adopting the transaction
2. If buyer did not signify approval or acceptance, but retains
Effect if the buyer refuses to accept despite delivery of the object the goods without giving notice of rejection after the
of the sale expiration of the period fixed or of reasonable time (Art.
1502, NCC)
Delivery is completed. Since delivery of the subject matter of the
sale is an obligation on the part of the seller, the acceptance Rules in case of sale on trial, approval or satisfaction
thereof by the buyer is not a condition for the completeness of the
delivery (Villanueva, p. 117). Title Who bears the loss
GR: Borne by seller
NOTE: Thus, even with such refusal of acceptance, delivery
(actual/constructive), will produce its legal effects (e.g. transferring the risk
of loss of the subject matter to the buyer who has become the owner thereof)
XPN:
Risk of Loss
(Villanueva, p. 117). 1. Buyer is at fault
2. Buyer agreed to bear the
Under Art. 1588, when the buyers refusal to accept the goods is without just loss
cause, the title thereto passes to him from the moment they are placed at
his disposal (Villanueva, p. 117). GR: Buyer must give goods a trial
WHEN DELIVERY DOES NOT TRANSFER TITLE As to trial XPN: Buyer need not do so if it is
evident that it cannot perform
When delivery does not transfer title the work.
1. Sale on Trial, Approval, or Satisfaction When period within which It runs only when all the parts
2. When there is an EXPRESS RESERVATION buyer must signify his essential for the operation of the
a. If it was stipulated that ownership shall not pass to the acceptance runs object has been delivered
purchaser until he has fully paid the price (Art. 1478,
NCC)
Validity of stipulation that a
3. When there is an IMPLIED RESERVATION Valid, provided the 3rd person is in
a. When goods are shipped, but the bill of lading states 3rd person must satisfy
good faith
that goods are deliverable to the seller or his agent, or approval or satisfaction
to the order of the seller or his agent
b. When the bill of lading is retained by the seller or his If the sale is made to a buyer
Generally, it cannot be
agent who is an expert on the
considered a sale on approval
c. when the seller of the goods draws on the buyer for the object purchased
price and transmits the bill of exchange and the bill of
lading to the buyer , and the latter does not honor the
bill of exchange by returning the bill of lading to the
seller DOUBLE SALE
4. When sale is not VALID
5. GR: When the seller is not the owner of the goods Double Sale (Article 1544, NCC)
XPNs: There is double sale when the same object of the sale is sold to
a. Estoppel: when the owner is precluded from denying different vendees.
the sellers authority to sell
b. Registered land bought in good faith (Ratio: Buyer need Requisites of Double Sales
not go beyond the Torrens title)
c. Order of Courts in a Statutory Sale 1. Same subject matter
d. When the goods are purchased in a Merchants store, 2. Same immediate seller
Fair or Market (Art. 1505, NCC) 3. Two or moredifferent buyers
4. Both sales are valid
6. GR: When goods are held by a third party
XPN: Third person acknowledges to the buyer that he holds

the goods in behalf of the buyer (Art. 1521, NCC)

CIVIL LAW
Rules according to Article 1544 of the Civil Code In sheriffs sales, the sheriff does not guarantee the title to real property and
it is not incumbent upon him to place the buyer in possession of such
1. Movable Owner who is first to possess in good faith property (Pineda sales, p. 275).
2. Immovable
a. First to register in good faith Caveat emptor NOT applicable in sales of registered land
b. No inscription, first to possess in good faith
c. No inscription & no possession in good faith Person The purchaser of a registered land under the Torrens system is
who presents oldest title in good faith merely charged with notice of the burdens and claims on the
property which are inscribed on the face of certificate of title
Rule on Double Sale regarding immovables (Pineda sales, p. 275).
GR: Apply Art.1544 Application of caveat emptor in judicial sales
XPN: Sale of registered lands apply Torrens System Caveat emptor is applicable in judicial sales. The purchaser in a
judicial sale acquires no higher or better title or right than that of
Principle of prius tempore, potior jure - first in time, stronger in the judgment debtor. If it happens that the judgment debtor has
right no right, interest, or lien on and to the property sold, the purchaser
acquires none (Pineda sales, p. 280).
Knowledge by the first buyer of the second sale cannot defeat the
first buyers rights except when the second buyer first registers in Q: Juliet offered to sell her house and lot, together with all the
good faith the second sale. Conversely, knowledge gained by the furniture and appliances therein, to Dehlma. Before agreeing to
second buyer of the first sale defeats his rights even if he is first to purchase the property, Dehlma went to the Register of Deeds to
register, since such knowledge taints his registration with bad faith verify Juliets title. She discovered that while the property was
to merit the protection of Art. 1544 (2nd par.), the second realty registered in Juliets name under the Land Registration Act, as
buyer must act in good faith in registering his deed of sale (Diaz, p. amended by the Property Registration Decree, it was mortgaged
125). to Elaine to secure a debt of P80, 000. Wanting to buy the
property, Dehlma told Juliet to redeem the property from Elaine,
NOTE: Where one sale is absolute and the other is a pacto de retro and gave her an advance payment to be used for purposes of
transaction where the period to redeem has not yet expired, Art. 1544 will releasing the mortgage on the property. When the mortgage was
not apply (Pineda, p. 223). released, Juliet executed a Deed of Absolute Sale over the
property which was duly registered with the Registry of Deeds,
Q: Does prior registration by the second buyer of a property and a new TCT was issued in Dehlmas name. Dehlma
subject of a double sale confer ownership or preferred right in his immediately took possession over the house and lot and the
favor over that of the first buyer? movables therein. Thereafter, Dehlma went to the Assessors
Office to get a new tax declaration under her name. She was
A: No. Prior registration of the disputed property by the second surprised to find out that the property was already declared for
buyer does not by itself confer ownership or a better right over the tax purposes in the name of XYZ Bank which had foreclosed the
property. Article 1544 requires that such registration must be mortgage on the property before it was sold to her. XYZ Bank was
coupled with good faith. also the purchaser in the foreclosure sale of the property. At that
time, the property was still unregistered but XYZ Bank registered
Knowledge gained by the first buyer of the second sale the Sheriffs Deed of Conveyance in the day book of the Register
of Deeds under Act 3344 and obtained a tax declaration in its
Knowledge gained by the first buyer of the second sale cannot name. (2008 Bar Question)
defeat the first buyer's rights except where the second buyer
registers in good faith the second sale ahead of the first, as a. Was Dehlma a purchaser in good faith?
provided by the Civil Code. b. Who as between Dehlma and XYZ Bank has a better
right to the house and lot?
Knowledge gained by the second buyer of the first sale c. Who owns the movables inside the house?
Knowledge gained by the second buyer of the first sale defeats his A:
rights even if he is first to register the second sale, since such a) Yes, Dehlma is a purchaser in good faith. She learned about
knowledge taints his prior registration with bad faith (Art. 1544, the XYZ tax declaration and foreclosure sale only after the
NCC;Uraca, et. al v. CA,G.R. No. 115158, Sept. 5, 1997). sale to her was registered. She relied on the certificate of title
of her predecessor-in-interest. Under the Torrens System, a
Principle of caveat emptor buyer beware buyer of registered lands is not required by law to inquire
further than what the Torrens certificate indicates on its face.
It literally means, Let the buyer beware. The rule requires the If a person proceeds to but it relying on the title, that person
purchaser to be aware of the supposed title of the vendor and one is considered a buyer in good faith.
who buys without checking the vendors title takes all the risks and
losses consequent to such failure (Agcaoili, p. 184). The priority in time rule could not be invoked by XYZ Bank
because the foreclosure sale of the land in favour of the bank
Application of caveat emptor in particular sale transactions was recorded under Act 3344, the law governing transactions
affecting unregistered land, and thus, does not bind the land.
1. Sales of animals (Art. 1574, NCC)
2. Double sales (Art. 1544, NCC) b) Between Dehlma and the bank, the former has a better right
3. In sheriffs sales (Art. 1570, NCC) to the house and lot.
4. Tax sales (Art. 1547, last paragraph, NCC)
c) Unless there is a contrary stipulation in the absolute deed of
NOTE: In the above sales, there is no warranty of title or quality on the part sale, Dehlma owns the movables covered by the Deed of
of the seller. The purchaser who buys without checking the title of the Sale and her ownership is perfected by the execution and
vendor is assuming all risks of eviction. delivery of public document of sale. The delivery of the

SALES
absolute deed of sale is a symbolical delivery of the house buyer
and lot, including the contents of the house. This is an
obligation to deliver a specific thing, which includes the DOCUMENTS OF TITLE
delivery of the specific thing itself and all of its accessions and
accessories even though they may not have been mentioned Document of Title
(Art. 1166, NCC).
A document used in the ordinary course of business in the sale or
RISK OF LOSS transfer of goods , as proof of the possession or control of the
goods , or authorizing or purporting to authorize the possessor of
A thing is considered as lost the document to transfer or receive, either by endorsement or by
delivery, goods represented by such document (Art. 1636, NCC).
GR: It is understood that the thing is lost when it:
1. perishes, or Purpose of the Documents of Title
2. goes out of commerce, or
3. disappears in such a way that its existence is unknown or 1. Evidence of possession or control of goods described therein
cannot be recovered (Art. 1189, 2nd par., NCC). 2. Medium of transferring title and possession over the goods
described therein without having to effect actual delivery
XPN: In an obligation to deliver a generic thing, the loss or (Villanueva, 2009).
destruction of anything of the same kind does not extinguish the 3. The custody of a negotiable warehouse receipts issued to the
obligation (Art. 1263, NCC). order of the owner, or to bearer, is a representation of title
upon which bona fide purchasers for value are entitled to
Effect when the loss occurred at the time of perfection of the rely, despite breaches of trust or violations of agreement on
contract of sale the part of the apparent owner (Siy Cong Bieng v. HSBC, 56
Phil 598).
GR: When the object of the contract is entirely lost, the contract
shall be without effect. Rationale behind a document of title
XPN: In case of partial loss, the buyer may choose between Merchants are able to transact with goods and merchandise
withdrawing from the contract and demanding the remaining part. without having to physically carry them around, and that buyers
If he chooses the latter, he shall pay the remaining parts should be assured that they may deal with the evidence thereof
corresponding price in proportion to the total sum agreed upon with the same effect as though they could feel the merchandise
(Art. 1493, NCC). themselves (Villanueva, 2009).
Options of the buyer with regard to the sale in the total or partial Negotiable Document of Title
loss or deterioration of a mass of specific goods without the
knowledge of the seller A document of title which states that the goods referred therein
will be delivered to the bearer, or to the order of any person
1. He may treat the sale as avoided or cancelled named in such document (Art. 1509, NCC).
2. He may continue with the sale with respect to the available
or remaining goods (Art. 1494, NCC). Persons who may negotiate a Negotiable Document of Title
Effect suppose the buyer chooses to continue with the sale of the 1. Owner
remaining goods 2. Person to whom the possession or custody of the
document has been entrusted by the owner
The remaining goods shall pass in ownership to the buyer but a. If bailee undertakes to deliver the goods to such
subject to proportionate reduction of the price. But this is person
applicable only if the goods are divisible or capable of being divided b. If document is in such form that it may be negotiated
(Pineda, 2010). If indivisible, the only option available is the by delivery.
avoidance of the sale.
Non-negotiable documents of title
Person who bears the risk of loss or deterioration
1. They are delivered only to a specified person
2. Carrier will not deliver the goods to any holder of the
BEFORE Res perit domino Seller is the owner so seller
document or to whom such document may have been
PERFECTION bears risk of loss
endorsed by the consignee
Res perit domino 3. Must present the deed of sale or donation in his favor
AT PERFECTION Contract shall be without any effect the Warranties of seller of documents of title
seller bears the loss since the buyer is relieved
of his obligation under the contract 1. Genuineness of the Document
AFTER 2. Legal right to negotiate or transfer
PERFECTION Seller; 3. No knowledge of fact which would impair the validity or
BUT Deterioration & fruits Buyer bears loss worth of the document
BEFORE (Tolentino) 4. Right to transfer Title to the goods and merchantability or
DELIVERY fitness for a particular purpose, whenever such warranties
Buyer becomes the owner so buyer bears risk would have been implied had the contract transfer the goods
of loss without a document.
AFTER
DELIVERY
Delivery extinguish ownership vis-a-vis the
seller & creates a new one in favor of the

CIVIL LAW
Acquisition of a person to whom a non-negotiable instrument has 2. The buyer may accept the entire goods delivered and he shall
been transferred but not negotiated pay for them at the contract rate (Art. 1522, NCC).
He acquires: Rule when the seller delivers goods which are mixed with other
1. Title to the goods, subject to the terms of any goods of different description not included in the contract
agreement with the transferor;
2. Right to notify the bailee who issued the document of The buyer may accept the goods which are in accordance with the
the transfer thereof, and thereby to acquire the direct contract and reject the rest (Art. 1522, NCC).
obligation of such bailee to hold possession of the
goods for him according to the terms of the document. Rule if the subject matter is indivisible
How the transferors creditor may defeat the aforementioned The buyer may reject the whole of the goods (Art. 1522, NCC).
rights of the transferee
Duty of the seller with regard to accessions and accessories
Prior to the notification to such bailee by the transferor or
transferee of a non-negotiable document of title, the title of the The seller has the duty to preserve the thing and its accessions and
transferee to the goods and the right to acquire the obligation of accessories from the time of the perfection of the contract of sale
such bailee may be defeated by the transferors creditor by the (Art. 1537, NCC).
levy of an attachment or execution upon the goods(Art. 1514,
NCC). NOTE: In case of loss or deterioration, the seller is liable for damages or the
buyer may seek rescission with damages. However, if loss or deterioration is
Q: If the goods are delivered to the bailee by the owner or by a due to a fortuitous event, the seller is not liable (Art. 1538, NCC).
person whose act in conveying the title to them to a purchaser in Rule when the sale of immovable is by unit of measure or number
good faith for value and a negotiable instrument was issued for
them, can the said goods be attached, garnished or levied upon? GR: The seller must deliver all that may have been stated in the
contract.
A:
GR: No, the goods cannot be attached, garnished or levied upon
while they are in the bailees possession. XPN: If impossible to deliver all, the buyer may choose between:
1. Proportional reduction of the price
XPN: 2. Rescission of the contract, provided the deficiency is at least
1. When the document is first surrendered; or 1/10 of the area stated in the contract (Art. 1539, NCC).
2. When its negotiation is enjoined.
Prescription period for the action of rescission of contract
NOTE: The bailee shall in no case be compelled to deliver the actual
possession of the goods until the document is: 6 months from the day of delivery (Art. 1543, NCC).
1. Surrendered to him; or
2. Impounded by the court. (Art. 1519, NCC) How payment is made by the buyer
Rationale for the prohibition is to protect the bailee from liability as the Price is paid at the time and place stipulated in the contract. It is
document may have been negotiated by the holder to subsequent
transferees for value and in good faith. He may be liable for damages if he
made to the person in whose favor the obligation has been
cannot produce and deliver the goods later (Pineda, 2010). constituted or his successor in interest, or any person authorized to
receive (Villanueva, 2009).
Rights of a creditor whose debtor is the owner of a negotiable
document of title REMEDIES OF THE PARTIES
He is entitled to such aid from courts of appropriate jurisdiction by: REMEDIES OF THE SELLER
1. injunction;
2. attaching such document; Installment Sales Law
3. as regards property which cannot be readily attached or
levied upon by ordinary legal process - satisfying the Commonly known as the Recto Law. It is embodied in Art. 1484 of
claim by means allowed by law or equity (Art. 1520, the NCC which provides for the remedies of a seller in the contracts
NCC). of sale of personal property by installments.
NOTE: Art. 1484 of the NCC incorporates the provisions of Act No. 4122
PERFORMANCE OF CONTRACT
passed by the Philippine Legislature on Dec. 9, 1939, known as the
"Installment Sales Law" or the "Recto Law," which then amended Art. 1454
Rule when the seller delivers goods lesser than what he has of the Civil Code of 1889.
contracted to sell
Application of Recto Law
1. The buyer may reject the goods delivered and he shall have
no liability This law covers contracts of sale of personal property by
2. The buyer may accept the goods delivered, but he will pay installments (Act No. 4122). It is also applied to contracts
the contract price, if he has knowledge that the seller is not purporting to be leases of personal property with option to buy,
going to deliver all the goods contracted for (Art. 1522, NCC). when the lessor has deprived the lessee of the possession or
enjoyment of the thing (PCI Leasing and Finance Inc. v. Giraffe- X
Rule when the seller delivers goods greater than what he has Creative Imaging, Inc., G.R. No. 142618, July 12, 2007).
contracted to sell
1. The buyer may accept only the goods which were included in
the contract and reject the excess.

SALES
Alternative remedies in case of sale of personal property in Recto Law does NOT cover a contract to sell of movables
instalments
There will be nothing to rescind if the suspensive condition
1. Specific Performance: Exact fulfillment should the buyer fail (payment of full purchase price) upon which the contract is based
to pay fails to materialize (Villanueva, 2009).
GR: If availed of, the unpaid seller cannot anymore choose Realty Installment Buyer Act
other remedies;
Commonly known as the 957 Law. It is embodied in R.A. 6552
XPN: if after choosing, it has become impossible, rescission which provides for certain protection to particular buyers of real
may be pursued estate payable on installments. The law declares as "public policy
to protect buyers of real estate on installment payments against
2. Rescission: Cancel the sale if buyer fails to pay 2 or more onerous and oppressive conditions.
installments. Deemed chosen when:
a. Notice of rescission is sent The purpose of the law is to protect buyers in installment against
b. Takes possession of subject matter of sale oppressive conditions.
c. Files action for rescission
Transactions/sale covered by the Maceda Law
3. Foreclosure: Foreclose on chattel mortgage if buyer fails to
pay 2 or more instalments. He shall have no further action The law involves the sale of immovables on installment (Maceda
against the purchaser to recover any unpaid balance of the Law, R.A. 6552).
price. Any agreement to the contrary shall be void. 1. Coverage: Residential Real Estate (Villanueva, p. 431)
2. Exclude:
GR: Actual foreclosure is necessary to bar recovery of balance a. Industrial lots
b. Commercial buildings (and commercial lots by
XPN: Mortgagor refuses to deliver property to effect implication)
foreclosure; expenses incurred in attorneys fees, etc. c. Sale to tenants under agrarian laws
NOTE: The remedies are alternative not cumulative. Availment of one is a NOTE: The list is not exclusive (Villanueva, p. 416).
bar to the other remedies
Q: What are the so-called Maceda and Recto laws in
Rationale of Recto Law connection with sales on installments? Give the most important
features on each law. (1999 Bar Question)
To remedy the abuses committed in connection with the
foreclosure of chattel mortgages and to prevent mortgagees from A: The Maceda Law (R.A. 6552) is applicable to sales of immovable
seizing the mortgaged property, buying it at a foreclosure sale for a property on installments. The most important features are:
low price and then bringing suit against the mortgagor for a
deficiency judgment (Villanueva, 2009). 1. After having paid installments for at least two years, the
buyer is entitled to a mandatory grace period of one
Q: A, sold and delivered a car to B which was to be paid on a month for every year of installment payments made, to
monthly basis. After a series of payments, B subsequently pay the unpaid installments without interest.
defaulted. A then filed an action against B for specific
performance.However, the amount collected was not sufficient to If the contract is cancelled, the seller shall refund to the
cover the amount of the car. The court then issued a writ of buyer the cash surrender value equivalent to fifty
execution and the sheriff levied the subject car. B contends that percent (50%) of the total payments made, and after
this is a violation of the Recto law because having elected specific five years of installments, an additional five percent
performance, A can no longer foreclose the subject car. Is this (5%) every year but not to exceed ninety percent (90%)
correct? of the total payments made.
A: No. A evidently chose the remedy of specific performance. The 2. In case the installments paid were less than 2 years, the
sheriff levied upon the car by virtue of an execution and not as an seller shall give the buyer a grace period of not less than
incident of a foreclosure proceeding. The rule is that in installment 60 days. If the buyer fails to pay the installments due at
sales, if the action instituted is for specific performance and the the expiration of the grace period, the seller may cancel
mortgaged property is subsequently attached and sold, the sale the contract after 30 days from receipt by the buyer of
thereof does not amount to a foreclosure of the mortgage. Hence, the notice of cancellation or demand for rescission by
the seller-creditor is entitled to a deficiency judgment (Industrial notarial act. (Rillo v. CA, G.R. No. 125347 June 19, 1997)
Finance Corporation v Ramirez, G.R. No. L-43821 May 26, 1977).
The Recto Law (Art.1484) refers to sale of movables payable in
Q: A mortgaged a diamond ring to M as a security for a loan installments and limiting the right of seller, in case of default by the
which was to be paid 2 years thereafter. Since A failed to pay M, buyer, to one of three remedies:
she then foreclosed the mortgaged property. However, it turned
out that the proceeds of the sale were insufficient, thus, M filed 1. Exact fulfillment;
an action for specific performance. A contends that this is a 2. Cancel the sale of two or more installments have not
violation of the Recto law since the foreclosure of the chattel bars been paid;
subsequent recovery. Is this correct? 3. Foreclose the chattel mortgage on the things sold, also
in case of default of two or more installments, with no
A: No. A is not correct in invoking the Recto law since it is only further action against the purchaser.
applicable in case of sale of personal property through installment.
In the given case, the amount being claimed by A was to be paid 2
years thereafter as a lump sum, not through installments.
Moreover, the transaction is a loan not a sale.

CIVIL LAW
Other rights granted to a buyer under the Maceda Law It includes an agent of the seller to whom the bill of lading has
been indorsed, or consignor or agent who has himself paid, or is
1. Sell or assign rights to another directly responsible for the price, or any other person who is in the
2. Reinstate contract by updating within 30 days before and position of a seller (Pineda, 2010).
cancellation
3. Deed of Sale to be done by notarial act Q: When is a Seller considered unpaid despite the title of the
4. Pay full installment in advance the balance of price anytime goods passing to the buyer?
w/o interest
5. Have full payment annotated in certificate of title A: Whenever the seller was only paid partially, he remains an
unpaid seller (Pineda, 2010)
NOTE: Applies to contracts even before the law was enacted. Stipulation to
the contrary is void Remedies of an Unpaid Seller
Q: Bernie bought on installment a residential subdivision lot from I. Ordinary

DEVLAND. After having faithfully paid the installments for 48 1. Action for Price
months, Bernie discovered that DEVLAND had failed to develop Exercised when:
the subdivision in accordance with the approved plans and a. ownership has passed to buyer;
specifications within the time frame in the plan. He thus wrote a b. price is payable on a day certain
letter to DEVLAND informing it that he was stopping payment. c. goods cannot readily be resold for
Consequently, DEVLAND cancelled the sale and wrote Bernie, reasonable price and Art. 1596 is inapplicable
informing him that his payments are forfeited in its favor. 2. Action for Damages In case of wrongful neglect or
a. Was the action of DEVLAND proper? Explain. refusal by the buyer to accept or pay for the thing
b. Discuss the rights of Bernie under the circumstances. sold
c. Supposing DEVLAND had fully developed the II. Special
subdivision but Bernie failed to pay further 1. Possessory Lien Seller not bound to deliver if buyer
installments after 4 years due to business reverses. has not paid him the price. This remedy presupposes
Discuss the rights and obligations of the parties. (2005 that the sale is on credit.It is exercisable only in
Bar Question) following circumstances:
a. goods sold without stipulation as to credit
A: b. goods sold on credit but term of credit has
a) Assuming that the land is a residential subdivision project expired
under P.D. No. 957 (The Subdivision and Condominium c. buyer becomes insolvent
Buyers Protective Decree), DEVLAND's action is not proper
because under Section 23 of said Decree, no installment NOTE: When part of goods delivered, may still exercise right on
payment shall be forfeited to the owner or developer when goods undelivered
the buyer, after due notice, desists from further payment due
to the failure of the owner-developer to develop the 2. Stoppage in Transitu
subdivision according to the approved plans and within the Requisites:I-CSENT-U
time limit for complying with the same. a. Insolvent buyer
b. The sale of goods must be on credit
b) Under the same Section of the Decree, Bernie may, at his c. Seller must Surrender the negotiable document of
option, be reimbursed the total amount paid including title, if any
amortization interests but excluding delinquency interests at d. Seller must bear the Expenses of delivery of the
the legal rate. He may also ask the Housing and Land Use goods after the exercise of the right.
Regulatory Board to apply penal sanctions against DEVLAND e. Seller must either actually take possession of the
consisting of payment of administrative fine of not more than goods sold or give Notice of his claim to the carrier
P20.000.00 and/or imprisonment for not more than 20 years. or other person in possession
f. Goods must be in Transit
c) Under R.A. No. 6552 (Maceda Law), DEVLAND has the right to g. Unpaid seller
cancel the contract but it has to refund Bernie the cash
surrender value of the payments on the property equivalent 3. Special Right to Resell the Goods
to 50% of the total payments made. Exercised when:
a. Goods are perishable,
REMEDIES OF AN UNPAID SELLER b. Stipulated the right of resale in case of default, or
c. Buyer in default for unreasonable time
Unpaid Seller
4. Special Right to Rescind
One is considered as unpaid seller when: Requisites:
1. The whole of the price has not been paid or tendered; a. Expressly stipulated OR buyer is in default for
2. A bill of exchange or other negotiable instrument has unreasonable time
been received as conditional payment, and the b. Notice needed to be given by seller to buyer
condition on which it was received has been broken by
reason of the dishonor of the instrument, the insolvency Instances when possessory lien is lost
of the buyer, or otherwise.
1. Seller delivers without reserving ownership in goods or right
NOTE: The mere delivery of a negotiable instrument does not ipso to possess them
facto extinguish the obligation of the buyer to pay because the 2. Buyer or agent lawfully obtains possession of goods
instrument which has been delivered may be dishonoured. In which 3. Waiver
case, the seller is still an unpaid seller (US v. Bedoya, 14 Phil. 398).
NOTE: Seller loses lien when he parts with goods (but still, stoppage in
transitu can be exercised)

SALES
Right of stoppage in transit Effect of exercising the special right to rescind
The seller may resume possession of the goods at any time while The unpaid seller shall not be liable to the buyer upon the sale, but
they are in transit, and he will then become entitled to the same may recover from the buyer damages for any loss occasioned by
rights in regard to the goods as he would have had if he had never the breach of the sale (Art. 1534, NCC).
parted with the possession (Art. 1530, NCC).
Buyer deemed as insolvent
Goods considered to be in transit
One is deemed insolvent when he either ceased to pay his debts in
1. After delivery to a carrier or other bailee and before the the ordinary course of business or cannot pay his debts as they
buyer or his agent takes delivery of them; and become due, whether insolvency proceedings have been
2. If the goods are rejected by the buyer, and the carrier or commenced or not (Villanueva, 2009).
other bailee continues in possession of them (Art. 1531, par.
1, NCC). REMEDIES OF THE BUYER
Goods deemed to be no longer in transit Remedies of the buyer
1. After delivery to the buyer or his agent I. Immovables in general

2. If the buyer/agent obtains possession of the goods at a point 1. Disturbed in possession or with reasonable grounds
before the destination originally fixed; to fear disturbance Suspend payment
3. If the carrier or the bailee acknowledges that he holds the 2. In case of subdivision or condominium projects If
goods in behalf of the buyer/ his agent; real estate developer fails to comply with obligation
4. If the carrier or bailee wrongfully refuses to deliver the goods according to approved plan:
to the buyer or his agent. (Villanueva, p. 181) a. Rescind
b. Suspend payment until seller complies
Enforcement of right to stoppage in transitu II. Movables
1. Failure of seller to deliver Action for specific
The seller may: performance without giving the seller the option of
a. Take actual possession of the goods retaining the goods on payments of damages
b. Give notice of his claim to the carrier or other bailee 2. Breach of sellers warranty The buyer may, at his
who is in possession of the goods election, avail of the following remedies:
a. Accept goods & set up breach of warranty by
Effect of the exercise of this right way of recoupment in diminution or extinction
or the price.
Thereafter the seller becomes entitled to the same rights to the b. Accept goods & maintain action against seller
goods as if he had never parted with the possession of the goods for damages
(Pineda, 2010). c. Refuse to Accept goods & maintain action
against seller for damages
Sellers knowledge of the buyers insolvency d. Rescind contract of sale & refuse to receive
goods/return them when already received.
The seller cannot exercise the right to stoppage in transit because 3. Disturbed in possession or with reasonable grounds
he is under estoppel. He assumed the risk. to fear disturbance Suspend payment
Rationale behind the right of stoppage in transit NOTE: When the buyer has claimed and been granted a remedy in any
of these ways, no other remedy can thereafter be granted, without
To prevent injustice of allowing the buyer to acquire ownership prejudice to the buyers right to rescind, even if previously he has
chosen specific performance when fulfillment has become impossible
and possession of the goods when owing to his insolvency, he (Villanueva, p. 389 in relation with Art. 1191, NCC).
cannot pay the price (Pineda, 2010).
Effect of exercising the special right of resale WARRANTIES

The unpaid seller shall not be liable to the original buyer upon the Warranty
sale or for any profit made by such resale, but may recover from
the buyer damages for any loss occasioned by the breach of the A statement or representation made by the seller of goods, as part
sale (Art. 1533, NCC). of the contract of sale, having reference to the character, quality,
or title, of the goods, and by which he promises or undertakes to
Notice to the defaulting buyer insure that certain facts are or shall be as he then represents.
GR: Notice to the defaulting buyer NOT required in the resale of NOTE: May either be express or implied.
goods
Effect of a breach of warranty
XPN: Where the right to resell is not based on the perishable
nature of the goods or upon an express provision of the sale. Buyer may:
1. Refuseto proceed with the contract;or
Notice of time and place of resale is not essential to the validity of 2. Proceed with the contract and waive the condition.
such resale (Art. 1433, NCC).
NOTE: If the condition is in the nature that it should happen, the non-
performance may be treated as a breach of warranty.

CIVIL LAW
Kinds of warranties 4. Warranty against Hidden Defects
1. Express Requisites:(HENNAS)
2. Implied a. Defect is important or Serious
i. The thing sold is unfit for the use which it is
Express warranties intended
ii. Diminishes its fitness for such use or to such an
Any affirmation of fact or any promise by the seller relating to the extent that the buyer would not have acquired it
thing if the natural tendency of such affirmation or promise is to had he been aware thereof
induce the buyer to purchase the same, and if the buyer purchases b. Defect is Hidden
the thing relying thereon (Art. 1546, NCC). c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within
Requisites of express warranties (AIR) reasonable time
e. Action for rescission or reduction of the price is brought
1. It must be an Affirmation of fact relating to the subject within the proper period
matter of sale i. 6 months from delivery of the thing sold
2. Natural tendency is to Induce buyer to purchase subject ii. Within 40 days from the delivery in case of
matter animals
3. Buyer purchases the subject matter Relying thereon f. There must be No waiver of warranty on the part of the
buyer.
Liability of the seller for breach of express warranties
Non-applicability of implied warranty (ASAP)
The seller is liable for damages (Villanueva, p. 249).
1. As is and where is sale
Implied warranties 2. Sale of second hand articles
3. Sale by virtue of authority in fact or law
Warranties deemed included in all contracts of sale by operation of 4. Sale at public auction for tax delinquency
law (Art. 1547, NCC).
Q: Petitioner De Guzman purchased from Rspondent Toyota
1. Warranty that seller has right to sell refers to Cubao a white Toyota Hi-Lux 2.4 SS double cab motor vehicle,
consummation stage. Not applicable to sheriff, auctioneer, 1996 model, for a price of P508,000. He paid a downpayment of
mortgagee, pledgee P152,400, leaving a balance of P355,600. Later on, he demanded
that the engine of the vehicle be replaced for it had a crack after
2. Warranty against eviction travelling along Marcos Highway while raining hard. Petitioner
claims the replacement is based on an implied warranty. On the
Requisites: JPENS other hand, respondent answered that the said damage was not
a. Final Judgment covered by a warranty. Decide.
b. Buyer is Evicted in whole or in part from the subject A: In the absence of an existing express warranty on the part of the
matter of sale respondent, as in this case, the allegations in petitioner's complaint
c. Basis of eviction is a right Prior to sale or act imputable for damages were clearly anchored on the enforcement of an
to seller implied warranty against hidden defects, i.e., that the engine of the
d. Seller has been Summoned in the suit for eviction at vehicle which respondent had sold to him was not defective. By
the instance of buyer; or made 3rd party defendant filing this case, petitioner wants to hold respondent responsible for
through 3rd party complaint brought by buyer breach of implied warranty for having sold a vehicle with defective
e. No waiver on the part of the buyer engine. Such being the case, petitioner should have exercised this
right within six months from the delivery of the thing sold. Since
NOTE: For eviction disturbance in law is required and not petitioner filed the complaint on April 20, 1999, or more than
just trespass in fact. nineteen months counted from November 29, 1997 (the date of
the delivery of the motor vehicle), his cause of action had become
3. GR: Warranty against encumbrances (non- apparent) time-barred (De Guzman v. Toyota Cubao, G.R. No. 141480,
November 29, 2006).
Requisites:
a. immovable sold is encumbered with non-apparent Effects of waiver of an implied warranty
burden or servitude not mentioned in the agreement
b. nature of non-apparent servitude or burden is such that 1. Seller in bad faith and there is waiver against eviction void
it must be presumed that the buyer would not have 2. When buyer without knowledge of a particular risk, made
acquired it had he been aware thereof general renunciation of warranty is not a waiver but merely
limits liability of seller in case of eviction
XPN: warranty not applicable when non-apparent burden or 3. When buyer with knowledge of risk of eviction assumed its
servitude is recorded in the Registry of Property unless consequences and made a waiver seller not liable
there is expressed warranty that the thing is free from all (applicable only to waiver of warranty against eviction)
burdens and encumbrances

SALES
WARRANTY AGAINST EVICTION Void sale of animal
Warranty against eviction The sale is voidif animal is:

1. Suffering from contagious diseases;
In a contract of sale, unless a contrary intention appears, there is 2. Unfit for the use or service for which they were
an implied warranty on the part of the seller that when the purchased as indicated in the contract
ownership is to pass, and that the buyer shall from that time have
and enjoy the legal and peaceful possession of the thing (Art. 1547, Responsibility of a vendor for hidden defects
1st paragraph, NCC).
If the hidden defects which the thing sold may have:
Coverage of a warranty against eviction 1. Render it unfit for the use for which it is intended, or
2. Diminish its fitness for such use to such an extent that,
It covers eviction by a final judgment based on a right prior to the had the vendee been aware thereof, he would not have
sale or an act imputable to the vendor, the vendee is deprived of acquired it or would have given a lower price for it (Art.
the whole or of a part of the thing purchased. 1561, NCC).
The vendor shall answer for the eviction even though nothing has Extent of warranty by the seller against hidden defects
been said in the contract on the subject (Art. 1548, NCC).
The seller is responsible to the vendee for any hidden faults or
Effect of a breach of warranty against eviction defects in the thing sold, even though he was not aware thereof.
The buyer shall have the right to demand the seller: When the seller is not answerable for the defects of the thing sold
1. The return of the value which the thing sold had at the
time of the eviction, be it greater or lesser than the 1. For patent defects or those which are visible
price of the sale 2. Even for those which are not visible if the buyer is an expert
2. The income or fruits, if he has been ordered to deliver who, by reason of his trade or profession, should have known
them to the party who won the suit against him them (Art. 1561, NCC)
3. The costs of suit which caused the eviction, and, in a 3. If the contrary has been stipulated, and the vendor was not
proper case, those of suit brought against the vendor aware of the hidden faults or defects in the thing sold (Art.
for the waranty 1566, NCC)
4. The expenses of contract if buyer has paid them
5. The damages and interests and ornamental expenses if Effect of a breach of warranty against hidden defects
sale was made in bad faith.
It would depend on whether the seller had knowledge of such
NOTE: Vendor is liable for any hidden defect even if he is not aware. (Caveat defect and whether there has been a waiver of the warranty.
Venditor)
1. If the thing should be lost in consequence of the hidden
Purchaser must be aware of the title of the vendor. (Caveat Emptor) faults, and seller was aware of them he shall:
a. bear the loss,
Rights of buyer in case of partial eviction b. return the price and
c. refund the expenses of the contract with damages
1. Restitution (with obligation to return the thing w/o other
encumbrances than those which it had when he acquired it) 2. If the thing is lost and seller was not aware of the hidden
2. Enforcement of warranty against eviction (Paras, and Art. faults he shall:
1556, NCC) a. return the price and interest
b. reimburse the expenses of the contract which the
WARRANTY AGAINST HIDDEN DEFECT buyer might have paid, but not for damages.
(Villanueva, 2004).
Hidden defect
Remedies of the buyer in case of sale of things with hidden
A hidden defect is one which is unknown or could not have been defects
known to the buyer (Diaz, p. 145).
NOTE: Seller does not warrant patent defect; Caveat emptor (buyer beware)
The vendee may elect between:
1. Withdrawing from the contract, or
Redhibitory defect 2. Demanding a proportionate reduction of the price, with
damages in either case.
It is a defect in the article sold against which defect the seller is
bound to warrant. The vice must constitute an imperfection, a Waiver of Warranty against eviction
defect in its nature, of certain importance; and a minor defect does
not give rise to redhibition (De Leon, 2005). There is waiver of warranty against eviction when the lessee has
inspected the premises and decides to consummate the contract
Redhibitory defect on animals based on such inspection. Under Arts. 1561 and 1653 of the Civil
Code, the lessor is responsible for warranty against hidden defects,
If the hidden defect of animals, even in case a professional but he is not answerable for patent defects or those, which are
inspection has been made, should be of such a nature that expert visible, and which can be seen upon inspection (Jon and Marissa De
knowledge is not sufficient to discover it, the defect shall be Ysasi v. Arturo and Estela Arceo, G.R. No. 136586, Nov. 22, 2001).
considered as redhibitory.

CIVIL LAW
Specific implied warranties in sale of goods PNP. This problem was relayed by Lee to Sy. It led to Sy filing a
case against Goodyear for breach of warranty. It is Sys argument
1. Warranty of fitness that it is Goodyears duty to convey the vehicle to Sy free from all
liens, encumbrances and legal impediments. Was there a breach
GR: No implied warranty of warranty by Goodyear?
XPN: A:No. Upon the execution of the Deed of Sale, petitioner did
a. Buyer manifests to the seller the particular purpose for transfer ownership of and deliver the vehicle to Respondent Sy.
which the goods are required; and The impoundment of the vehicle and the failure to register it were
b. Buyer relies upon the sellers skill or judgment clearly acts that were not deliberately caused by petitioner, but
that resulted solely from the failure of the PNP to lift the latters
2. Warranty of merchantability That goods are reasonably fit own alarm over the vehicle. Hence, the former did not breach its
for the general purpose for which they are sold. obligation as a vendor to Respondent Sy; neither did it violate his
right for which he could maintain an action for the recovery of
REMEDIES IN CASE OF BREACH OF WARRANTY damages (Goodyear Philippines, Inc. v. Sy and Lee, G.R. No. 154554,
Nov. 9, 2005).
Remedies of the buyer in case of breach of warranty
1. Accept goods and set up breach of warranty by way of CONDITION VIS--VIS WARRANTY
recoupment in diminution or extinction or the price.
2. Accept goods and maintain action against seller for damages Effect of non-fulfillment of a condition
3. Refuse to accept goods and maintain action against seller for
damages If imposed on the perfection of contract prevents the juridical
4. Rescind contract of sale and refuse to receive goods/return relation itself from coming into existence
them when already received. The other party may:
1. Refuse to proceed with the contract
Remedies of the buyer in case of breach of warranty NOT 2. Proceed w/ contract, waiving the performance of the
absolute condition
The vendee's remedies against a vendor with respect to the Condition v. Warranty
warranties against hidden defects or encumbrances upon the thing
sold are not limited to those prescribed in Article 1567 where the CONDITION WARRANTY
vendee, in the case of Arts. 1561, 1562, 1564, 1565 and 1566, may Purports to the existence of Purports to the performance of
elect either to withdraw from the contract or demand a obligation obligation
proportionate reduction of the price, with damages in either case. Need not be stipulated; may
Must be stipulated to form part
form part of obligation by
The vendee may also ask for the annulment of the contract upon of the obligation
provision of law
proof of error or fraud, in which case the ordinary rule on Relates to the subject matter
obligations shall be applicable. Under the law on obligations, May attach itself to obligation
itself or to obligation of the
responsibility arising from fraud is demandable in all obligations of seller to deliver possession
seller as to the subject matter
and any waiver of an action for future fraud is void. Responsibility and transfer
of the sale
arising from negligence is also demandable in any obligation, but
such liability may be regulated by the courts, according to the EXTINGUISHMENT OF THE SALE
circumstances.
Causes for extinguishment of sale
The vendor could likewise be liable for quasi-delict under Article
2176 of the Civil Code, and an action based thereon may be A contract of sale is extinguished by:
brought by the vendee. While it may be true that the pre-existing 1. Same causes as how an obligation is extinguished,
contract between the parties may, as a general rule, bar the namely:
applicability of the law on quasi-delict, the liability may itself be a. Payment or performance
deemed to arise from quasi-delict, i.e., the acts which breaks the b. Loss of the thing due
contract may also be a quasi-delict(Coca-Cola Bottlers Philippines, c. Condonation or remission of the debt
Inc. v. CA, G.R. No. 110295, Oct. 18, 1993). d. Confusion or merger of the rights of creditor and
debtor
Instances when the buyer cannot rescind the sale in case there is e. Compensation
a breach of warranty f. Novation
g. Annulment
1. If he knew of the breach of warranty h. Rescission
2. If he fails to return or offer to return goods to seller in i. Fulfillment of resolutory condition
substantially as good condition as they were at time j. Prescription
ownership was transferred 2. Conventional Redemption
3. If he fails to notify the seller within a reasonable time of his 3. Legal redemption
election to rescind
Redemption
Q: Goodyear Philippines sold a car to Anthony Sy. Later on, Sy
sold the car to Jose Lee. When Lee tried to register the car in his It is a mode of extinguishment wherein the seller has the right to
name, he failed to have it registered because it turned out that redeem or repurchase the thing sold upon return of the price paid.
the car was stolen before and was only subsequently recovered
by Goodyear. However, PNP did not lift the alert alarm over the
said car. Due to this, the car was impounded and Lee was sued by

SALES
Kinds of redemption Essential requisites of equitable mortgage
1. Legal 1. Parties entered into a contract of sale

2. Conventional 2. Their intention was to secure an existing debt by way of a
mortgage.
Incorporation of right to redeem in every contract of sale
Presumption of an equitable mortgage
The right of the vendor to redeem/repurchase must appear in the
same instrument. However, parties may stipulate on the right of A sale with conventional redemption is deemed to be an equitable
repurchase in a separate document but in this case, it is valid only mortgage in any of the following cases (Art. 1602, NCC): (AIR-STAR)
between the parties and not against third persons (Pineda, p. 333). 1. Price of the sale with right to repurchase is unusually
Inadequate
Pre-emption v. Redemption 2. Seller Remains in possession as lessee or otherwise
3. Upon or after the expiration of the right to repurchase
PRE-EMPTION REDEMPTION Another instrument extending the period of redemption
Arises before sale Arises after sale or granting a new period is executed
There can be rescission of 4. Purchaser Retains for himself a part of the purchase
Rescission inapplicable price
original sale
Action is directed against Action is directed against 5. Seller binds himself to pay the Taxes on the thing sold
prospective seller buyer 6. In any other case where the real intention of the parties
is that the transaction shall Secure the payment of a
CONVENTIONAL REDEMPTION debt or the performance of any other obligation.
7. Art. 1602 shall also apply to a contract purporting to be
Conventional redemption an Absolute sale (Art. 1604, NCC).
Seller reserves the right to repurchase thing sold coupled with In case of doubt in determining whether it is equitable mortgage or
obligation to return the purchase price of the sale, expenses sale a retro (with right of repurchase); it shall be construed as
incurred under the contract, other legitimate payments and, equitable mortgage. The remedy is reformation.
necessary & useful expenses made on the thing sold.
Inadequacy of price and Equitable Mortgage
Other person can exercise the right to repurchase
Inadequacy of price does NOT constitute proof sufficient to declare
The right to repurchase may be exercised by any person to whom a contract as one of equitable mortgage. Mere inadequacy of the
the right of repurchase may be transferred, or in case of legal price is not sufficient. The price must be grossly inadequate, or
redemption, by the person so entitled by law (Villanueva, 2009). purely shocking to the conscience (Diaz, p. 186).
NOTE: Right to repurchase must be reserved at the time of perfection of sale Q: Spouses Ramos executed a Deed Of Sale under Pacto De Retro
(Pineda, p. 333). over their conjugal house and lot in favor of Susana Sarao. The
contract granted the Ramos spouses the option to repurchase the
Reservation of right to repurchase property within six months plus an interest of 4.5 percent a
month. It was further agreed that should the spouses fail to pay
The right to repurchase is reserved by a stipulation to that effect in the monthly interest or to exercise the right to repurchase within
the contract of sale. Because it is not a right granted to the vendor the stipulated period, the conveyance would be deemed an
by the vendee, but is a right reserved by the vendor. absolute sale. In the succeeding months, the wife Myrna Ramos
tendered to Sarao payment in the form of two managers checks,
Reservation CANNOT be made in an instrument different from that which the latter refused to accept for being allegedly insufficient.
of the contract of sale. Once the instrument of absolute sale is Myrna filed a complaint for the redemption of the property. She
executed, and any right thereafter granted the vendor in a deposited with the RTC two checks that Sarao refused to accept.
separate instrument cannot be a right of repurchase but some Is the contract a Pacto De Retro sale or an equitable mortgage?
other right like the option to buy in the instant case (Villanueva, Decide.
2009).
A: The contract shall be presumed to be an equitable mortgage, in
Effect on the reserved right to repurchase if the principal contract any of the following cases: (1) When the price of a sale with right to
of sale is void repurchase is unusually inadequate; (2) When the vendor remains
in possession as lessee or otherwise; (3) When upon or after the
Since the underlying contract of sale was inoperative and expiration of the right to repurchase another instrument extending
consequently void, then the right of repurchase reserved would the period of redemption or granting a new period is executed; (4)
also be void (Villanueva, 2009). When the purchaser retains for himself a part of the purchase
price; (5) When the vendor binds himself to pay the taxes on the
thing sold; (6) In any other case where it may be fairly inferred that
EQUITABLE MORTGAGE the real intention of the parties is that the transaction shall secure
the payment of a debt or the performance of any other obligation.
Equitable mortgage (Article 1602, New Civil Code) Furthermore, a contract purporting
to be a pacto de retro is construed as an equitable mortgage when
One which lacks the proper formalities, form or words or other the terms of the document and the surrounding circumstances so
requisites prescribed by law for a mortgage, but shows the require. The law discourages the use of a pacto de retro, because
intention of the parties to make the property subject of the this scheme is frequently used to circumvent a contract known as
contract as security for a debt and contains nothing impossible or a pactum commissorium. Jurisprudence has consistently declared
contrary to law that the presence of even just one of the circumstances set forth in
the foregoing Civil Code provision suffices to convert a contract to
an equitable mortgage. Article 1602 specifically states that the

CIVIL LAW
equitable presumption applies to any of the cases therein Q: Eulalia was engaged in the business of buying and selling large
enumerated. In the present factual milieu, the vendor retained cattle. In order to secure the financial capital she advanced for
possession of the property allegedly sold. Petitioner and her her employees (biyaheros) she required them to surrender TCT of
children continued to use it as their residence, even after Jonas their properties and to execute the corresponding Deeds of Sale
Ramos had abandoned them. In fact, it remained as her address for in her favor. Domeng Bandong was not required to post any
the service of court orders and copies of Respondent Saraos security but when Eulalia discovered that he incurred shortage in
pleadings (Ramos v. Sarao, G.R. No. 149756, Feb. 11, 2005). cattle procurement operation, he was required to execute a deed
of sale over a parcel of land in favor of Eulalia. She sold the
Q: Respondent Dizon mortgaged to Monte de Piedad a parcel of property to her grandniece Jocelyn who thereafter instituted an
land including the two-storey apartment built thereon to secure a action for ejectment against the Spouses Bandong. To assert
loan. Respondent failed to settle the loan, drawing Monte de their right, Spouses Bandong filed an action for annulment of sale
Piedad to foreclose the mortgage, consolidate its ownership of against Eulalia and Jocelyn alleging that there was no sale
the property, and register it in its name. Monte de Piedad intended but only equitable mortgage for the purpose of securing
nevertheless gave respondent until May 28, 1987 to purchase the shortage incurred by Domeng in the amount of P70, 000.00
back the property. On the day of the expiration itself, one of the while employed as biyahero by Eulalia. Was the deed of sale
petitioners on behalf of respondent paid for the property. Monte between Domeng and Eulalia a contract of sale or an equitable
de Piedad thereupon executed a deed of sale in favor of mortgage?
respondent who, the following day, executed a deed of sale in
favor of petitioners. Also, respondent and petitioners executed A:It is an equitable mortgage. In executing the said deed of sale,
an agreement giving respondent repurchase within three months Domeng and Eulalia never intended the transfer of ownership of
from the date of this agreement.Failure to repurchase shall result the subject property but to burden the same with an encumbrance
to respondent vacating the premises and turn over possession to secure the indebtedness incurred by Domeng on the occasion of
thereof to petitioners. Three months passed without respondent his employment with Eulalia. The agreement between Dominador
repurchasing the property. Petitioners registered the Deed of Sale and Eulalia was not avoided in its entirety so as to prevent it from
executed by Monte de Piedad in favor of respondent, as well as producing any legal effect at all. Instead, the said transaction is an
the Deed of Sale of the property executed by respondent in favor equitable mortgage, thereby merely altering the relationship of the
of petitioners. Notwithstanding this, respondent failed to vacate parties from seller and buyer, to mortgagor and mortgagee, while
the property. An ejectment case was filed against respondent. Is the subject property is not transferred but subjected to a lien in
the agreement a contract of sale or an equitable mortgage? favor of the latter (Sps. Raymundo, et al. v. Sps. Bandong, G.R. No.
171250, Jul. 4, 2007).
A: It is a contract of sale. The presumption of equitable mortgage
created in Article 1602 of the Civil Code is not conclusive. It may be REDEMPTION V. OPTION TO BUY
rebutted by competent and satisfactory proof of the contrary. In
the case at bar, ample evidence supports petitioners claim that Redemption v. Option to Buy
the transaction between them and respondent was one of sale
with option to repurchase. While after the sale of the property REDEMPTION OPTION TO BUY
respondent remained therein, her stay was not in the concept of Principal and preparatory
an owner. Contrary to respondents claim that after the sale of the Forms part of the contract of sale
contract
property in 1987, the tax declarations remained in her name and
May exist prior to or after the
she continued to pay realty taxes thereon,the record shows that The right must be imbedded in a
perfection of the sale, or be
the 1987 tax declarations were in the names of Monte de Piedad contract of sale upon its
imbedded in another contract
and petitioners (Spouses Cristobal, et. al v. Dizon, G.R. No. 172771, perfection
upon perfection
Jan. 31, 2008).
Does not need a separate Separate consideration is
consideration to be valid and needed for it to be valid and
Q: Ceballos was able to borrow from Mercado certain sum of
effective effective
money and as security, she executed a Deed of Real Estate
Redemption period cannot Period for an option right may
Mortgage over the subject property. The said mortgage was not
exceed 10 years exceed 10 years
registered. Ceballos defaulted. Thereafter, a Deed of Absolute
Notice is required for its exercise
Sale was executed by Ceballos and her husband whereby the
accompanied with tender of Only notice is required
mortgaged property was sold to Mercado for the price of P16,
payment/consignment
500.00. Ceballos offered to redeem the property from Mercado
for the price of P30, 000.00 but the latter's wife refused since the Its exercise results into the
Its exercise extinguishes a
same was already transferred in their names by virtue of the perfection of a contract of
existing contract of sale
Deed of Absolute Sale. As a consequence, Ceballos filed the case sale
contending that the Contract should be declared as an equitable (Villanueva, 2009)
mortgage. Is the contention of Ceballos correct?
Q: On May 19, 1951, the spouses-sellers executed a public
A:No. The instances when a contract, regardless of its instrument of absolute sale in favor of the buyer for a
nomenclature, may be presumed to be an equitable mortgage are consideration which is sufficiently adequate. A few days
enumerated in Art. 1602 of the Civil Code. Here, none of those thereafter, the buyers executed in favor of the sellers an option
circumstances were present. The original transaction was a loan. to buy within one year, the property subject of the absolute sale,
Ceballos failed to pay the loan; consequently, the parties entered which option was extended for a month. Prior to the expiration of
into another agreement the assailed, duly notarized Deed of said one-year period, the buyer sold said property to a third
Absolute Sale, which superseded the loan document. Ceballos had person.
the burden of proving that she did not intend to sell the property
and that Mercado did not intend to buy it; and that the new If the spouses-sellers would file an action for reformation of
agreement did not embody the true intention of the parties instrument where they seek reformation of the absolute sale into
(Ceballos v. Intestate Estate of the Late Emigdio Mercado, G.R. No. one of equitable mortgage, will said action prosper?
155856, May 28, 2004).

SALES
A: No, it will not prosper. If a seller has been granted merely an Written notice mandatory for the right of redemption to
option to buy (not a right to repurchase) within a certain period, commence
and the price paid by the buyer is adequate, the sale is absolute
and cannot be construed nor presumed to be one of equitable Written notice is mandatory for the right of redemption to
mortgage, even if the period within which to exercise the option commence and the notice must be in writing stating the execution
has been extended (Villarica, et. al. v. CA, G.R. L-19196, Nov. 29, of the sale and its particulars. It may be made in a private or public
1968). document (Pineda, p. 400).
NOTE: SC held that in this case, there was no sale a retro and that the right Prescribed form for an offer to redeem
of repurchase is not a right granted the seller by the buyer in a separate
instrument. Such right is reserved by the vendor in the same instrument of
There is no prescribed form for an offer to redeem to be properly
the sale as one of the stipulations in the contract.
effected. Hence, it can either be through a formal tender with
Also, once the instrument of absolute sale is executed, the seller can no consignation of the redemption price within the prescribed period.
longer reserve the right of repurchase and any right thereafter granted the What is paramount is the availment of the fixed and definite period
seller by the buyer cannot be a right of repurchase but some other rights, within which to exercise the right of legal redemption.
like that of an option to buy.
NOTE: Art. 1623 does not prescribe any distinctive method for notifying the
PERIOD OF REDEMPTION redemptioner.
Period of redemption Tender of payment NOT necessary for redemption to take effect
1. No period agreed upon 4 years from date of contract Tender of payment is not necessary; offer to redeem is enough.
2. When there is agreement should not exceed 10 years; but if
it exceeded, valid only for the first 10 years. Effect of failure to redeem
3. When period to redeem has expired & there has been a
previous suit on the nature of the contract seller still has 30 There must be judicial order before ownership of real property is
days from final judgment on the basis that contract was a sale consolidated to the buyer a retro.
with pacto de retro:
Vendor a retro CANNOT be compelled to redeem
Rationale: no redemption due to erroneous belief that it is equitable
mortgage which can be extinguished by paying the loan. There is no obligation on the part of the vendor a retro to
repurchase. He may or may not exercise the right to repurchase
4. When period has expired & seller allowed the period of (Pineda, 2010).
redemption to expire seller is at fault for not having
exercised his rights so should not be granted a new period Trust de son tort
NOTE: Tender of payment is sufficient but it is not in itself a payment that It is a trust created by the purchase or redemption of property by
relieves the seller from his liability to pay the redemption price.
one other than the person lawfully entitled to do so and in fraud of
the other.
Running of period of redemption
Constructive trusts does NOT arise only out of fraud or duress
1. Right of legal pre-emption or redemption shall be exercised
within 30 days from written notice by the buyer deed of A constructive trust, otherwise known as a trust ex maleficio, a
sale not to be recorded in Registry of Property unless trust ex delicto, a trust de son tort, an involuntary trust, or an
accompanied by affidavit that buyer has given notice to implied trust, is a trust by operation of law which arises contrary to
redemptioners intention and in invitum, against one who, by fraud, actual or
constructive, by duress or abuse of confidence, by commission of
2. When there is actual knowledge, no need to give written wrong, or by any form of unconscionable conduct, artifice,
notice; period of redemption begins to run from actual concealment, or questionable means, or who in any way against
knowledge equity and good conscience, either has obtained or holds the legal
right to property which he ought not, in equity and good
Extension of the time to redeem conscience, hold and enjoy. It has been broadly ruled that a breach
of confidence, although in business or social relations, rendering an
Parties may extend the period to redeem as long as the total acquisition or retention of property by one person unconscionable
period shall not exceed ten years. However, such extension can against another, raises a constructive trust. It is raised by equity in
only be granted when the original period has not yet expired. respect of property, which has been acquired by fraud, or where,
Otherwise, there exists only a promise to sell on the buyers part although acquired originally without fraud, it is against equity that
(Pineda, 2010). it should be retained by the person holding it (Arlegui v. CA G.R.
No. 126437, Mar. 6, 2002).
EXERCISE OF THE RIGHT TO REDEEM
A constructive trust is substantially an appropriate remedy against
Obligations the vendor a retro if he desires to redeem unjust enrichment. It is raised by equity in respect of property,
which has been acquired by fraud, or where, although acquired
The vendor a retro must pay or reimburse the vendee a retro the originally without fraud, it is against equity that it should be
following: retained by the person holding it." (76 Am. Jur. 2d, Sec. 222, p. 447
1. Price of the sale cited in Arlegui v. CA G.R. No. 126437, Mar. 6, 2002).
2. Expenses of the contract
3. Other legitimate expenses
4. Necessary and useful expenses (Pineda, 2010)

CIVIL LAW
LEGAL REDEMPTION Sale or Sell defined under the Decree
Legal redemption It shall include:

1. Every disposition, or attempt to dispose, for a valuable
It is also referred to as retracto legal, it is the right to be consideration, of a subdivision lot, including the building
subrogated upon the same terms and conditions stipulated in the and other improvements thereof, if any, in a subdivision
contract, in the place of one who acquires the thing by purchase or project or a condominium unit in a condominium project;
by dation in payment or by other transaction whereby ownership is 2. contract to sell;
transmitted by onerous title. 3. contract of purchase and sale;
4. exchange;
Instances of legal redemption 5. attempt to sell;
6. option of sale or purchase;
1. Sale of a co-owner of his share to a stranger (Art. 1620, NCC) 7. solicitation of a sale;
2. When a credit or other incorporeal right in litigation is sold 8. offer to sell, directly or by an agent, or by a circular,
(Art. 1634, NCC) letter, advertisement or otherwise; and
3. Sale of an heir of his hereditary rights to a stranger (Art. 1088, 9. a. privilege given to a member of a cooperative,
NCC) corporation, partnership, or any association and/or
4. Sale of adjacent rural lands not exceeding 1 hectare (Art. b. the issuance of a certificate or receipt evidencing or
1621, NCC) giving the right of participation in, or right to, any
5. Sale of adjacent small urban lands bought merely for land in consideration of payment of the membership fee
speculation (Art. 1622, NCC) or dues. (Deemed sale)
Other instances when the right of legal redemption is also Buy and purchase defined under the Decree
granted
It shall include any contract to buy, purchase, or otherwise acquire
1. Redemption of homesteads for a valuable consideration a subdivision lot, including the building
2. Redemption in tax sales and other improvements, if any, in a subdivision project or a
3. Redemption by judgment debtor condominium unit in a condominium project.
4. Redemption in extrajudicial foreclosure
5. Redemption in judicial foreclosure of mortgage Subdivision project
Basis of legal redemption A tract or a parcel of land registered under Act No. 496 which is
partitioned primarily for residential purposes into individual lots
It is created partly for reason of public policy and partly for the with or without improvements thereon, and offered to the public
benefit and convenience of the redemptioner to afford him a way for sale, in cash or in installment terms.
out of what might be a disagreeable or inconvenient association
into which he has been in trust. It is intended to minimize co- NOTE: It shall include all residential, commercial, industrial and recreational
ownership (Pineda, 2010). areas as well as open spaces and other community and public areas in the
project.
Running of period of legal redemption Subdivision lot

The right of legal redemption shall not be exercised except within Any of the lots, whether residential, commercial, industrial, or
30 days from the notice in writing by the prospective seller, or recreational, in a subdivision project.
seller, as the case may be. The deed of sale shall not be recorded in
the Registry of Property unless accompanied by an affidavit of the Complex subdivision plan
seller that he has given written notice thereof to all possible
redemptioners (Art. 1623, NCC). A subdivision plan of a registered land wherein a street,
passageway or open space is delineated on the plan.
THE SUBDIVISION AND CONDOMINIUM BUYERS PROTECTIVE Condominium project
DECREE (P.D. 957)
The entire parcel of real property divided or to be divided primarily
Q: Are sales or dispositions of subdivision lots or condominium for residential purposes into condominium units, including all
units prior to the effectivity of the decree exempt from structures thereon.
compliance with the requirements stated therein?
A: No. It shall be incumbent upon the owner or developer of the Condominium unit
subdivision or condominium project to complete compliance with
his or its obligations as provided in the decree within two years A part of the condominium project intended for any type of
from the date of effectivity of the Decree, unless otherwise independent use or ownership, including one or more rooms or
extended by the Authority or unless an adequate performance spaces located in one or more floors (or part of parts of floors) in a
bond is filed. building or buildings and such accessories as may be appended
NOTE: Failure of the owner or developer to comply with the obligations
under this and the preceding provisions shall constitute a violation
thereto.
punishable under Sections 38 and 39 of the Decree.

SALES
Definition of Terms mortgaged property from engaging in subdivision or
condominium project while the mortgage is in force?
a. Owner -Registered owner of the land subject of a
subdivision or a condominium project. A:No. In case any subdivision lot or condominium unit is
b. Developer - person who develops or improves the mortgaged, it is sufficient if the instrument of mortgage contains a
subdivision project or condominium project for and in behalf stipulation that the mortgagee shall release the mortgage on any
of the owner thereof. subdivision lot or condominium unit as soon as the full purchase
c. Dealer - any person directly engaged as principal in the price for the same is paid by the buyer.
business of buying, selling or exchanging real estate whether
on a full-time or part-time basis. Q: When is a subdivision or condominium project deemed to be
d. Broker- any person who, for commission or other registered?
compensation, undertakes to sell or negotiate the sale of a
real estate belonging to another. A: Upon completion of the publication requirement
e. Salesman - person regularly employed by a broker to
perform, for and in his behalf, any or all functions of a real NOTE: The fact of such registration shall be evidenced by a registration
estate broker. certificate to be issued to the applicant-owner or dealer.
Q: After issuance of the registration certificate, may the owner or

Procedure for converting of a parcel of land into a subdivision or dealer already sell subdivision lots or condominium units?
condiminium project by the Registered Owner
A: No. He must first obtain a license to sell the project within two
He shall: weeks from the registration of such project.
1. Submit his subdivision plan to the Authority which shall
act upon and approve the same, upon a finding that the Issuance of license to sell
plan complies with the Subdivision Standards' and
Regulations enforceable at the time the plan is After an examination of the registration statement filed by said
submitted. owner or dealer and all the pertinent documents attached thereto,
2. If the conversion desired involves a condominium the Authority is convinced that the owner or dealer is of good
project, the same procedure shall be followed except repute, that his business is financially stable, and that the proposed
that, in addition, the NHA shall act upon and approve sale of the subdivision lots or condominium units to the public
the plan with respect to the building or buildings would not be fraudulent.
included in the condominium project in accordance with
the National Building Code (R.A. No. 6541). Purpose of the requirement of posting of a performance bonds
3. The subdivision plan, as so approved, shall then be before a license to sell may be issued
submitted to the Director of Lands for approval.
4. In case of complex subdivision plans, court approval It is to guarantee the construction and maintenance of the roads,
shall no longer be required. gutters, drainage, sewerage, water system, lighting systems, and
5. The condominium plan as likewise so approved, shall be full development of the subdivision project or the condominium
submitted to the Register of Deeds of the province or project and the compliance by the owner or dealer with the
city in which the property lies and the same shall be applicable laws and rules and regulations.
acted upon subject to the conditions and in accordance
with the procedure prescribed in Section 4 of the License to sell and performance bond NOT required in all
Condominium Act (R.A. No. 4726). subdivision and condominium projects
Q: The owner or the real estate dealer interested in the sale of The following transactions are exempt from said requirements:
lots or units, respectively, in such subdivision project or 1. Sale of a subdivision lot resulting from the partition of
condominium project shall register the project with the Authority land among co-owners and co-heirs.
by filing a sworn registration statement. What shall be contained 2. Sale or transfer of a subdivision lot by the original
in the sworn registration statement? purchaser thereof and any subsequent sale of the same
lot.
A: 3. Sale of a subdivision lot or a condominium unit by or for
(a) Name of the owner the account of a mortgagee in the ordinary course of
(b) The location of the owner's principal business office, and if business when necessary to liquidate a bona fide debt.
the owner is a non-resident Filipino, the name and address of
his agent or representative in the Philippines is authorized to Suspension of a license to sell
receive notice 1. Upon verified complaint by a buyer of a subdivision lot or a
(c) The names and addresses of all the directors and officers of condominium unit in any interested party, the Authority may,
the business firm, if the owner be a corporation, association, in its discretion, immediately suspend the owner's or dealer's
trust, or other entity, and of all the partners, if it be a license to sell pending investigation and hearing of the case.
partnership 2. The NHA may motu proprio suspend the license to sell if, in its
(d) The general character of the business actually transacted or opinion, any information in the registration statement filed
to be transacted by the owner by the owner or dealer is or has become misleading,
(e) A statement of the capitalization of the owner, including the incorrect, inadequate or incomplete or the sale or offering for
authorized and outstanding amounts of its capital stock and a sale of the subdivision or condominium project may work or
the proportion thereof which is paid-up. tend to work a fraud upon prospective buyers.
Q: Part of the required documentary attachments to the

application is a certificate of title to the property which is free
from all liens and encumbrances. Does this bar an owner of

CIVIL LAW
Revocation of license to sell or registration of a subdivision or must reflect the real facts and must be presented in such
condominium project manner that will not tend to mislead or deceive the public.
2. The owner or developer shall answerable and liable for the
The Authority may, motu proprio or upon verified complaint filed facilities, improvements, infrastructures or other forms of
by a buyer of a subdivision lot or condominium unit, revoke the development represented or promised in brochures,
registration of any subdivision project or condominium project and advertisements and other sales propaganda disseminated by
the license to sell any subdivision lot or condominium unit in said the owner or developer or his agents and the same shall form
project by issuing an order to this effect, with his findings in part of the sales warranties enforceable against said owner or
respect thereto, if upon examination into the affairs of the owner developer, jointly and severally.
or dealer during a hearing, it shall appear there is satisfactory
evidence that the said owner or dealer: NOTE: Failure to comply with these warranties shall also be punishable in
1. is insolvent; or accordance with the penalties provided for in this Decree.
2. has violated any of the provisions of this Decree or any
applicable rule or regulation of the Authority, or any Q: Within what period must the owner or developer construct
undertaking of his/its performance bond; or and provide the facilities, improvements, infrastructures and
3. has been or is engaged or is about to engage in other forms of development, including water supply and lighting
fraudulent transactions; or facilities, which are offered and indicated in the approved
4. has made any misrepresentation in any prospectus, subdivision or condominium plans, brochures, prospectus,
brochure, circular or other literature about the printed matters, letters or in any form of advertisement?
subdivision project or condominium project that has
been distributed to prospective buyers; or A:
5. is of bad business repute; or GR: Within one year from the date of the issuance of the license
6. does not conduct his business in accordance with law or for the subdivision or condominium project
sound business principles.
XPN: Such other period of time as may be fixed by the Authority.
NOTE: Where the owner or dealer is a partnership or corporation or an
unincorporated association, it shall be sufficient cause for cancellation of its Registration needed after the execution of a contract to sell
registration certificate and its license to sell, if any member of such relevant to the sale or conveyance of subdivision lots and
partnership or any officer or director of such corporation or association has condominium units
been guilty of any act or omission which would be cause for refusing or
revoking the registration of an individual dealer, broker or salesman.
All contracts to sell, deeds of sale and other similar instruments
relative to the sale or conveyance of the subdivision lots and
Duration of the registration of dealers, brokers and salesmen
condominium units, whether or not the purchase price is paid in
full, shall be registered by the seller in the Office of the Register of
On the thirty-first day of December of each year. However, in the
Deeds of the province or city where the property is situated.
case of salesmen, their registration shall also cease upon
termination of their employment with a dealer or broker.
Mortgage CANNOT be made by the owner or developer without
NOTE: Renewal of registration for the succeeding year shall be granted upon permission
written application therefore made not less than thirty nor more than sixty
days before the first day of the ensuing year and upon payment of the There must be prior written approval of the Authority.
prescribed fee, without the necessity of filing further statements or
information, unless specifically required by the Authority. When approval by the Authority is given
All applications filed beyond said period shall be treated as original
applications.
When it is shown that the proceeds of the mortgage loan shall be
used for the development of the condominium or subdivision
Grounds for refusal or revocation of registration as dealers, project and effective measures have been provided to ensure such
brokers or salesmen utilization.
Such registration may be refused or revoked by the NHA if, after Rule if the owner desires to make alterations in the approved
reasonable notice and hearing, it shall determine that such subdivision plan
applicant or registrant has:
1. violated any provision of this Decree or any rule or GR: No owner or developer shall change or alter the roads, open
regulation made hereunder; or spaces, infrastructures, facilities for public use and/or other form
2. made a material false statement in his application for of subdivision development as contained in the approved
registration; or subdivision plan and/or represented in its advertisements
3. been guilty of a fraudulent act in connection with any
sale of a subdivision lot or condominium unit; or XPN: If he has obtained the permission of the Authority and the
4. demonstrated his unworthiness to transact the business written conformity or consent of the duly organized homeowners
of dealer, broker, or salesman, as the case may be. association, or in the absence of the latter, by the majority of the
lot buyers in the subdivision.
NOTE: The suspension or revocation of the registration of a dealer or broker
shall carry with it all the suspension or revocation of the registration of all his Q: May payment made by a buyer be forfeited in favor of the
salesmen. owner or developer in case the buyer desists from further
payment due to the failure of the owner or developer to develop
Warranties attached to advertisements made by the owner or the subdivision or condominium project according to the
developer approved plan within the time limit provided for such? What is
the buyers remedy in this case?
1. Advertisements that may be made through newspaper, radio,
television, leaflets, circulars or any other form about the A: No, such forfeiture is not allowed. Such buyer may, at his option,
subdivision or the condominium or its operations or activities be reimbursed the total amount paid including amortization

SALES
interests but excluding delinquency interests, with interest thereon Take-Over Development
at the legal rate.
Defaulting buyers have rights under the Decree The NHA may take over or cause the development and completion
of the subdivision or condominium project at the expenses of the
The rights of the buyer in the event of this failure to pay the owner or developer, jointly and severally, in cases where the
installments due for reasons other than the failure of the owner or owner or developer has refused or failed to develop or complete
developer to develop the project shall be governed by Republic Act the development of the project as provided for in the Decree.
No. 6552. NOTE: The Authority may, after such take-over, demand, collect and receive
from the buyers the installment payments due on the lots, which shall be
Where the transaction or contract was entered into prior to the utilized for the development of the subdivision.
effectivity of Republic Act No. 6552 on August 26, 1972, the
defaulting buyer shall be entitled to the corresponding refund Q: Ernesto Marcelo sold the lot where the water tank of the
based on the installments paid after the effectivity of the law in the subdivision, Happy Glen Loop, is located for almost 30 years to
absence of any provision in the contract to the contrary. Hermogenes Liwag, president of the Homeowners association of
the said subdivision. Is the sale of the lot where the water tank
Owner or developers obligation in case the lot bought and fully- was located valid?
paid by the buyer is mortgaged
A: The basic statutory construction principle of ejusdem
In the event a mortgage over the lot or unit is outstanding at the generis states that where a general word or phrase follows an
time of the issuance of the title to the buyer, the owner or enumeration of particular and specific words of the same class, the
developer shall redeem the mortgage or the corresponding portion general word or phrase is to be construed to include or to be
thereof within six months from such issuance in order that the title restricted to things akin to or resembling, or of the same kind or
over any fully paid lot or unit may be secured and delivered to the class as, those specifically mentioned.
buyer in accordance herewith.
Here, the water facility was undoubtedly established for the
Parties CANNOT waive compliance with the decree benefit of the community. Water is a basic need in human
settlements, without which the community would not survive. We
Any condition, stipulation, or provision in contract of sale whereby therefore rule that, based on the principle of ejusdem generis and
any person waives compliance with any provision of the Decree or taking into consideration the intention of the law to create and
of any rule or regulation issued thereunder shall be void. maintain a healthy environment in human settlements,the location
of the water facility in the Subdivision must form part of the area
Instance when there will be non-forfeiture of installment reserved for open space.
payments paid by the buyer
The law expressly provides that open spaces in subdivisions are
No installment payment shall be forfeited in favor of the owner or reserved for public use and are beyond the commerce of man. As
developer when the buyer, after due notice to the owner or such, these open spaces are not susceptible of private ownership
developer, desists from further payment due to the failure of the and appropriation. The sale of the subject parcel of land by the
owner or developer to develop the subdivision or condominium subdivision owner or developer to Hermogenes was contrary to
project according to the approved plans and within the time limit law (Liwag v. Happy Glen Loop Homeowners Association, Inc., G.R.
for complying with the same (Sec. 23, P.D. 957). No. 189755, July 4, 2012).
Remedy of the buyer in case of non-compliance by the owner or THE CONDOMINIUM ACT (RA 4726)
developer of the approved plans within the time limit
Condominium
Such buyer may, at his option, be reimbursed the total amount
paid including amortization interests but excluding delinquency It is an interest in real property consisting of separate interest in a
interests, with interest thereon at the legal rate (Sec. 23, P.D. 957). unit in a residential, industrial or commercial building and an
undivided interest in common, directly or indirectly, in the land on
Notice NOT required in the demand of refund which it is located and in other common areas of the building.
Section 23 of P.D. 957 does not require that a notice be given first It may include, in addition, a separate interest in other portions of
by the buyer to the seller before a demand for refund can be made such real property.
as the notice and demand can be made in the same letter or
communication (Villanueva, 2009). Real right in condominium
Rights of the buyer in case he defaults in his installment payment The real right in condominium may be ownership or any other
due to causes other than the failure of the owner or developer to interest in real property recognized by law, on property in the Civil
develop the project Code and other pertinent laws.
Where the transaction or contract was entered into prior to the Condominium unit
effectivity of Republic Act No. 6552, the defaulting buyer shall be
entitled to the corresponding refund based on the installments It is a part of the condominium project intended for any type of
paid after the effectivity of the law in the absence of any provision independent use or ownership, including one or more rooms or
in the contract to the contrary (Sec. 24, P.D. 957). spaces located in one or more floors (or part or parts of floors) in a
building or buildings and such accessories as may be appended
thereto.

CIVIL LAW
Condominium project 1. The boundary of the unit granted are the interior surfaces of
the perimeter walls, floors, ceilings, windows and doors
It is the entire parcel of real property divided or to be divided in thereof.
condominiums, including all structures thereon,
NOTE: The following are not part of the unit bearing walls,
Common areas columns, floors, roofs, foundations and other common
structural elements of the building:
The entire project excepting all units separately granted or held or a. lobbies, stairways, hallways, and other areas of
reserved. common use,
b. elevator equipment and shafts, central heating,
To divide real property c. central refrigeration and central air-conditioning
equipment,
To divide the ownership thereof or other interest therein is by d. reservoirs, tanks, pumps and other central services
conveying one or more condominiums therein but less than the and facilities,
e. pipes, ducts, flues, chutes, conduits, wires and other
whole thereof. utility installations, wherever located, except the
outlets thereof when located within the unit.
Rule as regards acquisition of ownership over common areas
2. There shall pass with the unit, as an appurtenance thereof,
Transfer or conveyance of a unit or apartment, office or store or an exclusive easement for the use of the air space
other space therein shall include the transfer or conveyance of the encompassed by the boundaries of the unit as it exists at any
undivided interests in the common areas or, in a proper case, the particular time and as the unit may lawfully be altered or
membership or shareholdings in the condominium corporation reconstructed from time to time.
Restrictions as regards ownership of condominium units provided NOTE: Such easement shall be automatically terminated in any
under the Condominium Act air space upon destruction of the unit as to render it
untenantable.
1. As regards individuals:
3. Common areas are held in common by the holders of units,
GR: None. in equal shares, one for each unit, unless otherwise
provided.
XPN: where the common areas in the condominium project
are owned by the owners of separate units as co-owners 4. A non-exclusive easement for ingress, egress and support
thereof, no condominium unit therein shall be conveyed or through the common areas is appurtenant to each unit and
transferred to persons other than: the common areas are subject to such easements.
1. Filipino citizens, or
2. Corporations at least sixty percent of the capital stock of 5. Each condominium owner shall have the exclusive right to
which belong to Filipino citizens paint, repaint, tile, wax, paper or otherwise refinish and
decorate the inner surfaces of the walls, ceilings, floors,
XPN to the XPN: in cases of hereditary succession. windows and doors bounding his own unit.
2. As regards corporations: 6. Each condominium owner shall have the exclusive right to
mortgage, pledge or encumber his condominium and to
Where the common areas in a condominium project are held have the same appraised independently of the other
by a corporation, no transfer or conveyance of a unit shall be condominiums but any obligation incurred by such
valid if the concomitant transfer of the appurtenant condominium owner is personal to him.
membership or stockholding in the corporation will cause the
alien interest in such corporation to exceed the limits 7. GR: Each condominium owner has also the absolute right to
imposed by existing laws. sell or dispose of his condominium.
NOTE: Under Republic Act (R.A.) No. 4726, otherwise known as the XPN: If the master deed contains a requirement that the
Condominium Act, foreign nationals can own Philippine real estate through property be first offered to the condominium owners within
the purchase of condominium units or townhouses constituted under the a reasonable period of time before the same is offered to
Condominium principle with Condominium Certificates of Title. The law
outside parties;
provides that no condominium unit can be sold without at the same time
selling the corresponding amount of rights, shares or other interests in the
condominium management body, the Condominium Corporation; and no Division of common areas through judicial partition
one can buy shares in a Condominium Corporation without at the same time
buying a condominium unit. It expressly allows foreigners to acquire GR: Common areas shall remain undivided, and there shall be no
condominium units and shares in condominium corporations up to not more judicial partition thereof.
than 40% of the total and outstanding capital stock of a Filipino-owned or
controlled corporation. Under this set up, the ownership of the land is legally XPN: Where several persons own condominiums in a condominium
separated from the unit itself (Hulst v. PR Builders, Inc., G.R. No. 156364,
September 25, 2008).
project, an action may be brought by one or more such persons for
partition thereof by sale of the entire project, as if the owners of all
Incidents of a condominium grant of the condominiums in such project were co-owners of the entire
project in the same proportion as their interests in the common
Unless otherwise expressly provided in the enabling or master areas:
deed or the declaration of restrictions, the incidents of a
NOTE: However, a partition shall be made only upon a showing that:
condominium grant are as follows: 1. three years after damage or destruction to the project which
renders material part thereof unit for its use prior thereto, the
project has not been rebuilt or repaired substantially to its state
prior to its damage or destruction, or

SALES
2. damage or destruction to the project has rendered one-half or Rule regarding issuance of certificate of title where the enabling
more of the units therein untenantable and that condominium or master deed provides that the land included within a
owners holding in aggregate more than thirty percent interest in condominium project are to be owned in common by the
the common areas are opposed to repair or restoration of the
project; or
condominium owners therein
3. the project has been in existence in excess of fifty years, that it
is obsolete and uneconomic, and that condominium owners The Register of Deeds may, at the request of all the condominium
holding in aggregate more than fifty percent interest in the owners and upon surrender of all their "condominium owner's"
common areas are opposed to repair or restoration or copies, cancel the certificates of title of the property and issue a
remodeling or modernizing of the project; or new one in the name of said condominium owners as pro-indiviso
4. the project or a material part thereof has been condemned or co-owners thereof.
expropriated and that the project is no longer viable, or that the
condominium owners holding in aggregate more than seventy
percent interest in the common areas are opposed to Construction of deeds, declarations or plans for a condominium
continuation of the condominium regime after expropriation or project
condemnation of a material portion thereof; or
5. the conditions for such partition by sale set forth in the 1. Liberally, to facilitate the operation of the project
declaration of restrictions, duly registered in accordance with 2. Provisions shall be presumed to be independent and
the terms of the Act, have been met. severable.
Requirements before a property be considered divided or to be Registration of declaration of restrictions and its effect
divided into condominiums
The owner of a project shall, prior to the conveyance of any
An enabling or master deed must be recorded in the Register of condominium therein, register a declaration of restrictions relating
Deeds of the province or city in which the property lies and duly to such project.
annotated in the corresponding certificate of the title of the land, if
the latter has been patented or registered under either the Land Such restrictions shall constitute a lien upon each condominium in
Registration or Cadastral Acts (Sec. 4, R.A. 4726). the project, and shall insure to and bind all condominium owners in
the project.
Contents of enabling or master deed
NOTE: Such liens, unless otherwise provided, may be enforced by any
1. Description of the land on which the building or buildings and condominium owner in the project or by the management body of such
improvements are or are to be located; project.
2. Description of the building or buildings, stating the number of
stories and basements, the number of units and their Mandatory provisions of declaration of restrictions
accessories, if any;
3. Description of the common areas and facilities; The declaration of restrictions shall provide for the management of
4. A statement of the exact nature of the interest acquired or to the project by anyone of the following management bodies:
be acquired by the purchaser in the separate units and in the 1. a condominium corporation,
common areas of the condominium project. Where title to or 2. an association of the condominium owners,
the appurtenant interests in the common areas are or are to 3. a board of governors elected by condominium owners,
be held by a condominium corporation, a statement to this or
effect shall be included; 4. a management agent elected by the owners or by the
5. Statement of the purposes for which the building or buildings board named in the declaration.
and each of the units are intended or restricted as to use; 5. voting majorities,
6. A certificate of the registered owner of the property, if he is 6. quorums,
other than those executing the master deed, as well as of all 7. notices,
registered holders of any lien or encumbrance on the 8. meeting date, and
property, that they consent to the registration of the deed; 9. other rules governing such body or bodies.
7. The following plans shall be appended to the deed as integral
parts thereof: Other provisions of declaration of restrictions
a. A survey plan of the land included in the project, unless
a survey plan of the same property had previously Such declaration of restrictions, among other things, may also
been filed in said office; provide:
b. A diagrammatic floor plan of the building or buildings 1. As to any such management body;
in the project, in sufficient detail to identify each unit, a. For the powers thereof, including power to
its relative location and approximate dimensions; enforce the provisions of the declarations of
8. Any reasonable restriction not contrary to law, morals or restrictions;
public policy regarding the right of any condominium owner b. For maintenance of insurance policies, insuring
to alienate or dispose of his condominium. condominium owners against loss by fire, casualty,
liability, workmen's compensation and other
NOTE: The enabling or master deed may be amended or revoked upon insurable risks, and for bonding of the members of
registration of an instrument executed by the registered owner or owners of any management body;
the property and consented to by all registered holders of any lien or
c. Provisions for maintenance, utility, gardening and
encumbrance on the land or building or portion thereof. The term
registered owner shall include the registered owners of condominiums in
other services benefiting the common areas, for
the project. Until registration of a revocation, the provisions of RA. No. 4726 the employment of personnel necessary for the
shall continue to apply to such property (Sec. 4, R.A. 4726). operation of the building, and legal, accounting
and other professional and technical services;
d. For purchase of materials, supplies and the like
needed by the common areas;
e. For payment of taxes and special assessments
which would be a lien upon the entire project or
common areas, and for discharge of any lien or

CIVIL LAW
encumbrance levied against the entire project or
the common areas; Q: May the management body acquire and hold, for the benefit
f. For reconstruction of any portion or portions of of the condominium owners, tangible and intangible personal
any damage to or destruction of the project; property and dispose of the same by sale or otherwise?
g. The manner for delegation of its powers;
h. For entry by its officers and agents into any unit A:Yes, unless otherwise provided for by the declaration of
when necessary in connection with the restrictions.
maintenance or construction for which such body
is responsible; NOTE: The beneficial interest in such personal property shall be owned by
i. For a power of attorney to the management body the condominium owners in the same proportion as their respective
to sell the entire project for the benefit of all of interests in the common areas.
the owners thereof when partition of the project A transfer of a condominium shall transfer to the transferee ownership of
may be authorized under Section 8 of the the transferor's beneficial interest in such personal property.
Condominium Act, which said power shall be
binding upon all of the condominium owners Condominium corporation
regardless of whether they assume the obligations
of the restrictions or not. A corporation specially formed for the purpose, in which the
2. The manner and procedure for amending such holders of separate interest shall automatically be members or
restrictions: Provided, That the vote of not less than a shareholders, to the exclusion of others, in proportion to the
majority in interest of the owners is obtained. appurtenant interest of their respective units in the common areas.
3. For independent audit of the accounts of the
management body; NOTE: As regards title to the common areas, including the land, or the
4. For reasonable assessments to meet authorized appurtenant interests in such areas, these may be held by a condominium
expenditures, each condominium unit to be assessed corporation.
separately for its share of such expenses in proportion
(unless otherwise provided) to its owners fractional Term of a condominium corporation
interest in any common areas;
5. For the subordination of the liens securing such Co-terminous with the duration of the condominium project, the
assessments to other liens either generally or provisions of the Corporation Law to the contrary notwithstanding.
specifically described;
6. For conditions, other than those provided for in Rules regarding membership in a condominium corporation
Sections 8 and 13 of the Act, upon which partition of the
project and dissolution of the condominium corporation Membership in a condominium corporation, regardless of whether
may be made. it is a stock or non-stock corporation, shall not be transferable
separately from the condominium unit of which it is an
NOTE: Such right to partition or dissolution may be conditioned appurtenance.
upon:
a. failure of the condominium owners to rebuild within a When a member or stockholder ceases to own a unit in the project
certain period; in which the condominium corporation owns or holds the common
b. specified inadequacy of insurance proceeds;
c. specified percentage of damage to the building;
areas, he shall automatically cease to be a member or stockholder
d. a decision of an arbitrator; or of the condominium corporation.
e. upon any other reasonable condition.
Q: May a condominium corporation sell, exchange, lease or
Duty of the Register of Deeds as regards this declaration of otherwise dispose of the common areas owned or held by it in
restrictions the condominium project?
The Register of Deeds shall enter and annotate the declaration of A:

restrictions upon the certificate of title covering the land included GR: During its existence, it cannot do so.
within the project, if the land is patented or registered under the
Land Registration or Cadastral Acts. XPN: If authorized by the affirmative vote of all the stockholders or
members.
Restrictions imposed by the law upon corporations which is also
the management body of the condominium project Q: Is the so called appraisal right under the Corporation Code
available to stockholders or members of a condominium
The restrictions are as follows: corporation?
1. The corporate purposes of such a corporation shall be
limited to the: A:
a. holding of the common areas, either in ownership GR: It is not available. The law provides that the by-laws of a
or any other interest in real property recognized condominium corporation shall provide that a stockholder or
by law, member shall not be entitled to demand payment of his shares or
b. management of the project, and interest in those cases where such right is granted under the
c. to such other purposes as may be necessary, Corporation Law xxx
incidental or convenient to the accomplishment of
said purposes. XPN: If said stockholder or member consents to sell his separate
2. The articles of incorporation or by-laws of the interest in the project to the corporation or to any purchaser of the
corporation shall not contain any provision contrary to corporation's choice who shall also buy from the corporation the
or inconsistent with the: dissenting member or stockholder's interest.
a. provisions of the Act;
b. enabling or master deed; or NOTE: In case of disagreement as to price, the procedure set forth in
c. declaration of restrictions of the project. the appropriate provision of the Corporation Law for valuation of shares
shall be followed.

SALES
NOTE: An action for voluntary dissolution is that under Rule 104 of the Rules
The corporation shall have two years within which to pay for the shares of Court.
or furnish a purchaser of its choice from the time of award. Dissolution of a condominium corporation by the members or
stockholders of such corporation
All expenses incurred in the liquidation of the interest of the dissenting
member or stockholder shall be borne by him. A condominium corporation may be dissolved by the affirmative
vote of all the stockholders or members thereof at a general or
Effect of involuntary dissolution of a condominium corporation special meeting duly called for the purpose: Provided, that all the
for any of the causes provided by law requirements of Section 62 of the Corporation Law are complied
with.
1. The common areas owned or held by the corporation shall,
by way of liquidation, be transferred pro-indiviso and in Consequence of voluntary dissolution of a condominium
proportion to their interest in the corporation to the corporation
members or stockholders thereof, subject to the superior
rights of the corporation creditors. GR: The corporation shall be deemed to hold a power of attorney
from all the members or stockholders to sell and dispose of their
NOTE: Such transfer or conveyance shall be deemed to be a full
liquidation of the interest of such members or stockholders in the
separate interests in the project.
corporation.
XPN: Unless otherwise provided for in the declaration of
2. After such transfer or conveyance, the provisions of this Act restrictions
governing undivided co-ownership of, or undivided interest
in, the common areas in condominium projects shall fully Liquidation of the condominium corporation
apply.
Liquidation of the corporation shall be effected by a sale of the
Instances when voluntary dissolution of a condominium entire project as if the corporation owned the whole thereof,
corporation may be allowed subject to the rights of the corporate and of individual
condominium creditors.
A condominium corporation may be voluntarily dissolved only:
1. when the enabling or the master deed of the project in Q: What should the Court do if, in an action for partition of a
which the condominium corporation owns or holds the condominium project or for the dissolution of condominium
common area is revoked; and corporation on the ground that the project or a material part
2. upon a showing that: thereof has been condemned or expropriated, the Court finds
a. three years after damage or destruction to the that the conditions provided for in the Condominium Act or in the
project in which the corporation owns or holds the declaration of restrictions have not been met?
common areas, which damage or destruction
renders a material part thereof unfit for its use A:The Court may decree a reorganization of the project, declaring
prior thereto, the project has not been rebuilt or which portion or portions of the project shall continue as a
repaired substantially to its state prior to its condominium project, the owners thereof, and the respective
damage or destruction; or rights of said remaining owners and the just compensation, if any,
b. damage or destruction to the project has rendered that a condominium owner may be entitled to due to deprivation
one-half or more of the units therein untenantable of his property.
and that more than thirty percent of the members
of the corporation, if non-stock, or the NOTE: Upon receipt of a copy of the decree, the Register of Deeds shall
enter and annotate the same on the pertinent certificate of title.
shareholders representing more than thirty
percent of the capital stock entitled to vote, if a
Assessment for taxation of a real property that has been divided
stock corporation, are opposed to the repair or
into condominiums
reconstruction of the project, or
c. the project has been in existence in excess of fifty
Each condominium separately owned shall be separately assessed,
years, that it is obsolete and uneconomical, and
for purposes of real property taxation and other tax purposes to
that more than fifty percent of the members of
the owners thereof and the tax on each such condominium shall
the corporation, if non-stock, or the stockholders
constitute a lien solely thereon.
representing more than fifty percent of the capital
stock entitled to vote, if a stock corporation, are
Q: Who should pay for an assessment upon any condominium
opposed to the repair or restoration or remodeling
made in accordance with a duly registered declaration of
or modernizing of the project; or
restrictions?
d. the project or a material part thereof has been
condemned or expropriated and that the project is
A: It is an obligation of the owner thereof at the time the
no longer viable, or that the members holding in
assessment is made.
aggregate more than seventy percent interest in
the corporation, if non-stock, or the stockholders
Rules as regards the notice of assessment
representing more than seventy percent of the
capital stock entitled to vote, if a stock
The notice:
corporation, are opposed to the continuation of
1. is to be registered with the Register of Deeds of the city
the condominium regime after expropriation or
or province where such condominium project is located.
condemnation of a material portion thereof; or
2. shall state the following:
e. the conditions for such a dissolution set forth in
a. amount of such assessment and such other
the declaration of restrictions of the project in
charges thereon as may be authorized by the
which the corporation owns or holds the common
declaration of restrictions,
areas, have been met.
b. a description of the condominium unit against
which same has been assessed, and

CIVIL LAW
c. the name of the registered owner thereof.
3. Such notice shall be signed by an authorized
representative of the management body or as
otherwise provided in the declaration of restrictions.
Effect if the management body causes a notice of assessment to

be registered with the register of deeds
The amount of any such assessment plus any other charges

thereon, such as interest, costs (including attorney's fees) and
penalties, as such may be provided for in the declaration of
restrictions, shall be and become a lien upon the condominium
assessed.
NOTE: Upon payment of said assessment and charges or other satisfaction

thereof, the management body shall cause to be registered a release of the
lien.
Rules as regards the lien created in case of unpaid assessments,

etc
GR: Such lien shall be superior to all other liens registered

subsequent to the registration of said notice of assessment
XPNs:
1. real property tax liens are superior;
2. when declaration of restrictions provide for the
subordination thereof to any other liens and
encumbrances.
Rule as regards enforcement of the lien

Such liens may be enforced in the same manner provided for by
law for the judicial or extra-judicial foreclosure of mortgages of real
property.
Q: Can the management body bid in the foreclosure sale based on

the lien for unpaid assessments?
A:
GR: No, the management body shall have power to bid at
foreclosure sale.
XPN: Unless otherwise provided for in the declaration of

restrictions,
NOTE: The condominium owner shall have the same right of redemption as
in cases of judicial or extra-judicial foreclosure of mortgages.

SUCCESSION
SUCCESSION
XPN:
GENERAL PROVISIONS 1. when a contrary intention expressly appears in the will
(Art. 793), in which case the property will be included in
Succession that portion of the estate that will pass to the instituted
heirs by way of testamentary succession; and
Succession is a mode of acquisition by virtue of which the property, 2. if the after-acquired property is one which the testator
rights and obligations to the extent of the value of the inheritance has disposed of under his will as a legacy or device, i.e.,
of a person, are transmitted through his death to another or others the property did not belong to the testator at the time
either by his will or by operation of law (Art. 774, NCC) he disposed of it as a device or as a legacy and he only
acquired the same after making his will. In this case, the
Requisites of succession (DATE) legacy or device will be given effect even if the will is
silent with regard to such an intention on the part of the
1. Death of decedent; testator.
2. Acceptance of the inheritance by the successor;
Note: Property acquired after the death of the testator in the form of
3. Transmissible estate;
accession, accruals, earnings and the like pertain to the heirs as owners of
4. Existence and capacity of successor, designated by decedent the estate in their own right but for purposes of defining the extent of the
or law. heirs liability for the obligations left behind by the decedent, the properties
after death should be treated as part of the heirs inheritance (Refer to Art.
Decedent 781 in relaton to Art. 777, NCC).
A decedent is person whose property is transmitted through
succession whether or not he left a will. If the decedent left a will, Rights that are extinguished by death (PAPULP)
he is also called a testator (Art. 774 & 775, NCC).
1. Partnership rights
Inheritance 2. Agency
3. Personal easements
It includes all the property, rights and obligations of a person which 4. Usufruct
are not extinguished by his death (Art 776, NCC) 5. Legal support
6. Parental authority
Only the property, rights and obligations not extinguished by death
are transmitted to the heirs in succession. Liability of the heirs for the obligations of the decedent
The inheritance of a person includes not only the property and the The heirs CANNOT be held liable for the debts or obligations of the
transmissible rights and obligations existing at the time of his decedent. The heirs are not personally liable with their own
death, but also those which have accrued thereto since the individual properties for the monetary obligations/debts left by the
opening of the succession (Art. 781, NCC) decedent. It is the estate that pays for the debts left by the
decedent.
Purely personal rights are extinguished by death. Hence, they are
not transmitted to the heirs. It is true that the heirs assume liability for the debts of the
decedent, although it is limited only to the extent of the value of
GR: Patrimonial rights are transmissible to the heirs the inheritance received (Estate of Hemady v. Luzon Surety Co.,
G.R. No. L-8437, Nov. 28, 1956) because it is only after the debts
XPN: are paid that the residue of the estate is distributed among the
1. Otherwise provided by law successors. With respect to obligations arising from contracts,
2. By the will of the testator while the same is transmissible to the heirs, the latters liability
shall, however, be limited only up to the value of the property they
The heirs succeed not only to the rights of the deceased but also to received from the decedent (Art. 1311, NCC)
his obligations.
Q: Before his death, A borrowed from X P1, 000 evidenced by a
GR: Rights and obligations arising from contracts are promissory note. A died without paying the debt. He left no
binding upon the heirs. property but he is survived by his son, B, who is making good in
the buy and sell business. Subsequently, X brought an action
XPN: when the rights and obligations arising are not against B for the collection of P1,000 plus legal interest thereon
transmissible by on the ground that, since B is the only heir of A, he has inherited
1. Their nature from the latter not only the latters property, but also all his
2. Stipulation rights and obligations. Will the action prosper? Reason.
3. Provided by law
A: No. Since B did not inherit anything from A, B cannot be made
Inheritance refers to the objective element of succession, to the liable for As unpaid obligation. An heirs liability for his
mass or totality of the estate of a deceased person. Succession, on predecessors obligations is limited by the amount of inheritance
the other hand refers to the legal mode by which inheritance is he receives. No inheritance, no obligation.
transmitted.
Rules on properties acquired after the execution of a will
GR: Property acquired during the period between the execution of

the will and the death of the testator will not pass under the
provisions of the will but by the rules on legal succession.
Otherwise stated, the property will NOT form part of the estate of
the testator that will pass on to his instituted heirs.

CIVIL LAW
A contract of guaranty is NOT extinguished by death Future Inheritance
Because a contract of guaranty does not fall in any of the GR: Contracts entered into upon future inheritance are void (Art
exceptions under Art. 1311 (relativity of contracts). A guarantors 1347, (2), NCC).
obligation is basically to pay the creditor if the principal debtor
cannot pay. Payment does not require any personal qualifications. XPN: Partition inter vivos(Art 1080, NCC)
The personal qualifications become relevant only at the time the
obligation is incurred but not so at the time of discharge or Requisites for the contract to be classified as one upon future
fulfillment of the obligation (Estate of Hemady v. Luzon Surety Co., inheritance:
Inc., G.R. No. L-8437, Nov. 28, 1956). 1. The succession has not yet been opened.
2. The object of the contract forms part of the inheritance.
Q: The wife died while the action for legal separation was 3. The promissory has an expectancy of a right which is
pending. Her children, however, wanted to continue the action. purely hereditary in nature with respect to the object.
They ask that they be allowed to substitute their deceased
mother, arguing that the action should be allowed to continue. An heir CANNOT enter into a compromise agreement to renounce
Decide. his rights over a future inheritance
A: The children cannot be substituted in an action for legal Every renunciation or compromise as regards a future legitime
separation upon the death of their mother who filed the case.An between the person owing it and his compulsory heirs is void, and
action for legal separation is purely personal on the part of the the latter may claim the same upon the death of the former; but
innocent spouse because such an action affects the marital status they must bring to collation whatever they may have received by
of the spouses (Bonilla v. Barcena, G.R. No. L-41715, June 18, virtue of the renunciation or compromise (Art 905, NCC).
1976).
A future legitime is merely an expectancy, and the heir does not
Q: Fortunata died while her action for quieting of title of parcels acquire any right over the same until the death of the testator.
of land was pending. Does her death result in the extinguishment Hence, juridically, there is nothing on which to compromise.
of the action or may her heirs substitute her in the case? Furthermore, Art. 1347 of NCC expressly provides that, no
contract may be entered into upon future inheritance except in
A:Her heirs may substitute her because the action is not cases expressly authorized by law.
extinguished by her death. Since the rights to the succession are
transmitted from the moment of the death of the decedent, from Actual delivery is NOT necessary for an heir to acquire ownership
that moment, the heirs become the absolute owners of his over an inherited property
property, subject to the rights and obligations of the decedent, and
they cannot be deprived of their rights thereto except by the The possession of hereditary property is deemed transmitted to
methods provided for by law. The right of the heirs to the property the heir without interruption and from the moment of the death of
of the deceased vests in them upon such death, even before judicial the decedent, in case the inheritance is transmitted.
declaration of their being heirs in the testate or intestate
proceedings. Pending a proceeding determining the rightful heirs, the
prospective heirs can demand delivery of their supposed
When she died, her claim or right to the parcels of land in litigation inheritance.
was not extinguished by her death but was transmitted to her heirs
upon her death. Her heirs have thus acquired interest in the This is because ownership passes to the heir at the very moment of
properties in litigation and became parties in interest in the case death.Basis of the heirs rights to the fruits is the Right of Accession
(Bonilla v. Barcena, et al., G.R. No. L-41715, June 18, 1976).
SUCCESSION OCCURS AT THE MOMENT OF DEATH
Q: Can the heir enter into a contract of sale, conveyance or any
disposition pertaining to his interest in the inheritance even The rights to the succession are transmitted from the moment of
pending the settlement of the estate? the death of the decedent (Art. 777, NCC).
A:Yes, because his hereditary share/interest in the decedents It is clear that the moment of death is the determining point when
estate is transmitted or vested immediately from the moment of the heirs acquire a definite right to the inheritance, whether such
decedents death. This is, however, subject to the outcome of the right be pure or conditional. The possession of hereditary property
settlement proceedings. is therefore deemed transmitted to the heir without interruption
and from the moment of death of the decedent, in case the
Q: What is the nature of the transaction entered into by the heir inheritance is accepted.
pertaining to his hereditary share in the estate pending the
settlement of the estate? The right of the heirs to the property of the deceased vests in them
even before judicial declaration of their being heirs in the estate or
A:The effect of such transaction is to be deemed limited to what intestate proceedings.
is ultimately adjudicated to the heir. However, this aleatory
character of the contract does not affect the validity of the It is immaterial whether a short or long period of time elapses
transaction. between the death of the predecessor and the entry in the
possession of the properties of the inheritance, because the right is
An heir can sell his undivided share of the inheritance but not any always deemed to retroact to the moment of death.
particular part of the estate. (Flora v. Prado, GR. No. 156879) An
heir can validly convey a property of the estate only in so far as his The interest of the heir over the inheritance prior to the death of
individual share in the co-ownership is concerned (Aguirre v. CA, the decedent is merely inchoate or a mere expectancy.
GR. No. 122249).
The law at the time of the decedents death determines who the
heirs are.

SUCCESSION
Death who dies without a valid will, or to the portion of such estate
not disposed of by will.
The kind of death contemplated under the New Civil Code
a. ACTUAL death; and Distinctions between heirs and legatees/devisees
b. PRESUMPTIVE death.
Basis HEIRS DEVISEES OR
Presumptive Death LEGATEES
Represent the Never represent
In case of presumptive death, absentee shall not be considered juridical personality the personality of
dead for the purpose of opening his succession til after an absence As to representation of the deceased and the deceased no
of ten years. If he disappeared after the age of seventy-five years, of deceaseds acquire their rights, matter how big the
an absence of five years shall be sufficient in order that his juridical person with certain legacy or the
succession may be opened (Art. 390, NCC). exceptions to his devise is
obligations
Different circumstances of qualified or extraordinary absence in Inherit an Are always given a
the Civil Code: undetermined determinate thing
1. A person on board a vessel lost during a sea voyage, or an quantity whose or a fixed amount
aeroplane which is missing, who has not been heard of for Determinability of exact amount
four years since the loss of the vessel or aeroplane; amount of cannot be known a
2. A person in the armed forces who has taken part in war, inheritance priori and which
and has been missing for four years; cannot be fixed
3. A person who has been in danger of death under other until the
circumstances and his existence has not been known for inheritance is
four years. liquidated
Succeed to the Only succeed to
NOTE: The persons included the aforementioned circumstances are remainder of the the determinate
considered dead for all purposes including the division of the estate among
Extent of properties after all thing or quantity
the heirs (Art. 391, NCC).
successional right the debts and all which is
NOTE: If there is a doubt, as between two or more persons who are called to the legacies and mentioned in the
succeed each other, as to which of them died first, whoever alleges the devices have been legacy or devise
death of one prior to the other, shall prove the same; in the absence of paid or given
proof, it is presumed that they died at the same time and there shall be no Can exist whether Only in
transmission of rights from one to the other (Art. 43, NCC).
As to when they the succession be testamentary
exist testate or intestate succession
KINDS OF SUCCESSION AND SUCCESSORS
The institution of an The legacies and
heir is entirely devises remain
Kinds of succession
Effect of preterition annulled valid insofar as
they are not
1. Testamentary Succession- That which results from the
inofficious.
designation of an heir, made in a will executed in the form
In case of imperfect The legacies and
prescribed by law (Art 779, NCC).
or defective devises remain
2. Legal or Intestate Succession- That which takes place if a
disinheritance, the valid to such
person dies without a will, or with a void will, or one which
Effect of defective institution of an extent as will not
has subsequently lost its validity.
disinheritance heir is annulled impair the
3. Mixed Succession- that effected partly by will and partly by
insofar as it may legitime.
operation of law (Art 780, NCC).
prejudice the
4. Compulsory Succession- That which takes place compulsorily
person disinherited.
by operation of law with respect to the legitime in favor of
compulsory heirs.
Q: Suppose a person is named to succeed to an entire estate. The
estate, however, consists of only one parcel of land. Is he an heir
Kinds of heirs
or a devisee?
1. Voluntary or testamentary heirs called to succeed by virtue
A: It depends on the manner of his designation in the will. Here,
of the will of the testator:
because he is called to inherit the entire estate, he is an heir.
a. Devisee - are persons to whom gifts of real property are
given by virtue of a will
Instances where the distinctions between heirs and
b. Legatee - are persons to whom gifts of personal
devisees/legatees become significant
property are given by virtue of a will
NOTE: An heir is one who succeeds to the whole (universal) or aliquot

1. Preterition.
part of the estate. Devisee or legatee is one who succeeds to definite,
specific, and individualized properties. The effect is:
a. to annul entirely the institution of heirs, but
2. Compulsory called by law to succeed to a portion of the b. the legacies and devises shall be valid insofar as they
testators estate known as legitime. Those who succeed by are not inofficious.
force of law to some portion of the inheritance, in an amount
predetermined by law, of which they cannot be deprived by
the testator, except by a valid disinheritance
3. Legal or Intestate by operation of law through intestate
succession. Those who succeed to the estate of the decedent

CIVIL LAW
2. Imperfect/defective disinheritance.
The following, however may be entrusted to a third person
The effect is:
a. to annul the institution of heirs insofar as it may 1. Distribution of specific property or sums of money that the
prejudice the person disinherited, but testator may leave in general to specified classes or causes
b. the devises and legacies and other testamentary 2. Designation of the persons, institutions or establishments to
dispositions shall be valid to such extent as will not which such property or sums are to be given or applied (Art.
impair the legitime. 786, NCC)
TESTAMENTARY SUCCESSION Reason: Here, there is really no delegation because the testator
has already set the parameters required by law, namely:
Will a. The specification of property or sums of money
b. The specification of classes or causes.
A will is an act whereby a person is permitted, with the formalities
prescribed by law, to control to a certain degree the disposition of In effect, the third person will only be carrying out the will of the
his estate, to take effect after his death (Art. 783, NCC) testator as determined by these parameters.
Characteristics of a will NOTE: Should the testator dispose of the whole or part of his property for
prayers and pious works for the benefit of his soul, in general terms and
A will is: without specifying its application, the executor, with the court's approval
shall deliver one-half thereof or its proceeds to the church or denomination
1. Statutory right The making of a will is only a statutory to which the testator may belong, to be used for such prayers and pious
not a natural right. Hence, a will should be subordinated works, and the other half to the State, for the purposes mentioned in article
to both the law and public policy. 1013 (Art. 1029, NCC).
2. Unilateral act No acceptance by the transferees is
needed during the lifetime of the testator. Testamentary provisions in favor of the poor in general, without designation
3. Strictly personal act The disposition of property is of particular persons or of any community, shall be deemed limited to the
solely dependent upon the testator. poor living in the domicile of the testator at the time of his death, unless it
should clearly appear that his intention was otherwise (Art. 1030, NCC).
4. Ambulatory A will is essentially revocable during the
lifetime of the testator.
Construction of a wills provision
5. Free from vices of consent A will must have been
executed freely, knowingly and voluntarily, otherwise, it
If a testamentary disposition admits of different interpretations, in
will be disallowed.
case of doubt, that interpretation by which the disposition is to be
6. Individual act A will must be executed only by one
operative shall be preferred (Art. 788, NCC).
person. A joint will executed by Filipinos even abroad is
not allowed in the Philippines.
Construing the provisions of a will, substance rather than form
NOTE: Mutual wills Separate wills although containing
must be regarded, and the instrument should receive the most
reciprocal provisions are not prohibited, subject to the rule on favorable construction to accomplish the purpose intended by the
disposicion captatoria. testator.
7. Solemn or formal act A will is executed in accordance Reason: Testacy is preferred over intestacy because testacy is the
with formalities prescribed by law. express will of the decedent whereas intestacy is only his implied
will (Art. 791, NCC).
PERSONAL ACT;
NON-DELEGABILITY OF WILL-MAKING Rules in the construction of Wills
Under Art. 784, the making of a will is a strictly personal act; 1. Words of the will are to be taken in their ordinary and
meaning, it cannot be left in whole or in part to the discretion of a grammatical sense unless there is a clear intention to use
third person, or accomplished through the instrumentality of an them in another sense can be gathered, and that can be
agent or attorney. ascertained (Art. 790, NCC).
2. Technical words are to be taken in their technical sense,
Rule on non-delegability of will-making unless:
a. The context clearly indicates a contrary intention or
It is the exercise of the disposing power that cannot be delegated. b. It satisfactorily appears that he was unacquainted with
But the mere mechanical act of drafting the will may be done by a such technical sense (Ibid.).
third person as it does not constitute a delegation of the will or 3. The invalidity of one of several dispositions contained in a will
disposition. does not result in the invalidity of the other dispositions
unless it is to be presumed that the testator would not have
The following cannot be delegated to a third person because they made such other dispositions if the first invalid disposition
comprise the disposing power of the testator: had not been made (Art. 792, NCC)
1. Duration or efficacy of designation of heirs, legatees, or 4. Every devise or legacy shall cover all the interest in the
devisees. property disposed of unless it clearly appears from the will
2. Determination of the portions which the heirs are to that he intended to convey a less interest (Art. 794, NCC)
receive when referred to by name.
3. Determination as to whether or not a disposition is to
be operative (Art. 785 and 787, NCC).
NOTE: It is not only the delegation which is void; the

testamentary disposition whose effectivity will depend upon the
determination of the third person is the one that cannot be
made. Hence, the disposition itself is void.

SUCCESSION
The parol evidence rule with respect to interpretation of the wills TESTAMENTARY CAPACITY AND INTENT
When there is an imperfect description, or when no person or Requisites of testamentary capacity

property exactly answers the description, mistakes and omissions
must be corrected, if the error appears from the context of the will 1. All persons not expressly prohibited by law
or from extrinsic evidence, excluding the oral declarations of the
testator as to his intention; and when an uncertainty arises upon The capacity of a person to make a will shall be governed by
the face of the will, as to the application of any of its provisions, his national law (Art. 15, NCC).
the testator's intention is to be ascertained from the words of the
will, taking into consideration the circumstances under which it NOTE: The ability as well as the power to make a will must be present
was made, excluding such oral declarations(Art.789, NCC) at the time of the execution of the will.
Kinds of ambiguities in a will 2. At least 18 years of age; and

3. Of sound mind
1. Latent (Intrinsic) ambiguitiesAmbiguities which are not
apparent on the face of a will but to circumstances outside To be of sound mind, it shall be sufficient if the testator was
the will at the time the will was made. E.g. If it contains an able at the time of making the will to know the:
imperfect description of person or property; No person or a. nature of the estate to be disposed of;
property exactly answers the description. b. proper objects of his bounty; and
c. character of the testamentary act.
Example: Testator gives a legacy to my cousin Anna and it will turn
out that the testator has three cousins named Anna To be of sound mind, it is not necessary that the testator be
in full possession of all his reasoning faculties or that his mind
2. Patent (Extrinsic) ambiguitiesThose which are apparent on be wholly unbroken, unimpaired or unshattered by disease,
the face of the will. E.g. Uncertainty which arises upon the injury or other cause. It shall be sufficient if the testator was
face of the will as to the application of any of its provisions able at the time of making the will to know the nature of the
(Art. 789, NCC) estate to be disposed of, the proper objects of his bounty,
and the character of the testamentary act.
Example: Testator gives a devise to some of the eleven children of
my only brother"
The requirement that the testator be of sound mind is
essential only at the time of the making of the will (or
Steps in resolving the ambiguities execution). If he is not of sound mind at that time, the will is
invalid regardless of his state of mind before or after such
1. Examine the will itself; execution. In other words, the will of an incapable will not be
2. Refer to extrinsic evidence or the surrounding circumstances, validated by supervening capacity.
except oral declarations of the testator as to his intention but
in the case of patent ambiguities, the extrinsic evidence NOTE: Conversely, if the testator was of sound mind at the time of the
acceptable is limited to those pertaining to the circumstances making of the will, the will is valid even if the testator should later on
under which the will was executed. become insane and die in that condition. In other words, supervening
incapacity does not invalidate an effective will.
What law governs the validity of wills?
The law presumes that every person is of sound mind, in the
1. As to extrinsic validity - refers to the forms and solemnities absence of proof to the contrary.
required by law. It is governed by:
a. As to time - the law in force at the time of the making of Such presumption of soundness of mind, however, does not
the will. arise if the testator was
b. As to place - the will can be executed in accordance to 1. Publicly known to be insane, one month, or less,
the formalities of the testators nationality, domicile, before making his will;
residence or the place where the will was executed 2. Under guardianship at the time of the making of
depending on the place where it is executed and the the will.
nationality of the testator.
2. As to Intrinsic validity- refers to the legality of provisions in NOTE: Mere weakness of mind or partial imbecility from disease of
the will. It is governed by: body or from age does not necessarily render a person incapable of
making a will.
a. As to time- the law in force at the time of the
decedents death.
Where the presumption of soundness of mind is not
b. As to place- the national law of the testator governs the
applicable, the burden of proving that the testator acted in
intrinsic validity of the will regardless of the place of
lucid interval lies on the person who maintains the validity of
execution.
the will.
Basis Place of execution Applicable Law
Testamentary Capacity and Testamentary Power
Philippines New Civil Code (NCC)
Testator is a Testamentary capacity refers to the ability as well as the power to
Filipino Foreign country Law of the place of
make a will. In American law, testamentary capacity is concerned
execution
with the ability of the testator while the testamentary power
Philippines NCC or
involves a privilege under the law. Hence, although a person may
National law
have testamentary capacity, it does not necessarily follow that he
Testator is an Foreign country 1.National law;
has testamentary power. In the Philippines, however, such
alien 2. Law of the place
distinction is lost altogether. As a matter of fact, the term
of residence;
testamentary power is sometimes understood to refer to the
3.NCC
power of the testator to designate the person or persons who are

CIVIL LAW
to succeed him in his property and transmissible rights and Formal requirements common to both notarial and holographic
obligations. wills
A person suffering from civil interdiction is qualified to make a 1. Law governing extrinsic validity of wills;
will. He is deprived of the power to dispose of his properties 2. In writing;
through acts inter vivosbut not through acts mortis causa (Art. 34, 3. In a language or dialect known to the testator.
RPC).
The object of the solemnities surrounding the execution of wills is
A married woman may make a will without the consent of her to close the door against bad faith and fraud, to avoid substitution
husband, and without the authority of the court (Art 802, NCC) of wills and testaments and to guarantee their truth and
A married woman may dispose by will all her separate property as authenticity.
well as her share of the conjugal partnership or absolute
community property (Art 803, NCC). Rule that every will must be in writing is mandatory
FORMAL VALIDITY RULES If the will is not in writing, it is void and cannot be probated.
Formal Vailidity of Wills Philippine laws do not recognize the validity of noncupative wills,
which are oral wills declared or dictated by the testator and
It is the law of the country where the will was executed that dependent merely on oral testimony.
governs the form and solemnities of wills. (Art. 17(1); Art. 815,
NCC) In case of a holographic wills, it must be entirely handwritten by
the testator himself (Art. 810, NCC)
Due execution of the will includes a determination of whether
1. the testator was of sound and disposing mind at the time Rules in relation to notarial or attested wills
of its execution,
2. that he freely executed the will and was not acting under Notarial or attested will may be:
duress, fraud, menace or undue influence and a. Entirely handwritten by a person other than the
3. that the will is genuine and not forgery, testator;
4. that he was of proper testamentary age b. Partly handwritten by the testator himself and partly
5. that he is not expressly prohibited by law from making a handwritten by another person;
will. c. Entirely printed, engraved or lithographed; or
d. Partly handwritten (whether by testator or another
The will of an alien who is abroad produces effect in the person) and partly printed, engraved or lithographed.
Philippines if made with the formalities prescribed by the law of
the place in which he resides, or according to the formalities NOTARIAL WILLS
observed in his country, or in conformity with those which the Civil
Code prescribes (Art. 816, NCC). Formalities in the Execution of a Notarial Will (WESA-PNAN)
The will of an alien in the Philippines shall produce the same 1. In Writing;
effect as if it was executed in the Philippines if it is executed in
accordance with the law of the country where he is a citizen or Notarial or attested will may be:
subject, and which might be proved and allowed by the law of his 1. Entirely handwritten by a person other than the
own country(Art. 817, NCC). testator;
2. Partly handwritten by the testator himself and partly
A joint will executed by a Filipino in a foreign country is still void. handwritten by another person;
The same holds true even if it is authorized by the law of the 3. Entirely printed, engraved or lithographed; or
country where the joint will was executed (Art. 819, NCC). A joint 4. Partly handwritten (whether by testator or another
will is against the public policy of the Philippines. person) and partly printed, engraved or lithographed.
LAW GOVERNING SUBSTANTIVE VALIDITY 2. Executed in a language or dialect known to the testator;
Matters mentioned in Article 15 of the New Civil Code which are Every will must be executed in a language known to the testator.
governed by Philippine laws This rule is mandatory.Otherwise, the will is void. (Suroza v.
Honrado, 110 SCRA 388). It is also applicable even if the provisions
1. Family rights and duties of the will are interpreted or explained to the testator.
2. Status;
3. Condition; and The fact that the will was executed in a language known to the
4. Legal capacity of persons (Art. 15, NCC). testator NEED NOT be stated in the attestation clause.This fact can
be established by extrinsic evidence or evidence aliunde (Lopez v.
Matters pertaining to intestate and testamentary successions Liboro, 81 Phil. 429).
which are regulated by the national law of the deceased
If the testator resides in a certain locality, it can be presumed that
1. Order of succession he knows the dialect or the language in the said locality (Abangan
2. Amount of successional rights v. Abangan, G.R. No. 13431, Nov. 12, 1919).
3. Intrinsic validity of testamentary provisions
4. Capacity to succeed. (Art. 16; Art. 1039, NCC) The fact that the testator knew the language need not appear on
the face of the will. This fact may be proven by extrinsic evidence.
This rule does NOT apply to witnesses in a notarial or attested will
because the witnesses do not need to know the contents of the
will. The attestation clause, on the other hand, must be understood

SUCCESSION
by the witnesses even if it is in a language not known to them. (Art.
805, NCC states that the attestation clause need not be in a It is not necessary that the testator or the witnesses should
language known to the witnesses) actually see the others subscribe their names to the
instrument provided that they are in a position to see
The fact that the will was executed in a language known to the them sign if they choose.
testator NEED NOT be stated in the attestation clause.This fact can
be established by extrinsic evidence or evidence aliunde (Lopez v. 5. The testator or the person requested by him to write his
Liboro, 81 Phil. 429). name must also sign every page, except the last, on the left
margin in the presence of the witnesses;
If the testator resides in a certain locality, it can be presumed that
he knows the dialect or the language in the said locality (Abangan 6. All the pages shall be Numbered correlatively in letters on
v. Abangan, G.R. No. 13431, Nov. 12, 1919). the upper part of each page;
The fact that the testator knew the language need not appear on 7. Must contain an Attestation clause which expressly states
the face of the will. This fact may be proven by extrinsic evidence. the following:
1. The number of pages used upon which the will is
3. Subscribed at the end thereof by the testator himself or by written;
the testators name written by some other person in his 2. The fact that the testator signed the will and every
presence, and by his express direction; page thereof, or caused some other person to write his
name, under his express direction, in the presence of
The signature of the testator of the will must be at the end of the the instrumental witnesses;
will, which may be at the logical end (last testamentary disposition) 3. The fact that the witnesses witnessed and signed the
or physical end (non dispositive provisions). will and all the pages thereof in the presence of the
testator and of one another.
In an ordinary will, the testator may validly delegate the signing to
someone else. A will is valid if it is signed by way of the testators The attestation clause is executed by the witnesses to the
name written by some other person in his presence, and by his will and not the testator. Hence, even if the language used
express direction. in the attestation clause is not known to the testator, but
only to the witnesses, the will still remains valid.
Where the signature is followed by dispositive provisions, even the
portion of the instrument preceding the signature cannot be 8. Must be acknowledged before a Notary public by the
probated, because the instrument must be considered as a whole. testator and the witnesses.
In notarial wills, subscription by fingerprint is allowed as long as it A jurat is insufficient as the law requires an acknowledgment
is voluntarily made but not in holographic wills given the explicit executed by the party before a notary public, not a declaration of
requirement for a hollographic will to be entirely written, dated the notary public.
and signed with the handwriting of the testator.
Lack of one of the requisites is a fatal defect which will render the
A cross however will not suffice as a general rule except If it is (1) will null and void.
the customary, habitual signature or (2) one of the ways the
testator signs his signature. The one who alleges that it is the SPECIAL RULES FOR HANDICAPPED TESTATORS
customary, habitual or one of the ways he sign his signature has
the burden of proof. Special requirements if the testator is deaf or mute
4. Attested and subscribed by three or more credible 1. If the testator is able to read, he must personally read the
witnesses in the presence of the testator and of one will; or
another; 2. If the testator is unable to read, he must designate two
persons to read it and communicate to him, in some
A notary public CANNOT serve as one of the instrumental practicable manner, the contents thereof (Art. 807, NCC).
witnesses.The notary public before whom the will was
acknowledged cannot be considered as the third instrumental NOTE: The law does not require that the persons reading and
witness since he cannot acknowledged before himself having communicating the contents of the will be the instrumental witnesses.
signed the will. He cannot split his personality into two so that one
will appear before the other to acknowledge his participation in Special requirements if the testator is blind
the making of the will. To permit such a situation to obtain would
be sanctioning a sheer absurdity (Cruz v. Villasor, 52 SCRA 31) The will shall be read to him twice, once by one of the subscribing
witnesses, and another time by the notary public before whom the
Q: Clara, thinking of her mortality, drafted a will and asked will is acknowledged (Art. 808, NCC).
Roberta, Hannah, Luisa and Benjamin to be witnesses. During the
day of the signing of the will, Clara fell down the stairs and broke Art. 808 applies not only to blind testators but also to those who,
both her arms. Coming from the hospital, Clara, insisted on for one reason or another, are incapable of reading their wills,
signing her will by thumbmark. Later Clara was run over by a either because of poor or defective eye sight or because of
drunk driver while crossing the street in Greenbelt. May the will illiteracy.
of Clara be admitted to probate? Give your reason briefly. (2007
Bar Question)
A: Yes. Claras thumbmark in this case has all the hallmarks of a

valid signature. Clara clearly intended to use her thumbmark as her
signature and the circumstances justified her use of her
thumbmark. (Garcia v. La Cuesta, GR. No. L-4067)

CIVIL LAW
SUBSTANTIAL COMPLIANCE Q: Stevie was born blind. He went to school for the blind, and
learned to read in Braille language. He speaks English fluently.
A will is not rendered invalid by reason of defects or Can he:
imperfections in the form of attestation or in the language used a. Make a will?
therein in the absence of bad faith, forgery, or fraud, or undue and b. Act as a witness to a will?
improper pressure and influence, defects and imperfections in the c. In either of the instances, must the will be read to
form of attestation or in the language used therein shall not render him? (2008 Bar Question)
the will invalid if it is proved that the will was in fact executed and
attested in substantial compliance with all the requirements of A:
article 805 (Art 809, NCC). a. Yes. Stevie may make a notarial will. A blind man is not
expressly prohibited from executing a will. In fact, Art. 808 of
In cases of omissions in the will, if itcan be supplied by an NCC provides for additional formality when the testator is
examination of the will itself, without the need of resorting to blind. Stevie however, may not make a holographic will in
extrinsic evidence, it will not be fatal and, correspondingly, would Braille because the writing in Braille is not handwriting. A
not obstruct the allowance to probate of the will being assailed. holographic will to be valid must be entirely written, signed
and dated by the testator in his own handwriting.
However, evidence aliunde are not allowed to fill a void in any part
of the document or supply missing details that should appear in the b. No. A blind man is disqualified by law to be a witness to a
will itself. They only permit a probe into the will, an exploration notarial will.
into its confines, to ascertain its meaning or to determine the
existence or absence of the requisite formalities of law (Caeda v. c. In case Stevie executes a notarial will, it has to be read to
CA, G.R. No. 103554, May 28, 1993). him twice. First by one of the instrumental witnesses and
second by the notary public before whom the will was
WITNESSES acknowledged.
Qualifications of witnesses (S18-ABCD) If one of the instrumental witnesses is of unsound mind, a

notarial will CANNOT be considered valid even if the testator is of
1. Of Sound mind. sound mind. The will shall be void since it was expressly provided
2. At least 18 years of age. under Art.820 of the NCC that for a witness to a notarial or
3. Able to read and write attested will to be qualified, he/she must be of sound mind.
4. Not Blind, deaf or dumb The person signing the testators name MUST NOT be one of the 3
instrumental witnesses because he must sign in the presence of
NOTE: While a blind or deaf may not be a witness, he could be a the testator and of three other instrumental witnesses.
testator in a notarial will
The essential thing for validity (if a witness is the one who would
5. Not have been Convicted by final judgment of falsification of sign under the presence of the testator and under his express
a document, perjury or false testimony. direction or the signing by an agent of the testator) is that the
6. Domiciled in the Philippines his habitual residence must be agent write the testators name nothing more (Barut v.
in the Philippines (Art. 50, NCC) Cabacungan, 21 Phil. 461).
The qualifications of witnesses are determined at the time of the HOLOGRAPHIC WILLS
attestation of the will. If the witnesses attesting the execution of a
will are competent at the time of attesting, their becoming A holographic will is one entirely written, dated, and signed by the
subsequently incompetent shall not prevent the allowance of the hand of the testator himself. It is subject to no other form, and may
will. be made in or out of the Philippines, and need not be witnessed
(Art. 810, NCC).
A person qualified to make a will is NOT necessarily qualified to
be a witness to the will of another. Even if a person can make a Formalities required in the execution of holographic wills: (EDS)
will because he can comply with the age and mental requirements
imposed by law, he cannot be a witness to the will of another in 1. Entirely handwritten by the testator
four specific cases. They are:
1. Where he is not domiciled in the Philippines An illiterate can make an ordinary or notarial will because the law
2. Where he had been convicted of falsification of a allows a notarial will to be written by someone else and in certain
document, perjury or false testimony cases, for the will to be read by someone else not the testator
3. Where he is blind, deaf or dumb however, he cannot make a holographic will because it is required
4. Where he is not able to read or write. to be in writing by the testator.
If an instrumental witness is a beneficiary under the will Effects of insertions or interpolations:

GR: When a number of erasures, corrections, cancellation,
The fact that a person acts as a witness to a will does not disqualify or insertions are made by the testator in the will but the
him to be a witness. However, it renders void any legacy or device same have not been noted or authenticated with his full
given under said will to such person or to his spouse, or parent or signature, only the particular words erased, corrected,
child, unless there are three other competent witnesses to the altered will be invalidated, not the entirety of the will.
will (Art 823, NCC).
XPNs:
If the witness is instituted as heir, not as devisee or legatee, the a. Where the change affects the essence of the
rule would still apply, because undue influence or pressure on the will of the testator;
part of the attesting witness would still be present.
NOTE: When the holographic will had only one
substantial provision, which was altered by
substituting the original heir with another, and the

SUCCESSION
same did not carry the requisite full signature of the Rules governing the probate of holographic wills
testator, the entirety of the will is voided or revoked.
In the post mortem probate of holographic wills, the following rules
Reason: What was cancelled here was the very
essence of the will; it amounted to the revocation of
are to be observed as to the number of witnesses to be presented:
the will. Therefore, neither the altered text nor the a. If the will is not contested, it shall be necessary that at
original unaltered text can be given effect (Kalaw v. least one witness who knows the handwriting and
Relova, G.R. No. L-40207, Sept. 28, 1984). signature of the testator explicitly declares that the will
and the signature are in the handwriting of the testator.
b. Where the alteration affects the date of the will b. If the will is contested, at least three of such witnesses
or the signature of the testator, the whole will shall be required.
is void. c. In the absence of any competent witness and if the
c. If the words written by a 3rd person were court deems it necessary, expert testimony may be
contemporaneous with the execution of the resorted to (Art. 811, NCC).
will, even though authenticated by the testator,
the entire will is void for violation of the In the probate of a holographic will, the will was contested. It is
requisite that the holographic will must be required to have at least three witnesses to explicitly declare that
entirely in the testators handwriting. the signature in the will is the genuine signature of the testator.
2. Dated This requirement is mandatory. In the case of Ajero v. Court of

Appeals, the Court held that the object of the solemnities
GR: The "date" in a holographic will should include the day, surrounding the execution of wills is to close the door against bad
month, and year of its execution. faith and fraud, to avoid substitution of wills and testaments and to
guaranty their truth and authenticity.
XPN: When there is no appearance of fraud, bad faith, undue
influence and pressure and the authenticity of the will is Therefore, the laws on this subject should be interpreted in such a
established and the only issue is whether or not the date way as to attain these primordial ends. But, on the other hand,
appearing on the holographic will is a valid compliance with one must not also lose sight of the fact that it is not the object of
Art. 810 probate of the holographic will should be allowed the law to restrain and curtail the exercise of the right to make a
under the principle of substantial compliance. will.
The day and month may be indicated by implication as long The contents and due execution of a lost holographic will
as there is no doubt as to the exact date. The date may be CANNOT be established merely through oral testimonies of
placed at the end or at the beginning of the will, or in the witness who allegedly seen the same
body, although its normal location should be after the
signature. The execution and contents of a lost or destroyed holographic will
may not be proved by the bare testimony of witnesses who have
The law does not specify the particular location where the seen or read such will. The will itself must be presented; otherwise,
date should be placed in the will. The only requirements are it shall produce no effect (Gan v. Yap, 104 Phil. 509;id.) By its very
that the date be in the will itself and executed in the hand of nature, a hollographic will can only be proven authentic by
the testator. establishing that the handwriting in which it is written belongs to
the testator himself and this can only be done through an
3. Signed by the hand of the testator himself examination of the will.
In a holographic will, the signature must be at the end of the will. A holographic will which was lost or could not be found can be
This can be inferred from Article 812 of the NCC by the reference proved by means of a photostatic copy (photocopy. A photostatic
to dispositions written below his signature. This phrase implies copy or xerox copy of the holographic will may be allowed because
that the signature is at the end of the will, and any disposition comparison can be made with the standard writings of the testator
below it must further be signed and dated. (Rodelas v. Aranza, 119 SCRA 16).
In a holographic will, the dispositions of the testator written
below his signature must be dated and signed by him in order to ALTERATIONS, REQUIREMENTS
make them valid as testamentary dispositions (Art. 812). If one
disposition below the signature of the testator is not dated, even if In case of insertion, cancellation, erasure or alteration in a
signed, that particular disposition is void, without affecting the holographic will, the testator must authenticate the same by his
validity of the others or of the will itself. full signature (Art. 814, NCC).
When a number of dispositions appearing in a holographic will are Full signature refers to the testators habitual, usual and customary
signed without being dated, and the last disposition has a signature.
signature and a date, such date validates the dispositions
preceding it, whatever be the time of prior dispositions (Art. 813, If not authenticated with the testators full signature, it is
NCC) considered as not made, but the will is not invalidated. It does not
affect the validity of the will itself. The will is not thereby
NOTE: It is not required that the will be executed on a single day, at one invalidated as a whole, but at most only as regards the particular
time and in the same ink. The unity of the act is not required in holographic words erased, corrected or inserted. (Kalaw v. Relova, 132 SCRA
wills. 237, 1984), citing Velasco v. Lopez, (1 Phil 720, 1903), unless the
portion involved is an essential part of the will, such as the date.
Where the testator himself crossed out the name of the original
heir, and substituted the name of another, without proper
authentication, it was held that this did not result in making the
person whose name was crossed as heir. This is clear from the

CIVIL LAW
provision of the law. But applying the same provision, the Q: Manuel, a Filipino, and his American wife Eleanor, executed a
cancellation should not have also been given effect. The Supreme joint will in Boston, Massachusetts when they were residing in
Court, however, ruled that neither the original heir nor the said city. The law of Massachusetts allows the execution of joint
substituted heir can receive the estate on the ground that it could wills. Shortly thereafter, Eleanor died. Can the said will be
not ignore what appeared to be a change of heart on the part of probated in the Philiipines for the settlement of her estate? (2000
the testator. One way to justify the ruling of the Supreme Court is Bar Question)
to consider the cancellation as tantamount to a revocation of the
will. It amounts to a revocation even though the cancellation only A:Yes, the will may be probated in the Philippines insofar as the
pertained to the name of the original heir because without the said estate of Eleanor is concerned. While the Civil Code prohibits the
name, there remains no other disposition in the will (Kalaw v. execution of joint wills here and abroad, such prohibition applies
Relova, 132 SCRA 237). only to Filipinos. Hence, the joint will which is valid where executed
is valid in the Philippines but only with respect to Eleanor. Under
JOINT WILLS Article 819, it is void with respect to Manuel whose joint will
remains void in the Philippines despite being valid where executed.
Joint wills are NOT allowed in the Philippines
Two or more persons cannot make a will jointly, or in the same CODICILS
instrument, either for their reciprocal benefit or for the benefit of a
third person (Art. 818, NCC). A codicil is a supplement or addition to a will, made after the
execution of a will and annexed to be taken as part thereof, by
Wills, prohibited by Article 818, executed by Filipinos in a foreign which any disposition made in the original will is explained, added
country shall not be valid in the Philippines, even though to, or altered (Art. 825, NCC).
authorized by the laws of the country where they may have been
executed (Art. 819, NCC). The formalities which are required in the execution of the codicil
are the same those required in the execution of the will.
NOTE: Mutual wills Separate wills although containing reciprocal provisions
are not prohibited, subject to the rule on disposition captatoria. GR: A codicil is a supplement or addition to a will made after the
execution of a will and annexed to be taken as a part thereof
Reason why joint wills are prohibited (Art.825)
Whether in the Philippines or in foreign country, Filipino citizens XPN: If the latter instrument makes disposition independent of
are prohibited from executing joint wills because it is a matter of those in the original will, without explaining or modifying such
public policy. Joint wills may lead to the commission of parricide (In original will, then it is a new WILL, and it must be executed in
re Will of Bilbao, 87 Phil. 114; Dacanay v. Florendo). accordance with all the formalities required in executing a will.
Q: John and Paula. British citizens at birth, acquired Philippine Distinctions between a codicil and a subsequent will
citizenship by naturalization after their marriage. During their
marriage the couple acquired substantial landholdings in London
CODICIL SUBSEQUENT WILL
and in Makati. Paula bore John three children, Peter, Paul and
Mary. In one of their trips to London, the couple executed a joint Forms a part of the original
It is a new or a separate will.
will appointing each other as their heirs and providing that upon will.
the death of the survivor between them the entire estate would Supplements the original will,
go to Peter and Paul only but the two could not dispose of nor Makes dispositions without
explaining, adding to, or
divide the London estate as long as they live. John and Paula died reference to and independent of
altering any of its
tragically in the London Subway terrorist attack in 2005. Peter the original will.
dispositions.
and Paul filed a petition for probate of their parents will before a
Makati Regional Trial Court.
a. Should the will be admitted to probate? If it provides for a full disposition
b. Are the testamentary dispositions valid? of the testators estate, may
Does not, as a rule, revoke
c. Is the testamentary prohibition against the division of revoke the whole prior will by
entirely the prior will.
the London estate valid? (2008 Bar Question) substituting a new and last
disposition for the same.
A:
a. No, the will cannot be admitted to probate. Joint wills are A will and a codicil, being A prior will and a subsequent
void under the New Civil Code. And even if the joint will regarded as a single will, being two separate wills,
executed by Filipinos abroad were valid where it was instrument are to be may be construed
executed, the joint will is still not valid in the Philippines. construed together. independently of each other.
b. If a will is void, all testamentary dispositions contained in
If the former will is a notarial will, it is not required that the
that will are also void. Hence, all testamentary provisions
codicil be notarial in form as well. The law only requires that a
contained in the void joint will are also void.
codicil be in the form of a will. It does not require that it be of the
same kind as the will it is supplementing.
c. The testamentary prohibition against the division by Peter
and Paul of the London estate for as long as they live, is not
INCORPORATION BY REFERENCE
valid. Art. 494 of NCC provides that a donor or testator may
prohibit partition for a period which may not exceed twenty
Incorporation by reference is the incorporation of an extrinsic
(20) years.
document or paper into a will by reference so as to become a part
thereof.

SUCCESSION
The documents or papers incorporated will be considered part of 3. By physical destruction through burning, cancelation or
the will even though the same are not executed in the form of a obliteration (Art. 830, NCC).
will. The doctrine of incorporation by reference is not applicable in
a holographic will unless the documents or papers incorporated by Revocation by Implication of law
reference are also in the handwriting of the testator.
It takes place when certain acts or events take place subsequent to
Requisites of incorporation by reference(EDIS) the making of a will, which nullify or render inoperative either the
will itself or some testamentary disposition therein.
1. The document or paper referred to in the will must be in
Existence at the time of the execution of the will; Instances when revocation by implication of law takes place
2. The will must clearly Describe and identify the same, stating
among other things the number of pages thereof; 1. Upon the termination of the subsequent marriage in Article
3. It must be Identified by clear and satisfactory proof as the 41 of the FC through the filing of the affidavit of
document or paper referred to therein; reappearance, the spouse who contracted the marriage in
4. It must be Signed by the testator and the witnesses on each bad faith shall be disqualified to inherit from the innocent
and every page, except in case of voluminous books of spouse by testate and intestate succession. Hence, any
account or inventories (Art. 827, NCC). testamentary disposition in the will of the innocent spouse in
favour of the guilty spouse shall be revoked by implication of
Incorporation by reference applies only to attested wills because of law (Art. 43, par. 5, FC).
the mention of witnesses in paragraph 4 of Art. 827 (Rabuya, 2009) 2. If both spouses of the subsequent marriage referred in Art.
41 of the FC acted in bad faith, testamentary dispositions by
REVOCATION OF WILLS one in favour of the other are revoked by operation of law
(Art. 44, FC).
A will may be revoked by the testator at any time before his death. 3. In case of annulment, the spouse who contracted the
Any waiver or restriction of this right is void (Art. 828, NCC). marriage in bad faith shall be disqualified to inherit from the
innocent spouse by testate and intestate succession. Hence,
This right of the testator to revoke the will CANNOT be waived or any disposition in the will of the innocent spouse in favour of
restricted the guilty spouse shall be revoked by operation of law (Art. 50
in relation to Art. 43(5), FC).
The testators right to revoke during his lifetime is absolute 4. Upon issuance of the decree of legal separation, provisions in
because a will is ambulatory. It can neither be waived nor favor of the offending spouse made in the will of the innocent
restricted. As a matter of fact, even if the will has already been spouse shall be revoked by operation of law (Art. 63 (4), FC).
admitted to probate during the testators lifetime, it may still be
5. In case of preterition of compulsory heirs in the direct line,
revoked. This necessarily follows from the principle that a
whether living at the time of the execution of the will or born
testament is of force after men are dead; otherwise it is of no
after the death of the testator. In such case, the preterition
strength at all while the testator lives.
shall annul the institution of heir; but the devises and legacies
shall be valid insofar as they are not inofficious (Art. 854,
What law governs in case of revocation?
NCC)
1. If the revocation takes place in the Philippines, whether the
6. When the heir, devisee or legatee commits any of the acts of
unworthiness which by express provision of law will
testator is domiciled in the Philippines or in some other
incapacitate him to succeed. In such case, any testamentary
country Philippine laws
disposition in favour of such heir, devisee or legatee is
2. If the revocation takes place outside the Philippines:
a. by a testator who is domiciled in the Philippines revoked (Art. 1032, NCC)
Philippine laws 7. When in the testators will there is a legacy of a credit against
b. by a testator who is not domiciled in this country a third person or of the remission of a debt of the legatee,
i. Laws of the place where the will was made, or and subsequently, after the execution of the will, the testator
ii. Laws of the place in which the testator had his brings an action against the debtor for the payment of his
domicile at the time of revocation (Art. 829, NCC). debt. In such case, the legacy is revoked (Art. 935 and 936,
NCC)
Revocation based on a false or illegal cause is null and void 8. When the testator (a) transforms the thing bequeathed in
such a manner that it does not retain either the form or
Requisites: denomination it had, or (b) when he alienates by any title or
1. The cause must be concrete, factual and not purely for any cause the thing bequeathed or any part thereof, or (c)
subjective when the thing bequeathed is totally lost during the
2. It must be false testators lifetime or after his death without the heirs fault.
3. The testator must not know of its falsity In such cases, the legacy is revoked (Art. 957, NCC; Rabuya,
4. It must appear from the will that the testator is revoking 2009).
because of the cause which is false.
Revocation by Subsequent Will, Codicil, or Other Writing
The rule is if the revocation is based on a false or illegal cause, it is
null and void (Art. 833, NCC) while institution of heir based on false Requisites of revocation by subsequent will or codicil
cause as a general rule does not affect the validity or efficacy of the
institution (Art. 850, NCC). 1. The subsequent instrument must comply with the formal
requirements of a will
Modes of revoking a will 2. The testator must possess testamentary capacity
3. The subsequent instrument must either contain a revocatory
1. By implication of law; clause or be incompatible with the prior will (totally or
2. By some will, codicil, or other writing partially)
4. The revoking will must be admitted to probate.

CIVIL LAW
Different ways of making a revocation by a subsequent will The physical destruction NEED NOT be done by the testator
himself
a. Express by providing for a revocatory clause;
b. Implied provisions are completely inconsistent with It may be performed by another person under his express direction
previous will. and in his presence. If the destruction done by a person other than
the testator is made not in his presence or not upon his express
The will containing the revocatory clause must itself be valid, and direction, there is no revocation.
admitted to probate, otherwise, there is no revocation.
Even if the person directed by the testator to revoke his will is
Principle of Instanter incapacitated to make a will (such as when he is below 18 years
of age), such revocation will still be valid
The express revocation of the 1st will renders it void because the
revocatory clause of the 2nd will, not being testamentary in It is because in revocation of wills, what is essential is the capacity
character, operates to revoke the 1st will instantly upon the of the testator to revoke. The capacity of the person directed by
execution of the will containing it. the testator to revoke his will is immaterial.
In implied revocation, the first will is not instantly revoked by the Q: In 1919, Miguel executed a will. In the post mortem probate,
second will because the inconsistent testamentary dispositions of there was a testimony to the effect that the will was in the
the latter do not take effect immediately but only after the death testators possession in 1919, but it can no longer be found. Is the
of the testator. will revoked?
The fact that the subsequent will is posterior and incompatible A: Yes, the Doctrine of Presumed Revocation applies, which
with the first does not mean that the first is entirely revoked provides that: where a will which cannot be found, is shown to
because the revocation may be total or partial. Therefore it is have been in the possession of the testator when last seen, the
possible for a prior will to subsist with a subsequent will even if presumption is, in the absence of other competent evidence, that
they are incompatible. the same was cancelled or destroyed. The same presumption arises
where it is shown that the testator had ready access to the will and
NOTE: In case of inconsistent wills, the subsequent will prevails over the it cannot be found after his death (Gago v. Mamuyac G.R. No.
prior will because it is the latest expression of testamentary intent of the 26317, Jan. 29, 1927).
testator.
NOTE: The presumption is, however, not conclusive and anyone may prove
A revocation made in a subsequent will shall take effect even if the the contrary to rebut the presumption.
new will should become inoperative by reason of the incapacity of
the heirs, devisees or legatees designated therein, or by their Doctrine of Dependent Relative Revocation
renunciation (Art. 832, NCC)
Where the testators act of destruction is connected with the
Revocation by Physical Destruction through burning, cancelation making of another will, so as fairly to raise the inference that the
or obliteration testator meant the revocation of the old to depend upon the
efficacy of the new disposition intended to be substituted, the
Ways for physically destroying a will (BTCO) revocation will be conditional and dependent upon the efficacy of
the new disposition; and if, for any reason, the new will intended
1. Burning to be made as a substitute is inoperative, the revocation fails and
2. Tearing the original will remains in full force. But a mere intent to make at
3. Cancelling some time a will in place of that which is destroyed will not render
4. Obliterating the destruction conditional. It must appear that the revocation is
dependent upon the valid execution of a new will
Requisites of revocation by physical act of destruction (OTAP)
It was held, therefore, that even in the supposition that the
1. Overt act of physical destruction; destruction of the original will by the testator could be presumed
2. Testamentary capacity of the testator at the time of from the failure of the petitioner to produce it in court, such
performing the act of revocation; destruction cannot have the effect of defeating the prior will of
3. Animus Revocandi - intention to revoke; 1918 because of the fact that it is founded on the mistaken belief
4. Performed by testator himself or other person in the that the will of 1939 has been validly executed and would be given
presence and express direction of the testator. due effect. The theory on which this principle is predicated is that
the testator did not intend to die intestate. And this intention is
NOTE: It is not necessary that the will be totally destroyed. It is sufficient if clearly manifest when he executed two wills on two different
on the face of the will, there is shown some sign of the physical act of occasions and instituted his wife as his universal heir. There can
destruction. (Maloto v. CA, G.R. No. 76464, Feb. 29, 1988)
therefore be no mistake as to his intention of dying testate (Molo
v. Molo, G.R. No. L-2538, Sept. 21, 1951).
A will, to be revoked by physical destruction, must be coupled
with animus revocandi NOTE: Failure of the new testamentary disposition upon whose validity the
revocation depends is equivalent to the non-fulfillment of a suspensive
The physical act of destruction of a will, like burning, does not per condition and thus prevents the revocation of the original will.
se constitute an effective revocation, unless the destruction is
coupled with animus revocandi on the part of the testator (Maloto Q: Mr. Reyes executed a will completely valid as to form. A week
v. CA, G.R. No. 76464, Feb. 29, 1988). later, however, he executed another will which expressly revoked
his first will, upon which he tore his first will to pieces. Upon the
death of Mr. Reyes, his second will was presented for probate by
his heirs, but it was denied due to formal defects. Assuming that a
copy of the first will is available, may it now be admitted to
probate and given effect? Why? (2003 Bar Question)

SUCCESSION
In testate succession, there can be no valid partition among the
A: Yes, the first will may be admitted to probate and given effect heirs, until after the will has been probated.
because the will that was supposed to revoke the same was never
admitted to probate on account of formal defects. Admission to The parties CANNOT agree to waive the probate proceedings
probate of the subsequent revoking will is one of the requisites for It is a mandatory requirement. Until admitted to probate, no right
express revocation to take place. can be claimed under the will.
The principle of estoppel IS NOT applicable in probate
Recognition in a will of an illegitimate child does not lose its legal proceedings
effect even if the will is revoked.
These proceedings involve public interest and the application
REPUBLICATION AND REVIVAL OF WILLS therein of the principle of estoppel would seem inimical to public
policy when it will block the ascertainment of truth surrounding
Republication of wills the execution of a testament.
Itis the re-execution or the re-establishment by a testator of a will Prescription (statute of limitations) DOES NOT apply to probate of
which is void or a will which the testator had once revoked. wills. (Imprescriptibility of Probate)
Two ways of republishing wills Rationale: Probate proceedings are not established in the interest
of the surviving heirs, but primarily for the protection of the
1. By Reproduction - the contents of a previous will are expressed wishes of the testator.
reproduced in a subsequent will
2. By Execution of a Codicil - such codicil referring to the Different kinds of probate
previous will to be republished
1. Ante-mortem testator himself petitions the court for the
There can be NO republication by execution of a codicil if the probate of his own will during his lifetime.
previous will is void as to its form. If the previous will is void as to 2. Post-mortem another person applies for probate of the will
its form, it can only be republished by reproducing the provisions after the testators death.
thereof in a subsequent will.
Questions that can be determined by a probate court
Revival of wills
GR: Probate courts cannot inquire into the intrinsic validity of will.
It is the process of renewing the operative force of a will which had The only questions that can be determined by a probate court are
once been revoked by the testator. the:
a. Due execution
Rule on revival of wills b. Testamentary capacity
c. Identity of the will
1. If there is an EXPRESS REVOCATION - The revocation of the
expressly revoking will by a subsequent will does not revive XPN:
the first will. The previous will can only be revived by a. When the defect of the will is apparent on the face and the
republication. probate of the will may become a useless ceremony if it is
2. If there is an IMPLIED REVOCATION - The revocation of the intrinsically invalid;
subsequent will which impliedly revoked the previous will b. For practical considerations as when there is preterition of
revives the latter heirs, or testamentary provisions are of doubtful legality;
c. Estoppel on the part of the parties if they put the intrinsic
ALLOWANCE AND DISALLOWANCE OF WILLS validity of the will in issue.
PROBATE REQUIREMENT
Q: The testator devised a part of his estate to his concubine,
Probate which fact of concubinage was stated in his will. On probate, the
court ruled that the will was validly executed but the devise in
Probate is a special proceeding mandatorily required for the favor of the concubine is null and void. Can the probate court
purpose of establishing the validity of a will. pass upon the intrinsic validity of the testamentary provision
stated in the will?
No will shall pass either real or personal property unless it is
proved and allowed in accordance with the Rules of Court. (Art. A: Yes. While as a general rule, in probate proceedings, the courts
838) area of inquiry is limited to an examination and resolution of the
extrinsic validity of the will, given exceptional circumstances, the
It means to prove before some officer or tribunal, vested by law probate court is not powerless to do what the situation constrains
with authority for that purpose, that the instrument offered to be it to do and pass upon certain provisions of the will, as in this case
proved is the will and testament of the deceased person whose (Nepomuceno v. CA, G.R. No. 62952, Oct. 9, 1985).
testamentary act is alleged to be, and that it is executed, attested,
and published as required by law, and that the testator was of NOTE: The SC held as basis its finding that in the event of probate of the
sound and disposing mind. will, or if the court rejects the will, probability exists that the case will come
up once again on the same issue of the intrinsic validity or nullity of the will,
the same will result in waste of time, effort, expense plus added anxiety.
The presentation of the will for probate is mandatory, and is a
matter of public policy.
Probate deals with the wills extrinsic validity. The court merely
inquires into its due execution. It does not determine the validity of
each and every disposition made in it.

CIVIL LAW
Probate court on questions of ownership the contract the character of a compromise, affect the validity of the
transaction(De Borja, et al. v. Vda. de Borja, G.R. No. L-28040, Aug. 18,
GR: A probate court has no jurisdiction to decide questions of 1972).
ownership.
Scope of a final decree of probate
XPN:
1. When the parties voluntary submit the issue of ownership to A final decree of probate is conclusive as to the due execution and
the court; extrinsic validity of the will, i.e., as to the extrinsic or formal validity
2. When provisionally, the ownership is passed upon to only. Also, it settles the question of whether the testator, being of
determine whether or not the property involved is part of the sound mind, freely executed it in accordance with the formalities
estate. set forth by law.
3. The question of ownership is an extraneous matter which the
probate court cannot resolve with finality. Q: After an ante mortem proceeding, the will was allowed. Later
on, during the post mortem settlement of estate proceedings, one
Q: When Vic died, he was survived by his legitimate son, Ernesto, of the heirs filed a criminal case alleging falsification in the
and natural daughter, Rosario. Rosario, who had Vics will in her execution of the will. Will the action prosper?
custody, did not present the will for probate. She instituted an
action against Ernesto to claim her legitime on the theory that Vic A: No. Pursuant to Sec. 1, Rule 75 of the Rules of Court, the
died intestate because the absence of probate. To support her probate court inquires into the due execution of the will.
claim, she presented Vics will, not for its probate, but for proving Regardless of whether it is ante mortem or post mortem, once an
that Vic acknowledged her. Is the procedure adopted by Rosario issue of due execution has already been passed upon by the
allowed? probate court, it would constitute res judicata if such issue be
raised again. In the present scenario, the issue on due execution
A:No. It is in violation of procedural law and an attempt to was already passed upon and therefore, allegations of whatever
circumvent and disregard the last will and testament of the ground assailing the due execution of the will, will be barred by res
decedent. The presentation of a will to the court for probate is judicata.
mandatory and its allowance by the court is essential and
indispensable to its efficacy (Guevara v. Guevara G.R. No. 48840, Q: If a probate court passed upon the intrinsic validity of a will
Dec. 29, 1943) pursuant to the exceptions as regards its powers and jurisdiction,
may the decision of that probate court be considered as res
Q: To put an end to the numerous litigations involving decedent judicata?
Franciscos estate, his heirs entered into a compromise
agreement whereby they agreed to pay Tasiana, Franciscos A: Yes. As a general rule, a probate court may only pass upon the
surviving spouse, P800,000 as her full share in the hereditary extrinsic validity of the will. However, by virtue of the exceptions,
estate. the probate court may pass upon the intrinsic validity of a will. If it
does so, then it will constitute as a ruling on such issues on the
When submitted to the court for approval, Tasiana attacked its intrinsic validity and questioning such again in a different
validity on the ground that the heirs cannot enter into a proceeding shall be barred by res judicata.
compromise agreement without first probating Franciscos will.
NOTE: A joint will even if invalid but has been probated by the court and
Tasiana relied on Guevara v. Guevara (74 Phil. 479) where the whose decision was not appealed, already constitutes res judicata, and has a
court held that the presentation of a will for probate is conclusive effect. The error committed by the probate court was an error of
mandatory and that the settlement and distribution of an estate law that should have been corrected by appeal, but which did not affect the
on the basis of intestacy when the decedent left a will, is against jurisdiction of the probate court nor the conclusiveness of its final decision,
the law and public policy. Decide. however erroneous since the final judgment is binding upon the whole world
(De la Cerna v. Potot, 12 SCRA 576).
A:The Guevara ruling is not applicable in this case because here,
there was no attempt to settle or distribute the estate among the GROUNDS FOR DENYING PROBATE
heirs before the probate of the will. The clear object of the
contract was merely Tasianas conveyance of any and all her Grounds for disallowance of a will? (FIFUSM)
individual share and interest, actual or eventual in the estate.
There is no stipulation as to any other claimant, creditor or legatee. 1. The Formalities required by law have not been complied
with;
As a hereditary share in a decedent's estate is transmitted or 2. The testator was Insane or otherwise mentally incapable of
vested immediately from the moment of the death of such making a will, at the time of its execution;
predecessor in interest, there is no legal bar to a successor (with 3. The will was executed through Force or under duress, or
requisite contracting capacity) disposing of her or his hereditary influence of fear or threats;
share immediately after such death, even if the actual extent of 4. The will was procured by Undue and improper pressure and
such share is not determined until the subsequent liquidation of influence, on the part of the beneficiary or some other
the estate. person;
5. The Signature of testator was procured by fraud.
Also, as Franciscos surviving spouse, Tasiana was his compulsory 6. The testator acted by Mistake or did not intend that the
heir. Wherefore, barring unworthiness or valid disinheritance, her instrument he signed should be his will at the time of affixing
successional interest existed independent of Francisco's last will his signature thereto (Art. 839, NCC).
and testament and would exist even if such will were not probated
at all. Thus, the prerequisite of a previous probate of the will, as
established in the Guevara and analogous cases, can not apply to
the case.
NOTE: Neither the aleatory character of the contract nor the coetaneous
agreement that the numerous litigations between the parties are to be
considered settled and should be dismissed, although such stipulation gives

SUCCESSION
Q: When do the following constitute as grounds for disallowance? 3. The institution must be effective.
1. Violence NOTE: No repudiation by the heir; testator is not predeceased by the heir.
A: When in order to compel the testator to execute a will, Three principles in the institution of heirs
serious or irresistible force is employed
1. Equality heirs who are instituted without a designation of
2. Intimidation shares inherit in equal parts.
A: When the testator is compelled by a reasonable and well- NOTE: Applies only when the heirs are of the same class or same
juridical condition and involves only the free portion.
grounded fear of an imminent and grave evil upon his person
or property of his spouse, descendants, or ascendants, to As between a compulsory heir and a voluntary heir and they are
execute the will instituted without any designation of shares, the legitime must first be
respected and the free portion shall then be equally divided between
3. Undue Influence them.
A: When a person takes improper advantage of his power 2. Individuality heirs collectively instituted are deemed
over the will of another, depriving the latter of a reasonable individually instituted unless contrary intent is proven.
freedom of choice.
NOTE: Art. 847 itself gave an example, when the testator institutes
4. Mistake some heirs individually and others collectively as when he says, I
designate my heirs A and B, and the children or C, those collectively
designated shall be considered as individually instituted, unless it
A: Pertains to the mistake in execution which may either clearly appears that the intention of the testator was otherwise.
be:
1. mistake as to the identity or character of the instrument 3. Simultaneity when several heirs are instituted, they are
which he signed, or instituted simultaneously and not successively, unless the
2. mistake as to the contents of the will itself. contrary is proved.
Effect if the grounds for disallowance is proved Designation of heir in the will
The will in such case shall be set aside as VOID. Generally, an heir must be designated by his name and surname.
This rule, however, is not mandatory. Even when the name of the
Person who intervenes heir has been omitted but the testator has designated the heir in
such a manner that there can be no doubt as to who has been
The person who intervenes must have an interest in the estate or instituted, the institution is valid.
in the will, or in the property to be affected by it, either as executor
or claimaint of the estate, and an interested party is one who If two or more persons have the same names,the testator must
would be benefited by the estate such as an heir or one who has a indicate some circumstance by which the instituted heir may be
claim against the estate like a creditor. known.
INSTITUTION OF HEIRS If the testator fails to mention any circumstance regarding the heir
instituted and there appear to be several persons bearing the same
Institution of heirs is an act by virtue of which a testator name, there is latent ambiguity and extrinsic evidence other than
designates in his will the person or persons who are to succeed him the oral declaration of the testator as to his intention is admissible
in his property and transmissible rights and obligations (Art. 840, to resolve the ambiguity.
NCC).
A conceived child may be instituted, provided the conditions in
Institution of heirs cannot be allowed to affect the legitimes of the Arts. 40 and 41 are present (Conceptus pro nato habetur).
compulsory heirs.
NOTE: A conceived child, although as yet unborn, has a limited and
There can be an instituted heir only in testamentary succession. provisional personality (Quimiguing v. Icao, G.R. No. 26795, 1970). Its
personality is essentially limited because it is only for purposes
There can be a valid will even if it contains only a provision for favourable to the child. Its personality is provisional because it
disinheritance or if only legacies and devises are contained in the depends upon the child being born alive later under the following
conditions:
will even though it does not contain an institution of heir, or such
1. The child must be alive for at least 24 hours from complete
institution should not comprise the entire estate, and even though delivery, if it had an intra-uterine life of less than 7
the person so instituted should not accept the inheritance or months.
should be incapacitated to succeed (Art. 841, NCC). 2. If the child had an intra-uterine life of at least 7 months (Art. 41,
NCC), it is enough that the child is alive upon delivery.
Requisites of a valid institution
Disposition in favor of an unknown person
1. The will must be extrinsically valid;
GR: Every disposition in favor of an unknown person shall be void.
NOTE: The testator must have the testamentary capacity to make the
institution. XPNS:
1. If the identity can become certain by some event or
2. The institution must be intrinsically valid; circumstance, the disposition is valid. It is important,
however, that the event or circumstance must appear in the
NOTE: The legitime must not be impaired, the person instituted must be will itself; it cannot be shown by extrinsic evidence, either
identified or identifiable, and there is no preterition.
oral or documentary

CIVIL LAW
2. A disposition in favor of a definite class or group of persons GR: The testator cannot impose any charge, condition or
shall be valid. substitution whatsoever upon the legitimes. If a charge condition
or substitution is imposed, it shall be considered as not imposed.
Evidence aliunde CANNOT be presented to identify the unknown
person. The determinate event or circumstance, sufficient to XPN: Testator can validly impose a prohibition against the partition
indicate with certainty the person whom the testator wants to of the legitime for a period not exceeding 20 years.
favor, must appear in the will itself; it cannot be shown by extrinsic
evidence, either oral or documentary. NOTE: The legitime passes by strict operation of law, independently of the
testators will. As such, any condition, burden, or substitution upon the same
is merely considered by law as not imposed (Art. 872, NCC).
If there is merely a latent ambiguity as to the identity of the heir,
extrinsic evidence other than the oral declaration of the testator
may be used, but if his identity is unknown, extrinsic evidence is Rule regarding conditions on the prohibition to marry
not allowed.
GR: An absolute condition not to contract a first or subsequent
Effect if the institution of heir is based on a false cause marriage is not a valid condition and shall be considered as not
written (Art. 874, NCC). However, the validity of the disposition
GR: The institution of heir is valid. The false cause shall be itself shall not be affected.
considered simply as not written.
XPN: If such condition was imposed on the widow or widower by
XPN: If from the will itself, it appears that the testator would not the deceased spouse or by the latters ascendants or descendants,
have made the institution if he had known the falsity of the cause, in which case, the condition is valid (Art. 874, NCC).
the institution shall be void.
If the prohibition is relative with respect to persons, time or place,
NOTE: The rule is, if the revocation is based on a false or illegal cause, it is such conditions is valid and must be complied with unless the
null and void (Art. 833) while institution of heir based on false cause as a testator renders it impossible for the heir to marry at all.
general rule does not affect the validity or efficacy of the institution (Art.
850, NCC). Disposition Captatoria
Reason for the general rule, that institution of heir, though based It isany disposition made upon the condition that the heir shall
on false cause, will not affect the validity or efficacy of the make some provision in his will in favor of the testator or of any
institution other person shall be void (Art. 875, NCC). Here, both the
condition and the disposition are void but the validity of the other
This is because testamentary dispositions are ultimately based on provisions, including the will itself, shall not be affected.
liberality. As such, the false cause is merely incidental to the
ultimate cause of making the disposition which is the testators Reason for the prohibition: Disposition captatoria is incompatible
liberality. Unless it be shown that the testator would not have with good faith and with the nature of testaments; it is immoral
made such institution if he had known the falsity of such cause, and contrary to the freedom to make wills.
which is the reason for the disposition (Art. 850, NCC).
Instances when a violation of the NCC would NOT invalidate the
Kinds of institution will
Institution of heir may be: 1. False cause in case of institution of heir because it is merely
1. With a condition considered not written unless from the will itself, it appears
2. With a term that the testator would not have made the institution if he
3. For a certain purpose or cause (modal Institution) had known the falsity of the cause, the institution shall be
void (Art. 850, NCC)
Conditional Institution of heirs 2. Charge, condition or substitution whatsoever upon the
legitimes shall be considered as not written (Art.872, NCC)
A condition is a future or uncertain event or a past event unknown 3. Defect in the fideicommisary substitution will not affect the
to the parties, upon which the performance of an obligation will (Art. 868, NCC)
depends. Conditions, terms and modes are not presumed, they
must be clearly expressed in the will. The condition must fairly Instances when a violation of the NCC would invalidate the will
appear from the language of the will. Otherwise, it shall be not just the provision
considered pure.
1. Joint wills (Art. 818, NCC)
Kinds of condition 2. False cause in case of revocation (Art. 833, NCC)
3. DispositionCaptatoria(Art. 875, NCC)
Resolutory Condition Suspensive Condition
The disposition becomes The effectivity of the Kinds of suspensive conditions
effective upon the death of disposition is suspended
the testator but is until the fulfillment of the 1. Purely Potestative the fulfillment of the condition depends
extinguished upon the condition. solely upon the will of the heir, devisee or legatee
happening of the condition.
GR: The condition must be fulfilled as soon as the heir learns
Effect of an impossible condition on the testamentary disposition of the testators death.
XPN: If the condition has already been fulfilled and it cannot
Impossible conditions and those contrary to law or good customs be fulfilled again and the condition was already complied
shall be considered as not imposed and shall in no manner with at the time he learns of the testators death.
prejudice the heir, even if the testator should otherwise provide 2. Casual The fulfillment of the condition depends solely on
(Art. 873, NCC). chance or on the will of a third person.

SUCCESSION
3. Mixed The fulfillment of the condition depends partly on A disposition with a suspensive term does not prevent the
chance and partly on the will of the heir, devisee, or legatee. instituted heir from acquiring his rights and transmitting them to
his heirs even before the arrival of the term.
Rules for casual and mixed conditions
Reason: The right of the heir instituted subject to a term is vested
GR: The condition may be fulfilled any time, either before or after at the time of the testator's death - he will just wait for the term to
the testators death unless the testator provides otherwise. expire. Before the arrival of the term, the property should be
XPN: delivered to the intestate heirs but a caucion muciana must be
a. If the condition is fulfilled at any time before the death of the posted by them (Art. 885 (2)).
testator, the condition is deemed fulfilled, unless the testator
provides otherwise. If the heir dies after the testator but before the term expires, he
b. If condition is already fulfilled at the time of the execution: transmits his rights to his own heirs because of the vested right.
1. Testator is unaware- The condition is deemed
complied with or fulfilled. Suspensive Term Suspensive Condition
2. Testator is aware- The right of the heir The instituted heir does not
i. If the condition can no longer be fulfilled again, it is instituted subject to a acquire any successional
deemed fulfilled. term is vested at the time right upon the death of the
ii. If the condition can still be fulfilled, there is a need of the testators death. testator as long as teh
to fulfill it again. Hence, if he dies after the condition is not yet fulfilled.
testator but before the Hence, upon the death of
Effect of a Suspensive Condition term expires, he can the instituted heir, prior to
transmit his rights to his the fulfillment of the
1. Heir, Devisee, or legatee acquires no rights until the condition own heirs. condition, no right is
is fulfilled. transmitted to his heirs.
2. If he dies before the condition is fulfilled, he transmits no
rights to his heirs, even though he survived the testator. Q: When the disposition is subject to a term, what should be
done by the instituted heirs or legal heirs so that they can enjoy
Reason: Capacity to succeed by the conditional heir must be possession of the property?
determined both at the time of the death of the testator and
at the time of the fulfillment of the condition. A: If the disposition is subject to a:
1. Suspensive term- The legal heirs can enjoy possession of
3. Once the condition is fulfilled, its effects retroact to the the property until the expiration of the period but they
moment of the death of the testator. must put up a bond (caucion muciana) in order to
4. If the suspensive condition is not fulfilled, the estate will be protect the right of the instituted heir.
placed under administration until: 2. Resolutory term- The legal heirs can enjoy possession of
a. The condition is fulfilled, in which case the estate should the property but when the term arrives, he must give it
be given to the instituted heir; to the legal heirs. The instituted heir does not have to
b. It becomes obvious that it cannot be fulfilled, in which file a bond.
case, the estate should be given to the intestate heirs.
Caucion Muciana
Q: Must there be actual or strict fulfillment of the condition, or is A caucion muciana is a security or bond required from the
constructive or substantial fulfillment sufficient? conditional heir in order to secure the rights of those who would
succeed to the property upon violation of the condition.
A:
1. Casual Condition- there must be actual or strict fulfillment. Instances when caucion muciana is needed
2. Potestative Condition- there can be constructive fulfillment, i.
e. Heir or legatee has done everything to perform the Suspensive term - the legal heir shall be considered as called
condition and yet for some reason or another it cannot be to the succession until the arrival of the period. But he shall
fulfilled. not enter into possession of the property until after having
3. Mixed Condition- given sufficient security, with the intervention of the
GR: There must be actual or strict fulfillment instituted heir (Art. 885 (2)).
Negative potestative condition - If the potestative condition
XPN:There can be constructive fulfillment when the heir has imposed upon the heir is negative, or consists in not doing or
done everything in his power to comply and still the condition not giving something, he shall comply by giving a security that
is not fulfilled because it was prevented by a third party he will not do or give that which has been prohibited by the
interes in its non-fulfillment. testator, and that in case of contravention he will return
whatever he may have received, together with its fruits and
Negative potestative condition consists in the non-performance of interests (Art. 879, NCC).
an act or not giving something (Art. 879, NCC). In this case, the heir
instituted has a right to receive his share in the inheritance upon Note: If the heirs do not post the required bond in case of a
the death of the testator and loses his right only when he violates suspensive term or a negative potestative condition, the estate shall
the condition. be placed under administration (Art. 880, NCC).
Institution of heir with a term Mode - That which has been left in this manner may be
claimed at once provided that the instituted heir or his heirs
A term is any future and certain event upon the arrival of which give security for compliance with the wishes of the testator
the validity or efficacy of a testamentary disposition subject to it, and for the return of anything he or they may receive,
depends. together with its fruits and interests, if he or they should
disregard this obligation (Art. 882, NCC).

CIVIL LAW
Modal Institution of heirs 3. The omitted compulsory heir must survive the testator, or in
case the compulsory heir predeceased the testator, there is a
A mode is an obligation imposed upon the heir to do or to give right of representation;
something 4. Nothing must have been received by the heir by gratuitous
title.
Modal institution statement of
1. Object of the institution, A spouse CANNOT be preterited. While a spouse is a compulsory
2. Application of the property left by the testator, heir, he/she is not in the direct line (ascending or descending).
3. Charge imposed by him.
NOTE: The surviving spouse shall only be entitled to recover his legitime but
Modal disposition the institution of heirs shall not be annulled.
A mode imposes an obligation upon the heir, devisee or legatee, There is total omission when the heir
but it does not affect the efficacy of his rights to the succession.
The mode obligates but does not suspend. 1. Receives nothing under the will whether as heir, legatee, or
devisee;
Mode distinguished from a condition NOTE: If a compulsory heir is given a share in the inheritance, no
matter how small, there is no preterition.
MODE CONDITION
Imposes an obligation The condition must However, if a compulsory heir gets less than his legitime, while this is
upon the heir, devisee happen or be fulfilled in not a case of preterition. In this case, he is entitled to a completion of
or legatee, but it does order for the heir to be his legitime under Art. 906.
not affect the efficacy entitled to succeed the
of his rights to the testator. 2. Has received nothing by way of donation inter vivos or
succession. propter nuptias; and
Obligates but does not Suspends but does not NOTE: If a compulsory heir has already received a donation from the
suspend obligate testator, there is no preterition.
In case of doubt, the institution should be considered
as modal not conditional. Reason: A donation to a compulsory heir is considered an advance of
the inheritance.
Q: The testatrix devised a parcel of land to Dr. Rabadilla. It was

3. The heir will receive nothing by way of intestate succession.
provided that Dr. Rabadilla will acquire the property subject to
(e.g. if the heir is not mentioned in the will nor a recipient of
the obligation, until he dies, to give Maria 100 piculs of sugar, and
a donation inter vivos and all of the estate is disposed by
in the event of non-fulfillment, the property will pass to the
will)
nearest descendants of the testatrix.
Effects of preterition
When Dr. Rabadilla died, Maria filed a complaint to reconvey the
land alleging that the heirs of Dr. Rabadilla violated the condition.
1. Preterition annuls the institution of heirs;
Is the institution of Dr. Rabadilla, a modal institution?
2. Devices and legacies are valid insofar as they are not
inofficious;
A: Yes, because it imposes a charge upon the instituted heir
3. If the omitted compulsory heir dies before the testator, the
without, however, affecting the efficacy of such institution.
institution shall be effectual, without prejudice to the right of
representation.
In a modal institution, the testator states the object of the
institution, the purpose or application of the property left by the
Example: X has two legitimate children: A and B. X makes a
testator, or the charge imposed by the testator upon the heir. A
will which results in the preterition of A. A predeceases X but
mode imposes an obligation upon the heir or legatee but it does
leaves a legitimate child A-1, who is himself completely
not affect the efficacy of his rights to the succession. The condition
omitted from the inheritance (A-1 being entitled to succeed X
suspends but does not obligate; and the mode obligates but does
by representation). There is preterition, not because A was
not suspend (Rabadilla v. CA, G.R. No. 113725, June 29, 2000).
preterited but because A-1 was preterited (Balane, 2010).In
such case, the descendant of A can now file an action to
PRETERITION
annul the institution of heirs.
Preteritionis the omission in testators will of one, some or all of
NOTE: The effect of annulling the institution of heirs will open intestacy
the compulsory heirs in the direct line, whether living at the time except for the legacies and devices which must be respected.
of execution of the will or born after the death of the testator (Art.
854, NCC) The omission of an illegitimate child in a will amounts to
preterition
Meaning of born after the death of the testator
Art. 854 does not distinguish. It is immaterial whether the heir
It simply means that the omitted heir must already be conceived omitted in the testators will is legitimate or illegitimate provided
at the time of death of the testator but was born only after the that he is a compulsory heir in the direct line.
death of the testator.
The omission of an adopted child in a will also amount to
Requisites of preterition preterition
1. There is a total omission in the inheritance; An adopted child is by legal fiction considered a compulsory heir in
2. The person omitted is a compulsory heir in the direct line; the direct line. Besides an adopted child is by law given all of the
successional rights of a legitimate child.

SUCCESSION
The decedents parents may also be be preterited. In the absence Reason: The nullification of such institution of the universal heirs
of legitimate compulsory heirs in the descending line, the parents without any other testamentary disposition in the will amounts to
and other ascendants step in as the compulsory heirs of the a declaration that nothing at all was written.
decedent.
Rights of the preterited heirs
Compulsory heirs in the direct line
They are entitled not only to their shares of the legitime but also to
1. Legitimate children and descendants with respect to their those of the free portion which was not expressly disposed of by
legitimate parents or ascendants; the testator by way of devises and legacies.
2. Legitimate parents of ascendants, with respect to their
legitimate children and descendants; PREDECEASE, INCAPACITY
3. Illegitimate children; & REPUDIATION
4. The father or mother of illegitimate children
Effect if the heir predeceases the testator
Preterition and Defective Disinheritance
If the heir who predeceases the testator is a voluntary heir, a
DEFECTIVE DISINHERITANCE PRETERITION devisee or a legatee, he shall transmit no right to his own heirs.
Distinctions Death prevents him from acquiring any rights.
A testamentary disposition Omission in the tetsators NOTE: The rule is absolute with respect to a voluntary heir and a devisee or
depriving any compulsory heir of will of the forced heirs or legatee.
his share in the legitime for a any of them
cause authorized by law Effect if the heir repudiated or renounced his inheritance
The institution remains valid, but The institution of heirs is
must be reduced insofar as the completely annulled. An heir who renounced his inheritance, whether as compulsory or
legitime has been impaired. Such Hence, the annulment is as voluntary heir, does not transmit any right to his own heirs.
nullity of institution is limited in toto, unless there are
only to that portion of which, in addition, testamentary NOTE: An heir who repudiated his inheritance, may represent the person
the disinherited heir has been dispositions in the form whose inheritance he has renounced (Art. 976, NCC). The reason for this is
unlawfully deprived of. of legacies and devices found in Art. 971 (2nd sentence): the representative does not succeed the
person represented but the one whom the person represented would have
which shall remain valid
succeeded.
so long as they are not
inofficious. RIGHT OF REPRESENTATION
The omission is intentional in By mere mistake or
which case the institution of heir inadvertence resulting in Right of representation is the right created by fiction of law, by
is not wholly void but only in so the fact that the virtue of which, the representative is raised to the place and
far as it prejudices the legitime compulsory heir receives degree of the person represented, and acquires the rights which
of the person deisinherited nothing at all. There is the latter would have if he were living or if he could have inherited.
total deprivation.
Similarities The representative thereby steps into the shoes of the person he
In both cases, the omitted heir and the imperfectly represents and succeeds, not from the latter, but from the person
disinherited heir get at least their legitime whose estate, the person represented would have succeeded.
Both legacies and devises remain valid insofar as the legitime
has not been impaired. The right of representation is allowed in compulsory succession
Both legacies and devises refer to compulsory heirs. with respect to the legitime in case the compulsory heir in the
descending line dies before the testator or incapacitated to
The mere fact that an heir was omitted in a will, does NOT succeed.
automatically equate to preterition
Heirs who repudiated their share MAY NOT be represented. A
One must distinguish whether the omission of a forced heir in the voluntary heir MAY NOT also be represented.
will of the testator is by mistake or in advertence or voluntary or
intentional: Rules in case of representation
a. If by mistake or inadvertence, there is true preterition
and total intestacy results. 1. It shall take place in cases of:
b. If the omission is intentional, the effect would be a Predecease
defective disinheritance covered by art 918 in which Incapacity
case the institution of heir is not wholly void but only in Disinheritance
so far as it prejudices the legitime of the person
disinherited 2. Representation applies only to those acquired by virtue of
provision of the law (legitime, intestate share, in case of
Effect of preterition on the will itself reserva troncal);
3. No representation in cases of repudiation;
GR: The effect of annulling the institution of heirs will be, 4. Representation only occurs in the direct descending line and
necessarily, the opening of a total intestacy except that proper never in the ascending;
legacies and devises must be respected. Here, the will is not 5. In the direct collateral line, the right of representation only
abrogated. takes place in favour of children of brothers or sisters, full or
half-blood
XPN: If the will contains a universal institution of heirs to the entire 6. The representation obtains degree by degree, and no jump is
inheritance of the testator, the will is totally abrogated. made.

CIVIL LAW
COMPLETION OF 1. If the testator has expressly provided the contrary
THE LEGITIME 2. If the charges or conditions are personally applicable
only to the heir instituted (Art 862, NCC).
Any compulsory heir to whom the testator has left by any title less
than the legitime belonging to him may demand that the same be 4. Fideicommissary Substitution (Indirect Substitution) It is a
fully satisfied (Art. 906, NCC). substitution by virtue of which the fiduciary or first heir
instituted is entrusted with the obligation to preserve and to
NOTE: Testamentary dispositions that impair or diminish the legitime of the transmit to a second heir the whole or part of the
compulsory heirs shall be reduced on petition of the same, insofar as they inheritance, shall be valid and shall take effect, provided such
may be inofficious or excessive (Art. 907, NCC).
substitution does not go beyond one degree from the heir
originally instituted, and provided, further, that the fiduciary
If the testator has instituted only one heir, and the institution is or first heir and the second heir are living at the time of the
limited to an aliquot part of the inheritance, legal succession takes death of the testator.
place with respect to the remainder of the estate.
Parties to a fideicommissary substitution and their respective
If the testator instituted several heirs as sole heirs but allotted only obligations
an aliquot part of the inheritance and together they do not cover
the whole inheritance, or the whole free portion, each part shall be
increased proportionately (Art. 852, NCC). PARTIES OBLIGATIONS
First heir or He has the obligation to preserve and
If each of the instituted heirs has been given an aliquot part of the fiduciary transmit the inheritance.
inheritance and the parts together exceed the whole inheritance, Second heir or He eventually receives the property
or the whole free portion, as the case may be, each part shall be fideicommissary from the fiduciary.
reduced proportionately (Art. 853, NCC) Testator None
SUBSTITUTION OF HEIRS Distinctions between direct substitution and indirect substitution
Substitution is the appointment of another heir so that he may INDIRECT SUBSTITUTION

enter into the inheritance in default of the heir originally instituted DIRECT SUBSTITUTION (Fideicommissary
(Art 857, NCC) Substitution)
The concept of substitution applies in cases if the heir or heirs The substitute receives the The substitute receives the
instituted should die before the testator or should not wish, or property in default of the first property after the heir first
should be incapacitated to accept the inheritance. heir instituted who does not instituted has enjoyed the
or cannot receive the same. same for some time.
Effect if the substitute dies ahead of the testator
There are various liberalities,
The substitute who dies ahead of the testator prevents him from one that is immediate and the
acquiring any rights, since there is no substitution to speak of. other or others eventual, but
There are two liberalities
with only one of them
which are both effective but
The substitution is extinguished effective (because ultimately
successively enjoyed.
either the instituted heir
1. By the nullity of the will; succeeds or it is the
2. By the annulment of the institution of heir; substitute).
3. By the death of the substitute before the testator; The first heir instituted is
The testator so directs the
4. When the substitute himself is incapacitated to succeed the obliged to preserve the
transmission of his property
testator; property for the benefit of one
that one or more heirs enjoy
5. When the substitute repudiates or renounces the inheritance. or more succeeding heirs and
and may freely dispose of the
his power of alienation is
same.
Different kinds of substitution curtailed or at least limited.
Has a further social effect as it
1. Simple/common takes place when the heir instituted: No other purpose than to limits the free circulation of
a. predeceases testator; prevent the succession of the property and for such reason
b. repudiates the inheritance; or intestate heirs. many laws prohibit the same
c. is incapacitated to succeed or limit it.
There is only one transfer. There are 2 transfers
NOTE: Simple substitution without a statement of the causes, to which No absolute disposition
it refers, shall comprise the 3 above mentioned situations unless the because it is subject to the
testator has otherwise provided. condition that he will preserve
Has the free and absolute
and transmit the same to the
2. Brief/compendious when two or more persons are disposition and control over
fideicommissary. And also,
substituted for one or for two or more heirs. the property.
there is control on the
property but there is a limit to
3. Reciprocal one heir designated as substitute for instituted the circulation of the property.
heir while latter is simultaneously instituted as substitute for The fideicommissary is limited
former. The identity of the substitute to relatives within one degree
does not matter. from the first heir or fiduciary:
GR: The substitute shall be subject to the same charges and parentchild.
conditions imposed upon the instituted heir.
XPN:

SUCCESSION
Elements/requisites of fideicommissary substitution May alienate his right of
usufruct but always subject
1. There must be a first heir or fiduciary; to his obligation of Cannot alienate anything
2. An absolute obligation is imposed upon the fiduciary to preserving and whatsoever
preserve and to transmit to a second heir the property at a transmitting the object to a
given time; second heir
3. There is a second heir who must be one degree from the first Fiduciary carries out not
heir; anothers wishes but his
4. The first and second heir must both be living and qualified at won and he enjoys the use Obligation is broader
the time of the death of the testator. and the fruits unlike a because it extends not only
trustee (he is like a to the properties but also
NOTE: That it should be imposed on the free portion and not on the legitime. usufructuary) (Perez v. to the fruits
Gachitorena,G.R. No. L-
Obligations of a fiduciary 31703, 1930)
1. To preserve the inheritance; The obligation to preserve and transmit must be given clearly and
2. To deliver the inheritance; expressly
3. To make an inventory of the inheritance. 1. by giving it a name fideicommissary substitution or
2. by imposing upon the first heir the absolute obligation
NOTE: The first heir receives property, either upon the death of the testator
to preserve and deliver the property to the second
or upon the fulfillment of any suspensive condition imposed by the will.
heir.
The first heir is almost like a usufructuary with right to enjoy the property.
Thus, like a usufructuary, he cannot alienate the property. The first heir is Q: If the testator provided that the 1st heir shall enjoy the
obliged to make an inventory but he is not required to furnish a bond. property during his life and that upon his death it shall pass to
another expressly designated by the testator, but without
Alienation of the property subject to the fideicommissary imposing the obligation to preserve the property, is there
substitution by the first heiris not valid. The fiduciary cannot fideicommissary substitution in this case?
alienate the property either by an act inter vivos or mortis causa.
He is bound to preserve the property and transmit it to the second A:None. There is no fideicommissary substitution but merely a
heir or fideicommissary. legacy of the residue, a kind of conditional institution.
NOTE: Meaning of "One degree"

a. If the fiduciary registers the property in his name without the
fideicommissary substitution, innocent parties are protected.
It refers to the degree of relationship; it means one generation.
However, if the property is unregistered, the buyer acquires only
the sellers right; i.e., subject to the fieocommissary substitution
As such, the fideicommissary can only be either a parent or child of
b. The fideicommissary is a sort of naked owner; ownership is the first heir (Palacios v. Ramirez, G.R. No. L-27952, 1982).
consolidated in him upon transmission of the property to him.
The relationship is always counted from the first heir. However,
Period of the fiduciarys tenure fideicommissary substitutions are also limited to one transmission.
Upon the lapse of time for the first heir, he transmits the property
1. Primary rule the period indicated by the testator to the second heir. In other words, there can only be one
2. Secondary rule if the testator did not indicate a period, then fideicommissary transmission such that after the first, there can be
the fiduciarys lifetime no second fideicommissary substitution.
Delivery of the property to the fideicommissary heir Both the first and second heir must be living and qualified at the
time of the death of the testator
GR: The fiduciary should deliver the property intact and
undiminished to the fideicommisary heir upon arrival of the period. The fideicommissary inherits not from the first heir but from the
testator, thus, the requirement that the fideicommissary be alive
XPN: The only deductions allowed, in the absence of a contrary or at least conceived at the time of the testators death.
provision in the will are:
1. Legitimate expenses The heirs to a fideicommissary substitution does not inherit
2. Credits successively
3. Improvements
Both the first heir and the fideicommissary inherit the property
The coverage of legitimate expenses and improvements are limited simultaneously, although the enjoyment and possession are
to necessary and useful expenses, but not to ornamental expenses. successive.
Distinctions between a fiduciary in fideicomissary substitution Effect if the fideicommissary predeceases the fiduciary
and a trustee in a trust
If the fideicommissary predeceases the fiduciary, but survives the
FIDUCIARY TRUSTEE testator, his rights pass to his own heirs.
May be designated either
Can only be designated expressly by acts inter vivos Remedy of the fideicommissary to protect himself against
expressly by means of a or mortis causa or alienation to an innocent third person
will impliedly by operation of
law If the first heir was able to register the property in his name, the
Has no usufructuary right fideicommissary should annotate his claim on the land on the title
Entitled to all of the rights to protect himself against any alienation in favor of innocent third
over the property which he
of a usufructuary parties.
holds in trust

CIVIL LAW
When the property passes to the fideicommissary, there is no more LEGITIME
prohibition to alienate.
Legitime
If the testator gives the usufruct to different persons successively,
the provisions on fideicommissary substitution also apply. It is that part of the testator's property which he cannot dispose of
because the law has reserved it for certain heirs who are,
Different dispositions related or analogous to fideicommissary therefore, called compulsory heirs (Art. 886, NCC).
substitutions which the law considers as void
It is mandatory on the part of the testator to reserve that part of
1. Fideicommissary substitutions which are not made in an the estate to the legitime.
express manner, either by giving them this name, or imposing
upon the fiduciary the absolute obligation to deliver the Determination of the legitime
property to a second heir
2. Provisions which contain a perpetual prohibition to alienate To determine the legitime, the value of the property left at the
and even a temporary one, beyond the limit fixed in Art. 863 death of the testator shall be considered, deducting all debts and
(20 years) charges, which shall not include those imposed in the will.
3. Those which impose upon the heir the charge of paying to
various persons successively, beyond the limit prescribed in To the net value of the hereditary estate, shall be added the value
Art. 863, a certain income or pension of all donations by the testator that are subject to collation, at the
4. Those which leave to a person the whole or part of the time he made them (Art. 908, NCC).
hereditary property in order that he may apply or invest the
same according to secret instructions communicated to him Kinds of legitime
by the testator (Art. 867, NCC)
1. Fixed If the amount (fractional part) does not vary or
The nullity of the fideicommissary substitution DOES NOT change regardless of whether there are concurring
prejudice the validity of the institution of the heirs first designated; compulsory heirs or not.
the fideicommissary clause shall simply be considered as not a. legitimate children and descendants (legitimate
written (Art. 868, NCC). childrens legitime is always )
b. legitimate parents and ascendants (When there are no
Q: Raymond, single, named his sister Ruffa in his will as a devisee legitimate children and descendants, Art. 887 (1))
of a parcel of land which he owned. The will imposed upon Ruffa 2. Variable If the amount changes or varies in accordance with
the obligation of preserving the land and transferring it, upon her whom the compulsory heir concur.
death, to her illegitimate daughter Scarlet who was then only one
year old. Raymond later died, leaving behind his widowed NOTE: Factors which affect the legitime:
mother, Ruffa and Scarlet. 1. Identity of the concurring compulsory heirs
a. Is the condition imposed upon Ruffa to preserve the 2. Number of concurring compulsory heirs.
property and to transmit it upon her death to Scarlet, valid?
b. If Scarlet predeceases Ruffa, who inherits the property? After the legitime has been determined in accordance with
c. If Ruffa predeceases Raymond, can Scarlet inherit the Articles 908 to 910, the reduction shall be made as follows
property directly from Raymond? (2008 Bar Question)
1. Donations shall be respected as long as the legitime can be
covered, reducing or annulling, if necessary, the devises or
A: legacies made in the will;
a) When an obligation to preserve and transmit the property to 2. The reduction of the devises or legacies shall be pro rata,
Scarlet was imposed on Ruffa, the testator Raymond without any distinction whatever.
intended to create a fideicommissary substitution where
Ruffa is the fiduciary and Scarlet is the fideicommisary. If the testator has directed that a certain devise or legacy be
Having complied with the requirements of Art. 863 and 869 paid in preference to others, it shall not suffer any reduction
(NCC), the fideicomissary substitution is valid. until the latter have been applied in full to the payment of
the legitime.
b) If Scarlet predeceases Ruffa, the latter as the formers heir, 3. If the devise or legacy consists of a usufruct or life annuity,
will be entitled to the property. But since it is also Ruffas whose value may be considered greater than that of the
death which will trigger the fideicommissary substitution, the disposable portion, the compulsory heirs may choose
practical effect of her death would be to allow her (Ruffas) between complying with the testamentary provision and
mother to inherit the property as Ruffas heir. The transfer of delivering to the devisee or legatee the part of the
the property from Scarlet to Ruffa (as Scarlets heir) is what inheritance of which the testator could freely dispose. (Art.
allows Ruffas mother to inherit the property which she 911)
would otherwise be disqualified to inherit under Article 992. 4. If the devise subject to reduction should consist of real
property, which cannot be conveniently divided, it shall go to
c) One requirement of a valid fideicommissary substitution is the devisee if the reduction does not absorb one-half of its
that both heirs should be alive at the time of the testators value; and in a contrary case, to the compulsory heirs; but the
death. Ruffa predeceasing Raymond means that the former and the latter shall reimburse each other in cash for
fideicommissory substitution is no longer valid. In this regard, what respectively belongs to them. (Art. 912) The devisee
the only way by which Scarlet can inherit the property who is entitled to a legitime may retain the entire property,
directly from Raymond is by legal succession. Her right to do provided its value does not exceed that of the disposable
so, however, is negated by (1) the presence of Raymond and portion and of the share pertaining to him as legitime.
Ruffas mother who necessarily excludes her; and (2) the
NOTE: If the heirs or devisees do not choose to avail themselves of the
provisions of Art. 992.
right granted by the preceding article, any heir or devisee who did not
have such right may exercise it; should the latter not make use of it,

SUCCESSION
the property shall be sold at public auction at the instance of any one Remedy(ies) available to a compulsory heir whose legitime has
of the interested parties (Art. 913, NCC). been impaired
The testator may devise and bequeath the free portion as he may
deem fit (Art. 914, NCC)
1. In case of preterition annulment of institution of heir and
reduction of devises and legacies
RULES ON LEGITIME 2. In case of partial impairment completion of legitime
3. In case of inofficious donation collation
The compulsory heirs are not obliged to accept their legitimes.
The renunciation or compromise of future legitime is prohibited
There is no obligation on the compulsory heirs to accept.
and considered null and void
GR: The testator cannot deprive the compulsory heirs of their
Scope of the prohibition
legitimes.
1. Any renunciation of future legitimes, whether for a valuable
XPN: When the testator validly disinhirited his heir and when there
consideration or not;
partition of the hereditary estate for a period not exceeding twenty
2. Any waiver of the right to ask for the reduction of an
(20) years, which prohibition can apply even to the legitime of the
innoficious donation;
compulsory heirs.
3. Compromise between the compulsory heirs themselves
during the lifetime of the testator.
NOTE: Only the legitime is reserved. The free portion may be disposed of by
will.
NOTE: The prohibition is not applicable in cases of:
1. Renunciations or compromises made after the death of the
Rules governing succession in the direct descending line testator;
2. Donations or remissions made by the testator to the
1. Rule of preference between lines descending line is compulsory heirs as advances of their legitime.
preferred over the ascending line
2. Rule of proximity nearer excludes the more remote Order of preference in reducing testamentary dispositions and
3. Right of representation, in case of predecease, incapacity and donations
disinheritance 1. Reduce pro rata the non-preferred legacies and devises
4. If all the legitimate children repudiate their legitime, the next (Art.911[2], NCC), and the testamentary dispositions (to heirs)
generation of legitimate descendants, succeed in their own (Art. 907, NCC). Among these legacies, devises, and
right. testamentary dispositions there is no preference.
Rules governing succession in the ascending line NOTE: preferred legacies and devisees are those directed by testator
to be preferred than the others
1. Rule of proximity nearer excludes the more remote
2. Division by line 2. Reduce pro rata the preferred legacies and devises (Art. 911,
3. Equal division within the line last par.)
3. Reduce the donations inter vivos according to the inverse
Limitations imposed on the testator regarding his rights of order of their dates (i.e., the oldest is the most preferred)
ownership (Art. 773, NCC)
The testator CANNOT make donations inter vivos which impinge NOTE: These reductions shall be to the extent required to complete
the legitimes, even if in the process the disposition is reduced to
upon the legitime or which are inofficious.
nothing
NOTE: The prohibition does not cover an onerous disposition (sale) because The order of preference is applicable when:
this involves an exchange of values. 1. The reduction is necessary to preserve the legitime of
compulsory heirs from impairment whether there are donations
Rules governing the donations made by the testator in favor of inter vivos or not; or
his children, legitimate and illegitimate, and strangers and those 2. Although, the legitime has been preserved by the testator
which are inofficious himself there are donations inter vivos.
1. Donations given to children shall be charged to their legitime. Effect of donations to the inheritance of an heir
2. Donations made to strangers shall be charged to that part of
the estate of which the testator could have disposed by his Donations inter vivos given to children shall be charged to their
last will. legitime, unless otherwise provided by the testator.
3. Insofar as they may be inofficious or may exceed the
disposable portion, they shall be reduced according to the Reason: Donations to the compulsory heirs are advances to the
rules established by this Code (Art. 909, NCC). legitime.
4. Donations which an illegitimate child may have received
during the lifetime of his father or mother, shall be charged NOTE: Donations inter vivos to strangers shall be charged to the free portion.
to his legitime. Should they exceed the portion that can be
Collation
freely disposed of, they shall be reduced in the manner
prescribed by this Code (Art. 910, NCC).
It is the process of adding the value of thing donated to the net
value of hereditary estate.
To collate is to bring back or return to the hereditary mass, in fact

or fiction, property which came from the estate of the decedent,
during his lifetime, but which the law considers as an advance from
the inheritance.

CIVIL LAW
Collation is applicable to both donations to compulsory heirs and
donations to strangers.
GR: Compulsory heirs are obliged to collate.
XPN:
1. When testator should have so expressly provided;
2. When compulsory heir repudiates his inheritance
Properties that are to be collated
Any property/right received by gratuitous title during

testators lifetime
All that may have been received from decedent during
his lifetime
All that their parents have brought to collation if alive
Properties not subject to collation
1. Absolutely no collation expenses for support, education

(elementary and secondary only), medical attendance, even
in extra-ordinary illness, apprenticeship, ordinary equipment
or customary gifts.
2. Generally not imputed to legitime:
a. Expenses incurred by parents in giving their children
professional, vocational, or other career unless the
parents so provide, or unless they impair the legitime.
b. Wedding gifts by parents and ascendants consisting of
jewelry, clothing and outfit except when they exceed
1/10 of the sum disposable by will.
NOTE: Only the value of the thing donated shall be brought to collation. This
value must be the value of the thing at the time of the donation.
Property left by will (like a legacy or devise) is not deemed subject

to collation if the testator has not otherwise provided, but the
legitime shall in any case remain unimpaired. This means that the
legacy or devise should be imputed to the free portion, not to the
legitime.

SUCCESSION
Steps in Determining the Legitime of Compulsory Heirs
Step 1: INVENTORY 1. Determination of the gross value of the estate at the time of
(Gross Value of Estate) the death of the testator
Step 2: DEDUCT 2. Determination of all the debts and charges which are
OBLIGATIONS chargeable against the estate
3. Determination of the net valueof the estate by deducting all

the debts and charges from the gross value of the estate
Step 3: Net Value
4. Collation or addition of all the value of all donations inter

Step 4: Collation vivos to the net value of the estate
1. Determination of the Net Hereditary Estate from the total

Net Hereditary Estate thus found
2. Imputation of all the value of donations inter vivos made to

compulsory heirs against their legitimes and of the value of
all donations inter vivos made to strangers against the
disposable free portion and restoration to the hereditary
estate if the donation is inofficious.
3. If the legitime is impaired, the following reductions shall be

made:
1. First, reduce pro rata non-preferred legacies and devices,
and the testamentary dispositions.
2. Second, reduce pro rata the preferred legacies and
devises
3. Third, reduce the donations inter vivos according to the
inverse order of their dates.
*** As to the remaining portion of the estate, it shall be

distributed to the devisees and legatees

CIVIL LAW
TABLES OF LEGITIMES
WHEN SURVIVING ALONE

of the hereditary estate (Free portion = )
Surviving spouse where the marriage was solemnized under articulo 1/3 of the hereditary estate (Free portion =2/3)
mortis and the deceased died within 3 months from the time of
marriage.
NOTE: The deceased was the spouse who was at the point of death at the time
of marriage (Tolentino, Civil Code, 1992 ed.)
Surviving spouse where the marriage was solemnized under articulo of the hereditary estate (Free portion = )
mortis and the deceased died within 3 months from the time of
marriage but the parties have been living as huband and wife for
more than 5 years prior to the marriage
PRIMARY HEIRS CONCUR WITH CONCURRING COMPULSORY HEIRS

One legitimate child and the surviving spouse Legitimate child = of the hereditary estate
Surviving spouse = of the hereditary estate
Free portion =
Two or more legitimate children and the surviving spouse Legitimate children = of the hereditary estate in equal portions
Surviving spouse = a share equal to that of each child
Free portion = whatever remains
One legitimate child and illegitimate children Legitimate child = of the hereditary estate (if there are several, they
shall divide the share in equal portions)
Illegitimate children = of the share of each legitimate child (if the
free portion is insufficient, the illegitimate children shall divide the
free portion equally among themselves)
One legitimate child, the surviving spouse, and illegitimate children Legitimate child = of the hereditary estate
Illegitimate children = of the share of each legitimate child
NOTE: The share of the surviving spouse shall have preference over those of the
illegitimate children whose share may suffer reduction pro rata because there is
no preference as among themselves.
Two or more legitimate children, surviving spouse, and illegitimate Legitimate children = of the hereditary estate in equal portions
children Surviving spouse = a share equal to that of each legitimate child
Illegitimate children = of the share of each legitimate child
NOTE: The share of the surviving spouse shall have preference over those of the
illegitimate children whose share may suffer reduction pro rata because there is
no preference as among themselves.
SECONDARY HEIRS CONCUR WITH COMPULSORY HEIRS

Legitimate parents and surviving spouse Legitimate parents = of the hereditary estate
Free portion =
Legitimate parents and illegitimate children Legitimate parents = of the hereditary estate
Illegitimate children = of the hereditary estate in equal shares
Free portion =
Legitimate parents, surviving spouse, and illegitimate children Legitimate parents = of the hereditary estate
Illegitimate children = of the hereditary estate in equal shares
Surviving spouse = 1/8 of the hereditary estate
Free portion = 1/8
Parents of the Illegitimate Decedent and children Parents = excluded
Children = if legitimate and of the share of each legitimate child if
illegitimate children
Parents of the Illegitimate Decedent and the surviving spouse Parents = of the hereditary estate
Free portion =
CONCURRENCE AMONG CONCURRING COMPULSORY HEIRS

Surviving spouse and illegitimate children Surviving spouse = 1/3 of the hereditary estate
Illegitimate children = 1/3 of the hereditary estate
(Rabuya, 2009)

2014 GOLDEN NOTES
242
SUCCESSION
COMPULSORY HEIRS AND VARIOUS COMBINATIONS any impediment to marry each other, or were so disqualified only
The following are compulsory heirs because either or both of them were below eighteen (18) years of
age, may be legitimated (Art. 177, FC as amended by R.A. 9858).
1. Legitimate children and descendants, with respect to their For purposes of succession, the opening of succession must
legitimate parents and ascendants; happen after the effectivity of R.A. 9858; otherwise, the child will
2. In default of the foregoing, legitimate parents and be considered as illegitimate.
ascendants, with respect to their legitimate children and
descendants; Rule regarding an illegitimate child
3. The widow or widower;
4. Acknowledged natural children, and natural children by legal He may become a primary compulsory heir of his illegitimate
fiction; parents only if they do not concur with legitimate children or
5. Other illegitimate children referred to in Article 287. descendants of his illegitimate parents.
NOTE: Compulsory heirs mentioned in Nos. 3, 4, and 5 are not excluded by If the illegitimate parents have legitimate children or descendants,
those in Nos. 1 and 2; neither do they exclude one another. the latter shall be the primary compulsory heirs and the illegitmate
child shall be considred merely as concurring compulsory heir.
In all cases of illegitimate children, their filiation must be duly proved.
NOTE: Under the Family Code, there is no more distinction between
The father or mother of illegitimate children of the three classes mentioned,
acknowledged natural children and illegitimate children. They are all
shall inherit from them in the manner and to the extent established by this
considered as illegitimate.
Code (Art. 887, NCC).
Compulsory heirs of a person who is illegitimate:
Classifications of compulsory heirs 1. Legitimate children and descendants;
2. Illegitimate children and descendants;
1. Primary compulsory heirs They are not excluded by the 3. In default of the foregoing, parents only;
presence of other compulsory heirs. Those who have 4. Surviving spouse.
precedence over and exclude other compulsory heirs. E.g.
legitimate children and / or decendants Parents and ascendants inherit in default of legitimate children
2. Secondary compulsory heirs Those who succeed only in and descendants. They are secondary compulsory heirs.
default of the primary compulsory heirs. E.g.legitimate
parents and/ or legitimate ascendants; illegitimate parents The presence of illegitimate children of the decedent DOES NOT
3. Concurring compulsory heirs Those who succeed together exclude parents and ascendants. Parents and ascendants concur
with the primary or secondary compulsory heirs. E.g. with the illegitimate children of the decedent. However, if the
Surviving spouse and illegitimate children and descendants. decedent is himself illegitimate, his illegitimate children exclude
the illegitimate parents and ascendants.
Compulsory heirs inherit either
A common law spouse CANNOT be a compulsory heir. There must
1. in their own right; or be valid marriage between the decedent and the surviving spouse.
2. by right of representation If the marriage is null and void, the surviving spouse cannot inherit.
An adopted child is a compulsory heir The heirs of the decedent can raise the issue of nullity of the
marriage in the same proceeding for the settlement of the estate
Legitimate children includes adopted children and legitimated to prevent the surviving spouse from inheriting. This is allowed
children. because a marriage that is null and void can be collaterally
attacked.
Under R.A. 8552 or the Domestic Adoption Law adopted children
have the same rights granted to the legitimate children. Adopted However, in case of voidable marriages, if the marriage is not
children, for all intents and purposes are considered as legitimate annulled before the decedent died, the surviving spouse can still
children. The relationship, however, does not extend to other inherit
relatives of the adopter, thus, disqualifying the adopted from
directly inheriting from the adopters ascendants. NOTE: Voidable marriages can only be attacked in a direct proceeding, i.e.
annulment proceeding.
Since the adopted child enjoys successional rights as a legitimate NOTE: The surviving spouse is not a compulsory heir of his/her parent-in-
child, then he excludes the adopters parents and ascendants. law. When the spouse has given a ground for legal separation, it is a
Formal or judicial adoption is necessary before the adopted child sufficient cause for disinheriting a spouse even without a decree of legal
can inherit from the adopter because adoption is a juridical act, a separation. If there is already a decree for legal separation then
proceeding in rem, which creates between two persons a disinheritance is superfluous for this in effect would be denying the guilty
relationship similar to that which results from legitimate paternity spouse of a right not possessed.
and filiation.
Without the benefit of formal (judicial) adoption, the adopted child RESERVA TRONCAL
is neither a compulsory nor a legal heir. Hence, he is not entitled to
inherit. Reserva troncal
Rule regarding legitimated children:
Prior to the marriage of the parents of the child, he is an The ascendant who inherits from his descendant any property
illegitimate child since he is born outside a valid marriage. which the latter may have acquired by gratuitous title from
Legitimation takes place upon the marriage of the childs parents, another ascendant, or a brother or sister, is obliged to reserve such
the marriage being valid or at least voidable, the child is property as he may have acquired by operation of law for the
automatically raised to the status of legitimacy, without need of benefit of relatives who are within the third degree and who
any additional act on the part of either the child or the parents. belong to the line from which said property came (Art. 891, NCC).
Children conceived and born outside of wedlock of parents who, at Purpose: To prevent persons who are outsiders to the family from
the time of the conception of the former, were not disqualified by acquiring, by chance or accident, property which otherwise would

CIVIL LAW
have remained with the said family. In short, to put back the A: Since the fathers legitime is only , he received the P600,000 in
property to the line from which it originally came. two capacities: P300,000 as a compulsory heir and which was
received therefore as a legitime or by operation of law and
NOTE: Other terms used to refer to reserva troncal P300,000 as a voluntary heir. According to the theory of reserva
1. Lineal minima, the reservable property is only P 100,000 on the theory
2. Familiar that half of the P200,000 received from the origin (mother in this
3. Extraordinaria
4. Semi-troncal
case) was given to the father as his legitime or by operation of law.
5. Pseudo-troncal Therefore, the reservable property is only P100,000 (Paras, 2008).
Requisites that must exist in order that a property may be NOTE: According to Manresa, in view of the silence of the law on the matter,
the principle of reserve minima should be followed. This seems also the
impressed with a reservable character opinion of Scaevola (Paras, 2008).
That the property was acquired by a descendant (called Parties in reserva troncal
praepositus or propositus) from an ascendant or from
a brother or sister by gratuitous title when the recipient 1. Origin
does not give anything in return;
That said descendant (praepositus) died without an The origin of the property must be an ascendant, brother or
issue; sister of the propositus.
That the same property (called reserva) is inherited by
another ascendant (called reservista) by operation of NOTE: The origin must be a legitimate relative because reserva troncal
law (either through intestate or compulsory succession) exists only in the legitimate family.
from the praepositus; and
That there are living relatives within the third degree The transmission from the origin to the propositus must be
counted from the praepositus and belonging to the by gratuitous title.
same line from where the property originally came
(called reservatarios) (Art. 891; Chua v. CFI of Negros The origin can alienate the property
Occidental, Branch V, 78 SCRA 412; Rabuya, 2009).
While the origin owns the property, there is no reserva yet,
Reserva troncal DOES NOT exist in an illegitimate or adoptive and therefore, he has the perfect right to dispose of it, in any
relationship way he wants, subject, however to the rule on inofficious
donations.
It only exists in the legitimate family (Centeno v. Centeno, 52 Phil.
322; id, p. 635). 2. Propositus
NOTE: In order that reserva will exist, all these persons should be The propositus must be a legitimate descendant or half-
legitimately related. Reserva troncal only exists in a legitimate family brother/sister of the origin of the property.
relation. Illegitimate and adoptive relationships, as well as those by affinity
are excluded. NOTE: To give rise to reserve troncal, the propositus must not have
any legitimate child; otherwise, the reservable property will be
Causes for the extinguishment of the reserve (DD LRR P) inherited by the latter
1. Death of the reservista The presence of illegitimate children of the propositus will not prevent
2. Death of all the relatives within the third degree prior to the his legitimate parents or ascendants from inheriting the reserved
death of the reservista property.
3. Accidental Loss of all the reservable properties
The propositus is the descendant whose death gives rise to the reserva
4. Renunciation or waiver by the reservatarios troncal, and from whom therefore the third degree is counted.
5. Registration under Act 496 without the reservable character
being annotated if it falls into the hands of a buyer in good The propositus can alienate the property
faith for value
6. By Prescription reservista seeks to acquire (30 years While propositus is still alive, there is no reserva yet,
immovable; 8 years- movable) therefore, he is the absolute owner of the property, with full
freedom to alienate or dispose or encumber.
Reserva minima distinguished from reserva maxima
NOTE: The propositus is referred to as the arbiter of the reserva.
RESERVA MINIMA RESERVA MAXIMA
3. Reservista
All of the properties which the
All of the properties which the
descendant had previously
descendant had previously The reservista is the ascendant who inherits from the
acquired by gratuitous title from
acquired by gratuitous title from propositus by operation of law. It is he who has the obligation
another ascendant or from a
another ascendant or from a to reserve.
brother or sister must be
brother or sister must be
considered as passing to the
included in the ascendants NOTE: The relationship between the reservista and the propositus
ascendant- reservista partly by must be legitimate.
legitime insofar as such legitime
operation of law and partly by
can contain.
force of the descendants will. If he inherited the property from the propositus, not by legal
succession or by virtue of legitime, there is no obligation to reserve.
Q: A son received from his mother P200,000 by virtue of a will.
The son had properties of his own amounting to P400,000. When The reservista owns the reservable property
the son died without issue, he left a will giving all his estate to his
father. How much is the reservable property? The reservista is an absolute or full owner, subject to a
resolutory condition. If the resolutory condition is fulfilled,
the reservistas ownership of the property is terminated.

SUCCESSION
Relatives within the third degree from the propositus
Resolutory condition: If at the time of the reservistas death,
there still exist relatives within the third degree 1. Parents;
(reservatarios) of the propositus and belonging to the line 2. Grandparents;
from which the property came. 3. Full and half blood brothers and sisters;
4. Great grandparents,
NOTE: The reservable property is not part of the estate of the 5. Nephews and nieces.
reservista.
Requisites for passing of title to the reservatarios
The reservista can alienate the property
1. Death of the reservista; and
Unlike in fideicommisary substitution where the fiduciary heir 2. The fact that the reservatarios survived the reservista.
cannot alienate the property because he is merely considered
a usufruct, the reservista can alienate the property being the The reservatario acquires the right over the reservable property
owner thereof but subject to the reservation. upon the death of the reservista, the reservatario nearest the
decedent propositus becomes, automatically and by operation of
GR: The reservista is required to furnish a bond, law, the absolute owner of the reservable property (Cano v.
security or mortgage to guarantee the safe delivery Director of Lands).
later on to the reservatarios of the properties
concerned, in the proper cases. There is right of representation in reserva troncal
XPN: The bond, security or mortgage is not needed There is representation in reserva troncal, but the representative
when the property has been registered or annotated in must also be within the third degree from the propositus
the certificate of title as subject to reserva troncal. (Florentino v. Florentino, 40 Phil. 480, 1990)
NOTE: Upon the reservistas death the ownership of the reserved
NOTE: The reservatarios inherit the property from the propositus, not from
properties is automatically vested to the reservatarios who are
the reservista.
existing. Hence, the reservista cannot dispose the reserved property
by will if there are reservatarios existing at the time of his death.
Reserva troncal is governed by the following rules on intestate succession:
(Applicable when there are concurring relatives within the third degree)
4. Reservatartios/Reservees 1. Proximity - The nearer excludes the farther
2. The direct line is preferred over the collateral line
The reservatarios are relatives within the third degree of the 3. The descending line is preferred over the ascending line
propositus, who belong to the same line from which the
property originally came, who will become the full owners of Rights of the reservatarios
the property the moment the reservista dies, because by such
death, the reserva is extinguished. 1. To ask for the inventory of all reservable property
2. The appraisal of all reservable movable property
NOTE: It is further required that the reservatario should be related by 3. The annotation in the registry of deeds of the reservable
blood not only from the prepositus but also to the other descendant, character of all reservable immovable property
or brother, or sister, from whom the property came. Only then can he 4. Constitution of the necessary mortgage
be considered as belonging to the line from which the property
came.

CIVIL LAW
OPERATION OF RESERVA TRONCAL
The origin of the property is the legitimate ascendant, brother or sister of the propositus
Upon death of the ORIGIN, his property is transmitted to the PROPOSITUS either by donation inter vivos or
mortis causa, as long as it is by gratuitous title.
ORIGIN
The PROPOSITUS is a legitimate descendant or half-brother/sister of the ORIGIN of the property.

To give rise to reserve troncal, the PROPOSITUS must not have any legitimate children, otherwise, the
reservable property will be inherited by the latter
The PROPOSITUS is the descendant whose death gives rise to the reserva troncal, and from whom the third
PROPOSITUS degree is counted.
The RESERVISTA is the ascendant who inherits from the PROPOSITUS by operation of law. It is he who has
the obligation to reserve.
The relationship between the RESERVISTA and the PROPOSITUS must be legitimate.
The RESERVISTA is an absolute or full owner, subject to a resolutory condition.
RESERVISTA Resolutory condition: If at the time of the RESERVISTASs death, there should still exist relatives within the
third degree (reservatarios) of the propositus and belonging to the line from which the property came.
The RESERVATARIO's are relatives within the third degree of the propositus, who belong to the same line
from which the property originally came, who will become the full owners of the property the moment the
reservista dies.
RESERVATARIO The reservatarios inherit the property from the PROPOSITUS, not from the RESERVISTA.
Upon the death of the RESERVISTA, the RESERVATARIO nearest the decedent PROPOSITUS becomes,
automatically and by operation of law, the absolute owner of the reservable property.
DISINHERITANCE
1. Made in a valid will
Disinheritance 2. Identity of the heir is clearly established
3. For a legal cause
Disinheritance is the process or act, thru a testamentary 4. Expressly made
disposition of depriving in a will any compulsory heir of his legitime 5. Cause stated in the will
for true and lawful cause. 6. Absolute or unconditional
7. Total
The only way in which a compulsory heir can be deprived of his 8. Cause must be true and if challenged by the heir, it must be
legitime is through valid disinheritance. proved to be true.
Disinheritance is not automatic NOTE: Proponent of disinheritance has the burden of proof.
There must be evidence presented to substantiate the Grounds for disinheritance

disinheritance and must be for a valid and sound cause.
1. Common causes for disinheritance of children or descendants,
Effect of disinheritance parents or ascendants, and spouse:
a. When the heir has been found guilty of an attempt
Total exclusion to the inheritance, meaning, loss of legitime, right against the life of the testator, his/her descendants or
to intestate succession, and of any disposition in a prior will. ascendants, and spouse, in case of children or parents.
b. When the heir by fraud, violence, intimidation, or undue
Disinheritance, however, is without prejudice to the right of influence causes the testator to make to make a will or
representation of the children and descendants of the person to change one already made.
disinherited. c. When the heir has accused the testator of a crime for
which the law prescribes imprisonment of six years or
But the disinherited parent shall not have the usufruct or more, if the accusation has been found groundless.
administration of the property which constitutes the legitime. d. Refusal without justifiable cause to support the testator
who disinherits such heir.
Note: Parents no longer enjoy the right of usufruct over the properties of
their children under the Family Code. 2. Peculiar Causes for Disinheritance
Requisites of a valid disinheritance a. Children and Descendants:

SUCCESSION
i. Conviction of a crime which carries with it a penalty LEGACIES AND DEVISES
of civil interdiction
ii. Maltreatment of the testator by word or deed by the Subject of legacies and devises
children or descendant
iii. When the children or descendant has been convicted Anything within the commerce of man or which is alienable can be
of adultery or concubinage with the spouse of the bequeathed or devised.
testator
iv. When the children or descendant leads a Persons that may be charged with legacies and devices
dishonorable or disgraceful life
b. Parents or Ascendants: 1. Any compulsory heir
i. When the parent or ascendant has been convicted of 2. Any voluntary heir
adultery or concubinage with the spouse of the 3. Any legatee or devisee
testator 4. The estate, represented by the executor or administrator
ii. When the parents have abandoned their children or (Jurado, p. 345)
induced their daughters to live a corrupt or immoral
life, or attempted against their virtue The testator can bequeath or devise a thing or property belonging
iii. Loss of parental authority for causes specified in the to someone else.
Code
iv. Attempt by one of the parents against the life of the It occurs when:
other, unless there has been reconciliation between 1. The testator thought that he owned it
them
c. Spouse: GR: A legacy or devise of a thing belonging to someone else
i. When the spouse has given cause for legal separation when the testator thought that he owned it is a void legacy or
ii. When the spouse has given grounds for the loss of devise because it is vitiated by mistake.
parental authority
XPN: If the testator acquires it after making his will.
Reconciliation
2. The testator knows that he does not own but ordered its
It exists when two persons who are at odds decide to set aside acquisition
their differences and to resume their relations. They need not go
back to their old relation. If the thing given as devise or legacy is not owned by the
testator at the time he made the will but he orders his estate
NOTE: A handshake is not reconciliation. It has to be something more. It to acquire it, it is a valid legacy or devise. The testator knew
must be clear and deliberate.
that he did not own it. There is no mistake.
In order to be effective, the testator must pardon the disinherited heir. The
pardon whether express or tacit, must refer specifically to the heir If the thing or property bequeathed or devised belonged to the
disinherited and to the acts he has committed, and must be accepted by legatee or devisee at the time the will was executed, the legacy or
such heir. devise is ineffective even if the legatee or devisee alienates the
thing after the will is made.
In disinheritance, reconciliation need not be in writing.
Suppose the legatee or devisee acquired the property after the
Effect of reconciliation on a persons right to disinherit will has been executed
1. If made before disinheritance right to disinherit is 1. If he acquired it by gratuitous title, then the legacy or devise
extinguished. is void.
2. If made after disinheritance disinheritance is set aside.
Reason: The purpose of the testator that the property would
There is right of representation in case of disinheritance go to the devisee or legatee has already been accomplished
with no expense to the legatee or devisee.
The causes of disinheritance are personal to the disinherited heir.
Hence, in case of valid disinheritance, only the disinherited heir is 2. If he acquired it by onerous title, the legacy or devise is valid
deprived of his right to the legitime. But the children or and the estate may be required to reimburse the amount.
descendants of the disinherited heir can take his place and
preserve the disinherited heirs to the legitime. Suppose the property bequeathed or devised has been pledged
or mortgaged
Effect of disinheritance without cause
GR: The pledge or mortgage must be paid by the estate.
Disinheritance without a specification of the cause, or for a cause
the truth of which, if contradicted, is not proved, or which is not XPN: If the testator provides otherwise. However, any other charge
one of those set forth in this Code, shall annul the institution of such as easements and usufruct, with which the thing bequeathed
heirs insofar as it may prejudice the person disinherited; but the is burdened, shall be respected by the legatee or devisee.
devises and legacies and other testamentary dispositions shall be
valid to such extent as will not impair the legitime. (Art. 918) A legacy of credittakes place when the testator bequeaths to
another a credit against a third person. In effect, it is a novation of
the credit by the subrogation of the legatee in the place of the
original creditor.
A legacy of remission is a testamentary disposition of a debt in

favor of the debtor. The legacy is valid only to the extent of the
amount of the credit existing at the time of the testator's death. In
effect, the debt is extinguished.
CIVIL LAW
A legacy or devise is NOT considered payment of a debt, if the For application of inheritance, the following are applied
testator has a standing indebtedness to the legatee or devisee. successively (ISRAI)
Because if it is, then it would be a useless legacy or devise since it
will really be paid. 1. Institution of an heir (Bequest, in case of legacies or devises)
2. Substitution, if proper
Order of payment of legacies and devises 3. Representation, if applicable
4. Accretion, if applicable
1. Remuneratory legacies or devises 5. Intestacy, if all of the above are not applicable
2. Legacies or devises declared by testator to be preferential
3. Legacies for support Legal orIntestate succession takes place when
4. Legacies for education
5. Legacies or devises of a specific determinate thing which 1. There is no will; the will is void, or the will is revoked;
forms part of the estate 2. The will does not dispose all the property of the testator
6. All others pro rata (partial intestacy);
3. The suspensive condition attached to the inheritance is not
NOTE: The order of preference abovementioned is applicable when: fulfilled;
1. There are no compulsory heirs and the entire estate is distributed by 4. The heir predeceased the testator or repudiates the
the testator as legacy/devise; or
inheritance and no substitution and no right of accretion take
2. There are compulsory heirs but their legitime has already been
provided for by the testator and there are no donations inter vivos.
place.
5. The heir instituted is incapacitated to succeed.
Distinction between Art. 911 and Art. 950
NOTE: The enumeration is not exclusive; there are other causes for intestacy
which are not included in the enumeration.
Order of preference under Order of preference under Art. E.g.
Art. 911 950 1. Preterition;
2. Arrival of the resolutory term or period;
LDPO: 1. Remuneratory L/D; 3. Fulfillment of a resolutory condition attached to the inheritance;
1. Legitime of compulsory 2. Preferential L/D; 4. Non-compliance or impossibility of complying with the will of
heirs; 3. Legacy for support; the testator.
2. Donations inter vivos; 4. Legacy for education;
3. Preferential legacies or 5. L/D of a specific, determinate Rules on exclusion and concurrence in intestate succession
devises; thing which forms a part of
4. All Other legacies or the estate; 1. Legitimate children
devises pro rata 6. All others pro rata a. Exclude parents, collaterals and State
b. Concur with surviving spouse and illegitimate children
NOTE: When the question of reduction is between and among legatees and c. Are excluded by no one
devisees themselves, Art. 950 governs; but when there is a conflict between
compulsory heirs and legatees/devisees, Art. 911 governs. 2. Illegitimate children
a. Exclude illegitimate parents, collaterals and State
Grounds for the revocation of legacy or devise b. Concur with surviving spouse, legitimate children, and
legitimate parents
1. Transformation of the thing in such a manner that it does not c. Are excluded by no one
retain either the form or the denomination it had.
3. Legitimate parents
2. Alienation of the thing bequeathed. a. Exclude collaterals and the State
b. Concur with illegitimate children and surviving spouse
GR: The alienation of the property revokes the legacy or c. Are excluded by legitimate children
devise notwithstanding the nullity of the transaction.
However, if the nullity is based on vitiated consent, the legacy 4. Illegitimate parents
or devise is not revoked because there was no intention to a. Exclude collaterals and State
revoke (Fernandez v. Dimagiba, G.R. No. L-23638, 1967). b. Concur with surviving spouse
c. Are excluded by legitimate children and illegitimate
XPN: If the sale is pacto de retro and the testator reacquired children
it during his lifetime.
5. Surviving spouse
3. Total loss of the thing bequeathed. a. Excludes collaterals other than brothers, sister, nephews
and nieces, and State
The loss of the thing bequeathed must not be attributed to b. Concurs with legitimate children, illegitimate children,
the heirs. legitimate parents, illegitimate parents, brothers, sisters,
nephews and nieces
4. If the legacy is a credit against a third person or the remission c. Is excluded by no one
of a debt, and the testator, subsequent to the making of the
will, brings an action against the debtor for payment. 6. Brothers and Sister, nephews and nieces
a. Exclude all other collaterals and the State
LEGAL OR INTESTATE SUCCESSION b. Concur with surviving spouse
c. Are excluded by legitimate children, illegitimate children,
Legal or intestate succession is that which is effected by operation legitimate parents and illegitimate parents
of law in default of a will. It is legal because it takes place by
operation of law; it is intestate because it takes place in the 7. Other collaterals
absence or in default of a last will of the decedent. a. Exclude collaterals in remoter degrees and the State
b. Concur with collaterals in the same degree

SUCCESSION
c. Are excluded by legitimate children, illegitimate children, TABLE OF INTESTATE SHARES
legitimate parents, illegitimate parents, surviving spouse,
brothers and sisters, and nephews and nieces Legitimate Children alone The whole estate divided equally
Legitimate children and The whole estate, each illegitimate
8. State Illegitimate children child getting share of one
a. Excludes no one legitimate child
b. Concurs with no one Legitimate children and The whole estate, divided equally
c. Is excluded by everyone(Balane, 2010) surviving spouse (the surviving spouse counted as
one legitimate child)
ORDER OF INTESTATE SUCCESSION
Legitimate Children, The whole estate, the surviving
surviving spouse and spouse being counted as one
Order of preference between lines in legal or intestate succession
illegitimate children legitimate child and each
illegitimate child getting share of
First, succession takes place in the direct descending line;
one legitimate child
Second, in the direct ascending line;
Legitimate parents alone The whole estate, divided equally
Finally, in the collateral line.
Legitimate ascendants The whole estate, observing in
(other than parents) alone proper cases, the rule of division
Order of intestate succession to a legitimate child
by line
In general, and without prejudice to the concurrent right of other Legitimate parents and Legitimate parents = of the
heirs in proper cases, the order of intestate succession to a illegitimate children estate
legitimate child is as follows: Illegitimate children = of the
i. legitimate children and descendants; estate
ii. legitimate parents and ascendants; Legitimate parents and Legitimate parents = of the
iii. illegitimate children; surviving spouse estate
iv. the surviving spouse; Surviving spouse = of the estate
v. collaterals up to the fifth degree; and Legitimate parents, surviving Legitimate parents = of the
vi. State (Rabuya, 2009) spouse and illegitimate estate
children Surviving spouse = of the estate
Order of intestate succession to an illegitimate child Illegitimate children = of the
estate
1. The legitimate children and descendants of a person who is Illegitimate children alone The whole estate, divided equally
an illegitimate child are preferred over other intestate heirs, Illegitimate children and Illegitimate children = of the
without prejudice to the right of concurrence of illegitimate surviving spouse estate
children and the surviving spouse. Surviving spouse = of the estate
2. In the absence of legitimate children and descendants, the Surviving spouse alone The whole estate
illegitimate children (of the illegitimate child) and their Surviving spouse and No article governing, but Art. 997
descendants succeed to the entire estate, without prejudice illegitimate parents may be applied by analogy, thus:
to the concurrent right of the surviving spouse. Surviving spouse = of the estate
3. In the absence of children and descendants, whether Illegitimate parents = of the
legitimate or illegitimate, the third in the order of succession estate
to the estate of the illegitimate child is his illegitimate Surviving spouse and Surviving spouse = of the estate
parents. If both parents survive and are entitled to succeed, legitimate brothers and Legitimate brothers, sisters,
they divide the estate share and share alike. Although the law sisters, nephews and nieces nephews, nieces = of the estate
is silent, if the surviving spouse of the illegitimate child (the nephews and nieces inheriting
concurs with the illegitimate parents, the surviving spouse by representation in proper cases)
shall be entitled to one-half of the estate while the Surviving spouse and Surviving spouse = of the estate
illegitimate parents get the other half. illegitimate brothers and Illegitimate brothers, sisters,
sisters, nephews and nieces nephews and nieces = of the
NOTE: In the ascending line, only the illegitimate parents are entitled estate (the nephews and nieces
to inherit from the illegitimate child; the other illegitimate
inheriting by representation in
descendants are not so entitled.
proper cases)
4. In default of children or descendants, legitimate or
NOTE: When the law speaks of brothers
illegitimate, and illegitimate parents, the surviving spouse
and sisters, nephews and nieces as legal
shall inherit the entire estate. But if the surviving spouse heirs of an illegitimate child, it refers to
should survive with brothers and sisters, nephews and nieces, illegitimate brothers and sisters as well
the surviving spouse shall inherit one-half of the estate, and as to the children, whether legitimate
the latter the other half. The brothers and sisters must be by or illegitimate, of such brothers and
illegitimate filiation, otherwise, the Iron Curtain Rule shall sisters (Manuel v. Ferrer, 247 SCRA 476)
apply. Illegitimate parents alone The whole estate
Illegitimate parents and Illegitimate parents = excluded
5. Although the law is silent, illegitimate brothers and sisters children of any kind Children
who survive alone shall get the entire inheritance. The a. Child alone (legitimate or
legitimate children of the illegitimate parents are not entitled illegitimate) = whole estate
to inherit from the illegitimate child by virtue of Article 992 of b. Legitimate and illegitimate
the NCC. children = each illegitimate gets
6. The State (id., pp. 691-692). share of one legitimate child

CIVIL LAW
Effect of representation
Legitimate brothers and The whole estate, with a
sister alone brother/sister of the half-blood Whenever there is succession by representation, the division of the
inheriting the share of a estate shall be made per stirpes, in such manner that the
brother/sister of the full blood representative or representatives shall not inherit more than what
Legitimate brothers and The whole estate, observing the the person they represent would inherit, if he were living or could
sisters, nephews and nieces 2:1 proportion of full and half inherit (Art. 974, NCC).
blood fraternity and the nephews
and nieces inheriting by NOTE: Per stirpes means inheritance by group, all those within the group
inheriting in equal shares.
representation in the proper cases
Nephews and nieces with Uncles and Aunts = excluded
The right of representation ariseeither because of
Uncles and aunts Nephews and nieces = whole
estate per capita, but observing
1. Predecease
the 2:1 proportion for the full and
2. Incapacity
half blood
3. Disinheritance
Illegitimate brothers and The whole estate, observing the
sisters alone 2:1 proportion of full and half The right is NOT available
blood fraternity
Illegitimate brothers, sisters, No article governing, but Arts. 1. As to compulsory heirs: In case of repudiation, the one who
nephews and nieces 1005 and 1008 may be applied by repudiates his inheritance cannot be represented. Their own
analogy, hence, they acquire the heirs inherit in their own right.
whole estate 2. As to voluntary heirs: Voluntary heirs, legatees and devisees
Nephews and nieces alone The whole estate per capita, but who either:
observing the 2:1 proportion for a. Predecease the testator, or
the full and half blood b. Renounce the inheritance cannot be represented by
Other collaterals The whole estate, per capita, the their own heirs, with respect to their supposed
nearer in degree excluding the inheritance.
more remote
State The whole estate The representative does NOT inherit from the person represented
Assignment and disposition In representation, the representative does not inherit from the
person represented but from the decedent.
1. If decedent was a resident of
the Philippines at any time: The right of representation take place in the direct descending
a. Personal property to line, never in the ascending.
municipality of last residence
b. Real property where NOTE: The representative himself must be capable of succeeding the
situated decedent.
2. If decedent was never a resident An illegitimate child can represent his father, provided that the father was
also illegitimate.
of the Philippines
Personal and real property
The right of representation also applies in the collateral line, but
where respectively situated
it takes place only in favor of children of brothers or sisters,
whether full or half blood and only if they concur with at least one
How property is to be used:
uncle or aunt.
1. For the benefit of public
NOTE: This rule applies only when the decedent does not have descendants.
educational and charitable
institutions in the respective
An illegitimate sibling of the decedent can be represented. An
municipalities/cities
illegitimate brother or sister of the deceased can be represented by
his children, without prejudice to the application of the Iron
2. Alternatively, at the instance of
Curtain Rule (Tolentino, p. 451).
an interested party, or motu
propio, court may order creation
The right of representation does NOT apply to adopted children.
of a permanent trust for the
The right of representation cannot be invoked by adopted children
benefit of the institutions because they cannot represent their adopting parents to the
concerned
inheritance of the latters parents.
RIGHT OF REPRESENTATION Reason: The law does not create any relationship between the
adopted child and the relatives of the adopting parents, not even
Right of representation to the biological or legitimate children of the adopting parents.
Itis a right created by fiction of law where the representative is NOTE: Under R.A. 8552 or the Domestic Adoption Law, the adopted child
raised to the place and degree of the person represented, and and the adopting parents have reciprocal successional rights.
acquires the rights which the latter would have if he were living or
could have inherited.

SUCCESSION
Rule on equal division of lines
GR: Intestate heirs equal in degree inherit in equal shares.
XPN:
1. In the ascending line, the rule of division by line is to
the maternal line and to the paternal line, and within
each line, the division is per capita.
2. In the collateral line, the full-blood brothers/sisters will
get double that of the half-blood.
3. The division in representation, where division is per
stirpes the representative divide only the share
pertaining to the person represented.
NOTE: Compulsory heirs shall, in no case, inherit ab intesto less than their
legitime as provided in testamentary succession.
IRON CURTAIN RULE
Iron-curtain rule
Art. 992 of the Civil Code provides that illegitimate children cannot
inherit ab intestato from the legitimate children and relatives of his
mother or father. Legitimate children and relatives cannot inherit
in the same way from the illegitimate child.
NOTE: The iron curtain rule only applies in intestate succession.
There is a barrier recognized by law between the legitimate relatives and the
illegitimate child so that one cannot inherit from the other.
Application of iron curtain rule and right of representation

distinguished
IRON CURTAIN RULE RIGHT OF REPRESENTATION

Prohibits absolutely a
succession ab intestato
between the illegitimate child Right created by fiction of law
and the legitimate children where the representative is
and relatives of the father or raised to the place and degree
mother of said illegitimate of the person represented, and
child. acquires the rights which the
latter would have if he were
NOTE: Iron curtain rule imposes a living or could have inherited.
limitation on right of
representation.
Applies only in intestate Applies to both intestate and
succession testate succession
Determining factor: who died first? Is it the parent of the
illegitimate child or is it the legitimate relative or child of his
parent?
Applies if the one who died
Applies if the one who died first is the legitimate parent or
first is the illegitimates parent. child of the illegitimates
parent.
Reason: illegitimate will be
representing his parent Reason: illegitimate inherits
because of the predecease, from his parents estate which
the bar imposed by the iron includes his parents
curtain rule is rendered inheritance from said
operative to prevent such. legitimate relative or child who
died.

CIVIL LAW
Right of Representation and Iron Curtain Rule
(D)
If the child to be represented is If the child to be represented is
LEGITIMATE only legitimate children/ ILLEGITIMATE both legit & illegit
descendants can represent him children/ descendants can represent him
Legit X Illegit Y
Predeceased D Predeceased D
legit illegit legit illegit

(X1) (X2) (Y2) (Y1)
Iron Curtain Rule applies
Since X and Y both predeceased D, only X1 can represent X. X2 cannot by virtue of the iron curtain
rule.Both Y1 and Y2 can represent Y

SUCCESSION
PROVISIONS COMMON TO TESTATE AND INTESTATE SUCCESSION 2. There must be a vacancy in the inheritance, legacy or
devise as a result of predecease, incapacity or repudiation
RIGHT OF ACCRETION
In testamentary succession, accretion takes place in case of
Accretion
1. Predecease
Accretion is a right by virtue of which, when two or more persons 2. Incapacity
are called to the same inheritance, devise or legacy, the part 3. Renunciation
assigned to the one who renounces or cannot receive his share, or 4. Non-fulfillment of suspensive condition imposed upon
who died before the testator, is added or incorporated to that of instituted heir
his co-heir, co-devisees, or co-legatees. 5. Ineffective testamentary disposition
Basis: Accretion is a right based on the presumed will of the In intestate succession, accretion takes place in case of
deceased that he prefers to give certain properties to certain
individuals rather than to his legal heirs. Accretion is preferred over 1. Predecease of legal heir
intestacy. 2. Incapacity of legal heir
3. Repudiation by legal heir
Requisites of accretion
NOTE: Accretion takes place only if there is no representation. In
1. Two or more persons must have been called in the renunciation, there is always accretion.
testators will to the same inheritance, legacy or devise, or
to the same portion thereof, pro indiviso Reason: No representation in renunciation.
Substitution, representation and accretion in testate and intestate succession distinguished:
TESTAMENTARY SUCCESSION INTESTATE SUCCESSION

With respect to LEGITIME in case of predecease, incapacity and In case of predecease and incapacity
disinheritance
1. If the right of representation takes place, then the 1. If the right of representation takes place, then the
representative succeeds to the vacant portion. representative succeeds to the vacant portion.
2. If representation is not available, then the co-heirs of the same NOTE: Representation takes place in case of predecease and
degree shall succeed to it in their own right and not by accretion incapacity with respect to inheritance conferred by law. Hence,
since there is no accretion with respect to the legitime it takes place in legal or intestate succession.
3. In default of the above, the vacant portion shall go to the other 2. If representation is not available, then the vacant
secondary and/or other compulsory heirs portion shall go to the co-heirs in their own right
Note: Substitution cannot take place with respect to legitime 3. In default thereof, then the vacant share shall go to the
heirs in the next order of intestacy
With respect to LEGITIME in case of repudiation In case of repudiation
1. The other co-heirs shall succeed to it in their own right and not The vacant portion shall go to the other co-heirs by right of
by right of accretion since there is no accretion with respect to accretion. In legal succession, the share of the person who
legitime repudiates the inheritance always accrue to his co-heirs
2. In default thereof, the vacant portion shall go to the other In default thereof, the vacant share shall go to heirs of next degree
secondary and/or compulsory heirs in their own right
NOTE: Representation does not take place in repudiation. In default thereof, it shall go to the heirs in the next order of
intestacy
NOTE: Substitution cannot take place with respect to legitime
With respect to the FREE PORTION in case of predecease, incapacity or

renunciation
1. Substitution shall take place if provided for by the testator
2. If no substitution is provided, the vacant share shall go to the co-

heir by right of accretion if the requisites are present and the
testator has not provided to the contrary
3. If the requisites of accretion are not present or when the

testator provides that no accretion shall take place, the vacant
portion shall pass to the legal heirs if no substitute has been
designated
NOTE: In testamentary succession, representation takes place only with respect to the
legitime; it does not take place with respect to what is voluntarily given by will

CIVIL LAW
CAPACITY TO SUCCEED BY WILL OR INTESTACY

6. Individuals, associations and corporations not permitted by
PERSONS INCAPABLE OF SUCCEEDING law to inherit.
Absolute incapacity to succeed means that the person is Requisites for a priest to be disqualified from inheriting
incapacitated to succeed in any form, whether by testate or
intestate succession. 1. The will was made during the last illness of the testator;
2. The spiritual ministration must have been extended during
The following are absolutely incapacitated to succeed the last illness;
3. The will was executed during or after the spiritual
1. Those not living at the time of death of the testator ministration.
2. Those who cannot be identified (Art. 845, NCC).
3. Those who are not permitted by law to inherit (Art. 1027, The following are covered by this disqualification to inherit
NCC) (PMRC)
Determination of the capacity to succeed 1. Priest who heard the confession of the testator during his last
illness;
GR: In order to judge the capacity of the heir, devisee, or legatee, 2. Minister of the gospel who extended spiritual aid to him
his qualification at the time of the death of the decedent shall be during the same period;
the criterion. 3. Relatives of such priest or minister of the gospel within the
fourth degree; or
XPN: If the institution, devise or legacy should be conditional 4. The Church, order, chapter, community, organization, or
(suspensive condition), the capacity is to be determined not only at institution to which such priest or minister may belong;
the time of the death of the decedent but also at the time of the
fulfillment of the condition. Q: If the confession was made before the will was made, can the
priest inherit upon the death of the sick person, if:
The governing law in determining the capacity to succeed of the 1. The priest is the son of the sick person?
heir, devisee, legatee is the law of the nation of the decedent. 2. The priest was the sick persons brother?
RELATIVE INCAPACITY TO SUCCEED A:

1. Yes. He can get the legitime.
Relative incapacity to succeed means the person is incapacitated
NOTE: A priest is incapacitated to succeed when the confession is
to succeed because of some special relation to the testator made prior to or simultaneously with the making of a will.
Grounds for relative incapacity to succeed (UMA) The disqualification applies only to testamentary dispositions.
1. Undue influence or interest (Art. 1027, NCC) 2. Yes. He can inherit by intestacy.
2. Morality or public policy (Art. 739, NCC)
3. Acts of unworthiness (Art. 1032, NCC) NOTE: Despite this apparent restriction to Christian ministers, this
applies to all spiritual ministers, e.g., Buddhist monks.
The following are incapacitated to succeed based on undue
influence or interest (PRG-WPI) Reason: It is conclusively presumed that the spiritual minister
used his moral influence to induce or influence the sick
1. The Priest who heard the confession of the testator during his person to make a testamentary disposition in his favor.
last illness, or the minister of the gospel who extended
spiritual aid to him during the same period; Q: When is a guardian disqualified from inheriting by testate
succession?
2. The Relatives of such priest or minister of the gospel within
the fourth degree, the church, order, chapter, community, A:
organization, or institution to which such priest or minister GR: The disqualification applies when the disposition is made
may belong; before the approval of final accounts or lifting of guardianship.
3. A Guardian with respect to testamentary dispositions given XPN: It does not apply even when the disposition is made after the
by a ward in his favor before the final accounts of the guardianship began or before it is terminated when the guardian is
guardianship have been approved, even if the testator should an: ADBSS
die after the approval thereof; nevertheless, any provision 1. Ascendant
made by the ward in favor of the guardian when the latter is 2. Descendant
his ascendants, descendant, brother, sister, or spouse, shall 3. Brother
be valid; 4. Sister
5. Spouse
4. Any attesting Witness to the execution of a will, the spouse,
parents, or children, or any one claiming under such witness, The following are covered by the disqualification on attesting
spouse, parents, or children; witnesses
NOTE: Numbers 1 to 4 do not apply to legitimes. 1. Attesting witness to the execution of a will;
2. The attesting witness:
5. Any Physician, surgeon, nurse, health officer or druggist who a. spouse
took care of the testator during his last illness; b. parents
c. children
NOTE: Number 5 is an absolute disqualification.
UNIVERSITY OF SANTO TOMAS 254

2014 GOLDEN NOTES
SUCCESSION
a. Any one claiming under such witness, spouse, parents, or
children; UNWORTHINESS vs. DISINHERITANCE
NOTE: If, notwithstanding the disqualified witness, the number of witnesses Unworthiness distinguished from Disinheritance
is sufficient, the former is not disqualified.
DISINHERITANCE UNWORTHINESS
Requisites for the disqualification of physician to apply
Exclusion from
the entire
1. The will was made during the last illness
Effects on the inheritance.
2. The sick person must have been taken cared of during his last Deprivation of a compulsory
inheritance However,
illness heir of his legitime.
donations inter
3. Medical attendance was made
vivos are not
4. The will was executed during or after he was being taken care
affected.
of
Reconciliation between the If the testator
offender and the offended pardons the act
The disqualification applies to the following (PSN-HD)
Effects of party deprives the latter of of unworthiness,
pardon or the right to disinherit, and the cause of
1. Physician;
reconciliation renders ineffectual any unworthiness
2. Surgeon;
disinheritance that may have shall be without
3. Nurse;
been made. effect.
4. Health officer; or
5. Druggist Manner of
reconciliation Express or implied
The following are incapacitated to succeed based on morality or or pardon
public policy (ACO) There are grounds for disinheritance which are
Grounds also causes for incapacity by reason of
1. Persons guilty of Adultery or concubinage with the testator at unworthiness.
the time of the making of the will Effect of
2. Persons guilty of the same Criminal offense, in consideration subsequent
thereof reconciliation
3. A public officer or his wife, descendants and ascendants, by if
reason of his Office (Art. 1028 in relation to Art. 739, NCC) disinheritance
The moment the testator uses one of the causes
has already
for unworthiness as a ground for disinheritance,
The following are incapacitated to succeed by reason of been made
he thereby submits it to the rule on
unworthiness (P-CAV-AFP-F) on any of the
disinheritance (Rabuya, 2009).
grounds
1. Parents who have abandoned their children or induced their which are
daughters to lead a corrupt or immoral life, or attempted also causes
against their virtues for
2. Persons Convicted of an attempt against the life of the unworthiness
testator, his or her spouse, descendants or ascendants
3. Persons who Accused the testator of a crime for which the ACCEPTANCE AND REPUDIATION OF THE INHERITANCE
law prescribes imprisonment for six years or more, if the
accusation has been found to be groundless Three principal characteristics of acceptance and repudiation
4. Heir of full age who, having knowledge of the Violent death
of the testator, should fail to report it to an officer of the law 1. It is voluntary and free
within a month unless the authorities have already taken 2. It is retroactive
action. 3. Once made, it is irrevocable
NOTE: This prohibition shall not apply to cases wherein, Requisites of acceptance and repudiation
according to law, there is no obligation to make an accusation.
1. Certainty of the death of the decedent
5. Person convicted of Adultery or concubinage with the spouse 2. Certainty of the right of inheritance
of the testator
6. Person who by Fraud, violence, intimidation, or undue Inheritance may be accepted either by
influence should cause the testator to make a will or to
change one already made 1. Express acceptance through a public or private instrument
7. Person who by the same means Prevents another from 2. Tacit acceptance through acts by which the intention to
making a will, or from revoking one already made, or who accept is necessarily implied or which one would have no
supplants, conceals, or alters the latter's will right to do except in the capacity of an heir.
8. Person who Falsifies or forges a supposed will of the
decedent (Art. 1032, NCC) Inheritance is deemed accepted
NOTE: Grounds 1, 2, 3, 5 and 6 are the same grounds as in disinheritance. 1. When the heir sells, donates, or assigns his rights
Numbers 6, 7 and 8 cover six (6) acts which relate to wills: 2. When the heir renounces it for the benefit of one or more
1. Causing the testator to make a will heirs
2. Causing the testator to change an existing will 3. When renunciation is in favor of all heirs indiscriminately for
3. Preventing the decedent from making a will consideration
4. Preventing the testator from revoking his will 4. Other tacit acts of acceptance
5. Supplanting, concealing, or altering the testator's will. a. Heir demands partition of the inheritance
6. Falsifying or forging a supposed will of the decedent. b. Heir alienates some objects of the inheritance

CIVIL LAW
c. Acts of preservation or administration if, through 3. Prohibited by law
such acts, the title or capacity of the heir has been 4. To partition estate would render it Unserviceable for use for
assumed which it was intended
d. Under Art. 1057, failure to signify acceptance or
repudiation within 30 days after an order of An estate can be partitioned inter vivos. Such partition shall be
distribution by the probate court. respected, insofar as it does not prejudice the legitime of
compulsory heirs (See Art. 1080, NCC)
Ways by which the repudiation of the inheritance, legacy or
devise may be made Effects of partition
1. By means of a public instrument 1. Confers upon each heir the exclusive ownership of property
2. By means of an authentic instrument adjudicated.
3. By means of a petition presented to the court having 2. After the partition, the co-heirs shall be reciprocally bound to
jurisdiction over the testamentary or intestate proceedings. warrant the title to (warranty against eviction) and the quality
of (warranty against hidden defects) each property
Effect of repudiation if an heir is both a testate and legal heir adjudicated.
3. The obligation of warranty shall cease in the following cases:
If an heir is both a testate and legal heir, the repudiation of the a. When the testator himself has made the partition
inheritance as a testate heir, he is understood to have repudiated unless his intention was otherwise, but the legitime
in both capacities. However, should he repudiate as a legal heir, shall always remain unimpaired.
without knowledge of being a testate heir, he may still accept the b. When it has been expressly stipulated in the agreement
inheritance as a testate heir. of partition, unless there has been bad faith.
c. When the eviction was due to a cause subsequent to
Remedy if the heir repudiates the inheritance to the prejudice of the partition, or has been caused by the fault of the
his creditors distributee of the property.
4. An action to enforce warranty among co-heirs must be
If the heir repudiates the inheritance to the prejudice of his own brought within 10 years from the date the right of cause of
creditors, the latter may petition the court to authorize them to action accrues.
accept it in the name of the heir.
Effects of the inclusion of an intruder in partition
Requisites:
1. The heir who repudiated his inheritance must have 1. Between a true heir and several mistaken heirs partition is
been indebted at the time when the repudiation is void.
made 2. Between several true heirs and a mistaken heir
2. The heir-debtor must have repudiated his inheritance transmission to mistaken heir is void.
according to the formalities prescribed by law 3. Through the error or mistake; share of true heir is allotted to
3. Such act of repudiation must be prejudicial to the mistaken heir partition shall not be rescinded unless there
creditor or creditors. is bad faith or fraud on the part of the other persons
4. There must be judicial authorization (Art. 1052, NCC) interested, but the latter shall be proportionately obliged to
pay the true heir of his share.
PARTITION AND DISTRIBUTION OF ESTATE
Partition and distribution
It is the separation, division and assignment of a thing held in

common among those to whom it may belong.
The partition may be effected either
1. By the decedent himself during his lifetime by an act inter

vivos or by will
2. By a third person designated by the decedent or by the heirs
themselves
3. By a competent court in accordance with the New Rules of
Court
Partition may be demanded by:
1. Compulsory heir
2. Voluntary heir
3. Legatee or devisee
4. Person who has acquired an interest in the estate
Partition cannot be demanded when (PAPU)
1. Expressly Prohibited by testator for a period not more than

20 years
2. Co-heirs Agreed that estate not be divided for period not
more than 10 years, renewable for another 10 yrs

2014 GOLDEN NOTES
PARTNERSHIP
PARTNERSHIP 4. Consensual perfected by mere consent, upon the

express or implied agreement of two or more persons
CONTRACT OF PARTNERSHIP 5. Commutative the undertaking of each of the partners
is considered as the equivalent of that of the others
Partnership 6. Principal it does not depend for its existence or
validity upon some other contracts
It is a contract whereby two or more persons bind themselves to 7. Preparatory because it is entered into as a means to
contribute money, property, or industry to a common fund, with an end, i.e. to engage in business or specific venture for
the intention of dividing the profits among themselves (Art. 1767, the realization of profits with the view of dividing them
NCC). among the contracting parties.
NOTE: Two or more persons may also form a partnership for the exercise of Typical incidents of partnership
a profession (Art. 1767, NCC).
1. The partners share in profits and losses. (Arts. 1767,1797-98,
Essential elements of a partnership NCC)
2. They have equal rights in the management and conduct of
1. Agreement to contribute money, property or industry to a the partnership business. (Art. 1803, NCC)
common fund (mutual contribution to a common stock); and 3. Every partner is an agent of the partnership, and entitled to
2. Intention to divide the profits among the contracting parties bind the other partners by his acts, for the purpose of its
(joint interest in the profits) (Evangelista v. Collector of business (Art. 1818, NCC). He may also be liable for the entire
Internal Revenue, G.R. No. L-9996, Oct. 15, 1987). partnership obligations.
4. All partners are personally liable for the debts of the
Characteristics of a partnership partnership with their separate property (Arts. 1816, 1822-
24, NCC) except limited partners are not bound beyond the
1. Bilateral it is entered into by two or more persons and amount of their investment (Art 1843, NCC).
the rights and obligations arising therefrom are always 5. A fiduciary relation exists between the partners (Art. 1807,
reciprocal NCC).
2. Onerous each of the parties aspires to procure for 6. On dissolution, the partnership is not terminated, but
himself a benefit through the giving of something continues until the winding up of partnership is completed
3. Nominate it has a special name or designation in our (Art 1828, NCC)
law
NOTE: Such incidents may be modified by stipulation of the partners
subject to the rights of third persons dealing with the partnership.
Partnership , Co-ownership andCorporation, distinguished
BASIS PARTNERSHIP CO-OWNERSHIP COPORATION

Dissolution Created by contract or by mere agreement of the Created by law Created by law
parties
Juridical Has juridical personality separate and distinct from None Has juridical personality separate
Personality that of each partner and distinct from that of each
corporators
Purpose Realization of profits Common enjoyment of a thing or Depends in Articles of
right Incorporation (AOI)
Duration/ Term No limitation 10 years maximum (May be 50 years maximum, extendible for
of Existence extended by new agreement, Art. not more than 50 years in any one
494, Civil Code) instance
Number of Minimum of 2 persons Minimum of 2 persons Minimum of 5 persons
incorporators
Commencement From the moment of execution of the contract of None From the date of issuance of the
of Juridical partnership certificate of incorporation
Personality
Disposal/ Partner may not dispose of his individual interest Co-owner may freely do so Stockholder has a right to transfer
Transferability unless agreed upon by all partners shares without prior consent of
of Interest other stockholders
Power to Act In absence of stipulation to contrary, a partner Co-owner cannot represent the Management is vested with the
with 3rd Persons may bind partnership each partner is agent of co-ownership BOD
partnership
Effect of Death Death of a partner results in dissolution of Death of co-owner does not Death of stockholder does not
partnership necessarily dissolve co-ownership dissolve the corporation
Creation May be dissolved at any time by the will of any or May be dissolved anytime by the Can only be dissolved with the
all of the partners will of any or all of the co-owners consent of the State

CIVIL LAW
Joint venture ESSENTIAL FEATURES OF PARTNERSHIP
It is an association of persons or companies jointly undertaking Essential Features of Partnership

some commercial enterprise; generally, all contributes assets and
share risks. It requires a community of interest in the performance 1. There must be a valid contract
of the subject matter, a right to direct and govern the policy in 2. The parties (two or more persons) must have legal capacity to
connection therewith, and a duty which may be altered by enter into the contract
agreement to share both in profits and losses. 3. There must be a mutual contribution of money, property, or
industry to a common fund
Partnership v. Joint Venture 4. The object must be lawful
5. The primary purpose must be to obtain profits and to divide
BASIS Partnership Joint Venture the same among the parties.(De Leon, 2010)
The duration of a 1. VALID CONTRACT

Limited to the period
Transactions partnership generally
in which the goods
entered into relates to a
are sold or the project
continuing business of Contractual nature of partnership
is carried on or a
various transactions
single transaction.
of a certain kind. Partnership is a voluntary relation created by agreement of the
parties. It excludes from its concept all other associations which do
Permanent - partners not have their origin in a contract, express or implied. There is no
Nature are interested in such thing as a partnership created by law or by operation or
carrying on together implication of law alone (De Leon, 2010).
of a general and
continuing business of Temporary, although Partnership as a contract
a particular kind. it may continue for a
number of years. Since partnership is fundamentally contractual, all the essentials of
NOTE: A particular a valid contract must be present.
partnership has a limited
and temporary or ad hoc
nature, being confined to As in other cases of contracts, in order to make an agreement for a
a single undertaking. partnership valid, there must be a valid consideration existing as
There must be a between the partners. Each partner surrenders to the partnership
Legal partnership or firm in accordance with the express or implied stipulations of their
A firm name is not mutual agreement (De Leon, 2010).
Personality name under which
necessary, thus the
the partnership shall
participating persons
operate. The names
can transact business 2. LEGAL CAPACITY OF THE PARTIES TO CONTRACT
of the partners may
under their own name
appear in the firm
and can be Before there can be a valid contract of partnership, it is essential
name and the act of
individually liable that the contracting parties have the necessary legal capacity to
the partners will
therefore. enter into the contract. Consequently, any person who cannot give
make the partnership
liable. consent to a contract cannot be a partner.
Corporation cannot
Corporations can The following persons cannot give their consent to a contract of
Corporation enter into a
engage in a joint partnership
as partner partnership contract,
venture with others
thus it cannot be a
through a contract of 1. Unemancipated minors;
partner by reason of
agreement if the 2. Insane or demented persons;
public policy;
nature of the venture 3. Deaf-mutes who do not know how to write;
otherwise people
in line with the 4. Persons who are suffering from civil interdiction; and
other than its officers
business of the 5. Incompetents who are under guardianship
may be able to bind it
corporation and it is
(Albano, Civil Law
authorized in its Persons qualified to be a partner
Reviewer, 1998,
charter.
p.570)
A partnership GR: Any person capacitated to contract may enter into a contract
acquires personality of partnership.
after following the
Firm Name requisites required by XPNs:
and Liablities law. e.g. Art. 1771- 1. Persons who are prohibited from giving each other any
1773, NCC A joint venture has no donation or advantage cannot enter into a universal
legal personality. partnership (Art. 1782).
NOTE: SEC registration is
not required before a NOTE: A husband and wife, however, may enter into a particular
partnership acquires partnership or be members thereof. (De Leon, 2010)
legal personality. (Art.
1768) 2. Persons suffering from civil interdiction
3. Persons who cannot give consent to a contract:
a. Minors
b. Insane persons
c. Deaf-mutes who do not know how to write

2014 GOLDEN NOTES
PARTNERSHIP
Principle of delectus personae Consequences of a partnership formed for an unlawful purpose
This refers to the rule that is inherent in every partnership, that no 1. The contract is void ab initio and the partnership never
one can become a member of the partnership association without existed in the eyes of the law
the consent of all the partners. 2. The profits shall be confiscated in favor of the government
3. The instruments or tools and proceeds of the crime shall also
Even if a partner will associate another person in his share in the be forfeited in favor of the government
partnership, the associate shall not be admitted into the 4. The contributions of the partners shall not be confiscated
partnership without the consent of all the partners, even if the unless they fall under No.3 (De Leon, 2010).
partner having an associate should be a manager (Art. 1804, NCC).
Necessity of judicial decree to dissolve an unlawful partnership
Corporation entering into a partnership with another corporation
Judicial decree is not necessary to dissolve an unlawful partnership;
As a rule, it is illegal for two corporations to enter into a however, it may sometimes be advisable that a judicial decree of
partnership. Nevertheless, a corporation may enter into a joint dissolution be secured for the convenience and peace of mind of
venture with another if the nature of the venture is in line with the the parties (De Leon, 2010).
business authorized by its charter(Tuason v. Bolaos, G.R. No. L-
4935, May 28, 1954). 5. INTENTION TO DIVIDE THE PROFITS
3. MUTUAL CONTRIBUTION Sharing of profits as a presumptive evidence of partnership
A partner may contribute any of the following The sharing in profits is merely presumptive and not conclusive,
even if cogent, evidence of partnership. There are numerous
MONEY PROPERTY INDUSTRY instances of parties who have a common interest in the parties and
The term is to be The property The word industry losses of an enterprise but who are not partners. Thus, if the
understood as contributed may has been interprered division of profits is merely used as guide to determine the
referring to be real or to mean the active compensation due to one of the parties, such is not a partner (De
currency which is a personal, cooperation, the work Leon, Comments and Cases on Partnership, Agency, and Trust, 2010
legal tender in the corporeal or of the party ed., p. 25).
Philippines. incorporeal. associated, which may
Checks, drafts, Hence, credit be either personal Q: Mariano and Isabelo entered into a partnership agreement
promissory notes such as manual efforts or wherein they are to contribute P15,000 each for the purpose of
payable to order, promissory note intellectual, and for printing 95,000 posters. Isabelo was unable to print enough
and other or other which he receives a posters pursuant to the agreement, thus he executed in favor of
mercantile evidence of share in the profits Mariano a promissory note in an amount equivalent to the
documents are not obligation or (not merely salary) of unrealized profit due to insufficient printing. The whole amount
money but only even goodwill the business became due but Isabelo defaulted payment. Is Mariano entitled
representatives of may be to file a case for the recovery of the unrealized profit of the
money. There is no contributed, as partnership?
contribution of they are A:No. The essence of a partnership is to share in the profits and
money until they considered losses, thus, Mariano should shoulder the losses with Isabelo
have been encashed property (Moran Jr., v. CA, G.R. No. L-59956, Oct. 31, 1984).
(De Leon, 2010) Q: To form a lending business, it was verbally agreed that Noynoy
would act as financier while Cory and Kris would take charge of
A partnership may be formed even if the common fund is solicitation of members and collection of loan payments. They
comprised entirely of borrowed or loaned money agreed that Noynoy would receive 70% of the profits while Cory
A partnership may be deemed to exist among parties who agree to and Kris would earn 15% each. The parties executed the 'Articles
borrow money to pursue a business and to divide the profits or of Agreement' which formalized their earlier verbal agreement.
losses that may arise therefrom, even if it is shown that they have Later, Noynoy filed a complaint against Cory and Kris for
not contributed any capital of their own to a "common fund." Their misappropriation of funds allegedly in their capacities as
contribution may be in the form of credit or industry, not Noynoys employees. In their answer, Cory and Kris asserted that
necessarily cash or fixed assets. Being partners, they are all liable they were partners and not mere employees of Noynoy. What
for debts incurred by or on behalf of the partnership (Lim Tong Lim kind of relationship existed between the parties?
v. Philippine Fishing Gear Industries, Inc., G.R. No. 136448, Nov. 3, A:A partnership was formed among the parties. The "Articles of
1999). Agreement" stipulated that the signatories shall share the profits
4. LAWFUL OBJECT of the business in a 70-15-15 manner, with Noynoy getting the
lion's share. This stipulation clearly proved the establishment of a
Limitation on the parties freedom to choose the transaction or partnership (Santos v. Spouses Reyes, G.R. No.135813, Oct. 25,
transactions they will engage in 2001).
Q: Jose conveyed his lots in favor of his four sons in order for
The only limitation is that the object must be lawful and for the them to build their residences. His sons sold the lots since they
common benefit of the members. The limitation arises not only found the lots impractical for residential purposes because of
from the express provisions of the law, but from the general high costs of construction. They derived profits from the sale and
principles of morality and justice (De Leon, 2010). paid income tax. The sons were required to pay corporate income
tax and income tax deficiency, on the theory that they formed an
unregistered partnership or joint venture taxable as a
corporation. Did the siblings form a partnership?
A: No. The original purpose was to divide the lots for residential
purposes. If later, they found out that it is not feasible to build
their residences on the lots, they can dissolve the co-ownership by

CIVIL LAW
reselling said lots. The division on the profit was merely incidental Formation of Partnership
to the dissolution of the co-ownership which was in the nature of
things a temporary state (Obillos, Jr. v. CIR, G.R. No. L-68118, Oct. It is created by agreement of the parties (consensual). There is no
29, 1985). such thing as a partnership created by law or by operation or
implication of law alone. (De Leon, 2005)
Distribution of losses
Articles of Partnership
Agreeing upon a system of sharing losses is not necessaryfor the
obligation is implied in the partnership relation. If only the share of While partnership relation may be informally created and its
each partner in the profits has been agreed upon, the share of each existence proved by manifestations of the parties, it is customary
in the losses shall be in the same proportion. to embody the terms of the association in a written document
known as Articles of Partnership stating the name, nature or
The definition of partnership under Article 1767 refers to profits purpose and location of the firm, and defining, among others, the
only and is silent as to losses. The reason is that the object of powers, rights, duties, and liabilities of the partners among
partnership is primarily the sharing of profits, while the distribution themselves, their contributions, the manner by which the profits
of losses is but a consequence of the same. Be that as it may, the and losses are to be shared, and the procedure for dissolving the
right to share in the profits carries with it the duty to contribute to partnership (De Leon, 2010 ed.).
the losses, of any.
Commencement of Contract of Partnership
Q: Jose entered into a verbal agreement with Francisco to form a
partnership for the purchase of cascoes for a proposed boat A partnership is a consensual contract; hence, it exists from the
rental business. It was agreed that Francisco would buy the moment of the celebration of the contract by the partners.
cascoes and each partner is to furnish such amount of money as
he could, and that the profits will be divided proportionately. A partnership begins from the moment of the execution of the
After Francisco purchased a casco with the money advanced by contract, unless it is otherwise stipulated (Art 1784). Since under
Jose, they undertook to draft the articles of partnership and Art. 1784, a partnership commences from the time of execution of
embody the same in an authentic document. However, they did the contract if there is no contrary stipulation as to the date of
not come to an agreement. So, Francisco returned the money effectivity of the same, its registration in the Securities and
advanced by Jose, which the latter received with an express Exchange Commission is not essential to give it juridical personality
reservation of all his rights as a partner. (De Leon, 2010)
Formalities needed for the creation of a partnership
a. Was there a partnership formed between Jose and
Francisco? GR: No special form is required for its validity or existence (Art.
b. If such partnership existed, was it terminated by the receipt 1771, NCC). The contract may be made orally or in writing
of Jose of the money he advanced? regardless of the value of the contributions.
A: NOTE: An agreement to enter in a partnership at a future time, which by its

a) Yes. Both elements in a contract of partnership exist: a) terms is not performed within a year from the making thereof is covered by
the Statute of Frauds (Art. 1403(2), NCC). Such agreement is unenforceable
mutual contribution to a common stock, and b) a joint unless the same be in writing or at least evidenced by some note or
interest in the profits. If the contract contains these two memorandum therof subscribed by the parties (De Leon, 2010).
elements, a partnership relation results, and the law itself
fixes the incidents of this relation if the parties fail to do so. In XPN: If property or real rights have been contributed to the
this case, there was money furnished by Jose and received by partnership:
Francisco for the purchase of the cascoes and there was also
an intention to divide the profits proportionately between 1. Personal property
them. Thus, there is a partnership by virtue of the verbal a. Less than P3,000 may be oral
agreement between Jose and Francisco. b. P 3,000 or more must be:
i. In a public instrument; and
b) No. There was no clear intent on the part of Jose, in accepting ii. Registered with Securities and Exchange
the money, to relinquish his rights as a partner (Fernandez v. Commission (Art. 1772, NCC)
Dela Rosa, G.R. No. 413, Feb. 2, 1903).
NOTE: Even if the partnership is not registered with SEC,
NOTE: The partnership relation is not the contract itself, but the result of the the partnership is still valid and possesses a distinct
contract. The relation is evidenced by the terms of the contract which may personality (Paras, 1969)
be oral or written, express or implied from the acts and declarations of the
parties, subject to the provisions of Articles 1771-1773 and to the Statute of 2. Real property or real rights must be:
Frauds (De Leon, 2010).
a. In a public instrument (Art. 1771, NCC)
b. With an inventory of said property
FORMATION OF PARTNERSHIP
i. Signed by the parties
ii. Attached to the public instrument (Art. 1773, NCC)
The formation of a partnership is not an absolute right
iii. Registered in the Registry of Property of the
province, where the real property is found to bind
To organize a corporation or a partnership that could claim a
third persons (Paras, p. 412)
juridical personality of its own and transact business as such is not
a matter of right but a privilege which may be enjoyed only under
3. Limited partnership Must be registered as such with SEC,
such terms as the State may deem necessary to impose (De Leon,
otherwise, it is not valid as a limited partnership but may still
2010)
be considered a general partnership with juridical personality
(Paras,1969)

2014 GOLDEN NOTES
PARTNERSHIP
Where capital of the partnership consists of money or personal heirs, and, accordingly, he becomes liable individually for all the
property, amounting to P3000 or more taxes in connection therewith.
Article 1772 requires that partnerships with a capital of P3,000 or If, after such partition, an heir allows his shares to be held in
more must register with SEC. However, this registration common with his co-heirs under a single management to be used
requirement is not mandatory. Article 1768 explicitly provides that with the intent of making profit thereby in proportion to his share,
in case of failure to register with the SEC as provided for in this there can be no doubt that, even if no document or instrument
article, the partnership will retain its juridical personality. The were executed for the purpose, for tax purposes, at least, an
failure to register the contract of partnership does not invalidate unregistered partnership is formed (Ona v. Commissioner of
the same as among the partners, so long as the contract has the Internal revenue, 45 SCRA 74 [1972]).
essential requisites, because the main purpose of registration is to
give notice to third parties, and it can be assumed that the Meaning of cuentas en participacion
members themselves knew of the contents of their contract. Non-
compliance with this directory provision of the law will not Under the Code of Commerce, cuentas en participacion means a
invalidate the partnership. sort of an accidental partnership constituted in such a manner that
its existence was only known to those who had an interest in the
Registration is merely for administration and licensing purposes; same, there being no mutual agreement between the partners,
hence, it shall not affect the liability of the partnership and the and without a corporate name indicating to the public in some way
members thereof to third persons (Art. 1772, (2), NCC). that there were other people besides the one who ostensibly
managed and conducted the business, governed under article 239
Where real property is contributed of the Code of Commerce (Bourns v. Carman, G.R. No. L-2880, Dec.
4, 1906).
A partnership may be constituted in any form, except where
immovable property of real rights are contributed thereto, in which Q: Chim was the owner and manager of a lumber yard. Vicente
case a public instrument shall be necessary. Hence, based on the and Ting participated in the profits and losses. A contract of
intention of the parties, a verbal contract of partnership may arise sawing lumber was entered into by Chim, acting in his own name,
(Sunga-Chan v. Chua, G.R. No. 143340, Aug. 15, 2001). with Frank. At the time the contract was made, they were the
joint proprietors and operators of the said lumber yard engaged
A contract of partnership is VOID if the requirements under Art. in the purchase and sale of lumber under the name and style of
1773, as regards contribution of real property to a partnership, has Chim. In an action to recover the balance under the contract filed
not been complied with.Nonetheless, a void partnership under by Frank against Chim, Vicente and Ting, the latter two alleged
Art.1773, in relation to Art. 1771, may still be considered by the that they are not Chims partners. Did Chim, Vicente and Ting
courts as an ordinary contract as regards the parties thereto from form a partnership?
which rights and obligations to each other may be inferred and
enforced (Torres v. CA, G.R. No. 134559, Dec. 9 1999). A:No. A simple business was formed by Chim exclusively in his own
name and under his personal management and he effected every
NOTE: Torres v. CA does not involve third persons. transaction in his name and in the names of other persons
interested in the profits and losses of the business. What has been
To be effective against third persons, the transfer of real property formed is an accidental partnership of cuentas en participacion.
to the partnership must be duly registered in the Registry of
Property of the province or city where the property contributed is Q: Henry and Lyons are engaged in real estate business and are
located (Art. 1771, NCC). co-owners of a parcel of land. Henry, with the consent of Lyons,
mortgaged the property to raise the funds sufficient to buy and
Q: A partnership was entered into between Mauricio and develop the San Juan Estate. Lyons expressed his desire not to be
Severino to operate a fishpond. Neither partner contributed a part of the development project, but Henry, nevertheless,
fishpond or a real right over any fish pond. Their capital pursued the business alone. When the business prospered, Lyons
contributions were in cash in the amount of P1,000 each. While demanded for a share in the business. Is Lyons entitled to the
the partnership contract was done in a public instrument, no shares in San Juan Estate?
inventory of the fishpond to be operated was attached in the said
instrument. Is there a valid contract of partnership? A: No. Lyons himself manifested his desire not to be part of the
development project. Thus, no partnership was formed. The
A:Yes. There is a valid contract of partnership despite the lack of mortgage of the land was immaterial to the existence of the
inventory. The purpose of the partnership was not to engage in the partnership. It is clear that Henry, in buying the San Juan Estate,
fishpond business but to operate a fishpond. Neither said fishpond was not acting for any partnership composed of himself and Lyons,
nor a real right to any fish pond was contributed to the partnership and the law cannot be distorted into a proposition which would
(Agad v. Mabato, G.R. No. L-24193, June 28, 1968). make Lyons a participant in this deal contrary to his express
determination (Lyons v. Rosenstock, G.R. No. 35469, Mar. 17,
Q: A and B are co-owners of an inherited property. They agreed 1932).
to use the said common properties and the income derived
therefrom as a common fund with the intention to produce Q: Catalino and Ceferino acquired a joint tenancy over a parcel of
profits for them in proportion to their respective shares in the land under a verbal contract of partnership. It was stipulated that
inheritance as determined in a project of partition. What is the each of the said purchasers should pay one-half of the price and
effect of such agreement on the existing co-ownership? that an equal division should be made between them of the land
thus purchased.Despite Catalinos demand for an equal division
A: The co-ownership is automatically converted into a between them, Ceferino refused to do so and even profited from
partnership. From the moment of partition, A and B, as heirs, are the fruits of the land. Are they partners or co-owners?
entitled already to their respective definite shares of the estate
and the income thereof, for each of them to manage and dispose A: They are co-owners because it does not appear that they
of as exclusively his own without the intervention of the other entered into any contract of partnership but only for the sole
purpose of acquiring jointly or by mutual agreement of the land

CIVIL LAW
under the condition that they would pay of the price of the land DIFFERENT KINDS OF PARTNERS
and that it be divided equally between them (Gallemit v. Tabiliran,
G.R. No. 5837, Sept. 15, 1911). A. Under the Civil Code
Future partnership 1. Capitalist Contributes money or property to the common

fund
It is a kind of partnership where the partners may stipulate some 2. Industrial Contributes only his industry or personal service
other date for the commencement of the partnership. Persons who 3. General One whose liability to 3rd persons extends to his
enter into a future partnership do not become partners until or separate or personal property
unless the agreed time has arrived or the contingency has 4. Limited One whose liability to 3rd persons is limited to his
happened (De Leon, 2010). capital contribution
5. Managing Manages the affairs or business of the
As long as the agreement for a partnership remains inchoate or partnership; he may be appointed either in the articles of
unperformed, the partnership is not consummated (De Leon, partnership or after the constitution of the partnership. He is
2010). also known as general or real partner.
6. Liquidating Takes charge of the winding up of partnership
RULES TO DETERMINE EXISTENCE affairs upon dissolution
7. Partner by estoppel Is not really a partner but is liable as a
Rules to determine the existence of partnership partner for the protection of innocent 3rd persons; he is also
known as the partner by implication or nominal partner or a
1. Except as provided by Art. 1825 (partnership by estoppel), quasi-partner
persons who are not partners as to each other are not 8. Continuing partner Continues the business of a partnership
partners as to third persons; after it has been dissolved by reason of the admission of a
2. Co-ownership or co-possession does not of itself establish a new partner, retirement, death or expulsion of one of the
partnership, whether such co-owners or co- possessors do or partners
do not share any profits made by the use of the property; 9. Surviving partner Remains after a partnership has been
3. The sharing of gross returns does not of itself establish a dissolved by death of any partner
partnership, whether or not the persons sharing them have a 10. Sub-partner Is not a member of the partnership; contracts
joint or common right or interest in any property from which with a partner with reference to the latter's share in the
the returns are derived; partnership
4. The receipt by a person of a share of the profits of a business
is prima facie evidence that he is a partner in the business, B. Other Classifications
but no such inference shall be drawn if such profits were
received in payment: 11. Ostensible Takes active part and known to the public as
a. As a debt by instalments or otherwise; partner in the business, whether or not he has an actual
b. As wages of an employee or rent to a landlord; interest in the firm. Thus, he may be an actual or a nominal
c. As an annuity to a widow or representative of a partner.
deceased partner; 12. Secret Takes active part in the business but is not known to
d. As interest on a loan, though the amount of payment be a partner by outside parties
vary with the profits of the business; 13. Silent Does not take any active part in the business although
e. As the consideration for the sale for the sale of a he may be known to be a partner. If he withdraws from the
goodwill of a business or other property by instalments partnership, he must give notice to those persons who do
or otherwise. (Art. 1769, NCC) business with the firm to escape liability in the future
14. Dormant Does not take active part in the business and is
NOTE: In sub-paragraphs a e, the profits in the business are not
shared as profits of a partner as a partner, but in some other respects
not known or held out as a partner; the term is also
or for some other purpose. synonymous with a sleeping partner
15. Original partner -one who is a member of the partnership
Burden of proving the existence of a partnership from the time of its organization
16. Incoming partner - a person lately, or about to be, taken into
The burden of proving the existence of a partnership rests on the an existing partnership as a member
party having the affirmative of that issue. The existence of a 17. Retiring partner - one withdrawn from the partnership; a
partnership must be proved and will not be presumed. withdrawing partner
However, when a partnership is shown to exist, the presumption is CLASSIFICATIONS OF PARTNERSHIP

that it continues in the absence of evidence to the contrary, and
the burden of proof is on the person asserting its termination (De Different kinds of partnership under the Spanish Civil Code
Leon, 2010).
1. Sociedad Anonima similar to anonymous partnership
Person who alleges the existence of partnership cannot prove it 2. Sociedad Colectiva general or collective partnership
by evidence of an agreement wherein the parties call themselves 3. Sociedad de Cuentas en Participacion joint account
partners partnership
4. Sociedad Mercantile Regular Colectiva mercantile
The reason behind this is because the use of the term partner in partnership company
popular sense, or as a matter of business convenience, will not 5. Sociedad Leonila partnership by which the entire profits
necessarily import an intention that a legal partnership should should belong to some of the partners in exclusion of the rest
result. But while the use of partnership or partners in an
alleged oral agreement claimed to have constituted partnership is
not conclusive that partnership did not exist, non-use of such terms
is entitled to weight (De Leon, 2010).

2014 GOLDEN NOTES
PARTNERSHIP
A partnership contract may be classified as to
7. Purpose
1. Object a. Commercial or trading One formed for the transaction
a. Universal partnership of business.
i. Of all present property (Art. 1778, NCC) The b. Professional or non-trading One formed for the
partners contribute all the property which actually exercise of a profession
belongs to them to a common fund, with the
intention of dividing the same among themselves, UNIVERSAL vs. PARTICULAR
as well as all profits they may acquire therewith.
The following become the common fund of all the Classes of Universal Partnership
partners:
Property which belonged to each of the ALL PROFITS ALL PRESENT PROPERTY
partners at the time of the constitution of What constitutes common property
the partnership Only usufruct of
Profits which they may acquire from all All properties actually belonging to the
the properties of
property contributed partners are contributed they become
the partners
ii. Of all profits(Art. 1780, NCC) Comprises all that common property
become common
the partners may acquire by their industry or work (owned by all of the partners and the
property
during the existence of the partnership partnership)
b. Particular partnership It is one which has for its object, As to profits as common property
determinate things, their use and fruits, or a specific As to profits from other sources:
undertaking or the exercise of a profession or a
GR: Aside from the contributed
vocation. (Art. 1783, NCC)
properties, the profits of said property
All profits acquired
become common property
2. Liability of partners by the industry of
a. General partnership One where all partners are the partners
XPN: Profits from other sources may
general partners who are liable even with respect to become common
become common if there is a stipulation
their individual properties, after the assets of the property (whether
to such effect
partnership have been exhausted (Paras,p. 411) or not they were
b. Limited partnership One formed by 2 or more persons obtained through As to properties subsequently acquired:
having as members one or more general partners and the usufruct GR: Properties subsequently acquired by
one or more limited partners, the latter not being contributed) inheritance, legacy or donation, cannot
personally liable for the obligations of the partnership. be included in the stipulation
(Art. 1843)
XPN: Only fruits thereof can be included
3. Duration in the stipulation (Art. 1779, NCC)
a. Partnership at will Partnership for a particular
undertaking or venture which may be terminated Presumption of universal partnership of profits
anytime by mutual agreement; one for a fixed term or
particular undertaking which is continued by the When the Articles of Universal Partnership fail to specify whether it
partners after the termination of such term or particular is one of all present property or of profits, only constitutes a
undertaking without express agreement universal partnership of profits (Art. 1781, NCC), because it
b. Partnership with a fixed period The term for which the imposes lesser obligations on the partners, since they preserve the
partnership is to exist is fixed or agreed upon or one ownership of their separate property.
formed for a particular undertaking.
Contribution of future properties
4. Legality of existence
a. De jure partnership One which has complied with all As a general rule, future properties cannot be contributed. The
the requirements for its establishment very essence of the contract of partnership that the properties
b. De facto partnership One which has failed to comply contributed be included in the partnership requires the
with all the legal requirements for its establishment. contribution of things determinate (De Leon, 2010).
5. Representation to others Particular partnership

a. Ordinary or real partnership One which actually exist
among the partners and also as to third person. It is one which has for its object determinate things, their use or
b. Ostensible or partnership by estoppel When two or fruits, or a specific undertaking, or the exercise of a profession or
more persons attempt to create a partnership but fail to vocation (Art. 1783, NCC).
comply with the legal personalities essential for juridical
personality, the law considers them as partners, and the The fundamental difference between a universal partnership and a
association is a partnership insofar as it is favorable to particular partnership lies in the scope of their subject matter or
third persons, by reason of the equitable principle of object. In the former, the object is vague and indefinite,
estoppel (MacDonald et. al. v. Natl. City Bank of New contemplating a general business with some degree of continuity,
York, G.R. No. L-7991, May 21, 1956) while in the latter, it is limited and well-defined, being confined to
an undertaking of a single, temporary, or ad hoc nature (De Leon,
6. Publicity 2010).
a. Secret partnership Partnership that is not known to
many but only as to its partners. There is no requirement that the business of the partnership be
b. Notorious or open partnership It is known not only to continuing in nature.
the partners, but to the public as well.

CIVIL LAW
This may be inferred from Articles 1761 and 1783 that the carrying limited partners
on of a business of a continuing nature is not essential to right or liability to
constitute partnership. An agreement to undertake a particular the partnership
piece of work or a single transaction or a limited number of Assignment of Interest is not Interest is freely
transactions and immediately divide the resulting profits would Interest assignable without assignable
seem to fall within the meaning of the term partnership as used consent of other
in the law (De Leon, 2010). partners
It must operate It must also operate
Q: J, P and B formed a limited partnership called Suter Co., with P under a firm name, under a firm name,
as the general partner and J and B as limited partners. J and B which may or may followed by the word
contributed P18,000 and P20,000 respectively. Later, J and B got not include the Limited.
married and P sold his share of the partnership to the spouses name of one or
which was recorded in the SEC. Has the limited partnership been more of the GR: The surname of a
dissolved by reason of the marriage between the limited partners. limited partner shall
partners? not appear in the
NOTE: Those, who, not partnership name.
A:No. The partnership is not a universal but a particular one. As Firm Name being members of the
provided by law, a universal partnership requires either that the partnership, include XPNs:
object of the association must be all present property of the their names in the firm
name, shall be subject
1. It is also the
partners as contributed by them to a common fund, or all else that surname of a
to the liability of a
the partners may acquire by their industry or work. Here, the partner. (Art. 1815) general partner;
contributions were fixed sums of money and neither one of them 2. Prior to the time
were industrial partners. Thus, the firm is not a partnership which when the limited
the spouses are forbidden to enter into. The subsequent marriage partner became
cannot operate to dissolve it because it is not one of the causes such, the business
provided by law. The capital contributions were owned separately had been carried
by them before their marriage and shall remain to be separate on under a name
under the Spanish Civil Code. Their individual interest did not in which his
become common property after their marriage (Commissioner of surname
Internal Revenue v. Suter, G.R. No. L-25532, Feb. 28, 1969). appeared.
GENERAL vs. LIMITED NOTE: A limited partner

whose surname appears
General partnership in a partnership name is
liable as a general
partner to partnership
It is a partnership where all partners are general partners who are
creditors who extend
liable even with respect to their individual properties, after the credit to the partnership
assets of the partnership have been exhausted (Paras, 1969) without actual
knowledge that he is not
General partner a general partner. (Art.
1846)
It is a partner whose liability to third persons extends to his The capitalist No prohibition against
separate property; he may be either a capitalist or an industrial partner cannot engaging in business
partner(De Leon, 2005). He is also known as real partner. engage for their own
account in any
General v. Limited partner/partnership Prohibition to operation which is
Engage in Other of the kind of
BASIS GENERAL LIMITED Business business in which
Composition / Personally liable for Liability extends only the partnership is
Membership partnership to his capital engaged, unless
obligations contributions there is a stipulation
When manner of No participation in to the contrary
Right in management has management
Management not agreed upon, all If he is an industrial
general partners partner- in any
have an equal right business for himself.
in the management Effect of Death, Retirement, death, Does not have same
of the business Insolvency, insolvency, insanity effect; rights are
Contribution Contribute money, Contribute cash or Retirement, of general partner transferred to legal
property or industry property only, not Insanity dissolves representative
services partnership
Not proper party to As a rule, it maybe Created by the
Proper party to proceedings Creation constituted in any members after
proceedings by/against form, by contract or substantial
If Proper Party to by/against partnership, unless: conduct of the compliance in good
Proceedings By partnership 1. He is also a parties faith of the
or Against general partner; or requirements set
Partnership 2. Where the object forth by law
of the proceeding Extent of Liability Composed only of Composed of at least
is to enforce a general partners one general partner

2014 GOLDEN NOTES
PARTNERSHIP
and one limited 4. A relationship to colleagues at the bar characterized by
partner. candor, fairness, and unwillingness to resort to current
business methods of advertising and encroachment on their
PARTNERSHIP WITH A FIXED TERM v. PARTNERSHIP AT WILL practice, or dealing with their clients (In the Matter of Petition
for Authority to Continue Use of Firm Name Sycip, Salazar,
Partnership with a fixed term etc. / Ozaeta Romulo, etc., 92 SCRA 1 *1979+, citing H.S.
Drinker, Legal Ethics [1953], pp4-5.)
It is one in which the term of its existence has been agreed upon by
the partners either: Prohibition in the firm name of a partnership for the practice of
1. Expressly There is a definite period law
2. Impliedly A particular enterprise or transaction is
undertaken In the selection and use of firm name, no false, misleading,
assumed, or trade names should be used (Canons of Professional
The mere expectation that the business would be successful and Ethics)
that the partners would be able to recoup their investment is not
sufficient to create a partnership for a term. MANAGEMENT OF THE PARTNERSHIP
Fixing the term of the partnership contract Modes of appointment of a manager
The partners may fix in their contract any term and they shall be Appointment through the Appointment Other Than in the
bound to remain under such a relation for the duration of the Articles of Partnership Articles
term. Power is irrevocable without
just or lawful cause
Expiration of the partnership contract
NOTE: Vote required for removal of
manager
The expiration of the term fixed or the accomplishment of the Power to act is revocable
particular undertaking specified will cause the automatic anytime, with or without cause
1. For just cause Vote of
dissolution of the partnership. (should be done by the
the controlling partners
(controlling financial controlling interest)
Termination of partnership at will
interest)
2. Without cause or for
It may be lawfully terminated at any time by the express will of all
unjust cause
the partners or any of them.
Unanimous vote
Extent of Power
Dissolution of partnership at will
1. If he acts in good faith, he
Any one of the partners may dictate the dissolution of a may do all acts of
As long as he is a manager, he
partnership at will. administration (despite
can perform all acts of
opposition of his
administration (if others
The partner who wants the partnership dissolved must do so in partners)
oppose, he can be removed)
good faith, not that the attendance of bad faith can prevent the 2. If he acts in bad faith, he
dissolution of the partnership, but to avoid the liability for damages cannot
to other partners.
Scope of the power of a managing partner
PROFESSIONAL PARTNERSHIP
As a general rule, a partner appointed as manager has all the
Professional partnership powers of a general agent as well as all the incidental powers
necessary to carry out the object of the partnership in the
It is a partnership formed by persons for the sole purpose of transaction of its business. The exception is when the powers of
exercising their common profession, no part of the income of the manager are specifically restricted (De Leon, 2010).
which is derived from engaging in any trade or business.
A managing partner may not bind the partnership by a contract
In a professional partnership, it is the individual partners that are wholly foreign to its business.
deemed engaged in the practice of profession and not the
partnership. Thus, they are responsible for their own acts. Rule where there are two or more managers
Prohibition in the formation of a professional partnership Without specification of their respective duties and without
stipulation requiring unanimity of action
Partnership between lawyers and members of other profession or
non-professional persons should not be formed or permitted GR: Each may separately execute all acts of administration
where any part of the partnerships employment consists of the (unlimited power to administer)
practice of law (Canons of Professional Ethics).
XPN: If any of the managers opposes, decision of the majority
Characteristics of a partnership for the practice of law prevails
1. A duty of public service, of which the emolument is a by- NOTE: In case of tie Decision of the controlling interest (who are also
managers) shall prevail
product;
2. A relation as an officer of court to the administration of
justice involving thorough sincerity, integrity, and reliability;
3. A relation to clients in the highest fiduciary degree;

CIVIL LAW
With stipulation that none of the managing partners shall act COMPENSATION
without the consent of the others
Entitlement of partners to compensation
GR: Unanimous consent of all the managing partners shall be
necessary for the validity of the acts and absence or inability of GR: In the absence of an agreement to the contrary, each member
any managing partner cannot be alleged. of the partnership assumes the duty to give his time, attention, and
skill to the management of its affairs, so far, at least, as may be
XPN: Where there is an imminent danger of grave or reasonably necessary to the success of the common enterprise;
irreparable injury to the partnership. and for this service a share of the profits is his only compensation.
XPNS:
Rule when the manner of management has not been agreed upon 1. A partner engaged by his co-partners to perform services not
required of him in fulfillment of the duties which the
1. All partners shall be considered agents and whatever any one partnership relation imposes and in a capacity other than that
of them may do alone shall bind the partnership, without of a partner
prejudice to the provisions of Art. 1801. This right is not 2. A contract for compensation may be implied if there is
dependent on the amount or size of the partners capital extraordinary neglect on the part of one partner to perform
contribution or services to the business. his duties toward the firms business, thereby imposing the
entire burden on the remaining partner
NOTE: If two or more partners have been entrusted with the 3. One partner may employ his co-partner to do work for him
management of the partnership without specification of their outside of and independent of the co-partnership, and
respective duties, or without a stipulation that one of them shall not become personally liable therefor
act without the consent of all the others, each one may separately 4. Where the services rendered are extra-ordinary
execute all acts of administration, but if any of them should oppose
5. Where one partner is entrusted with the management of the
the acts of the others, the decision of the majority shall prevail. In case
of a tie, the matter shall be decided by the partners owning the partnership business and devotes his whole time and
controlling interest (Art. 1801, Civil Code). attention thereto, at the instance of the other partners who
are attending to their individual business and giving no time
2. None of the partners may, without the consent of the others, or attention to the business of the firm (De Leon, 2010).
make any important alteration in the immovable property of
the partnership. (Art. 1803, NCC) RELATIONSHIPS IN A CONTRACT OF PARTNERSHIP
Rule in case where unanimity of action is stipulated A contract of partnership gives rise to at least four distinct juridical
relations, namely:
The partners may stipulate that none of the managing partners 1. Relations among the partners themselves
shall act without the consent of the others. 2. Relations of the partners with the partnership
3. Relations of the partnership with third persons with whom it
GR: In such a case, the unanimous consent of all the managing contracts
partners shall be necessary for the validity of their acts. 4. Relations of the partners with such third persons (De Leon,
2010).
XPN: Imminent danger of grave or irreparable injury for the
partnership, in which case, a partner may act alone without the RESPONSIBILITIES OF A PARTNERSHIP TO PARTNERS
consent of the partner who is absent or under disability, without
prejudice to his liability for damages. 1. Refund the amounts disbursed by partner in behalf of the
partnership plus corresponding interest from the time the
Q: Azucena and Pedro acquired a parcel of land and a building. expenses are made, not from the date of demand. (e.g. loans
Azucena obtained a loan from Tai Tong Co., secured by a and advances made by a partner to the partnership aside
mortgage which was executed over the land and building. from capital contribution);
Arsenio, representative of Tai Tong, insured it with Travellers 2. Answer for obligations the partner may have contracted in
Multi Indemnity Corporation. The building and the contents good faith in the interest of the partnership business;
thereof were razed by fire. Travellers failed to pay the insurance. 3. Answer for risks in consequence of its management (Art.
Hence, Azucena and Pedro filed a case against Travellers wherein 1796, NCC)
Tai Tong intervened claiming entitlement to the proceeds from
Travellers. Who is entitled to the proceeds of the policy? RIGHTS AND OBLIGATIONS OF PARTNERS AMONG THEMSELVES
A: Tai Toing is entitled to the insurance proceeds. Arsenio Obligations of partners among themselves
contracted the insurance policy on behalf of Tai Tong. As the
managing partner of the partnership, he may execute all acts of 1. Contribution of property (Art. 1786, NCC)
administration including the right to sue debtors of the partnership 2. Contribution of money and money converted to personal use
in case of their failure to pay their obligations when it became due (Art. 1788, NCC)
and demandable. Or at the very least, Arsenio is an agent of the 3. Prohibition in engaging in business for himself (Art. 1789,
partnership. Being an agent, it is understood that he acted for and NCC)
in behalf of the firm (Tai Tong Chuache & Co. v. Insurance 4. Contribute additional capital (Art. 1791, NCC)
Commissioner, G.R. No. L-55397, Feb. 29, 1988). 5. Managing partner who collects debt (Art. 1792, NCC)
6. Partner who receives share of partnership credit (Art. 1793,
NOTE: If refusal of partner is manifestly prejudicial to the interest of NCC)
partnership, courts intervention may be sought. 7. Damages to partnership (Art. 1794, NCC)
8. Keep the partnership books (Art. 1805, NCC)
9. Render information (Art. 1806, NCC)
10. Accountable as fiduciary (Art. 1807, NCC)

2014 GOLDEN NOTES
PARTNERSHIP
Obligations of partners with respect to contribution of property absence of stipulation, it shall be made by experts chosen by the
partners, and according to current prices, the subsequent changes
To : thereof being for the account of the partnership. (Art. 1787, NCC)
1. Contribute at the beginning of the partnership, or at the
stipulated time, the money, property or industry which he Rules regarding contribution of money to the partnership
may have promised to contribute;
2. Answer for eviction in case the partnership is deprived of the To
determinate property contributed 1. Contribute on the date fixed the amount the partner has
3. Answer to the partnership for the fruits of the property the undertaken to contribute to the partnership;
contribution of which he delayed, from the date they should 2. Reimburse any amount the partner may have taken from the
have been contributed up to the time of actual delivery partnership coffers and converted to his own use;
4. Preserve said property with the diligence of a good father of a 3. Indemnify the partnership for the damages caused to it by
family, pending delivery to the partnership delay in the contribution or conversion of any sum for the
5. Indemnify the partnership for any damage caused to it by the partners personal benefit;
retention of the same or by the delay in its contribution 4. Pay the agreed or legal interest, if the partner fails to pay his
contribution on time or in case he takes any amount from the
Withdrawal or disposal of money or property by a contributing common fund and converts it to his own use.
partner
Rule regarding obligation to contribute to partnership capital
Money or property contributed by a partner cannot be withdrawn
or disposed of by the contributing partner without the consent or Unless there is a stipulation to the contrary, the partners shall
approval of the partnership or of the other partners.The reason contribute equal shares to the capital of the partnership (Art 1790,
behind this is because the money or property contributed by a NCC). It is not applicable to an industrial partner unless, besides his
partner becomes the property of the partnership (De Leon, 2010). services, he has contributed capital pursuant to an agreement.
Liability of partner who fails to perform the personal services Liability of a capitalist partner to contribute additional capital
which he has stipulated to render to the partnership for the value
of the services GR: A capitalist partner is not bound to contribute to the
partnership more than what he agreed to contribute.
Unless there is a special agreement to that effect, the partners are
not entitled to charge each other, or the partnership of which they XPN:
are members, for their services in the firm business. The doctrine
seems to be that every partner is bound to work to the extent of 1. In case of imminent loss of the business
his ability for the benefit of the whole, without regard to the 2. There is no agreement to the contrary.
services of his co-partners, however unequal in value or amount,
and to require a partner to account for the value of his services He is under obligation to contribute an additional share to
would be, in effect, allowing compensation to the other members save the venture. If he refuses to contribute, he shall be
of the partnership for the services they rendered. obliged to sell his interest to the other partners.
Q: Who bears the risk of loss of things contributed? Requisites before capitalist partners are compelled to contribute
additional capital
A:
1. Imminent loss of the business of the partnership;
KIND OF PROPERTY / THING WHO BEARS THE RISK? 2. Majority of the capitalist partners are of the opinion that an
additional contribution to the common fund would save the
Specific and determinate things which business;
are not fungible where only the use is Partners 3. Capitalist partner refuses deliberately to contribute (not due
contributed to financial inability);
4. There is no agreement to the contrary.
Specific and determinate things the
ownership of which is transferred to the
NOTE: The refusal of the partner to contribute his additional share reflects
partnership his lack of interest in the continuance of the partnership. (De Leon, 2010)
Partnership
Fungible things (Consumable) It is to be noted that the industrial partner is exempted from the
requirement to contribute an additional share. Having contributed his entire
Things brought and appraised in the industry, he can do nothing further (De Leon, 2010).
inventory
Obligations of managing partners who collect his personal
Effect if a partner fails to contribute the property which he receivable from a person who also owes the partnership
promised to deliver to the partnership
1. Apply sum collected to 2 credits in proportion to their
1. Partner become ipso jure a debtor of the partnership even in amounts
the absence of any demand (Art. 1786, NCC) 2. If he received it for the account of partnership, the whole
2. Remedy of the other partner is not rescission but specific sum shall be applied to partnership credit
performance with damages and interest from defaulting
partner from the time he should have complied with his Requisites:
obligation. 1. At least 2 debts, one where the collecting partner is
creditor and the other, where the partnership is the
When the capital or a part hereof which a partner is bound to creditor
contribute consists of goods, their appraisal must be made in the 2. Both debts are demandable
manner prescribed in the contract of partnership, and in the

CIVIL LAW
3. Partner who collects is authorized to manage and Rule with regard to the obligation of a partner as to damages
actually manages the partnership suffered by the partnership through his fault
NOTE: The debtor is given the right to prefer payment of the credit of the GR: Every partner is responsible to the partnership for damages
partner if it should be more onerous to him in accordance with his right to suffered by it through his fault and he cannot compensate them
application of payment (Art. 1252, NCC; De Leon, 2010) with the profits and benefits which he may have earned for the
partnership by his industry.
Reason for applying payment to partnership credit
XPN: The courts may equitably lessen this responsibility if through
The law safeguards the interests of the partnership by preventing the partners extraordinary efforts in other activities of the
the possibility of their being subordinated by the managing partner partnership, unusual profit has been realized (Art. 1794, NCC).
to his own interest to the prejudice of the other partners (De Leon,
2010) Set-off of damages caused by a partner
Obligation of a partner who receives share of partnership credit GR: The damages caused by a partner to the partnership cannot be
offset by the profits of benefits which he may have earned for the
To bring to the partnership capital what he has received even partnership by his industry.
though he may have given receipt for his share only.
Ratio: The partner has the obligation to secure benefits for the
Requisites partnership. Hence, the profits which he may have earned pertain
1. A partner has received in whole or in part, his share of as a matter of law or right, to the partnership
the partnership credit
2. Other partners have not collected their shares XPN: If unusual profits are realized through the extraordinary
3. Partnership debtor has become insolvent efforts of the partner at fault, the courts may equitably mitigate or
lessen his liability for damages. This rule rests on equity.
Liability of a person who has not directly transacted in behalf of
an unincorporated association for a contract entered into by such Note that even in this case, the partner at fault is not allowed to
association compensate such damages with the profits earned. The law does
not specify as to when profits may be considered unusual. The
The liability for a contract entered into on behalf of an question depends upon the circumstances of the particular case.
unincorporated association or ostensible corporation may lie in a
person who may not have directly transacted on its behalf, but Duty of the partners with respect to keeping the partnership
reaped benefits from that contract (Lim Tong Lim v. Philippine books
Fishing Gear Industries Inc., G.R. No. 136448, Nov. 3, 1999).
The partnership books shall be kept, subject to any agreement
Rules regarding the prohibition to engage in another business between partners, at the principal place of business of the
partnership (Art. 1805, NCC).
INDUSTRIAL PARTNER CAPITALIST PARTNER
Prohibition Duty to keep partnership book belongs to managing or active
Absolute: Cannot engage in Relative: Cannot engage in partner
business for himself unless the business (with same kind of
partnership expressly permits business with the partnership) The duty to keep true and correct books showing the firms
him to do so for his own account, unless accounts, such books being at all times open to inspection of all
there is a stipulation to the members of the firm, primarily rests on the managing or active
contrary partner (De Leon, 2010).
Remedy
Capitalist partners may: Capitalist partner, who Duty of the partners with respect to information affecting the
1. Exclude him from the firm violated shall: partnership
2. Avail themselves of the 1. Bring to the common fund
benefits which he may any profits accruing to him Partners shall render on demand true and full information of all
have obtained from said transaction; and things affecting the partnership to:
3. Damages, in either case 2. Personally bears all losses 1. Any partner; or
(Art. 1789) (Art. 1808) 2. Legal representative of any deceased or any partner under
legal disability (Art. 1806, NCC).
Q: Joe and Rudy formed a partnership to operate a car repair
shop in Quezon City. Joe provided the capital while Rudy NOTE: Under the same principle of mutual trust and confidence among
contributed his labor and industry. On one side of their shop, Joe partners, there must be no concealment between them in all matters
opened and operated a coffee shop, while on the other side, Rudy affecting the partnership. The information, to be sure, must be used only for
a partnership purpose (De Leon, 2010).
put up a car accessories store. May they engage in such separate
businesses? Why? (2001 Bar Question)
Accountability of partners to each other as fiduciary
A: Joe, the capitalist partner, may engage in the restaurant
Every partner must account to the partnership for any benefit, and
business because it is not the same kind of business the
hold as trustee for it any profits derived by him without the
partnership is engaged in. On the other hand, Rudy may not
consent of the other partners from any transaction connected with
engage in any other business unless their partnership expressly
the formation, conduct, or liquidation of the partnership or from
permits him to do so because as an industrial partner he has to
any use by him of its property (Art. 1807, NCC).
devote his full time to the business of the partnership (Art. 1789,
NCC).

2014 GOLDEN NOTES
PARTNERSHIP
Duty of a partner to act with utmost good faith towards co- of the partners is a personal action which under the Rules of Court,
partners continues even after dissolution may be commenced and tried where the defendent resides or may
be found or where the plaintiffs reside, at the election of the latter.
The duty of a partner to act with utmost good faith towards his co-
partners continues throughout the entire life of the partnership NOTE: The fact that the some of the assets of the partnership are real
even after dissolution for whatever reason or whatever means, property does not materially change the nature of the action. It is an action
until the relationship is terminated, i.e., the winding up of in personam because it is an action against a person for the performance of a
personal duty on his part, and not an action in rem where the action is
partnership affairs is completed (De Leon, 2010). against the thing itself. It is only incidental that part of the assets of the
partnership subject to accounting or under liquidation happen to be real
RIGHTS OF PARTNERS property (De Leon, 2010).
Rights of partners among themselves Rules regarding distribution of profits and losses
1. Right to reimbursement for amounts advanced to the 1. Distribution of profits

partnership and to indemnification for risks in consequence a. The partners share in the profits according to their
of management (Art. 1796); agreement
2. Right on the distribution of profits and losses (Art. 1797, b. In the absence of such:
NCC). i. Capitalist partner in proportion to his
3. Right to associate another person with him in his share contribution
without the consent of the other partners (Art. 1804, NCC). ii. Industrial partner what is just and equitable
under the circumstances
NOTE: Such partnership formed between a member of a partnership
and a third person for a division of the profits coming to him from the NOTE: If the industrial partner has contributed capital other
partnership enterprise is termed subpartnership. (De Leon, 2010) than his services, he shall also receive a share in the profits in
proportion to his capital.
4. Right to free access and to inspect and copy at any
reasonable hour the partnership books (Art. 1805, NCC). 2. Distribution of losses
5. Right to formal account as to partnership affairs: a. The partners share in the losses according to their
a. If he is wrongfully excluded from the partnership agreement
business or possession of its property by his co- b. In the absence of such, according to their agreement as
partners; to profits
b. If the right exist under the terms of any agreement; c. In the absence of profit agreement, in proportion to his
c. As provided by Art. 1807; capital contribution
d. Whenever there are circumstances render it just and
reasonable. Rule regarding a stipulation excluding a partner in the sharing of
5. Right to have the partnership dissolved. profits and losses
6. Property rights of a partner (Art. 1810, NCC)
GR: Stipulation is void.
As a rule, a partner not entitled to formal account during the
existence of the partnership; exception XPN: Industrial partner is not liable for losses (Art. 1797(2), NCC).
However, he is not exempted from liability insofar as third persons
GR: During the existence of the partnership, a partner is not are concerned.
entitled to a formal account of partnership affairs.
NOTE: Loss is different from liability
XPNs: However, in the special and unusual situations enumerated
under Article 1809, the justification for a formal accounting even Property rights of a partner
before dissolution of the partnership cannot be doubted. An
example under No. (4) of Article 1809 is where a partner has been 1. Right in specific partnership property
assigned abroad for a long period of time in connection with the 2. Interest in the partnership (share in the profits and surplus)
partnership business and the partnership books during such period 3. Right to participate in the management
being in the possession of the other partners.
Related rights to the property rights of a partner
Partners inspection rights
1. Right to the partnership and to indemnification for risks in
The partners inspection rights are not absolute. He can be consequence of management (Art. 1796, NCC);
restrained from using the information gathered for other than 2. The right of access and inspection of partnership books (Art.
partnership purpose. 1805, NCC);
3. The right to true and full information of all things affecting
Any reasonable hour the partnership (Art. 1806, NCC);
4. The right to a formal account of partnership affairs under
Article 1805 declares that the rights of the partners with respect to certain circumstances (Art. 1809, NCC); and
partnership books can be exercised at any reasonable hour. This 5. The right to have the partnership dissolved also under certain
phrase has been interpreted to mean reasonable hours on business conditions (Arts. 1830-1831, NCC)(De Leon, 2010).
days throughout the year and not merely during some arbitrary
period of a few days chosen by the managing partners (De Leon, Nature of a partner's right in specific partnership property
2010).
1. Equal right to possession for partnership purposes
Action for accounting 2. Right is not assignable, except in connection with assignment
of rights of all partners in the same property
An action for accounting, asking that the assets of the partnership 3. Right is limited to his share of what remains after partnership
be accounted for, sold and distributed according to the agreement debts have been paid

CIVIL LAW
4. Right is not subject to attachment or execution except on a c. Knowledge of any other partner who reasonably could
claim against the partnership and should have communicated it to the acting partner
5. Right is not subject to legal support (Art. 1821, NCC)
7. Partners and the partnership are solidarily liable to 3rd
Effects of assignment of partners whole interest in the persons for the partner's tort or breach of trust (Art. 1822-24,
partnership NCC)
8. Liability of incoming partner is limited to:
1. Rights withheld from the assignee: a. His share in the partnership property for existing
Such assignment does not grant the assignee the right to: obligations
a. To interfere in the management b. His separate property for subsequent obligations (Art.
b. To require any information or account 1826, NCC)
c. To inspect partnership books 9. Creditors of partnership are preferred in partnership property
& may attach partner's share in partnership assets (Art. 1827,
2. Rights of assignee on partners interest: NCC)
a. To receive in accordance with his contract the profits
accruing to the assigning partner NOTE: On solidary liability, Art. 1816 should be construed together with Art.
b. To avail himself of the usual remedies provided by law 1824 (in connection with Arts. 1822 and 1823). While the liability of the
partners is merely joint in transactions entered into by the partnership, a
in the event of fraud in the management
third person who transacted with said partnership may hold the partners
c. To receive the assignors interest in case of dissolution solidarily liable for the whole obligation if the case of the third person falls
d. To require an account of partnership affairs, but only in under Articles 1822 and 1823(Munasque v. CA, G.R. No. L-39780, Nov. 11,
case the partnership is dissolved, and such account shall 1985).
cover the period from the date only of the last account
agreed to by all the partners Importance of having a firm name
Q: Rosa received from Jois money, with the express obligation to A partnership must have a firm name under which it will operate. It
act as Jois agent in purchasing local cigarettes, to resell them to is necessary to distinguish the partnership which has a distinct and
several stores, and to give Jois the commission corresponding to separate juridical personality from the individuals composing the
the profits received. However, Rosa misappropriated and partnership and from other partnerships and entities (De Leon,
converted the said amount due to Jois to her personal use and 2010).
benefit. Jois filed a case of estafa against Rosa. Can Rosa deny
liability on the ground that a partnership was formed between The partners enjoy the utmost freedom in the selection of the
her and Rosa? partnership name. As a general rule, they may adopt any firm
name desired. The firm name of a partnership may be that of an
A:No. Even assuming that a contract of partnership was indeed individual partner, the surnames of all the partners, or the
entered into by and between the parties, when a partner receives surname of one or more of the members with the addition of and
any money or property for a specific purpose (such as that Company, or it may consist of individual names wholly distinct
obtaining in the instant case) and he later misappropriates the from the names of any of the members, or it may be a name purely
same, he is guilty of estafa (Liwanag v. CA, G.R. No. 114398, Oct. fanciful or fictitious. But whatever the firm name may be, the
24, 1997). signature of the firm name is, in law, the signature of the several
partners name.
OBLIGATIONS OF PARTNERSHIP/PARTNERS TO THIRD PERSONS
Discuss the liability for the inclusion of name in the firm name
Obligations of partners with regard to 3rd persons
Persons who, not being partners, include their names in the firm
1. Every partnership shall operate under a firm name. Persons name do not acquire the rights of a partner but under Article 1815,
who include their names in the partnership name even if they they shall be subject to the liability of a partner (Art. 1816, NCC)
are not members shall be liable as a partner (Art. 1815, NCC) insofar as third persons without notice are concerned (De Leon,
2. All partners shall be liable for contractual obligations of the 2010).
partnership with their property, after all partnership assets
have been exhausted: Remedies available to the creditors of a partner
a. Pro rata
b. Subsidiary (Art. 1816, NCC) 1. Separate or individual creditors should first secure a
judgment on their credit; and
NOTE: Any stipulation against the liability laid down in Art. 1816 2. Apply to the proper court for a charging order subjecting the
shall be void except as among the partners. (Art. 1817, NCC) interest of the debtor-partner in the partnership for the
payment of the unsatisfied amount of the judgment debt
3. Partner as an agent of the partnership (Art. 1818, NCC) with interest thereon.
4. Conveyance of real property belonging to the partnership
(Art. 1819, NCC) Effects of the acts of partners acting as an agent of the
5. Admission or representation made by any partner concerning partnership
partnership affairs within the scope of his authority is
evidence against the partnership (Art. 1820, NCC) ACTS OF A PARTNER EFFECT
6. Notice to partner of any matter relating to partnership affairs Acts for apparently carrying on With binding effect except:
operates as notice to partnership except in case of fraud: in the usual way the business 1. When the partner so
a. Knowledge of partner acting in the particular matter of the partnership acting has in fact no
acquired while a partner authority to act for the
b. Knowledge of the partner acting in the particular matter partnership in the
then present to his mind particular matter, and
2. The person with whom he
is dealing has knowledge

2014 GOLDEN NOTES
PARTNERSHIP
of the fact that he has no assignee, is a holder for value,
such authority. without knowledge
(Art. 1818, par. 1, NCC) Title in name of 1 or
Conveyance will only pass equitable
Acts not in the ordinary course Do not bind partnership unless more or all partners or
interest, provided:
of business authorized by other partners 3rd person in trust for
1. The act is one within the
(Art. 1818, NCC) partnership;
authority of the partner, and
Acts of strict dominion or GR: One or more but less than Conveyance executed
2. Conveyance was done in the
ownership: all the partners have no in partnership name or
usual way of the business
authority in name of partners
1. Assigning partnership Title in the names of
property in trust for XPNs: all the partners; Conveyance will pass all the rights in
creditors ; 1. Authorized by the other Conveyance executed such property
2. Disposing of goodwill of partners; or by all the partners
business; 2. Partners have abandoned
3. Doing an act which would the business (Art. 1818, par. PARTNERSHIP BY ESTOPPEL
make it impossible to carry 3 , NCC)
on the ordinary business of Partner by estoppel
partnership;
4. Confessing a judgment; It is one who, by words or conduct does any of the following:
5. Entering into a compromise 1. Directly represents himself to anyone as a partner in an
concerning a partnership existing partnership or in a non-existing partnership
claim or liability; 2. Indirectly represents himself by consenting to another
6. Submitting partnership representing him as a partner in an existing partnership or in
claim or liability to a non-existing partnership
arbitration;
7. Renouncing claim of Elements before a partner can be held liable on the ground of
partnership estoppel
Partnership is not liable to 3rd
persons having actual or 1. Defendant represented himself as partner or is represented
Acts in contravention of a
presumptive knowledge of the by others as such, and did not deny/refute such
restriction on authority
restriction (Art. 1818, par.4, representation.
NCC) 2. Plaintiff relied on such representation.
3. Statement of defendant is not refuted.
Effect of conveyance of a real property
Liabilities in case of estoppel
TYPE OF CONVEYANCE EFFECT
When Partnership is Liable
Conveyance passes title but partnership
If all actual partners consented to the representation, then the
can recover unless:
liability of the person who represented himself to be a partner or
1.
who consented to such representation and the actual partner is
a. Conveyance was done in the
considered a partnership liability
usual way of business, and
b. The partner so acting has the When Liability is PRO RATA
Title in the authority to act for the When there is no existing partnership and all those represented
partnerships name; partnership; or as partners consented to the representation, then the liability of
Conveyance in 2. The property which has been the person who represented himself to be a partner and all who
partnership name conveyed by the grantee or a made and consented to such representation, is joint or pro-rata
person claiming through such
When Liability is SEPARATE
grantee to a holder for value
without knowledge that the When there is no existing partnership and not all but only some
partner, in making the of those represented as partners consented to the
conveyance, has exceeded his representation, or none of the partnership in an existing
authority partnership consented to such representation, then the liability
Conveyance does not pass title but only will be separate
equitable interest, provided:
Title in the
1. Conveyance was done in the usual Partnership Tort
partnerships name;
way of business, or
Conveyance in
2. The partner so acting has the There is a partnership tort where
partner's name
authority to act for the 1. By any wrongful act or omission of any partner, acting in the
partnership ordinary course of business of the partnership or with
Conveyance passes title but the authority of his co-partners, loss or injury is caused to any
Title in the name of 1 partnership may recover such property person, not being a partner in the partnership;
or more partners, and if the partners act does not bind the 2. One partner, acting within the scope of his apparent
the record does not partnership: authority, receives money or property from a third person,
disclose the right of 1. The partner so acting has no and misapplies it; or
the partnership; authority to act for the 3. The partnership, in the course of its business, receives money
Conveyance in name partnership, and or property, and it is misapplied by any partner while it is in
of partner/s in whose 2. The person with whom he is the custody of the partnership.
name title stands dealing has knowledge of the fact
unless the purchaser of his

CIVIL LAW
NOTE: Partners are solidarily liable with the partnership for any penalty or NOTE: The dissolution of a partnership must not be understood in the
damage arising from a partnership tort. absolute and strict sense so that at the termination of the object for which it
was created the partnership is extinguished, pending the winding up of some
DISSOLUTION incidents and obligations of the partnership, but in such case, the
partnership will be reputed as existing until the juridical relations arising out
of the contract are dissolved (Testate of Motta v. Serra, G.R. No. L-22825,
Dissolution, Winding Up andTermination, distinguished
Feb. 14, 1925).
Dissolution Winding up Termination Dissolution does not automatically result in the termination of the legal
A change in the relation Settling the Point in time when personality of the partnership, nor the relations of the partners among
of the partners caused partnership all partnership themselves who remain as co-partners until the partnership is terminated
by any partner ceasing business or affairs are wound (De Leon, 2005).
to be associated in affairs after up or completed;
carrying on the dissolution the end of the A partner cannot be expelled from the partnership without
business. partnership life agreement thereto.
It is that point in time It is the final It signifies the end
when the partners step after of the partnership In the absence of an express agreement to that effect, there exists
cease to carry on the dissolution life. It takes place no right or power of any member, or even a majority of the
business together. It in the after both members, to expel all other members of the firm at will. Nor can
represents the demise termination dissolution and they at will forfeit the share or interest of a member or members
of a partnership. Thus, of the winding up have and compel him or them to quit the firm, even paying what is due
any time a partner partnership. occurred. him (De Leon, 2010).
leaves the business, the
partnership is dissolved. Effect of dissolution on the authority of a partner
Causes of dissolution GR: The partnership ceases to be a going concern
1. Without violating the agreement: XPN: The partners power of representation is confined only to acts
a. Termination of the definite term or specific undertaking incident to winding up or completing transactions begun but not
b. Express will of any partner in good faith, when there is then finished (Art. 1832, NCC).
no definite term and no specified undertaking
NOTE: Subject to the qualifications set forth in Articles 1833 and 1834 in
c. Express will of all partners (except those who have
relation to Article 1832:
assigned their interests or suffered them to be charged 1. In so far as the partners themselves are concerned The authority of
for their separate debts) either before or after the any partner to bind the partnership by a new contract is immediately
termination of any specified term or particular terminated when the dissolution is not by the act, insolvency, or death
undertaking of a partner.
d. Expulsion of any partner in good faith of a member 2. When the dissolution is by the act, insolvency, or death, the
2. Violating the agreement termination of authority depends upon whether or not the partner
had knowledge or notice of dissolution (Art. 1833, NCC).
3. Unlawfulness of the business
4. Loss
Q: The articles of co-partnership provide that in case of death of
a. Specific thing promised as contribution is lost or
one partner, the partnership shall not be dissolved but shall be
perished before delivery
continued by the deceased partners heirs. When H, a partner,
b. Loss of a specific thing contributed before or after
died, his wife, W, took over the management of some of the real
delivery, if only the use of such is contributed
properties with permission of the surviving partner, X, but her
NOTE: The partnership shall not be dissolved by the loss of the
name was not included in the partnership name. She eventually
thing when it occurs after the partnership has acquired the sold these real properties after a few years. X now claims that W
ownership thereof. did not have the authority to manage and sell those properties as
she was not a partner. Is the sale valid?
5. Death of any of the partners
6. Insolvency of any partner or of the partnership A: Yes. The widow was not a mere agent, because she had become
7. Civil interdiction of any partner a partner upon her husband's death, as expressly provided by the
8. By decree of court under Art. 1831 articles of co-partnership, and by authorizing the widow to manage
a. A partner has been declared insane or of unsound mind partnership property X recognized her as a general partner with
b. A partner becomes in any other way incapable of authority to administer and alienate partnership property. It is
performing his part of the partnership contract immaterial that W's name was not included in the firm name, since
c. A partner has been guilty of such conduct as tends to no conversion of status is involved, and the articles of co-
affect prejudicially the carrying on of the business partnership expressly contemplated the admission of the partner's
d. A partner willfully or persistently commits a breach of heirs into the partnership (Goquiolay v. Sycip, G.R. No. L-11840,
the partnership agreement Dec. 16, 1963).
e. The business of the partnership can only be carried on
at a loss Liability of a partner where the dissolution is caused by the act,
f. Other circumstances render a dissolution equitable death or insolvency of a partner
Effects of dissolution GR: Each partner is liable to his co-partners for his share, of any
liability created by any partner for the partnership, as if the
1. Partnership is not terminated partnership had not been dissolved.
2. Partnership continues for a limited purpose
3. Transaction of new business is prohibited (De Leon, XPNs: Partners shall not be liable when:
Comments and Cases on Partnership, Agency, and Trust, p. 1. The dissolution, being by act of any partner, the partner
229, 2005 ed) acting for the partnership had knowledge of the dissolution;
or

2014 GOLDEN NOTES
PARTNERSHIP
2. The dissolution, being by the death or insolvency of a partner, In setting accounts after dissolution, the liabilities of the
the partner acting for the partnership had knowledge or partnership shall be entitled to payment in the following order:
notice of the death or insolvency (Art. 1833, NCC). 1. Those to creditors, in the order of priority as provided by law,
except those to limited partners on account of their
Q: After the dissolution of a partnership, can a partner still bind contributions, and to general partners
the partnership? 2. Those to limited partners in respect to their share of the
profits and other compensation by way of income on their
A: contributions
GR: A partner continues to bind partnership even after dissolution 3. Those to limited partners in respect to the capital of their
in the following cases: contributions
1. Transactions to wind up partnership affairs or to complete 4. Those to general partners other than for capital and profits
transactions unfinished at dissolution; 5. Those to general partners in respect to profits
2. Transactions which would bind partnership if dissolution had 6. Those to general partners in respect to capital (Art. 1863,
not taken place, provided the other party/obligee: NCC)
a. Had extended credit to partnership prior to dissolution;
and had no knowledge/notice of dissolution; or NOTE: Subject to any statement in the certificate or to subsequent
b. Did not extend credit to partnership; Had known agreement, limited partners share in the partnership assets in respect to
partnership prior to dissolution; AND Had no their claims for capital, and in respect to their claims for profits or for
compensation by way of income on their contribution respectively, in
knowledge/notice of dissolution/fact of dissolution not proportion to the respective amounts of such claims.
advertised in a newspaper of general circulation in the
place where partnership is regularly carried on. WINDING UP
XPNs: Partner cannot bind the partnership anymore after Winding up of the partnership
dissolution where dissolution is due to unlawfulness to carry on
business. It is during this time after dissolution that partnership business or
affairs are being settled (De Leon, 2005).
XPN to XPN: Winding up of partnership affairs
1. Partner has become insolvent Ways of winding up
2. Act is not appropriate for winding up or for completing
unfinished transactions The winding up of the dissolved partnership may be done either:
3. Completely new transactions which would bind the
partnership if dissolution had not taken place with third 1. Judicially, under the control and direction of the proper court
persons in bad faith. upon cause shown by any partner, his legal representative, or
4. Partner is unauthorized to wind up partnership affairs, except his assignee; or
by transaction with one who: 2. Extrajudicially, by the partners themselves without
a. Had extended credit to partnership prior to dissolution; intervention of the court (De Leon, 2010).
AND Had no knowledge or notice of dissolution; or
b. Did not extend credit to partnership prior to dissolution; Action for liquidation
Had known partnership prior to dissolution; AND Had
no knowledge/notice of dissolution/fact of dissolution An action for the liquidation of a partnership is a personal one;
not advertised in a newspaper of general circulation in hence, it may be brought in the place of residence of either the
the place where partnership is regularly carried on. plaintiff or the defendant (De Leon, 2010).
Q: does the dissolution of a partnership discharge existing liability Persons authorized to wind up
of a partner?
1. Partners designated by the agreement
A: 2. In the absence of such, all partners who have not wrongfully
dissolved the partnership
GR: Dissolution does not discharge the existing liability of a 3. Legal representative of last surviving partner who is not
partner. insolvent
XPN: Said liability is discharged when there is an agreement NOTE: The court may, in its discretion, after considering all the facts and
between: circumstances of the particular case, appoint a receiver to wind up the
1. Partner himself; partnership affairs where such step is shown to be to the best interests of all
2. Person/s continuing the business; and persons concerned.
3. Partnership creditors An insolvent partner does not have the right to wind up partnership affairs
(De Leon, 2010).
Liability of the estate of a deceased partner.
Rights of liquidating partner
In accordance with Article 1816, the individual property of a
deceased partner shall be liable for all obligations of the 1. Make new contracts
partnership incurred while he was a partner. Note that the 2. Raise money to pay partnership debts
individual creditors of the deceased partner are to be preferred 3. Incur obligations to complete existing contracts or preserve
over partnership creditors with respect to the separate property of partnership assets
said deceased partner (De Leon, 2010). 4. Incur expenses necessary in the conduct of litigation (De
Leon, 2010).
Order of priority in the distribution of assets during the
Order of payment in winding up
dissolution of a limited partnership
1. Those owing to creditors other than partners
2. Those owing to partners other than for capital or profits

CIVIL LAW
3. Those owing to partners in respect of capital 2. Order of application of the assets:
4. Those owing to partners in respect to profits (Art. 1839 (2) , a. First, those owing to partnership creditors
NCC) b. Second, those owing to partners other than for capital
and profits such as loans given by the partners or
Doctrine of marshalling of assets? advances for business expenses
c. Third, those owing for the return of the capital
The doctrine of marshalling of assets provides that: contributed by the partners
d. Fourth, the share of the profits, if any, due to each
1. Partnership creditors have preference in partnership assets partner
2. Separate or individual creditors have preference in separate
or individual properties Q: A partnership was formed with Magdusa as the manager.
3. Anything left from either goes to the other. During the existence of the partnership, two partners expressed
their desire to withdraw from the firm. Magdusa determined the
NOTE: The doctrine of marshalling of assets involves the ranking of assets in value of the partners share which were embodied in the
a certain order toward the payment of outstanding debts. (De Leon, 2010) document drawn in the handwriting of Magdusa but was not
signed by all of the partners. Later, the withdrawing partners
Rights of a partner where dissolution is not in contravention of demanded for payment but were refused. Considering that not all
the agreement partners intervened in the distribution of all or part of the
partnership assets, should the action prosper?
Unless otherwise agreed, the rights of each partner are as follows:
1. To have the partnership property applied to discharge the A: No. A partners share cannot be returned without first dissolving
liabilities of partnership; and and liquidating the partnership, for the return is dependent on the
2. To have the surplus, if any, applied, to pay in cash the net discharge of creditors, whose claims enjoy preference over those
amount owing to the respective partners. of the partner, and it is self-evident that all members of the
partnership are interested in its assets and business, and are
Rights of a partner where dissolution is in contravention of the entitled to be heard in the matter of the firms liquidation and
agreement distribution of its property. The liquidation prepared by Magdusa
not signed by the other partners is not binding on them (Magdusa
The rights of a partner vary depending upon whether he is the v. Albaran, G.R. No. L-17526, June 30, 1962).
innocent or guilty partner.
1. Rights of partner who has not caused the dissolution Since the capital was contributed to the partnership, not to
wrongfully: partners, it is the partnership that must refund the equity of the
a. To have partnership property applied for the payment of retiring partners. Since it is the partnership, as a separate and
its liabilities and to receive in cash his share of the distinct entity that must refund the shares of the partners, the
surplus amount to be refunded is necessarily limited to its total resources.
b. To be indemnified for the damages caused by the In other words, it can only pay out what it has in its coffers, which
partner guilty of wrongful dissolution consists of all its assets (Villareal v. Ramirez, G.R. No. 144214, July
c. To continue the business in the same name during the 14, 2003).
agreed term of the partnership, by themselves or jointly
with others Partners lien
d. To possess partnership property should they decide to
continue the business It is the right of every partner to have the partnership property
2. Rights of partner who has wrongfully caused the dissolution: applied, to discharge partnership liabilities and surplus assets, if
a. If the business is not continued by the other partners, to any, distributed in cash to the respective partners, after deducting
have the partnership property applied to discharge its what may be due to the partnership from them as partners.
liabilities and to receive in cash his share of the surplus
less damages caused by his wrongful dissolution Effects when the business of a dissolved partnership is continued
b. If the business is continued:
i. To have the value of his interest in the partnership 1. Creditors of old partnership are also creditors of the new
at the time of the dissolution, less any damage partnership who continues the business of the old one
caused by the dissolution to his co-partners, without liquidation of the partnership affairs.
ascertained and paid in cash, or secured by bond 2. Creditors have an equitable lien on the consideration paid to
approved by the court; and the retiring/deceased partner by the purchaser when
ii. To be released from all existing and future retiring/deceased partner sold his interest without final
liabilities of the partnership settlement with creditors.
3. Rights of retiring/estate of deceased partner:
Rights of injured partner where partnership contract is rescinded a. To have the value of his interest ascertained as of the
date of dissolution; and
1. Right of a lien on, or retention of, the surplus of partnership b. To receive as ordinary creditor the value of his share in
property after satisfying partnership liabilities for any sum of the dissolved partnership with interest or profits
money paid or contributed by him; attributable to use of his right, at his option.
2. Right of subrogation in place of partnership creditors after
payment of partnership liabilities; and NOTE: The right to demand on accounting of the value of his interest accrues
3. Right of indemnification by the guilty partner against all debts to any partner or his legal representative after dissolution in the absence of
and liabilities of the partnership. an agreement to the contrary.
Settlement of accounts between partners Prescription begins to run only upon the dissolution of the partnership, when
the final accounting is done.
1. Assets of the partnership include:

a. Partnership property (including goodwill)
b. Contributions of the partners

2014 GOLDEN NOTES
PARTNERSHIP
Persons that are required to render an account 5. Partnership debts are paid out of common fund and the
individual properties of general partners
1. Winding up partner; Consequences of separate personality of limited partnership
2. Surviving partner; and
3. Person or partnership continuing the business The personality of a limited partnership being different from that
of its members, it must, on general principle, answer for, and
Q: Emnace and Tabanao decided to dissolve their partnership in suffer, the consequence of its acts as such an entity capable of
1986. Emnace failed to submit the statement of assets and being the subject of rights and obligations. If the limited
liabilities of the partnership, and to render an accounting of the partnership failed to pay its obligations, this partnership must
partnership's finances. Tabanaos heirs filed against Emnace an suffer the consequences of such a failure, and must be adjudged
action for accounting, etc. Emnace counters, contending that insolvent (Campos Rueda & Co. v. Pacific Commercial Co., et. al,
prescription has set in. Decide. G.R. No. L- 18703, Aug. 28, 1922).
A:Prescription has not yet set in. Prescription of the said right Business reasons and purposes of statutes authorizing limited
starts to run only upon the dissolution of the partnership when the partnerships
final accounting is done. Contrary to Emnaces protestations,
prescription had not even begun to run in the absence of a final 1. Secure capital from others for ones business and still retain
accounting. The right to demand an accounting accrues at the date control
of dissolution in the absence of any agreement to the contrary. 2. Share in profits of a business without risk of personal liability
When a final accounting is made, it is only then that prescription 3. Associate as partners with those having business skill (De
begins to run (Emnace v. CA, G.R. No. 126334, Nov. 23, 2001). Leon, 2010).
Q: Pauline, Patricia and Priscilla formed a business partnership for FORMATION AND AMMENDMENT OF LIMITED PARTNERSHIP
the purpose of engaging in neon advertising for a term of five (5)
years. Pauline subsequently assigned to Philip her interest in the Essential Requirements for the formation of limited partnership
partnership. When Patricia and Priscilla learned of the
assignment, they decided to dissolve the partnership before the 1. Certificate of articles of limited partnership which states the
expiration of its term as they had an unproductive business matters enumerated in Art. 1844, must be signed and sworn;
relationship with Philip in the past. On the other hand, unaware and
of the move of Patricia and Priscilla but sensing their negative 2. Certificate must be filed for record in the office of the SEC.
reaction to his acquisition of Paulines interest, Philip
simultaneously petitioned for the dissolution of the partnership. NOTE: Strict compliance with legal requirements is not necessary. It is
a. Is the dissolution done by Patricia and Priscilla without the sufficient that there is substantial compliance in good faith. If there is no
substantial compliance, the partnership becomes general partnership as far
consent of Pauline or Philip valid? Explain
as third persons are concerned, in which the member are liable as general
b. Does Philip have any right to petition for the dissolution of partners (Jo Chun v. Pacific Commercial Co., G.R. No. 19892, Sept. 6, 1923).
the partnership before the expiration of its specified term?
Explain (1995 Bar Question) Cancellation of certificate or articles of limited partnership
A: 1. When the partnership is dissolved
a) Under Art 1830(1)(c), the dissolution by Patricia and Priscilla 2. When all the limited partners ceased to be such (Art. 1864,
is valid and did not violate the contract of partnership even NCC)
though Pauline and Philip did not consent thereto. The
consent of Pauline is not necessary because she had already Instances when a certificate or articles of limited partnership can
assigned her interest to Philip. The consent of Philip is also be amended
not necessary because the assignment to him of Paulines
interest did not make him a partner, under Art. 1813. 1. It must fall under the following changes and conditions:
a. There is a change in the name of the partnership or in
b) No, Philip has no right to petition for dissolution because he the amount or character of the contribution of any
does not have the standing of a partner (Art. 1813, NCC) limited partner
b. A person is substituted as a limited partner
LIMITED PARTNERSHIP c. An additional limited partner is admitted
d. A person is admitted as a general partner
Limited Partnership e. A general partner retires, dies, becomes insolvent or
insane, or is sentenced to civil interdiction and the
It is one formed by two or more persons having as members one or business is continued under Article 1860
more general partners and one or more limited partners, the latter f. There is a change in the character of the business of the
not being personally liable for partnership debts (Art. 1843, NCC). partnership
g. There is a false or erroneous statement in the certificate
Characteristics of limited partnership h. There is a change in the time as stated in the certificate
for the dissolution of the partnership or for the return
1. It is formed by compliance with the statutory requirements. of a contribution
2. One or more general partners control the business and are i. A time is fixed for the dissolution of the partnership, or
personally liable to creditors. the return of a contribution, no time having been
3. One or more limited partners contribute to the capital and specified in the certificate
share in the profits but do not participate in the management j. The members desire to make a change in any other
of the business and are not personally liable for partnership statement in the certificate in order that it shall
obligations beyond their capital contributions. accurately represent the agreement among them (Art.
4. The limited partners may ask for the return of their capital 1864 , NCC)
contributions under conditions prescribed by law.

CIVIL LAW
2. Must be signed and sworn to by all of the members including Rights and liabilities of a substituted limited partner
the new members if some added; in case of substitution, the
assigning limited partner must also sign. GR: He has all the rights and powers and is subject to all the
3. Must be recorded in the SEC restrictions and liabilities of his assignor.
Instances when a general partner needs consent or ratification of XPN: Those liabilities which he was ignorant of at the time that he
all the limited partners became a limited partner and which could not be ascertained from
the certificate
When he:
1. Does any act in contravention of the certificate; Requirements for the admission of a substituted limited partner
2. Does any act which would make it impossible to carry on the
ordinary business of the partnership; 1. All the members must consent to the assignee becoming a
3. Confesses judgment against partnership; substituted limited partner or the limited partner, being
4. Possesses partnership property / assigns rights in specific empowered by the certificate must give the assignee the
partnership property other than for partnership purpose; right to become a limited partner;
5. Admits person as general partner; 2. The certificate must be amended in accordance with Art.
6. Admits person as limited partner unless authorized in 1865; and
certificate; or 3. The certificate as amended must be registered in the SEC.
7. Continues business with partnership property on death,
retirement, civil interdiction, insanity or insolvency of general Basis of preference given to limited partners over other limited
partner unless authorized in the certificate. partners
RIGHTS AND OBLIGATIONS OF A LIMITED PARTNER Priority or preference may be given to some limited partners over
other limited partners as to the:
Rights of a limited partner 1. Return of their contributions;
2. Their compensation by way of income; or
1. To have partnership books kept at principal place of business; 3. Any other matter.
2. To inspect/copy books at reasonable hours;
3. To have on demand true and full information of all things NOTE: In the absence of such statement in the certificate, even if there is an
affecting partnership; agreement, all limited partners shall stand on equal footing in respect of
these matters.
4. To have formal account of partnership affairs whenever
circumstances render it just and reasonable;
5. To ask for dissolution and winding up by decree of court; Requisites for return of contribution of a limited partner
6. To receive share of profits/other compensation by way of
income; and 1. All liabilities of the partnership have been paid or if they have
7. To receive return of contributions, provided the partnership not yet been paid, the assets of the partnership are sufficient
assets are in excess of all its liabilities. to pay such liabilities;
2. The consent of all the members (general and limited
Liabilities of a limited partner partners) has been obtained except when the return may be
rightfully demanded; and
3. The certificate of limited partnership is cancelled or amended
AS CREDITOR AS TRUSTEE
Deficiency in Specific property stated as contributed but
Return of contribution of a limited partner as a matter of right
contribution not yet contributed/ wrongfully returned
Money/other property wrongfully paid/
Unpaid When all liabilities of the partnership, except liabilities to general
conveyed to him on account of his
contribution partners and to limited partners on account of their contributions,
contribution
have been paid or there remains property of the partnership
sufficient to pay them and the certificate is cancelled or so
Transactions allowed or prohibited in a limited partnership
amended as to set forth the withdrawal or reduction:
1. On the dissolution of the partnership;
1. Allowed
2. Upon the arrival of the date specified in the certificate for the
a. Granting loans to partnership
return; or
b. Transacting business with partnership
3. After the expiration of 6 month notice in writing given by him
c. Receiving pro rata share of partnership assets with
to the other partners if no time is fixed in the certificate for
general creditors if he is not also a general partner
the return of the contribution or for the dissolution of the
2. Prohibited
partnership.
a. Receiving/holding partnership property as collateral
security NOTE: Even if a limited partner has contributed property, he has only the
b. Receiving any payment, conveyance, release from right to demand and receive cash for his contribution. The exceptions are:
liability if it will prejudice right of 3rd persons 1. When there is stipulation to the contrary in the certificate; or
2. When all the partners (general and limited partners) consent to the
NOTE: The prohibition is not absolute because there is no prohibition return other than in the form of cash
if the partnership assets are sufficient to discharge partnership
liabilities to persons not claiming as general or limited partners. Liabilities of a limited partner
Substituted limited partner 1. To the partnership
It is a person admitted to all the rights of a limited partner who has Since limited partners are not principals in the transaction of
died or assigned his interest in the partnership. a partnership, their liability as a rule, is to the partnership,
not to the creditors of the partnership. The general partners

2014 GOLDEN NOTES
PARTNERSHIP
cannot, however waive any liability of the limited partners to 1. General partner - The partnership is dissolved (Art. 1860)
the prejudice of such creditors. unless the business is continued by the remaining general
partners:
2. To the partnership creditors and other partners a. Under the right stated in the certificate; or
b. With the consent of all the partners.
a. A limited partner is liable for partnership obligations 2. Limited partner - The partnership is not dissolved except all
when he contributed services instead of only money or limited partners cease to be such.
property to the partnership
b. When he allows his surname to appear in the firm name Rights of the executor/administrator on the death of the limited
c. When he fails to have a false statement in the partner
certificate corrected, knowing it to be false
d. When he takes part in the control of the business 1. All the rights of a limited partner for the purpose of settling
e. When he receives partnership property as collateral his estate
security, payment, conveyance, or release in fraud of 2. To have the same power as the deceased had to constitute
partnership creditors his assignee as substituted limited partner.
f. When there is failure to substantially comply with the
legal requirements governing the formation of limited In setting accounts after dissolution, the liabilities of the
partnerships partnership shall be entitled to payment in the following order:
1. Those to creditors, in the order of priority as provided by law,
3. To separate creditors except those to limited partners on account of their
contributions, and to general partners
As in a general partnership, the creditor of a limited partner 2. Those to limited partners in respect to their share of the
may, in addition to other remedies allowed under existing profits and other compensation by way of income on their
laws, apply to the proper court for a charging order contributions
subjecting the interest in the partnership of the debtor 3. Those to limited partners in respect to the capital of their
partner for the payment of his obligation. (De Leon, contributions
Comments and cases on Partnership, Agency and Trust, 2010, 4. Those to general partners other than for capital and profits
pp. 306-307) 5. Those to general partners in respect to profits
6. Those to general partners in respect to capital (Art. 1863,
Requisites for waiver or compromise of liabilities NCC)
The waiver or compromise: NOTE: Subject to any statement in the certificate or to subsequent
1. Is made with the consent of all partners; and agreement, limited partners share in the partnership assets in respect to
their claims for capital, and in respect to their claims for profits or for
2. Does not prejudice partnership creditors who extended credit
compensation by way of income on their contribution respectively, in
or whose claims arose before the cancellation or amendment proportion to the respective amounts of such claims.
of the certificate.
Q: Is a limited partner, not a proper party to proceedings?
When may a limited partner have the partnership dissolved
A:
1. When his demand for the return of his contribution is denied
although he has a right to such return; or GR: A limited partner is not a proper party to proceedings:
2. When his contribution is not paid although he is entitled to its 1. By a partnership
return because the other liabilities of the partnership have 2. Against a partnership
not been paid or the partnership property is insufficient for
their payment. XPNs:
1. If he is also a general partner.
Effect of retirement, death, civil interdiction, insanity or 2. Where the object is to enforce a limited partners right
insolvency of a partner against or liability to the partnership. (Art. 1866)
SUMMARY OF RIGHTS AND OBLIGATIONS OF PARTNERS
GENERAL PARTNER LIMITED PARTNER

Rights
1. Right in specific partnership property 1. To have partnership books kept at principal place of business
2. Interest in the partnership (share in the profits and surplus) 2. To inspect/copy books at reasonable hours
3. Right to participate in the management 3. To have on demand true and full information of all things
4. Right to associate another person with him in his share without affecting partnership
the consent of other partners (sub-partnership) 4. To have formal account of partnership affairs whenever
5. Right to inspect and copy partnership books at any reasonable circumstances render it just and reasonable
hour. 5. To ask for dissolution and winding up by decree of court
6. Right to a formal account as to partnership affairs (even during 6. To receive share of profits/other compensation by way of income
existence of partnership) 7. To receive return of contributions, provided the partnership
a. if he is wrongfully excluded from partnership business or assets are in excess of all its liabilities
possession of its property by his co-partners.
b. if right exists under the terms of any agreement.
c. as provided in Art. 1807
d. whenever the circumstances render it just and reasonable.

CIVIL LAW
Obligations
Obligations of partners among themselves To the partnership
1. Contribution of property Since limited partners are not principals in the transaction of a
2. Contribution of money and money converted to personal use partnership, their liability as a rule, is to the partnership, not to the
3. Prohibition in engaging in business for himself creditors of the partnership. The general partners cannot, however
4. Contribute additional capital waive any liability of the limited partners to the prejudice of such
5. Managing partner who collects debt creditors.
6. Partner who receives share of partnership credit
7. Damages to partnership
8. Render information
9. Accountable as fiduciary
Obligations of partners to 3rd persons To the partnership creditors and other partners
1. Every partnership shall operate under a firm name. Persons who 1. A limited partner is liable for partnership obligations when he
include their names in the partnership name even if they are not contributed services instead of only money or property to the
members shall be liable as a partner partnership
2. All partners shall be liable for contractual obligations of the 2. When he allows his surname to appear in the firm name
partnership with their property, after all partnership assets have 3. When he fails to have a false statement in the certificate
been exhausted: corrected, knowing it to be false
a. Pro rata 4. When he takes part in the control of the business
b. Subsidiary 5. When he receives partnership property as collateral security,
3. Admission or representation made by any partner concerning payment, conveyance, or release in fraud of partnership creditors
partnership affairs within the scope of his authority is evidence 6. When there is failure to substantially comply with the legal
against the partnership requirements governing the formation of limited partnerships
4. Notice to partner of any matter relating to partnership affairs
operates as notice to partnership except in case of fraud:
a. Knowledge of partner acting in the particular matter
acquired while a partner
b. Knowledge of the partner acting in the particular matter
then present to his mind
c. Knowledge of any other partner who reasonably could and
should have communicated it to the acting partner
5. Partners and the partnership are solidarily liable to 3rd persons for
the partner's tort or breach of trust
6. Liability of incoming partner is limited to:
a. His share in the partnership property for existing obligations
b. His separate property for subsequent obligations
7. Creditors of partnership are preferred in partnership property & may
attach partner's share in partnership assets
Other obligations To separate creditors
1. Duty to render on demand true and full information affecting As in a general partnership, the creditor of a limited partner may, in
partnership to any partner or legal representative of any deceased addition to other remedies allowed under existing laws, apply to the
partner or of any partner under legal disability. proper court for a charging order subjecting the interest in the
2. Duty to account to the partnership as fiduciary. partnership of the debtor partner for the payment of his obligation.

2014 GOLDEN NOTES
AGENCY
AGENCY Essential elements of an agency
1. Consent (express or implied) of the parties to establish the

DEFINITION OF AGENCY
relationship.
Contract of agency NOTE: A person may express his consent (1) by contract (Art. 1868,
NCC), orally or in writing, (2) by conduct (Art. 1869, NCC) (3) by
By the contract of agency a person binds himself to render some ratification (Art. 1910, NCC) or the consent may arise (4) by
service or to do something in representation or on behalf of presumption or operation of law (De Leon, 2010)
another, with the consent or authority of the latter (Art. 1868,
NCC). 2. The object is the execution of a juridical act in relation to
third persons.
Characteristics of a contract of agency 3. The agent acts as a representativeand not for himself.
4. The agent acts within the scopeof his authority (De Leon,
1. Bilateral If it is for compensation, it gives rise to reciprocal 2010).
rights and obligations.
2. Unilateral If gratuitous, it creates obligations for only one of Appointment of an Agent
the parties.
3. Nominate It has its own name. GR: There are no formal requirements governing the appointment
4. Consensual It is perfected by mere consent. of an agent.
5. Principal It can stand by itself without need of another
contract. XPN: When the law requires a specific form. i.e. when sale of land
6. Preparatory It is entered into as a means to an end (De or any interest therein is through an agent, the authority of the
Leon, 2010). latter must be in writing; otherwise, the sale shall be void (Art.
1874, NCC).
Classifications of Agency
Rules on implied acceptance of agency
1. As to manner of creation
a. Express Agent has been actually authorized by the 1. Between persons who are present The acceptance of the
principal, either orally or in writing (Art. 1869, NCC) agency may also be implied if the principal delivers his power
b. Implied Agency is implied from the acts of the of attorney to the agent and the latter receives it without any
principal, from his silence or lack of action or his failure objection (Art. 1871, NCC).
to repudiate the agency, knowing that another person is 2. Between persons who are absent The acceptance of the
acting on his behalf without authority (Art. 1869, NCC) agency cannot be implied from the silence of the agent
except:
2. As to character a. When the principal transmits his power of attorney to
a. Gratuitous Agent receives no compensation for his the agent, who receives it without any objection;
services(Art. 1875, NCC) b. When the principal entrusts to him by letter or telegram
b. Onerous Agent receives compensation for his services a power of attorney with respect to the business in
(Art. 1875, NCC) which he is habitually engaged as an agent and he did
not reply to the letter or telegram (Art. 1872, NCC).
3. As to extent of business of the principal
a. General Agency comprises all the business of the NOTE: Acceptance by the agent may also be express or implied from his acts
principal (Art. 1876, NCC) which carry out the agency, or from his silence or inaction according to the
circumstances (Art. 1870, NCC).
b. Special Agency comprises one or more specific
transactions (Art. 1876, NCC)
Nature of the relationship between principal and agent
4. As to authority conferred
It is fiduciary in nature that is based on trust and confidence (De
a. Couched in general terms Agency is created in general
Leon, 2010).
terms and is deemed to comprise only acts in the name
and representation of the principal (Art. 1877, NCC)
Qualifications of a Principal
b. Couched in specific terms Agency authorizing only the
performance of a specific act or acts (Art. 1876, NCC)
1. Natural or juridical person
2. He must have capacity to act
5. As to nature and effects
a. Ostensible or representative Agent acts in the name
NOTE: If a person is capacitated to act for himself or his own right, he can act
and representation of the principal (Art. 1868, NCC) through an agent.
b. Simple or commission Agent acts in his own name but
for the account of the principal (De Leon, 2010) Insofar as third persons are concerned, it is enough that the principal is
capacitated. But insofar as his obligations to his principal are concerned, the
Parties to a contract of agency agent must be able to bind himself.
1. Principal One whom the agent represents and from whom Kinds of Principal
he derives his authority; he is the person represented.
2. Agent One who acts for and represents another; he is the 1. Disclosed principal At the time of the transaction contracted
person acting in a representative capacity (De Leon, 2010). by the agent, the other party knows that the agent is acting
for a principal and of the principals identity.
NOTE: From the time the agent acts or transacts the business for which he 2. Partially disclosed principal The other party knows or has
has been employed in representation of another, a third party is added to reason to know that the agent is or may be acting for a
the agency relationship the party with whom the business is transacted (De principal but is unaware of the principals identity.
Leon, 2010).

CIVIL LAW
3. Undisclosed principal The party has no notice of the fact XPNs to the XPN:
that the agent is acting as such for a principal (De Leon, 2010). 1. When one of the other agents acts beyond the scope of
his authority Innocent agent is not liable.
Joint Principals 2. When the fault or negligence of his fellow agents acted
beyond the scope of their authority Innocent agent is
Two or more persons appoint an agent for a common transaction not liable (Art. 1895, NCC).
or undertaking (Art. 1915, NCC).
NOTE: An innocent agent has a right later on to recover from the guilty or
Requisites for solidary liability of joint principals negligent agent (Art. 1217, NCC).
1. There are two or more principals. Instances when the agent may incur personal liability
2. They have all concurred in the appointment of the same
agent. 1. Agent expressly bound himself.
3. Agent is appointed for a common transaction or undertaking 2. Agent exceeds his authority.
(De Leon, 2010) 3. Acts of the agent prevent the performance on the part of the
principal.
Theory of Imputed Knowledge 4. When a person acts as agent without authority or without a
principal.
The importance of the duty to give information of material facts 5. A person who acts as an agent of an incapacitated principal
becomes readily apparent when it is borne in mind that knowledge unless the third person was aware of the incapacity at the
of the agent is imputed to the principal even though the agent time of the making of the contract (De Leon, 2010)
never communicated such knowledge to the principal (De Leon,
2010). Presumption of contract of agency
Exceptions to the theory of imputed knowledge GR: Agency is not presumed. The relation between principal and
agent must exist as a fact. Thus, it is held that where the relation of
1. The agents interests are adverse to those of the principal. agency is dependent upon the acts of the parties, the law makes no
2. The agents duty is not to disclose the information, as where presumption of agency, and it is always a fact to be proved, with
he is informed by way of confidential information. the burden of proof resting upon the person alleging the agency to
3. The person claiming the benefit of the rule colludes with the show, not only the fact of its existence, but also its nature and
agent to defraud the principal. extent.
NOTE: The theory of imputed knowledge ascribes the knowledge of the XPNs:
agent to the principal, not the other way around. The knowledge of the 1. Operation of law
principal cannot be imputed to his agent (Sunace International Management 2. To prevent unjust enrichment (De Leon, 2010)
Services, Inc. vs. NLRC, 480 SCRA 146).
Agency by necessity
Kinds of Agents
Agency cannot be created by necessity. What is created instead is
1. Universal agent One employed to do all acts which the additional authority in an agent appointed and authorized before
principal may personally do, and which he can lawfully the emergency arose.
delegate to another the power of doing.
2. General agent One employed to transact all business of the Requisites for the additional authority of agent in cases of
principal, or all the business of a particular kind or in a necessity
particular place, do all acts connected with a particular trade,
business or employment. 1. Real existence of emergency
3. Special or particular agent One authorized to do act in one 2. Inability of the agent to communicate with the principal
or more specific transactions or to do one or more specific 3. Exercise of additional authority is for the principals
acts or to act upon a particular occasion (De Leon, 2010). protection
4. Adoption of fairly reasonable means, premises duly
Rule with regard to the execution of the agency considered
GR: The agent is bound by his acceptance to carry out the agency, Rule regarding double agency
in accordance with the instruction of the principal and is liable for
damages which, through his non-performance, the principal may GR: It is disapproved by law for being against public policy and
suffer (Art. 1884; Art.1887, NCC). sound morality.
XPN: If its execution could manifestly result in loss or damage to XPN: Where the agent acted with full knowledge and consent of
the principal (Art. 1888, NCC). the principals.
Responsibility of two or more agents appointed simultaneously Acts that a principal may delegate to his agent
GR: Jointly liable. GR: What a man may do in person, he may do thru another.
XPN: Solidarity has been expressly stipulated. Each of the agents XPNs:
becomes solidarily liable for: 1. Personal acts
1. The non-fulfilment of the agency 2. Criminal acts or acts not allowed by law
2. Fault or negligence of his fellow agent
Q: A granted B the exclusive right to sell his brand of Maong pants
in Isabela, the price for his merchandise payable within 60 days
from delivery, and promising B a commission of 20% on all sales.

2014 GOLDEN NOTES
AGENCY
After the delivery of the merchandise to B but before he could
sell any of them, Bs store in Isabela was completely burned Agency v. Judicial administration
without his fault, together with all of A's pants. Must B pay A for
the lost pants? Why? (1999 Bar Question)
JUDICIAL
BASIS AGENCY
ADMINISTRATION
A: The contract between A and B is a sale not an agency to sell
because the price is payable by B upon 60 days from delivery even As to the source Agent is appointed Judicial
if B is unable to resell it. If B were an agent, he is not bound to pay of authority by the principal Administrator is
the price if he is unable to resell it. As a buyer, ownership passed to appointed by the
B upon delivery and, under Art. 1504, the thing perishes for the court
owner. Hence, B must still pay the price. As to whom they Represents the Represents not only
represent principal the court but also
Proving the existence of principal-agent relationship through the heirs and
mere representation creditors of the
estate
Mere representation of an alleged agent is not sufficient to prove As to the Agent does not file Judicial
the existence of a principal-agent relationship.The declarations of requirement of a bond Administrator files
the agent alone are generally insufficient to establish the fact or bond a bond
extent of agency. It is a settled rule that the persons dealing with As to control of Agent is controlled His acts are subject
the assumed agent are bound at their peril, if they would hold the the agent/ by the principal to specific orders
principals liable, to ascertain not only the fact of agency but also administrator thru the agreement from the court
the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to establish it (Sps. Agency v. Lease of services
Yu v. Pan American World Airways, Inc., G.R. No. 123560, Mar. 27,
2000). BASIS AGENCY LEASE OF SERVICES
As to Agent represents Worker or lessor of
Q: A foreign manufacturer of computers and a Philippine
representation the principal services does not
distributor entered into a contract whereby the distributor
by the agent or represent his
agreed to order 1,000 units of the manufacturer's computers
worker employer
every month and to resell them in the Philippines at the
manufacturer's suggested prices plus 10%. All unsold units at the As to Relationship can be Generally,
end of the year shall be bought back by the manufacturer at the termination of terminated at the relationship can be
same price they were ordered. The manufacturer shall hold the relationship will of either terminated only at
distributor free and harmless from any claim for defects in the principal or agent the will of both
units. Is the agreement one for sale or agency? (2000 Bar As to the kind of Agent exercises Employee has
Question) function he discretionary ministerial
exercises powers functions
A: The contract is one of agency not sale. The notion of sale is
negated by the following indicia: (1) the price is fixed by the Agency v. Trust
manufacturer with the 10% mark-up constituting the commission;
(2) the manufacturer reacquires the unsold units at exactly the BASIS AGENCY TRUST
same price; and (3) warranty for the units was borne by the As to the Agent usually holds Trustee may hold
manufacturer. The foregoing indicia negate sale because they capacity to hold no title at all legal title to the
indicate that ownership over the units was never intended to title over the property
transfer to the distributor. property
As to his actions Agent usually acts Trustee may act in
Agency v. Guardianship in the name of the his own name
principal
BASIS AGENCY GUARDIANSHIP As to the Agency usually may Trust usually ends
As to who they Agent represents Guardian represents termination of be terminated or by the
represent a capacitated an incapacitated the relationship revoked any time accomplishment of
person person the purposes for
As to the source Agent derives Guardian derives which it was
of authority authority from the authority from the formed
principal court As to the scope Agency may not be Trust involves
As to the Agent is Guardian is of authority over connected at all control over
appointing appointed by the appointed by the property with property property
authority principal and can court, and stands in As to the binding Agent has authority Trustee does not
be removed by loco parentis effect of the to make contracts necessarily or even
the latter contracts which will be possess such
As to being Agent is subject to Guardian is not entered by them binding on his authority to bind
subject to the directions of the subject to the principal the trustor or the
person they principal directions of the cestuique trust
represent ward, but must act As to its creation Agency is really a Trust may be the
for the wards contractual relation result of a contract,
benefit it may also be
As to liability Agent can make Guardian has no created by law
the principal power to impose
personally liable personal liability on
the ward

CIVIL LAW
POWERS Rule as to when the principal is not bound by the act of the agent
Kinds of agency as to extent of powers conferred 1. GR: When the act is without or beyond the scope of his
authority in the principals name.
An agency may be couched in:
XPNs:
1. General terms It is one which is created in general terms a. Where the acts of the principal have contributed to
and is deemed to comprise only acts of administration (Art. deceive a 3rd person in good faith.
1877, NCC) b. Where the limitation upon the power created by the
2. Specific terms It is necessary to perform any act of strict principal could not have been known by the 3rd person.
ownership (De Leon, 2010). c. Where the principal has placed in the hands of the
agent instruments signed by him in blank.
Instances when the act of an agent is binding to the principal d. Where the principal has ratified the acts of the agent.
1. When the agent acts as such without expressly binding 2. GR: When the act is within the scope of the agents authority
himself or does not exceed the limits of his authority (Art. but in his own name.
1897, NCC).
2. If principal ratifies the act of the agent which exceeded his XPN: When the transaction involves things belonging to the
authority (Art. 1898, NCC). principal (Art. 1883, NCC).
3. Circumstances where the principal himself was, or ought to
have been aware (Art. 1899, NCC). NOTE: The limits of the agents authority shall not be considered
exceeded should it have been performed in a manner more
4. If such act is within the terms of the power of attorney, as advantageous to the principal than that specified by him.
written (Art.1900 & 1902, NCC).
5. Principal has ratified, or has signified his willingness to ratify RIGHTS OF AGENTS
the agents act (Art 1901, NCC).
Instances when the agent may retain in pledge the object of the
Knowledge of a fact by an agent is binding on the principal agency
GR: Knowledge of agent is knowledge of principal. 1. If principal fails to reimburse the agent the necessary sums,
including interest, which the latter advanced for the
XPNs: execution of the agency (Art. 1912, NCC).
1. Agents interests are adverse to those of the principal. 2. If principal fails to indemnify the agent for all damages which
2. Agents duty is not to disclose the information (e.g. the execution of the agency may have caused the latter,
confidential information). without fault or negligence on his part (Art. 1913, NCC).
3. Where the person claiming the benefit of the rule colludes
with the agent to defraud the principal (De Leon, 2010) Rule where two persons deal separately with the agent and the
principal
Effects of the acts of an agent
If the two contracts are incompatible with each other, the one of
1. With authority prior date shall be preferred. This is subject however to the rule on
a. In principals name Valid double sale under Art. 1544 of the NCC.
b. In his own name Not binding on the principal; agent
and stranger are the only parties, except regarding NOTE: Rules of preference in double sale
things belonging to the principal or when the principal 1. Personal property possessor in good faith
ratifies the contract or derives benefit there from 2. Real property
2. Without authority a. Registrant in good faith
a. In principals name Unenforceable but may be ratified, b. Possessor in good faith
in which case, may be validated retroactively from the c. Person with the oldest title in good faith (Art. 1544, NCC).
beginning If agent acted in good faith, the principal shall be liable for damages to the
b. In his own name Valid on the agent, but not on the third person whose contract must be rejected. If agent is in bad faith, he
principal alone shall be liable (Art. 1917, NCC).
Q: CX executed a special power of attorney authorizing DY to A person acting as an agent cannot escape criminal liability by
secure a loan from any bank and to mortgage his property virtue of the contract of agency
covered by the owners certificate of title. In securing a loan from
M Bank, DY did not specify that he was acting for CX in the The law on agency has no application in criminal cases. When a
transaction with the bank. Is CX liable for the bank loan? (2004 person participates in the commission of a crime, he cannot escape
Bar Question) punishment on the ground that he simply acted as an agent of
another party (Ong v. CA, G.R. No. 119858, Apr. 29, 2003).
A: While as a general rule the principal is not liable for the contract
entered into by his agent in case the agent acted in his own name An agent cannot maintain an action against persons with whom
without disclosing his principal, such rule does not apply if the they contracted on behalf of his principal.
contract involves a thing belonging to the principal. In such case,
the principal is liable under Art. 1883 of the NCC. The contract is Agents are not a party with respect to that contract between his
deemed made in his behalf (Sy-Juco v. Sy-Juco, G.R. No. L-13471, principal and third persons. As agents, they only render some
Jan. 12, 1920). service or do something in representation or on behalf of their
principals. The rendering of such service did not make them parties
to the contracts of sale executed in behalf of the latter. The fact
that an agent who makes a contract for his principal will gain or
suffer loss by the performance or non-performance of the contract

2014 GOLDEN NOTES
AGENCY
by the principal or by the other party thereto does not entitle him Instructions
to maintain an action on his own behalf against the other party for
its breach. An agent entitled to receive a commission from his Private directions which the principal may give the agent in regard
principal upon the performance of a contract which he has made to the manner of performing his duties as such agent but of which
on his principal's account does not, from this fact alone, have any a third party is ignorant. They are said to be secret if the principal
claim against the other party for breach of the contract, either in intended them not to be made known to such party (De Leon,
an action on the contract or otherwise. An agent who is not a 2010).
promisee cannot maintain an action at law against a purchaser
merely because he is entitled to have his compensation or Authority v. Principals instructions
advances paid out of the purchase price before payment to the
principal (Uy v. CA, G.R. No. 120465, Sept. 9, 1999). BASIS AUTHORITY INSTRUCTIONS
As to the scope Sum total of the Contemplates only
RESPONSIBILITIES AND OBLIGATIONS OF AN AGENT powers committed a private rule of
to the agent by the guidance to the
Specific obligations of an agent to the principal principal agent;
independent and
1. Carry out the agency (Art. 1884, NCC) distinct in
2. Answer for damages which through his non-performance the character
principal may suffer (Ibid) As to the Relates to the Refers to the
3. Finish the business already begun on the death of the relationship to the subject/business manner or mode of
principal (Ibid) agent with which the agents action
4. Observe the diligence of a good father of a family in the agent is empowered
custody and preservation of the goods forwarded to him by to deal or act
the owner in case he declines an agency, until an agent is As to third persons Limitations of Without
appointed (Art. 1885,NCC) authority are significance as
operative as against against those with
NOTE: the owner shall as soon as practicable either appoint an agent
those who neither knowledge
or take charge of the goods (Art. 1885,NCC).
have/charged with nor notice of them
knowledge of them
5. Advance the necessary funds should there be a stipulation to
do so except when the principal is insolvent (Art. 1886, NCC) As to purpose Contemplated to be Not expected to be
6. Act in accordance with the instructions of the principal (Art. made known to made known to
1887,NCC) third persons those with whom
7. Not to carry out the agency if its execution would manifestly dealing with the the agent deals (De
result in loss or damage to the principal (Art. 1888, NCC) agent Leon, 2010)
8. Answer for damages if there being a conflict between his
interests and those of the principal, he should prefer his own Breach of loyalty of the agent
(Art. 1889,NCC)
9. Not to loan to himself if he has been authorized to lend In case of breach of loyalty, the agent is NOT entitled to
money at interest (Art. 1890,NCC) commission
10. Render an account of his transactions and to deliver to the
principal whatever he may have received by virtue of the The forfeiture of the commission will take place regardless of
agency, even though it may not be owing to the principal (Art. whether the principal suffers any injury by reason of such breach of
1891, NCC) loyalty. It does not even matter if the agency is for a gratuitous
one, or that the principal obtained better results, or that usage and
NOTE: every stipulation exempting the agent from the obligation to customs allow a receipt of such a bonus.
render an account shall be void (Art. 1891(2), NCC)
NOTE: An agent has an absolute duty to make a full disclosure or accounting
11. Distinguish goods by countermarks and designate the to his principal of all transactions and material facts that may have some
relevance with the agency(Domingo v. Domingo, G.R. No. L-30573, Oct. 29,
merchandise respectively belonging to each principal, in the
1971).
case of a commission agent who handles goods of the same
kind and mark, which belong to different owners (Art. 1904,
When the obligation to account not applicable
NCC)
12. Be responsible in certain cases for the acts of the substitute
1. If the agent acted only as a middleman with the task of
appointed by him (Art. 1892,NCC)
merely bringing together the vendor and vendees.
13. Pay interest on funds he has applied to his own use (Art.
2. If the agent informed the principal of the gift/bonus/profit he
1896, NCC)
received from the purchaser and his principal did not object
14. Inform the principal, where an authorized sale of credit has
thereto.
been made, of such sale (Art. 1906,NCC)
3. Where a right of lien exists in favor of the agent.
15. Bear the risk of collection and pay the principal the proceeds
of the sale on the same terms agreed upon with the
purchaser, should he receive also on sale, a guarantee
commission (Art. 1907,NCC)
16. Indemnify the principal for damages for his failure to collect
the credits of his principal at the time that they become due
(Art. 1908,NCC)
17. Be responsible for fraud or negligence (Art. 1909, NCC; De
Leon, 2010)
NOTE: The court shall judge with more or less rigor, the fault or
negligence of the agent, according to whether the agency was or was
not for compensation.

CIVIL LAW
SUMMARY OF RULES; ACTS OF AN AGENT therefore, the
principal is deemed to
In behalf of the principal, within the scope of authority have actually
intended the agent to
1. Binds principal; possess
2. Agent not personally liable
Scope of the agents authority as to third persons
Without or beyond scope of authority
Contract is unenforceable as against the principal but binds the It includes not only the actual authorization conferred upon the
agent to the third person agent by his principal but also that which is apparent or impliedly
delegated to him (De Leon, 2010).
Binding on the principal when:
1. Ratified or Q: When third person is required to inquire into the authority of
2. The principal allowed the agent to act as though he had full the agent?
powers
A:
Within the scope of authority but in the agents name 1. Where authority is not in writing Every person dealing with
1. Not binding on the principal; an assumed agent must discover upon his peril, if he would
2. Principal has no cause of action against the 3rd parties and hold the principal liable, not only the fact of the agency but
vice versa the nature and extent of the authority of the agent.
2. Where authority is in writing 3rd person is not required to
NOTE: When the transaction involves things belonging to the principal: inquire further than the terms of the written power of
Remedy of the principal damages for agents failure to comply with the attorney.
agency
Within the scope of the written power of attorney but agent has NOTE: A third person with whom the agent wishes to contract on behalf of
actually exceeded his authority according to an understanding the principal may require the presentation of the power of attorney or the
instructions as regards the agency (Art. 1902, NCC).
between him and the principal
1. Insofar as 3rd persons are concerned (not required to inquire Q: When is the principal may be bound by the actual or apparent
further than the terms of the written power), agent acted authority of the agent?
within scope of his authority;
2. Principal stopped A: The principal is bound by the acts of the agent on his behalf,
With improper motives whether or not the third person dealing with the agent believes
that the agent has actual authority, so long as the agent has actual
Motive is immaterial; as long as within the scope of authority, valid
authority, express or implied.
With misrepresentations by the agent
1. Authorized principal still liable Doctrine of Apparent Authority
2. Beyond the scope of the agents authority
The principal is liable only as to third persons who have been led
GR: Principal not liable reasonably to believe by the conduct of the principal that such
actual authority exists, although none has been given.
XPN: Principal takes advantage of a contract or receives benefits
made under false representation of his agent Apparent authority v. Authority by estoppel
Mismanagement of the business by the agent
BASIS Apparent
1. Principal still responsible for the acts contracted by the agent Authority by Estoppel
Authority
with respect to 3rd persons; As to the That which is Arises when the
2. Principal, however, may seek recourse from the agent knowledge of the though not principal, by his
Tort committed by the agent principal of the actually granted, culpable negligence,
authority of the the principal permits his agent to
Principal civilly liable so long as the tort is committed by the agent
agent knowingly permits exercise powers not
while performing his duties in furtherance of the principals
the agent to granted to him, even
business
exercise or holds though the principal
Agent in good faith but prejudices 3rd parties him out as may have no notice or
Principal is liable for damages possessing knowledge of the
agents conduct
As to the Founded in Founded on the
EXPRESS v. IMPLIED AGENCY
establishment of conscious principals negligence
the authority permission of acts in failing properly to
BASIS EXPRESS AGENCY IMPLIED AGENCY beyond the supervise the affairs of
As to One where the agent One which is implied powers granted the agent
definition has been actually from the acts of the
authorized by the principal, AGENCY BY ESTOPPEL
principal, either orally
or in writing Agency by estoppel
As to When it is directly When it is incidental
authority conferred by words to the transaction or It is when one leads another to believe that a certain person is his
reasonably necessary agent, when as a matter of fact such is not true, and the latter acts
to accomplish the on such misrepresentation, the former cannot disclaim liability, for
purpose of the he has created an agency by estoppels (Paras, Civil Code of the
agency, and Philippines Annotated, 6thed.).

2014 GOLDEN NOTES
AGENCY
Rules regarding estoppel in agency Principal although it may be which he is
contrary to the authorized to
1. Estoppel of agent One professing to act as agent for another latters special perform
may be estopped to deny his agency both as against his instructions
asserted principal and the third persons interested in the Termination Apparent authority Duty imposed upon
transaction in which he engaged. of Authority does not terminate the third party to
2. Estoppel of principal by mere revocation inquire makes
a. As to agent One who knows that another is acting as of his authority termination of the
his agent and fails to repudiate his acts, or accepts the without notice to the relationship effective
benefits, will be estopped to deny the agency as against third party upon revocation
the other. Construction Merely advisory in Strictly construed as
b. As to sub-agent To estop the principal from denying of Principals nature they limit the agents
his liability to a third person, he must have known or be Instruction authority
charged with knowledge of the fact of the transaction
and the terms of the agreement between the agent and Commission agent
sub-agent.
c. As to third persons One who knows that another is He is one engaged in the purchase and sale of personal property
acting as his agent or permitted another to appear as for a principal, which, for this purpose, has to be placed in his
his agent, to the injury of third persons who have dealt possession and at his disposal.
with the apparent agent as such in good faith and in the
exercise of reasonable prudence, is estopped to deny Broker
the agency.
3. Estoppel of third persons A third person, having dealt with He is a middleman or intermediary who in behalf of others and for
one as agent may be estopped to deny the agency as against a commission or fee negotiatescontracts/transactions relating to
the principal, agent, or third persons in interest. real or personal property.
4. Estoppel of the government The government is not
estopped by the mistake or error on the part of its agents. Factorage
NOTE: However, the rule on non-estoppel of the government is not designed It is the compensation of a factor or commission agent.
to perpetrate an injustice (Leca Realty Corp. vs. Republic, G.R. Nos. 155605 &
160179, Sept. 27, 2006).
Ordinary commission
Implied agency v. Agency by estoppel
It is the compensation for the sale of goods which are placed in the
agents possession or at his disposal.
BASIS AGENCY BY
IMPLIED AGENCY
ESTOPPEL
Guarantee commission
As to liability Agent is a true If caused by the
between agent, with rights agent, he is not
It is the fee which is given in return for the risk that the agent has
principal and and duties of an considered a true
to bear in the collection of credits.
agent agent agent, hence, he has
no rights as such
The purpose of the guarantee commission is to compensate the
As to liability to 1. The principal is 1. If caused by the
agent for the risks he will have to bear in the collection of the
third persons always liable principal, he is
credit due the principal (De, Leon, 2010).
2. The agent is never liable, but only if
personally liable the 3rd person
Del credere agent
acted on the
misrepresentatio
He is the agent who guarantees payment of the customers
n;
account in consideration of the commission (De, Leon, 2010).
2. If caused by the
agent alone, only
A delcredere agent may sue in his name for the purchase price in
the agent is liable
the event of non-performance by the buyer (De, Leon, 2010)
GENERAL v. SPECIAL AGENCY AGENCY COUCHED IN GENERAL TERMS
BASIS General Agent Special Agent Agency couched in general terms

Scope of All acts connected Specific acts in
Authority with the business or pursuance of It is one which is created in general terms and is deemed to
employment in particular comprise only acts of administration (Art. 1877, NCC).
which he is engaged instructions or with
restrictions Acts of administration
necessarily implied
from the act to be Refers to those acts which do not imply the authority to alienate
done for the exercise of which an express power is necessary (De Leon,
Nature of Involves continuity of No continuity of 2010).
Service service service
Authorized NOTE: Payment is an act of administration when it is made in the ordinary
Extent to May bind his Cannot bind his course of management (Art. 1878, NCC; De Leon, 2010)
which the principal by an act principal in a manner
The making of customary gifts for charity, or those made to employees in the
Agent may within the scope of beyond or outside
business managed by the agent are considered acts of administration (Art.
Bind the his authority the specific acts 1878, NCC; De Leon, 2010)

CIVIL LAW
objections to the venue of an action or to abandon a
Q: P granted to A a special power to mortgage the formers real prescription already acquired.
estate. By virtue of said power, A secured a loan from C secured 14. Any other act of strict dominion.
by a mortgage on said real estate. Is P personally liable for said 15. To waive an obligation gratuitously.
loan?
Limitations to a special power of attorney
A: No. A special power to mortgage property is limited to such
authority to mortgage and does not bind the grantor personally to 1. A special power to sell excludes the power to mortgage (Art.
other obligations contracted by the grantee in the absence of any 1879, NCC).
ratification or other similar act that would estop the grantor from 2. A special power to mortgage does not include the power to
questioning or disowning such other obligations contracted by the sell (Ibid).
grantee. 3. A special power to compromise does not authorize
submission to arbitration (Art. 1880, NCC).
AGENCY REQUIRING SPECIAL POWER OF ATTORNEY
AGENCY BY OPERATION OF LAW
Special power of attorney (SPA)
Instances where an agency is created by operation of law
It is an instrument in writing by which one person, as principal,
appoints another as his agent and confers upon him the authority 1. When the agent withdraws from the agency for a valid
to perform certain specified acts or kinds of acts on behalf of the reason, he must continue to act until the principal has had a
principal with a primary purpose to evidence agents authority to reasonable opportunity to take the necessary steps like the
third parties within whom the agent deals. appointment of a new agent to remedy the situation caused
by the withdrawal (Art. 1929, NCC).
Intervention of a notary public in the validity of an SPA 2. In case a person declines an agency, he is bound to observe
the diligence of good father of the family in the custody and
GR: A power of attorney is valid although no notary public preservation of the goods forwarded to him by the owner
intervened in its execution (Barretto v. Tuason, G.R. Nos.L-36811, until the latter should appoint an agent (Art. 1885, NCC).
36827, 36840, 36872, Mar. 31, 1934).
NOTE: The law reconciles the interests of the agent with those of the
XPN: When SPA is executed in a foreign country, it must be principal, and if it permits the withdrawal of the agent, it is on the
condition that no damage results to the principal, and if the agent
certified and authenticated according to the Rules of Court,
desires to be relieved of the obligation of making reparation when he
particularly Sec. 25, Rule 132. withdraws for a just cause, he must continue to ac so that no injury
may be caused to the principal (De Leon Comments and Cases on
NOTE: When the special power of attorney is executed and acknowledged Partnership, Agency, and Trust, 8thed.).
before a notary public or other competent official in a foreign country, it
cannot be admitted in evidence unless it is certified as such by a secretary of
embassy or legation, consul general, consul, vice consul, or consular agent or
RIGHTS AND OBLIGATIONS OF PRINCIPAL
by any officer in the foreign service of the Philippines stationed in the foreign
country in which the record is kept of said public document and Obligations of the principal to the agent
authenticated by the seal of his office (Medina v. Natividad, G.R. No. 177505,
Nov. 27, 2008). To:
1. Comply with all obligations which the agent may have
The failure to have the special power of attorney (executed in a foreign contracted within the scope of his authority (Art.
country) authenticated is not merely a technicality it is a question of
jurisdiction. Jurisdiction over the person of the real party-in-interest was
1910(1), NCC).
never acquired by the courts (Ibid). 2. Advance to the agent, should the latter so request, the
sums necessary for the execution of the agency (Art.
A special power of attorney is required: 1912, NCC).
1. To create or convey real rights over immovable property. 3. Reimburse the agent for all advances made by him,
2. To enter into any contract by which the ownership of an even if the business or undertaking was not successful,
immovable is transmitted or acquired either gratuitously or provided the agent is free from fault (Ibid).
for a valuable consideration. 4. Indemnify the agent for all damages which the
3. To loan or borrow money, unless the latter act be urgent and execution of the agency may have caused the latter
indispensable for the preservation of the things which are without fault or negligence on his part (Art. 1913, NCC).
under administration. 5. Pay the agent the compensation agreed upon, or if no
4. To lease any real property to another person for more than compensation was specified, the reasonable value of
one year. the agents services (De Leon, 2010).
5. To make such payments as are not usually considered as acts
of administration. Liability for the expenses incurred by the agent
6. To obligate principal as guarantor or surety.
7. To bind the principal to render some service without GR: Principal is liable for the expenses incurred by the agents
compensation.
8. To bind the principal in a contract of partnership. XPNs:
9. To ratify obligations contracted before the agency. 1. If the agent acted in contravention of the principal's
10. To accept or repudiate an inheritance. instructions, unless principal should wish to avail himself of
11. To effect novation which put an end to obligations already in the benefits derived from the contract.
existence at the time the agency was constituted. 2. When the expenses were due to the fault of the agent
12. To make gifts, except customary ones for charity or those 3. When the agent incurred them with knowledge that an
made to employees in the business managed by the agent . unfavorable result would ensue, if the principal was not
13. To compromise, to submit questions to arbitration, to aware thereof.
renounce the right to appeal from a judgment, to waive 4. When it was stipulated that the expenses would be borne by
the agent, or that the latter would be allowed only a certain
sum (Art. 1918, NCC).
2014 GOLDEN NOTES
AGENCY
Liability for the contracts entered by the agent parties or by mutual consent; or (b) by unilateral act of one of them (Nos. 3
and 5; (3) by operation of law (Nos. 2 and 6) (De Leon, 2010).
GR: The principal must comply with all the obligations which the
agent may have contracted within the scope of his authority. Presumption of continuance of agency
XPN: Where the agent exceeded his authority. It means that when once shown to have existed, an agency relation
will be presumed to have continued, in the absence of anything
XPN to the XPN: When the principal ratifies it expressly or which shows its termination (De Leon, 2010).
tacitly (Art. 1910, NCC)
Essential elements for continuance of agency
NOTE: Even if the agent has exceeded his authority, the principal is solidarily
liable with the agent if the former allowed the latter to act as though he had Both principal and agent must be:
full powers (Art. 1911, NCC) 1. Present
2. Capacitated
Liability for tort committed by the agent 3. Solvent (De Leon, 2010)
GR: Where the fault or crime committed by the agent is not in the Heirs continuing the contract of agency
performance of an obligation of the principal, the latter is not
bound by the illicit acts of the agent, even if it is done in GR:Heirs cannot continue the contract of agency
connection with the agency.
Ratio:The agency calls for personal services on the part of the
XPNs: agent since it is founded on a fiduciary relationship; rights and
1. Where the tort was committed by the agent because of obligations intransmissible.
defective instructions from the principal or due to lack of
necessary vigilance or supervision on his part; or XPNs:
2. When the tort consists in the performance of an act which is 1. Agency by operation of law, or a presumed or tacit agency
within the powers of an agent but becomes criminal only 2. Agency is coupled with an interest in the subject matter of
because of the manner in which the agent has performed it; the agency (e.g. power of sale in a mortgage)
the principal is civilly liable to 3rd persons who acted in good
faith. Revocability of the contract of agency
IRREVOCABLE AGENCY GR: Agency is revocable at will by the principal.
An agency is irrevocable XPNs: It cannot be revoked if:

1. A bilateral contract depends upon it
1. If a bilateral contract depends upon it. 2. It is the means of fulfilling an obligation already contracted
2. If it is the means of fulfilling an obligation already contracted. 3. A partner is appointed manager of a partnership and his
3. If partner is appointed manager and his removal from the termination is unjustifiable (Art. 1927, NCC)
management is unjustifiable (Art 1927, NCC). 4. It is created not only for the interest of the principal but also
4. If it has been constituted in the common interest of the for the interest of third persons (Art. 1930, NCC)
principal and the agent (Art. 1930, NCC).
5. Stipulation pour atrui (Art. 1311, NCC). XPN to the XPN: When the agent acts to defraud the principal.
NOTE: The agent may withdraw from the agency by giving due notice to the Kinds of revocation
principal. If the latter should suffer any damage by reason of the withdrawal,
the agent must indemnify him therefor, unless the agent should base his
withdrawal upon the impossibility of continuing the performance of the
Revocation may either be express or implied (De Leon, 2010; Art.
agency without grave detriment to himself (Art. 1928, NCC). 1920, NCC)
The agent, even if he should withdraw from the agency for a valid reason, A contract of agency is impliedly revoked when the principal:
must continue to act until the principal has had reasonable opportunity to
take the necessary steps to meet the situation (Art. 1929, NCC). 1. Appoints a new agent for the same business or transaction
(Art. 1923, NCC)
MODES OF EXTINGUISHMENT 2. Directly manages the business entrusted to the agent (Art.
1924, NCC)
Modes of extinguishing an agency 3. After granting general power of attorney to an agent, grants a
special one to another agent which results in the revocation
1. Expiration of the period of the former as regards the special matter involved in the
2. Death, civil interdiction, insanity or insolvency of principal or latter (Art.1926, NCC).
of the agent
3. Withdrawal by the agent NOTE: A special power of attorney is not revoked by a subsequent
4. Accomplishment of the object or the purpose of the agency general power of attorney given to another agent, unless that the
5. Revocation latter refers also to the act authorized under the special power
6. Dissolution of the firm or corporation which entrusted or (Tolentino, Civil Code of the Philippines, Vol. V).
accepted the agency (Art. 1919, NCC)
NOTE: The list is not exclusive; May also be extinguished by the modes of
extinguishment of obligations in general whenever they are applicable, like
loss of the thing and novation.
Agency may be terminated: (1) by agreement (Nos. 1 and 4); (2) by the
subsequent acts of the parties which may be either: (a) by the act of both

CIVIL LAW
Revocation of agency when the agent is appointed by two or without the consent of all the others. As such, even granting that
more principals Zenaida exceeded the authority granted by the SPA, being a
partner in the constituted partnership between her and Eduardo,
When the agent has been appointed by two or more principals, the she can still execute acts of administration absent any agreement
agency is revoked if any one of the principals is granted the right to that one cannot act without the consent of all others(Mendoza v.
revoke the power of attorney without the consent of the others Paule, G.R. No. 175885, Feb. 13, 2009).
(Art. 1927, NCC).
When the agent can withdraw from the agency
Necessity of notice of revocation
The agent may renounce or withdraw from the agency at any time,
1. As to the agent Express notice is not always necessary; without the consent of the principal, even in violation of the
sufficient notice if the party to be notified actually knows, or latters contractual rights; subject to liability for breach of contract
has reason to know, a fact indicating that his authority has or for tort.
been terminated/suspended; revocation without notice to
the agent will not render invalid an act done in pursuance of Kinds of withdrawal by the agent
the authority (De Leon, 2010)
2. As to 3rd persons Express notice is necessary 1. Without just cause The law imposes upon the agent the
a. As to former customers Actual notice must be given to duty to give due notice to the principal and to indemnify the
them because they always assume the continuance of principal should the latter suffer damage by reason of such
the agency relationship (Art. 1873, NCC) withdrawal.
b. As to other persons Notice by publication is enough 2. With just cause If the agent withdraws from the agency for
(Art. 1922, NCC) a valid reasons (Art. 1929, NCC) as when the withdrawal is
based on the impossibility of continuing with the agency
NOTE: There is implied revocation of the previous agency when the principal without grave detriment to himself (Art. 1928, NCC) or is due
appoints a new agent for the same business or transaction, provided there is to a fortuitous event (Art. 1174, NCC), the agent cannot be
incompatibility. But the revocation does not become effective as between held liable (De Leon, 2010)
the principal and the agent until it is in some way communicated to the
latter. NOTE: Even if the agent withdraws from the agency for a valid reason,
he must continue to act until the principal has had reasonable
Effect of the direct management by the principal opportunity to take the necessary steps to meet the situation (Art.
1929, NCC).
GR: The agency is revoked for there would no longer be any basis
for the representation previously conferred. But the principal must Death of a party to the contract of agency
act in good faith and not merely to avoid his obligation to the
agent. GR: The agency is terminated by the death of the principal even if
the agency is for a definite period (Art. 1919, NCC).
XPN: The only desire of the principal is for him and the agent to
manage the business together. XPNs:
1. If it has been constituted in common interest of the
Q: Richard sold a large parcel of land in Cebu to Leo for P100 principal and the agent or in the interest of the third person
million payable in annual installments over a period of ten years, who accepted the stipulation in his favour (Art. 1930, NCC).
but title will remain with Richard until the purchase price is fully 2. Anything done by the agent, without the knowledge of the
paid. To enable Leo to pay the price, Richard gave him a power- death of the principal or on any other cause which
of-attorney authorizing him to subdivide the land, sell the extinguishes the agency is valid and shall be fully effective
individual lots, and deliver the proceeds to Richard, to be applied with respect to third persons who may have contracted with
to the purchase price. Five years later, Richard revoked the power him in good faith.
of attorney and took over the sale of the subdivision lots himself.
Is the revocation valid or not? Why? (2001 Bar Question) NOTE: The death of the principal extinguishes the agency; but in the
same way that revocation of the agency does not prejudice third
persons who have dealt with the agent in good faith without notice
A: The revocation is not valid. The power of attorney given to the
of the revocation (Art. 1921, 1922, NCC) such third persons are
buyer is irrevocable because it is coupled with an interest the protected where it is not shown that the agent had knowledge of the
agency is the means of fulfilling the obligation of the buyer to pay termination of the agency because of the death of the principal or of
the price of the land (Art. 1927, NCC). In other words, a bilateral any other cause which extinguishes the agency (Hererra v. Luy Kim
contract (contract to buy and sell the land) is dependent on the Guan, 1 SCRA 406).
agency.
Q: Is the sale of the land by the agent after the death of the
Q: Eduardo executed a SPA authorizing Zenaida to participate in principal valid?
the pre-qualification and bidding of a NIA project and to
represent him in all transactions related thereto. It was granted A: Article 1931 provides that an act done by the agent after the
to them. Zenaida leased Manuels heavy equipment to be used death of the principal is valid and effective if these two requisites
for the NIA project. Manuel interposed no objection to Zenaidas concur:
actuations. Eduardo later revoked the SPA alleging that Zenaida 1. that the agent acted without the knowledge of the
acted beyond her authority in contracting with Manuel under the death of the principal; and
SPA. Records show that Eduardo and Zenaida entered into a 2. that the third person who contracted with the agent
partnership in regard to the NIA project. Decide. himself acted in good faith.
A: Under Art. 1818 of the NCC, every partner is an agent of the Good faith here means that the third person was not aware of the
partnership for the purpose of its business and each one may death of the principal at the time that he contracted with said
separately execute all acts of administration, unless, under Art. agent (Rallos v. Felix Go Chan, G.R. No. L-24332, Jan. 31, 1978).
1801, a specification of their respective duties has been agreed
upon, or else it is stipulated that any one of them shall not act

2014 GOLDEN NOTES
AGENCY
Change of circumstance surrounding the transaction:
GR: The authority of the agent is terminated.
XPNs:
1. If the original circumstances are restored within a
reasonable period of time, the agent's authority may be
revived;
2. Where the agent has reasonable doubts as to whether the
principal would desire him to act, his authority will not be
terminated if he acts reasonably; or
Where the principal and agent are in close daily contact, the
agent's authority to act will not terminate upon a change of
circumstances if the agent knows the principal is aware of the
change and does not give him new instructions (De Leon, 2010).

CIVIL LAW
COMPROMISE 4. Administrators or executors of decedents estates (Art.

2032, NCC)
DEFINITION
A juridical person can enter into a compromise.
Compromise
Juridical persons may compromise only in the form and with the
A compromise is a contract whereby the parties, by making requisites which may be necessary to alienate their property (Art.
reciprocal concessions, avoid litigation or put an end to one already 2033, NCC).
commenced (Art. 2028, NCC).
Compromise on the civil aspect of a crime
Characteristics of a compromise
There may be a compromise upon the civil liability arising from an
1. Consensual offense; but such compromise shall not extinguish the public action
2. Reciprocal for the imposition of the legal penalty (Art. 2034, NCC).
3. Nominate
4. Onerous VOID COMPROMISE
5. Accessory (in the sense that a prior conflict is presupposed)
6. Once accepted, it is binding on the parties, provided there is A compromise of the following is void:
no vitiated consent (McCarthy v. Barber Steamship Lines, 45 1. Civil status of person
Phil. 488). 2. Validity of a marriage or a legal separation
7. It is the settlement of a controversy principally, and is but 3. Any ground for legal separation
merely incidentally, the settlement of a claim. (ibid) 4. Future support
5. Jurisdiction of courts
Kinds of Compromise 6. Future legitime (Art. 2035, NCC)
1. Judicial to end a pending litigation EFFECT

NOTE: As a contract, a compromise is perfected by mutual consent.
However, a judicial compromise, while immediately binding between Effect if two parties enter into a compromise
the parties upon its execution, is not executory until it is approved by
the court and reduced to a judgment. The validity of a compromise is It has the effect of res judicata. A compromise has upon the parties
upon its compliance with the requisites and principles of contracts the effect and authority of res judicata (Art. 2037, NCC).
dictated by law. Also the terms and conditions of a compromise must
not be contrary to law, morals, good customs, public policy and public Requirements in the execution of a compromise
order. A review of the terms of the agreement, indicated that it is a
judicial compromise because the parties intended it to terminate their
pending litigation by settling their dispute (Land Bank of the Phils. vs. There must be an approval of the court (Art 2037, NCC)
Heirs of Spouses Jorja Rigor-Soriano &Magin Soriano; G.R. No. 178312,
January 30, 2013). Q: When will a compromise become voidable?
2. Extrajudicial to prevent a litigation from arising A: When there is a mistake, fraud, violence, intimidation, undue
influence or falsity of documents (Art. 2038, NCC)
Duty of a court whenever a suit is filed
NOTE: However, one of the parties cannot set up a mistake of fact as against
The court shall endeavor to persuade the litigants in a civil case to the other if the latter, by virtue of the compromise, has withdrawn from a
agree upon some fair compromise (Art. 2029, NCC). litigation already commenced (Art. 2038, NCC).
Circumstances that may suspend the proceeding of a civil action Q: A and B entered into a compromise agreement. A week
thereafter, B filed an action in court seeking to annul the
1. Willingness to discuss a possible compromise is expressed by compromise agreement contending that it is one-sided. Is the
one or both parties; or action proper?
2. It appears that one of the parties, before the commencement
of the action or proceeding, offered to discuss a possible A: No, because where the compromise is instituted and carried
compromise but the other party refused the offer (Art. 2030, through in good faith, the fact that there was a mistake as to the
NCC). law or as to the facts, except in certain cases where the mistake
was mutual and correctible as such in equity, cannot afford a basis
Q: X is indebted to Y in the amount of P50,000 with the for setting aside a compromise. Compromises are favored without
stipulation that the same shall earn interest at 40% per annum. regard to the nature of the controversial compromise, and they
When X failed to pay, Y sued him. In an effort to settle the case, X cannot be set aside because the event shows all the gains have
offered to pay the principal but begged for the reduction of the been on one side (Asong v. Intermediate Appellate Court, May 12,
interest. Y refused, hence, trial was conducted. Can the judge 1989).
reduce the rate of interest?
NOTE: If a litigation has been decided upon by a final judgment, a
compromise later on agreed upon by either or both parties being unaware of
A: Yes. The courts may mitigate the damage to be paid by the the existence of the final judgment, the compromise may be rescinded.
losing party who has shown a sincere desire for a compromise (Art. Ignorance of a judgment which may be revoked or set aside is not a valid
2031, NCC). ground or attacking a compromise (Art. 2040, NCC).
Persons whoshould seek courts approval before entering into a Q: X and Y entered into a compromise agreement whereby X
compromise respected the ownership of Y over a part of a creek (now a
fishpond). Is the agreement valid?
1. Guardians
A: No, because that is contrary to public policy and the law. The
2. Parents
creek is a property belonging to the State; hence, it is part of public
3. Absentees representatives
2014 GOLDEN NOTES
COMPROMISE
domain which is not susceptible to private appropriation and
acquisition (Maneclang v Intermediate Appellate Court, 161 SCRA
469).
Q: X and Y entered into a compromise agreement, terminating a

suit between them. X failed to comply with the terms and
conditions of the same. What are the remedies of the aggrieved
party?
A: If one of the parties fails or refuses to abide by the compromise,
the other party may either enforce the compromise, or regard it
as rescinded and insist upon his original demand (Art 2041, NCC).
Effect of a contract or a compromise that is disadvantageous to

one of the parties
It remains to be valid. It is a long established doctrine that the law

does not relieve a party from the effects of an unwise, foolish, or
disastrous contract, entered into with all the required formalities
and with full awareness of what he is doing. Courts have no power
to relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be disastrous deals or unwise
investments (Tanda v. Aldaya, 89 Phil. 497; Villacorte v. Mariano,
89 Phil. 341).
It is a truism that a compromise agreement entered into by party-

litigants, when not contrary to law, public order, public policy,
morals, or good customs is a valid contract which is the law
between the parties themselves. It follows, therefore, that a
compromise agreement, not tainted with infirmity, irregularity,
fraud or illegality is the between the parties who are duty bound to
abide by it and observe strictly its terms and conditions (Esguerra
v. CA, GR 119310, February 3, 1997).

CIVIL LAW
CREDIT TRANSACTIONS Parties in a contract of bailment
GENERAL PRINCIPLES 1. BailorThe giver; the party who delivers the possession or
custody of the thing bailed
Credit 2. BaileeThe recipient; the party who receives the possession
or custody of the thing thus delivered
It is a persons ability to borrow money by virtue of confidence or
trust reposed in him by the lender that he will pay what he may Contractual bailments with reference to compensation
promise.
1. For the sole benefit of the bailor (gratuitous)e.g. gratuitous
Significance of Credit deposit, commodatum
2. For the sole benefit of the bailee (gratuitous)e.g.
By virtue of the use of credit, more exchanges are possible: persons commodatum, mutuum
are able to enjoy a thing today but pay it for later, and through the 3. For the benefit of both parties (mutual-benefit bailments)e.g.
banking system, the transfer of actual money is eliminated by deposit for compensaton, involuntary deposit, pledge and
cancellation of debts and credits. bailments for hire:
a. Hire of things temporary use
Credit transaction b. Hire of service for work or labor
c. Hire of carriage of goods for carriage
It refers to an agreement based on trust or belief of someone on d. Hire of custody for storage
the ability of another person to comply with his obligations.
LOAN
It includes all transactions involving the purchase or loan of goods,
service, or money in the present with a promise to pay or deliver in GENERAL PROVISIONS
the future.
Loan
Kinds of credit transactions
It is a contract where one of the parties delivers to another, either
1. As contracts of security something not consumable so that the latter may use the same for
a. Contracts of real security These are contracts a certain time and return it, in which case is called a commodatum;
supported by collateral/s or burdened by an or money or other consumable things, upon the condition that the
encumbrance on property such as mortgage and pledge same amount of the same kind and quality shall be paid, in which
b. Contracts of personal security These are contracts case the contract is simply called a loan or mutuum (Art. 1933,
where performance by the principal debtor is not NCC).
supported by collateral/s but only by a promise to pay
or by the personal undertaking or commitment of Kinds of loan
another person such as in surety or guaranty
2. As to their existence 1. Commodatum Where the bailor (lender) delivers to the
a. Principal contracts They can exist alone. Their bailee (borrower) a non-consumable thing so that the latter
existence does not depend on the existence of another may use it for a given time and return the same thing (i.e.
contract (e.g. commodatum and mutuum) identical thing)
b. Accessory contracts They have to depend on another 2. Mutuum or Simple Loan Where the bailor (lender) delivers
contract. These accessory contracts depend on the to the bailee (borrower) money or other consumable thing
existence of a principal contract of loan (e.g. guaranty subject to the condition that the latter shall pay same amount
proper, suretyship, pledge, mortgage and antichresis) of the same kind and quality
3. As to their consideration
a. Onerous This is a contract where there is consideration Consideration in a contract of loan
or burden imposed like interest.
b. Gratuitous This is a contract where there is no 1. As to the borrower, the acquisition of the thing
consideration or burden imposed (e.g. commodatum) 2. As to the lender, the right to demand its return or its
equivalent.
Security
Object of a contract of loan
It is something given, deposited, or serving as a means to ensure
the fulfillment or enforcement of an obligation or of protecting 1. Commodatum The object is generally not consumable;
some interest in the property. 2. Mutuum The object is consumable.
Bailment Consumable things and Non-consumable things
It is the delivery of a personal property for some particular use, or A thing is consumable when it cannot be used in a manner
on mere deposit, upon a contract, express or implied, that after the appropriate to its nature without being consumed (Art. 418, NCC)
purpose has been fulfilled, it shall be redelivered to the person (e.g. food, firewood, gasoline).
who delivered it, or otherwise dealt with according to his
directions, or kept until he reclaims it, as the case may be. On the other hand, a non-consumable thing is a movable thing
which can be used in a manner appropriate to its nature without it
Generally, no fiduciary relationship is created by bailment. No being consumed (Art. 418, NCC) (e.g. car, television, radio).
trustee-beneficiary relationship is created.

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
Fungible and Non-Fungible things Perfection of contract of loan
Fungible thing is one where the parties have agreed to allow the An accepted promise to deliver something by way of mutuum or
substitution of the thing given or delivered with an equivalent simple loan is binding upon the parties, but the mutuum or simple
thing (3 Manresa 58). Non-fungible thing is one where the parties loan itself shall not be perfected until the delivery of the object of
have the intention of having the same identical thing returned the contract (Art. 1934, NCC).
after the intended use (Ibid).
Unlawful purpose of the contract of loan
NOTE: As to whether a thing is consumable or not, it depends upon the
nature of the thing. If the loan is executed for illegal or immoral or unlawful purpose or
use, the contract is void. The bailor may immediately recover the
As to whether it is fungible or not, it depends upon the intention of the
parties.
thing before any illegal act is committed and provided he is
innocent or in good faith (Arts. 1411 and 1412, NCC).
Fungibles are usually determined by number, weight or measure.
COMMODATUM
Irreplaceability of Non-Fungible thing
Commodatum
GR: Non-fungible things are irreplaceable. They must be returned
to the lender after the purpose of the loan had been accomplished. It is a contract where one of the parties (bailor) delivers to another
(bailee) something not consumable so that the latter may use the
XPN: Non-fungible things may be replaced by agreement of the same for a certain time and thereafter returns it.
parties. In such case, the contract is barter and not loan
Kinds of commodatum
Loan v. Credit, Discount, Rent, Barter and Deposit
1. Ordinary commodatum bailor cannot just demand the
CREDIT LOAN return of the thing at will, because there is a period agreed
Ability to borrow money by Delivery by one party and the upon by the parties.
virtue of the confidence receipt by the other party of a 2. Precarium one whereby the bailor may demand the thing
reposed by the lender unto given sum of money, upon an loaned at will in the following cases:
him that he will pay what he agreement, expressed or a. If the duration of the contract had not been stipulated;
has promised implied, to repay the sum b. If the use to which the thing loaned should be devoted
loaned, with or without had not been stipulated; or
interest c. If the use of the thing is merely by tolerance of the
DISCOUNT LOAN owner
Interest is deducted in Interest is taken at the NOTE: The word owner in Art. 1947 (2) is not proper because
advance expiration of a credit the bailor need not be the owner of the thing (Pineda, 2006;
Always on double-name paper Generally on a single-name Art. 1938).
paper
RENT LOAN Characteristics of a contract of commodatum
The owner of property does The thing loaned becomes the
1. Real contract delivery of the thing loaned is necessary for
not lose the ownership; he property of the obligor
the perfection of the contract
loses his control over the
2. Unilateral contract once subject matter is delivered, it
property rented during the
creates obligations on the part of only one of the parties (the
period of contract
borrower)
Landlord-tenant relationship Obligor-obligee relationship
3. Essentially gratuitous
BARTER LOAN
4. Purpose is to transfer the temporary use of the thing loaned
Subject matter are non- Subject matter is money or 5. Principal contract
fungible things other fungible things 6. Purely personal contract
Always onerous May be gratuitous or onerous
There is a mutual sale In mutuum, there is transfer Consequence of purely personal character of commodatum
resulting in the transfer of of ownership, there is no sale
ownership on both sides 1. Death of a party
The parties do not return the In commodatum, the bailee
things subject of the exchange returns the thing after the GR: Commodatum is purely personal in character hence
expiration of the period death of either bailor or bailee extinguishes the contract (Art.
agreed upon 1939, NCC).
DEPOSIT LOAN
Safekeeping of the thing Lender grants the borrower XPN: By stipulation, the commodatum is transmitted to the
deposited. Generally, the the use of the thing learned heirs of either or both party.
depositary cannot use the
thing deposited 2. Lease of the thing subject of commodatum
Depositor can demand the Generally, borrower pays at
return of the thing deposited the end of the period GR: The bailee can neither lend nor lease the object of the
at any time contract to a third person.
Compensation not applicable Compensation of credits
to things deposited applicable XPN: Members of the bailees household may make use of
Relationship is one of Relationship is one of lender the thing loaned because members of the bailees household
depositor and depositary and borrower; or creditor and are not considered as third persons.
debtor

CIVIL LAW
NOTE: Household members are those permanently living or residing
within the same residence including the household helpers. XPN: Consumable goods may be the subject of commodatum if the
purpose is not to consume them such as when they were loaned
XPN to the XPN:Contrary stipulation; or Nature of the merely for ad ostentationem or exhibition purposes. After the
thing forbids such use. affair, the same and identical goods shall be returned to the lender
or bailor (Art. 1936, NCC).
3. Right of retention
Object of commodatum
GR: The bailee cannot exercise the right of retention against
the bailor Both movable and immovable property may be the object of
commodatum (Art. 1937, NCC).
XPN: However, he can exercise the right of retention on the
account of damages suffered by the bailee because of flaws Consideration in a commodatum
that the bailor knew of but did not disclose to the bailee
1. As to the borrower The acquisition of thing loaned
Use of fruits of the property by the bailee 2. As to the lender The right to demand the return of the same
thing loaned
The bailee in commodatum acquires only the use of the thing
loaned but not its fruits (Art. 1935, NCC). OBLIGATIONS OF THE BAILOR
A stipulation that the bailee may make use of the fruits of the thing Obligations of the bailor
loaned is valid. It is understood that the enjoyment of the fruits
must only be incidental to the use of the thing. It should not be the 1. Allow the bailee the use of the thing loaned for the duration
main cause; otherwise, the contract is not a commodatum but a of the period stipulated or until the accomplishment of the
usufruct (Art. 1940, NCC). purpose.
2. Refund the extraordinary expenses the bailee incurred for the
The stipulation that the bailee may make use of the fruits of the preservation of the thing.
thing loaned will not impair the essence of commodatum because
the actual cause or consideration therefore is still the liberality of GR: The bailee must bring to the knowledge of the bailor such
the bailor or lender. expenses before incurring the same.
Elements of commodatum XPN: In case there is urgency and delay would cause
imminent danger.
1. There must be a bailor and bailee;
2. the bailee acquires the use of the thing; If the extraordinary expenses arise on the occasion of the
3. it must be gratuitous actual use of the thing loaned by the bailee, the expenses
shall be borne by the bailor and bailee equally, even though
Parties to a commodatum the bailee is without fault (Art. 1949, NCC).
1. Bailor/Comodatario/Commodans The giver/ lender - The 3. To be liable for damages for known hidden defects.
party who delivers the possession or custody of the thing 4. Cannot exempt himself from payment of expenses or
bailed. damages by abandonment of the thing to bailee.
2. Bailee/Comodante/Commodatarius The recipient/ borrower
- The party who receives the possession or custody of the Liability of the bailor for hidden defects
thing thus delivered.
Requisites:
Liability when there are two or more bailees 1. There was a flaw or defect in the thing loaned;
2. The flaw or defect is hidden;
When there are 2 or more bailees to whom a thing is loaned in the 3. The bailor is aware thereof;
same contract, they are liable solidarily (Art. 1945, NCC). 4. He does not advise the bailee of the same; and
5. The bailee suffers damages by reason of said flaw or defect.
Their liability is solidary in order to protect the bailors rights over
the thing loaned. Cause of Action against bailor who did not disclose flaw or defect
Q: Following the principle of autonomy of contracts, may the The cause of action against the bailor who did not disclose the flaw
parties to a contract of commodatum validly stipulate that the or defect is action for recovery of damages on the ground of quasi-
liability of the bailees shall be joint? delict because of negligence or bad faith.
A:No. Article 1245 expressly provides that in a contract of Effect if both parties know the defect
commodatum, when there are two or more bailees to whom a
thing is loaned in the same contract, they are liable solidarily. It The effect if both parties are aware of the flaws or defects is that
constitutes as an exception to the general rule of joint the bailee is deemed to have assumed a risk. The bailor is not liable
obligations where there are two or more debtors, who concur in for the damages suffered by the bailee by reason thereof.
one and same obligation under Articles 1207 and 1208. Solidarity is
provided to safeguard effectively the rights of the bailor over the
thing loaned.
Subject matter of commodatum
GR: Under Art. 1933, the subject matter of commodatum must be

non-consumable because the thing must be returned.

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
RIGHTS OF THE BAILOR Not liable for the deterioration of the thing
As to the loaned caused by the ordinary wear and
Return of the thing loaned deterioration of tear of the thing loaned (Art. 1943, NCC).
the thing loaned
GR: The return of the thing loaned may be demanded by the bailor NOTE: When there are two or more bailees, their
liability is solidary.
only (1) after the expiration of the period stipulated or (2) after the
accomplishment of the use for which it is constituted.
RIGHTS OF A BAILEE
XPNs:
1. In case of urgent need by the bailor Rights of a bailee
2. In case of precarium
3. If the bailee commits an act of ingratitude specified in Article 1. Use of the thing;
765 to the bailor (Art. 1948, NCC), to wit: 2. Make use of the fruits of the thing when such right is
a. If the bailee should commit some offenses against the stipulated in the contract;
person, honor or the property of the bailor, or his wife 3. Not answerable for the deterioration of the thing loaned due
or children under his parental authority; to the use thereof and without his fault; and
b. If the bailee imputes to the bailor any criminial offense, 4. Right of retention for damages due to hidden defects or flaws
or any act involving moral turpitude, even though he of the thing of which he was not advised by the bailor.
should prove it, unless the crime or the act has been
committed against the bailee, his wife or children under Q: Art. 1178 of the NCC provides that all rights acquired by virtue
his authority; or of an obligation are transmissible. Is the right to use the thing by
c. If the bailee unduly refuses the bailor support when the virtue of a contract of commodatum transmissible?
bailee is legally or morally bound to give support to the
bailor. A: No, it is not transmissible for 2 reasons:
NOTE: The rationale for the application of Art. 765 which refers a.) Art. 1178 provides that the transmissibility of said acquired
to donations is the fact that commodatum, like donation, is rights are either subject to the laws or to a contrary
gratuitous in nature. stipulation; and
b.) Art. 1939 provides that a contract of commodatum is purely
Q: If the contract of commodatum is a precarium, will Art. 1942 personal in character.
(1) and (2) still apply?
To rule otherwise would be to run counter to the purely personal
A: It depends. If there has been a demand on the part of the bailor character of the commodatum and to the proviso that
before the loss of the thing under the circumstances set forth transmissibility is subject to the law governing such obligations.
under Art. 1942 (1) and (2) and the bailee did not return the thing,
then the latter is liable. However, if there has been no demand on Commodatum v. Lease
the part of the bailor and the thing was lost, the bailor is estopped
and cannot hold the bailee liable for under a contract of precarium, COMMODATUM LEASE
the use of the thing by the bailee depends on the pleasure of the Real contract Consensual
bailor and no time is fixed for such use. Hence, demand on the part Object is a non-consumable Object may even be work or
of the bailor is needed for the return of the thing. Without such, and non fungible thing service
loss of the thing on the hands of the bailee will not make him
Essentially gratuitous Onerous
liable.
If the bailor is not aware of Provisions governing warranty
the flaws, he is not liable for are made applicable
Bailor and ownership of the thing loaned
the resulting danger caused
by such.
The bailor in commodatum need not be the owner of the thing
loaned. It is sufficient that he has possessory interest over subject
Conversion of commodatum to lease
matter (Art. 1938, NCC).
NOTE: A mere lessee or usufructuary may gratuitously give the use of the
The legal effect if the bailee pays for the use of the thing is that the
thing leased or in usufruct, provided there is no prohibition against such. contract ceases to be commodatum; it becomes lease.
OBLIGATIONS OF THE BAILEE Right of retention in Commodatum
As to ordinary Pay for the ordinary expenses for the use GR: There is no right of retention in commodatum. The bailee
expenses and preservation of the thing cannot retain the thing loaned on the ground that the bailor owes
Liable for loss even through fortuitous the bailee.
event when:
1. When being able to save either of the XPN: The bailee has the right of retention for claims of damages
thing borrowed or his own thing, he which the bailee incurred or suffered by reason of the hidden
chose to save the latter defects or flaws of the thing loaned, of which he was not informed
As to the loss of 2. He keeps it longer than the period or advised by the bailor.
the thing in case stipulated, or after the accomplishment
of fortuitous of its use (in default); The reason for the general rule that there is no right of retention is
event 3. The thing loaned has been delivered that bailment implies a trust that as soon as the time has expired
with appraisal of its value or the purpose accomplished, the bailed property must be
4. When he lends or leases it to third returned to the bailor. Also, Art. 1287 provides that compensation
persons who are not members of his shall not be proper when one of the debts arises from the
household obligations of a bailee in commodatum (Art. 1287, reworded)
5. There is deviation from the purpose

CIVIL LAW
Q: Suppose during the said retention of the bailee by reason of
hidden defects, the thing is lost due to a fortuitous event. Can the c) No, Pedro cannot demand the return of the van until after
bailor hold the bailee liable for said loss based on Art.1942 (2)? the expiration of the one-year period stipulated. However, if
in the meantime he should have urgent need of the van, he
A:No, the bailee cannot be held liable for the loss. Art. 1942 (2) may demand its return or temporary use.
contemplates wrongful retention or a situation where the bailee is
not entitled to retain the thing loaned. d) Both Tito and Pedro shall bear equally the costs of the
extraordinary expenses, having been incurred on the
NOTE: Article 1942 (2) provides that the bailee is liable for the loss of the occasion of actual use of the van by Tito, the bailee, even
thing, even if it should be through a fortuitous event if he keeps it longer though he acted without fault (Art. 1949(2), NCC).
than the period stipulated, or after the accomplishment of the use for which
the commodatum has been constituted.
MUTUUM
Q: What if the bailee is entitled to payment or reimbursement of
Mutuum
expenses incurred or damages suffered and the bailor offers the
thing loaned as payment for said expenses or damages, would
It is a contract whereby one of the parties called the lender
such offer be valid or not, in view of the prohibition under Art.
delivers to another called the borrower, money or other
1952 which states that the bailor cannot exempt himself from the
consumable thing subject to the condition that the same amount
payment of expenses or damages by abandoning the thing to the
of the same kind and quantity shall be paid.
bailee?
Characteristics of a contract of mutuum
A:The offer is not valid. It may be considered as dation in payment.
In this case, the abandonment done by the bailor was made in
1. Borrower acquires ownership of the thing (Art 1953, NCC).
favor of the bailee for the payment of the expenses incurred by the
2. If the thing loaned is money, payment must be made in the
latter, hence, a violation of what the law has expressly prohibited
currency which is legal tender in the Philippines and in case of
under Article 1952.
extraordinary deflation or inflation, the basis of payment shall
be the value of the currency at the time of the creation of the
Entitlement for reimbursement
obligation (Art 1249 and 1250, NCC).
3. If fungible thing was loaned, the borrower is obliged to pay
The bailee is not entitled to reimbursement for the expenses he
the lender another thing of the same kind, quality and
incurred if, for the purpose of making use and preservation of the
quantity even if it should change in value.
thing, the bailee incurs expenses other than those ordinary and
extraordinary expenses.
Perfection of the Contract of Mutuum
Q: Before he left for Riyadh to work as a mechanic, Pedro left his
Real contracts, such as deposit, pledge and commodatum, are not
van with Tito, with the understanding that the latter could use it
perfected until the delivery of the object of the obligation (Art.
for one year for his personal or family use while Pedro works in
1316, NCC). While mutuum or simple loan is not mentioned, it has
Riyadh. He did not tell Tito that the brakes of the van were faulty.
the same character as commodatum. Hence, mutuum is also a real
Tito had the van tuned up and the brakes repaired. He spent a
contract which cannot be perfected until the delivery of the object.
total amount of P15,000.00. After using the vehicle for two
weeks, Tito discovered that it consumed too much fuel. To make
An accepted promise to make a future loan is a consensual
up for the expenses, he leased it to Annabelle. Two months later,
contract and therefore, binding upon the parties but it is only after
Pedro returned to the Philippines and asked Tito to return the
delivery, will the real contract of loan arise.
van.
Mere issuance of checks does not perfect the contract of loan. It is
Unfortunately, while being driven by Tito, the van was
only after the checks have been encashed that the contact may be
accidentally damaged by a cargo truck without his fault.
deemed perfected.
a. Who shall bear the P15,000.00 spent for the repair of the
Consideration in a simple loan
van? Explain.
b. Who shall bear the costs for the van's fuel, oil and other
1. As to the borrower the acquisition of money or any other
materials while it was with Tito? Explain.
fungible thing
c. Does Pedro have the right to retrieve the van even before
2. As to the lender the right to demand the return of the
the lapse of one year? Explain.
money or any other fungible thing or its equivalent
d. Who shall bear the expenses for the accidental damage
caused by the cargo truck, granting that the truck driver and
Object of mutuum
truck owner are insolvent? Explain. (2005 Bar Question)
Money or fungible and consumable things.
A:
a) The contract between Pedro and Tito is one of commodatum.
Governing rules on payment of loan
Of the P15, 000.00 spent, Pedro, the bailor, shall bear the
expenses for the repair of the faulty brakes, they being
If the object of loan is
extraordinary expenses incurred due to the non-disclosure by
the bailor of the defect or fault; Tito, on the other hand, shall
1. Money Governed by Arts. 1249 and 1250, NCC
shoulder "that part of the P15,000.00 spent for the tune-up,
said expense being ordinary for the use and preservation of
GR: Payment shall be made in the currency stipulated.
the van.
XPN: If not, that currency which is legal tender in the
b) The costs for the fuel and other materials are considered
Philippines.
ordinary expenses, and consequently Tito, the bailee, shall
shoulder them (Art. 1941, NCC).

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
In case of extraordinary inflation value of the currency at Contract of
Contract Contract of use
the time of the creation of the obligation. consumption
Loan of money can be payable in kind if there is an Mutuum v. Lease and Barter
agreement between the parties
MUTUUM LEASE
2. Consumable or fungible thing Debtor or borrower shall pay Object is money or any Object may be any thing,
another thing of the same kind, quality and quantity even if it consumable (fungible) thing whether movable or
should change in value. If cannot be done, the value of the immovable, fungible or non-
thing at the time of its perfection (delivery) shall be the basis fungible
of the payment of the loan (Art 1955, NCC). There is transfer of ownership No transfer of ownership
Creditor-debtor relationship Lessor-lessee relationship
Q: Can estafa be committed by a person who refuses to pay his Unilateral Bilateral
debt or denies its existence?
MUTUUM BARTER
A: No, because the debtor in mutuum becomes the owner of the
Subject matter is money or Subject matter are non-
thing delivered to him. If he consumed or disposed of the thing, the
other fungible things fungible things
act which is an act of ownership is not misappropriation. Hence,
May be gratuitous or onerous Always onerous
there is no basis for a criminal prosecution.
While in mutuum, there is There is a mutual sale
Destruction of the thing loaned transfer of ownership, there is resulting in the transfer of
no sale ownership on both sides
The destruction of the thing loaned does not extinguish ones The money or consumable The parties do not return the
obligation in a simple loan because his obligation is not to return thing loaned is not returned things subject of the exchange
the thing loaned but to pay a generic thing. but the same amount of the
same kind and quantity shall
Commodatum v. Mutuum be paid.
BASIS COMMODATUM MUTUUM INTEREST AND THE SUSPENSION OF THE USURY LAW
Non-consumable and Money or consumable
Object Interest
Non- fungible thing
Gratuitous, otherwise May or may not be
Cause It is the compensation to be paid by the borrower for the use of
it is a lease gratuitous
the money lent to him by the lender.
Use or temporary
possession of the
Classes of interest
thing loaned but
1. Simple Interest which is paid for the use of the money, at a
GR: not its fruit
certain rate stipulated in writing by the parties.
because the bailor
2. Compound Interest which is imposed upon accrued interest,
remains the owner
that is, the interest due and unpaid.
Purpose Consumption 3. Legal That interest which the law directs to be paid in the
XPNs:
absence of any agreement as to the rate.
use of the fruits is
stipulated;
Rules on interest
enjoyment of the
fruits is stipulated; or
GR: No interest shall be due unless it is stipulated in writing (Art.
enjoyment of the
1956, NCC).
fruits is incidental to
its use
XPN: In case of interest on damages or indemnity for damages, it
Real or personal
need not be in writing.
property
NOTE: Art. 1956 applies only to interest for the use of money and not to
Generally non- interest imposed as items of damages.
Subject consumable things but Only personal
Matter may cover property Basis of the right to interest
consumables if the
purpose of the The basis of the right to interest is it only arises by reason of the
contract is for contract (stipulation in writing) for the use of money or by reason
exhibition. of delay or failure to pay principal on which interest is demanded
Ownership due to a breach of an obligation (Baretto v. Santa Marina, No.
Retained by the bailor Passes to the debtor
of the thing 11908, Feb. 4, 1918).
Thing to be Equal amount of the
Exact thing loaned
returned same kind and quality If the obligation consists of the payment of a sum of money, and
Who bears the debtor incurs delay, the indemnity for damages shall be the
Bailor Debtor
risk of loss payment of legal interest (Philrock, Inc. v. Construction Industry
In case of urgent need Arbitration Commission, G.R. Nos. 132848-49, June 25, 2001).
even before the
When to Only after the
expiration of term (the
return expiration of the term
contract is in the
meantime suspended)

CIVIL LAW
Interest in Equitable mortgage The actual base for computing legal interest shall be the amount as
finally adjudged by the Supreme Court (Ibid).
There can be no interest to be collected in equitable mortgage
because the same is not stipulated in writing (Tan v. Valdehueza, Monetary Interest and Compensatory Interest
G.R. No. L-38745, Aug. 6, 1975).
Monetary interest must be expressly stipulated in writing and it
NOTE: Equitable mortgage is one which, although it lacks the proper must be lawful (Art. 1956, NCC).
formalities or other requisites of a mortgage required by law, nevertheless
reveals the intention of the parties to burden real property as a security for a Governing rate of interest effective July 1, 2013
debt, and contains nothing impossible or contrary to law.
The rate of interest for the loan or forbearance of any money,

Recovery of unstipulated interest
goods or credits and the rate allowed in judgments, in the absence
of an express contract as to such rate of interest, shall be six
A payment for unstipulated interest can be recovered if paid by
percent (6%) per annum (BSP Circular No. 799, July 1, 2013).
mistake, the debtor may recover as in the case of solutio indebiti or
undue payment. However if payment is made voluntarily, no
Prospective application of BSP Circular No. 799
recovery can be made as in the case of natural obligation (Art.
1960, NCC).
It should be noted, nonetheless, that the new rate could only be
applied prospectively and not retroactively. Consequently, the
Q: Siga-an granted a loan to Villanueva in the amount of
twelve percent (12%) per annum legal interest shall apply only until
P540,000.00. Such agreement was not reduced to writing. Siga-
June 30, 2013. Come July 1, 2013 the new rate of six percent (6%)
an demanded interest which was paid by Villanueva in cash and
per annum shall be the prevailing rate of interest when applicable
checks. The total amount Villanueva paid accumulated to
(Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013).
P1,200,000.00. Upon advice of her lawyer, Villanueva demanded
for the return of the excess amount of P660,000.00 which was NOTE: If the obligation consists in the payment of a sum of money and the
ignored by Siga-an. debtor incurs in delay, the debtor is liable for damages (Art. 2209, NCC).
1. Is the payment of interest valid?
2. Is solutio indebiti applicable? Explain. (2012 Bar Question) Basis for the interest rate for compensatory interest
A: 1. Central Bank Circular No. 799 6% per annum in cases of:

1. No. Payment of monetary interest is allowed only if: a. Loans
a. There was an express stipulation for the payment of b. Forbearance of money, goods and credits
interest; and c. Judgment involving such loan or forbearance
b. The agreement for the payment of interest was reduced
in writing. 2. Art. 2209, NCC 6% per annum in cases of:
a. Other sources (i.e. sale)
The concurrence of the two conditions is required for the b. Damages arising from injury from person.
payment of monetary interest. Thus, collection of interest c. Loss of property which does not involve a loan.
without any stipulation therefor in writing is prohibited by
law. 3. Interest accruing from unpaid interest (compound interest)
There must first be a stipulation for payment of interest due
2. Yes. The quasi-contract of solutio indebiti harks back to the and this shall earn interest from the time it is judicially
ancient principle that no one shall enrich himself unjustly at demanded although the obligation may be silent upon this
the expense of another.The principle of solutio indebiti point.
applies where (1) a payment is made when there exists no
binding relation between the payor, who has no duty to pay, Forbearance
and the person who received the payment; and (2) the
payment is made through mistake, and not through liberality Forbearance signifies the contractual obligation of the creditor to
or some other cause. We have held that the principle forbear during a given period of time to require the debtor
of solutio indebiti applies in case of erroneous payment of payment of an existing debt then due and payable. Such
undue interest (Siga-an v. Villanueva, G.R. No. 173227, Jan. forbearance of giving time for the payment of a debt is, in
20, 2009). substance, a loan (91 C.J.S. 598).
Interest on unliquidated claims Compounding of interest
GR: Interest may not be adjudged on unliquidated claims There must first be a stipulation of payment of interest and this
interest may earn interest only when it is judicially demanded,
XPN: Unless the same can be established with reasonable certainty although the obligation is silent upon this point (Art. 2212, NCC).
(Atlantic Gulf and Pacific Company of Manila, Inc. v. CA, G.R. Nos.
114841-42, Aug. 23, 1995). Rule on compounding of interest
Running of interest on unliquidated claims GR: Accrued interest (interest due and unpaid) shall not earn
interest.
If the interest is adjudged on unliquidated claim but the pleadings
in court did not spell out said amount with certitude, the legal XPN: When:
interest thereon shall run only from the promulgation of judgment 1. There is express stipulation made by the parties -that the
of said court, it being at that stage that the quantification of interest due and unpaid shall be added to the principal
damages may be deemed to have been reasonably ascertained obligation and the resulting total amount shall earn interest
(Ibid). (Art. 1959, NCC); or
2. Judicial demand has been made upon the borrower (Art.
2212, NCC)

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
Governing rule on usurious transactions consent (PNB v. CA, G.R. No. 107569, Nov. 8, 1994). To say
otherwise will violate the principle of mutuality of contracts under
CB Circular No. 905 has expressly removed the interest ceilings Article 1308 of the Civil Code. To be valid, therefore, any change of
prescribed by Usury Law, thus, the said law has become legally interest must be mutually agreed upon by the parties (Dizon v.
non-existent. Magsaysay, G.R. No. L-23399, May 31, 1974). In the present
problem, the debtor not having given his consent to the increase in
NOTE: It did not repeal/amend the usury law but merely suspended its interest, the increase is void.
effectivity.
DEPOSIT
Rationale behind the invalidity of unconscionable interest rate in
a loan despite the suspension of the Usury law Deposit
The Supreme Court said nothing in Circular 905 suspending Usury Deposit is a contract whereby a person (depositor) delivers a thing
Law that grants the lender the authority to raise interest rates to to another (depositary), for the principal purpose of safekeeping it,
levels which will either enslave their borrowers or lead to a with the obligation of returning it when demanded.
hemorraghing of their assets (Almeda v. CA, G.R. No. 113412, Apr.
17, 1996). A contract of deposit is constituted from the moment a person
receives a thing belonging to another, with the obligation of safely
Courts may simply reduce unreasonable interests keeping it and returning the same upon demand.
In the case of Medel v. CA, G.R. No. 131622, Nov. 27, 1998, the Characteristics of contract of deposit
court ruled that while stipulated interest of 5.5% per month on a
loan is usurious pursuant to CBC No. 905, the same must be 1. Real contract Because it can only be perfected by the
equitably reduced for being iniquitous, unconscionable and delivery of the object of the contract. However, an
exorbitant. It is contrary to morals. It was reduced to 12% per agreement to constitute a future deposit is a consensual
annum in consonant with justice and fairplay. contract and is therefore binding.
The Court had previously tagged a 5% monthly interest rate agreed NOTE: There is no consensual contract of deposit; there is only a
upon as excessive, iniquitous, unconscionable and exorbitant, consensual promise to deliver which is binding if such is accepted.
contrary to morals, and the law. We need not unsettle the
principle we had affirmed in a plethora of cases that stipulated 2. Object of the contract must be a movable property. This rule
interest rates of 3% per month and higher are excessive, iniquitous, applies only to extra-judicial deposit. Thus, in cases of judicial
unconscionable, and exorbitant (Arthur F. Mechavez v. Marlyn M, deposit, the subject matter may be a real property.
Bermudez, G.R. No. 185368, Oct. 11, 2012). 3. Purpose is for the safekeeping of the thing deposited. This
must be the principal purpose and not only secondary.
Floating interest 4. It is gratuitous, unless there is a:
a. Contrary agreement; or
Floating interest is the interest stipulated by banks which is not b. The depositary is engaged in the business of storing
fixed and made to depend upon the prevailing market conditions, goods, like a warehouseman (Art. 1965, NCC).
considering the fluctuating economic conditions. c. Where the property is saved from destruction without
knowledge of the owner, the latter is bound to pay the
A stipulation for floating interest is not valid. A stipulation for a other person just compensation (as in case of
floating rate of interest in a letter of credit in which there is no involuntary deposit).
reference rate set either by it or by the Central Bank, leaving the
determination thereof to the sole will and control of the lender NOTE: Deposit shall be considered as a loan if there is a stipulation for
bank is invalid. While it may be acceptable for practical reasons the payment of interest (Aquino v. Deala, 63 Phil. 582). The reason is
given the fluctuating economic conditions for banks to stipulate that interest can only arise from a contract of loan (mutuum).
that interest rates on a loan not be fixed and instead be made
5. The depositary cannot use the thing deposited, unless:
dependent on prevailing market conditions, there should be a
a. Permitted by the depositor; or
reference rate upon which to peg such variable interest rates
b. Preservation of the thing requires its use, but only for
(Consolidated Bank and Trust Corp (Solid Bank v. CA, G.R. No.
said purpose.
114672, Apr. 19, 2001).
Deposit v. Mutuum, Commodatum, Agency, Lease and Sale
Q: Samuel borrowed P300,000.00 housing loan from the bank at
18% per annum interest. However, the promissory note
DEPOSIT MUTUUM
contained a proviso that the bank "reserves the right to increase
interest within the limits allowed by law." By virtue of such Purpose
proviso, over the objections of Samuel, the bank increased the Safekeeping/custody Consumption
interest rate periodically until it reached 48% per annum. Finally, When to return
Samuel filed an action questioning the right of the bank to Upon demand of the Upon expiration of the term
increase the interest rate up to 48%. The bank raised the defense depositor granted to the borrower
that the Central Bank of the Philippines had already suspended Subject Matter
the Usury Law. Will the action prosper or not? Why? (2001 Bar Movable (extrajudicial) or may
Money or other fungible thing
Question) be immovable (judicial)
Relationship
A:The action will prosper. While it is true that the interest ceilings Depositor-depositary Lender-borrower
set by the Usury Law are no longer in force, it has been held that Compensation
PD No. 1684 and CB Circular No. 905 merely allow contracting No compensation of things There can be compensation of
parties to stipulate freely on any adjustment in the interest rate on deposited with each other credits
a loan or forbearance of money but do not authorize a unilateral (except by mutual agreement)
increase of the interest rate by one party without the other's

CIVIL LAW
DEPOSIT COMMODATUM The depositor need not be the owner of the thing deposited
Principal Purpose because the purpose of the contract is safekeeping and not
transfer of ownership.
Transfer of use
Safekeeping
Use of the thing
NOTE: A deposit may also be made by two or more persons each of whom
Nature believes himself entitled to the thing deposited with a third person, who
May be gratuitous or onerous Always gratuitous shall deliver it in a proper case to the one to whom it belongs.
Rent of safety deposit boxes

DEPOSIT AGENCY
Purpose The rent of safety deposit boxes is an ordinary contract of lease of
Representation of the things and not a special kind of deposit because the General
Safekeeping
principal by the agent Banking Law of 2000 has excluded the renting out of safety deposit
Reason for custody of the thing box where the bank shall act as agent or depositary with the
obligation to keep the funds, securities and other effects which it
The custody of the thing is the
It is merely an incidental receives duly separate from the banks own assets and liabilities.
principal and essential reason
obligation of the agent
for the deposit
The case of Sia v. CA (G.R. No. 102970, May 13, 1993) enunciating
Nature that a rent of a safety deposit box is a special kind of deposit, was
It is generally onerous or for decided under the former General Banking Act. However, SC has
Essentially gratuitous
compensation not yet decided a case abandoning the ruling in Sia v. CA, making it
conform with the General Banking Law of 2000.
DEPOSIT LEASE
Principal Purpose Fixed, savings and current deposits in banks
Safekeeping Use of the thing
Fixed, savings and current deposits in banks and other similar
When to return
institutions are not true deposits but are considered simple loans
Upon demand of the Upon termination of the lease because they earn interest (Art. 1980, NCC). Bank deposits are in
depositor contract. the nature of irregular deposit but they are really loans governed
by the law on loans (De Leon, 2010).
DEPOSIT SALE
Ownership NOTE: An irregular deposit is a deposit in which the depositary is not to
return the specific money deposited, but he is to return an equal sum to the
Retained by depositor. Transferred to buyer.
depositor.
Kinds of deposit Q: Maneja assigned and conveyed to Serrano her time deposit.
Notwithstanding series of demands for encashment of the
1. Judicial (sequestration) aforementioned time deposits, OBM refused to honor the time
2. Extra-judicial deposits. Is OBM liable to Serrano despite the fact the Central
a. Voluntary The delivery is made by the will of the Bank declared that OBM could no longer operate due to its
depositor (Art. 2005, NCC) chronic reserve deficiencies?
b. Necessary Made in compliance with a legal obligation,
or on the occasion of any calamity, or by travelers in A:Yes. Bank deposits are in the nature of irregular deposits. They
hotels and inns, or by travelers with common carriers are really loans because they earn interest. All kinds of bank
(Art. 1996, NCC) deposits, whether fixed, savings or current, are to be treated as
loans and are to be covered by the law on loans. Current and
Judicial v. Extra-judicial deposit savings deposits are loans to a bank because it can use the same.
Serrano, in making time deposits that earn interest with OBM was
BASIS JUDICIAL EXTRA-JUDICIAL in reality a creditor of the respondent bank, and not a depositor.
Will of the court Will of the The bank was in turn a debtor of Serrano. Failure of OBM to honor
Creation
contracting parties the time deposits is failure to pay its obligation as a debtor and not
Security or to ensure Custody and a breach of trust arising from a depositarys failure to return the
the right of a party to safekeeping subject matter of the deposit (Serrano v. Central Bank, G.R. No.
Purpose property or to 30511, Feb. 14, 1980).
recover in case of
favorable judgment Nature of advance payment in a contract of sale
Movables or Movables only
Subject
immovables but A so called deposit of an advance payment in the case of a sale is
Matter
generally immovable not the deposit contemplated under Art. 1962. It is that advance
Generally gratuitous payment upon which ownership is transferred to the seller once it
Cause Always onerous but may be is given subject to the completion of payment by the buyer under
compensated an agreement (Cruz v. Auditor General, No. L-12233, May 30,
When must Upon order of the Upon demand of 1959).
the thing be court or when depositor
returned litigation is ended
In whose Depositor or third
Person who has a
behalf it is person designated
right
held
Ownership of the thing deposited in a contract of deposit

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
PARTIES TO A CONTRACT OF DEPOSIT price he may have received or to assign his right of action against
the buyer in case the price has not been paid him (Art. 1991, NCC).
Parties to a contract of deposit
The provision applies only when the depositary has died
1. Depositary To whom the thing is deposited and left heir/s who took possession of the thing in the
2. Depositor The one who deposits the thing concept of an owner and sold it in good faith to a third
person.
A guardian is not a depositary of the wards property
NOTE: The word depositors in this part should be read as depositarys
He is not holding the funds of the ward merely for safekeeping (De Leon, 2010).
exclusively but also intended for the latters maintenance and
support. Losses, if any without the fault of the guardian shall be To whom it must be returned
deducted from the funds of the ward (Phil. Trust Co. v. Ballesteros,
No. L-8261, April 20, 1956). 1. The depositor, to his heirs and successors, or to the person
who may have been designated in the contract (Art. 1972,
Obligations of the depositor NCC).
2. If the depositor was incapacitated at the time of making the
1. Payment for necessary expenses for preservation deposit, to his guardian or administrator or to the depositor
a. If the deposit is gratuitous reimburse depositary himself should he acquire capacity (Art. 1970, NCC).
b. With compensation no need for reimbursement; 3. Even if the depositor had capacity at the time of making the
expenses borne by depositary deposit but he subsequently loses his capacity during the
deposit, the thing must be returned to his legal
2. GR: Pay losses incurred by depositary due to the character of representative (Art.1986, NCC).
the thing deposited.
Two or more depositors
XPNs:
a. When at the time of deposit, the depositor was not The rule when there are two or more depositors is if they are not
aware of the dangerous character of the thing or was solidary, and the thing admits of division, each one cannot demand
not expected to know it; more than his share.
b. When the depositor notified the depositary; or
c. When the depositary was aware of it without advice When there is solidarity or the thing does not admit of division, the
from the depositor. provisions of Art. 1212 and 1214 shall govern. However, if there is
a stipulation that the thing should be returned to one of the
3. In case of an onerous deposit, to pay the compensation depositors, the depositary shall return it only to the person
agreed upon as consideration for the deposit. designated (Art. 1985, NCC).
Diligence required in a contract of deposit Proving the ownership of the thing deposited
The depositary shall observe the diligence of a good father of a GR: The depositary cannot demand that the depositor should
family in the performance of his obligations to protect and prove his ownership of the thing deposited
preserve the thing deposited, unless a higher degree of diligence is
stipulated by the parties. XPN: Should he discover that the thing has been stolen and who its
true owner is, he must advise the latter of the deposit.
Loss through force majeure or expropriation
NOTE: If the depositary has reasonable grounds to believe that the thing has
If the depositary loses the thing through force majeure or not been lawfully acquired by the depositor, the former may return the
government order and receives money or another thing in its same.
place, he shall deliver the sum or other thing to the depositor.
If the depositary knew the identity of the owner of the thing
Manner of deposit deposited
The depositary may change the manner of the deposit if he may The depository may not return the thing to the owner should he
reasonably presume that the depositor would consent to the knew of the identity of the latter. He is not authorized to return the
change if the latter knew of the facts of the situation. However, thing unceremoniously to the alleged owner without the
before the depositary may make such change, he shall notify the knowledge of the depositor. His duty is merely to advise the owner
depositor thereof and wait for his decision, unless delay would of the deposit.
cause danger (Art. 1974, NCC).
If the depositor insists on his ownership as against the true owner,
Right of the depositary to retain the thing in pledge the depositary may file an interpleader suit against both of them to
avoid responsibility. If the identity of the true owner cannot be
The depositary has the right to retain the thing in pledge until full ascertained, the depositary may return the thing to the depositor
payment of what may be due him by reason of the deposit (Art. (Pineda, 2006).
1994, NCC).
Where it must be returned
Duty of the depositors heir who sold the thing deposited in good
faith GR: The thing deposited must be returned at the place agreed
upon.
The depositors heir who in good faith may have sold the thing he
did not know was deposited, shall only be bound to return the XPN: In the absence of stipulation, at the place where the thing
deposited might be, even if it should not be the same place where

CIVIL LAW
the original deposit was made provided the transfer was NOTE: GR: In such case, it is no longer a deposit but a contract of loan
accomplished without malice on the part of the depositary (Art. or commodatum, as the case may be.
1987, NCC).
XPN: Principal reason for the contract is still safekeeping, it is still
deposit.
When it must be returned
7. When the thing deposited is delivered sealed and closed:
GR: The thing deposited should be returned upon demand or at a. Return the thing in the same condition
will, whether or not a period has been stipulated. b. Pay damages if seal be broken through his fault
c. Keep the secret of the deposit when seal is broken w/ or
XPNs: w/o his fault
1. Thing is judicially attached while in the depositarys
possession. NOTE: However, the depositary is authorized to open the seal or lock
2. Depositary was notified of the opposition of a third person to when:
the return or the removal of the thing deposited (Art. 1988, i. There is presumed authority (i.e. the key is delivered)
NCC). ii. Out of necessity
3. When the thing is stolen and the period of 30 days from
notice to the true owner for him to claim it had not yet 8. GR: Pay for any loss or damage that may arise due to his fault
lapsed, the depositary cannot return the thing deposited to
the depositor. This is intended to protect the true owner. XPN: Liability of loss through fortuitous event
4. In case of gratuitous deposit, if the depositary has a justifiable
reason for not keeping the deposit. If the depositor refuses, XPNs to XPN Even in case of loss through fortuitous
the depositary may secure its consignation from the court event, still liable if: (Art. 1979, NCC)
(Art. 1989, NCC). a. Stipulated
b. He uses the thing without depositors permission
VOLUNTARY DEPOSIT c. He delays its return
d. He allows others to use it (even if he himself is
Voluntary deposit authorized to use it)
It is a contract or judicial relation wherein a thing is delivered at the 9. Return the thing deposited with all its fruits, accessions, and
will of a person (depositor) to another (depositary) for the purpose accessories (Art. 1983, NCC)
of safekeeping by the latter coupled with the obligation of 10. Pay interest on sums converted to personal use if the deposit
returning it upon demand. consists of money
Difference between voluntary and necessary deposit Extinguishment of voluntary deposit
There is a freedom of action which is implied in the phrase 1. Loss or destruction of thing deposited;
delivery is made by the will of the depositor, unlike in the case of 2. In gratuitous deposit, upon death of either depositor or
a necessary deposit. In other words, the depositor in a voluntary depositary; or
deposit is free to choose the depositary. 3. Other causes (e.g. return of thing, novation, expiration of the
term, fulfillment of resolutory condition)
Obligations of a depositary in voluntary deposit
NECESSARY DEPOSIT
1. To keep the thing safely and return it
2. Exercise same diligence as he would exercise over his own Necessary deposit
property
3. GR: Not to deposit the thing with a third person A necessary (involuntary) deposit is one wherein the deposit is not
made by the will of the depositor but created by force of the law or
XPNs: on occasion of a calamity.
a. When expressly authorized by stipulation; and
b. When the preservation of the thing requires its use (Art. When is deposit considered as necessary
1977, NCC)
1. When it is in compliance with a legal obligation;
NOTE: Depositary is liable for the loss if: 2. It takes place on the occasion of any calamity, such as fire,
i. He deposits the thing to a third person without authority, even storm, flood, pillage, shipwreck, or other similar events (Art.
though the loss is due to fortuitous events 1996, NCC).
ii. Deposits the thing to a third person who is manifestly careless 3. Made by passengers with common carriers; or
or unfit although there is authority. 4. Made by travelers in hotels or inns (Art. 1998, NCC).
4. If the thing should earn interest: Governing law in cases of voluntary deposit
a. Collect interest as it falls due
b. Take steps to preserve the value and rights 1. In compliance with a legal obligation by the law establishing
corresponding to it it, and in case of deficiency, the rules on voluntary deposit;
2. On occasion of a calamity by the provisions concerning
5. Not to commingle things if so stipulated voluntary deposit (Art. 1968 Art. 1971, NCC)
6. GR: Not to make use of the thing deposited
Keepers of hotels or inns
XPNs:
a. When preservation of thing deposited requires its use 1. The keepers of hotels or inns shall be held responsible for loss
b. When authorized by depositor of thing in case of deposit when both are present:
a. They have been previously informed by guest about the
effects the latter brought in, and

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
b. The guest has taken precautions prescribed for their
safekeeping. It is auxiliary to a case pending in court. The purpose is to maintain
the status quo during the pendency of the litigation or to insure
2. They are liable regardless of the degree of care exercised the right of the parties to the property in case of a favorable
when: judgment (De Leon, 2010).
a. Loss or injury is caused by his employees or even by
strangers (Art. 2000, NCC); or Object of judicial deposit
b. Loss is caused by act of thief or robber when there is no
use of arms or irresistible forc(Art. 2001, NCC). The object of judicial sequestration may be movables or
immovables (Art. 2006, NCC)
3. The keepers of hotels or inns are not liable for loss of thing in
case of deposit when: Q: When will the properties sequestered cease to be in custodia
a. Loss or injury is caused by force majeure; legis?
b. Loss due to the acts of guests, his family, his employees,
or visitors; and A: The properties sequestered cease to be in custodia legis when
c. Loss arises from the character of the goods (Art. 2002, the insolvency proceedings of a partnership terminated because
NCC) the assignee in insolvency has returned the remaining assets to the
firm, said properties cease to be in custodia legis (Ng Cho Cio, et al.
Posting of notice of exempt from liability v. Ng Diong & Hodges, L-14832, Jan. 28, 1961).
Hotel/Inn-keepers cannot escape or limit liability by stipulation or GUARANTY AND SURETYSHIP

the posting of notices. Any stipulation between the hotel keeper
and the guest whereby the responsibility of the former (Arts. 1998- Guaranty
2001, NCC) is suppressed or diminished shall be void (Art. 2003,
NCC). The hotel or inn keepers are still liable regardless of the Guaranty is a contract where a person called the guarantor binds
posting of notices exempting themselves from any liability. himself to the creditor to fulfill the obligation of the principal
debtor in case the latter should fail to do so.
Extent liability of the hotel keepers in case of loss
Suretyship
1. It covers liability in hotel rooms which come under the term
baggage or articles such as clothing as are ordinarily used Suretyship is a contract where a person binds himself solidarily
by travelers. with principal debtor.
2. It includes lost or damages in hotels annexes such as vehicles
in the hotels garage. Guaranty v. Suretyship
Q: Venus was the owner of Suzuki Grand Vitara which was GUARANTY SURETYSHIP
insured with Pioneer Insurance for loss and damage. When she Surety is an original
arrived and checked in at Heavens Hotel before midnight, its Collateral undertaking
promissory undertaking
parking attendant, John, got the key to said Vitara. At about one Guarantor-secondarily liable Surety-primarily liable
in the morning, Venus was awakened in her room by a telephone Surety undertakes to pay if
call from the Hotel Chief Security Officer who informed her that Guarantor binds himself to
principal
her Vitara was carnapped while it was parked unattended at the pay if the principal cannot pay
does not pay
parking area of the bank near the hotel. May the insurance Insurer of solvency of debtor Insurer of the debt
company, by right of subrogation, recover from the hotel the Guarantor can avail of the
damages it paid to Venus? Surety cannot avail of the
benefit of excussion and
benefit of excussion and
division in case creditor
A:Yes. The contract of necessary deposit existed between the division
proceeds against him
insured Venus and the hotel. Article 1962, in relation to Article
1998, of the Civil Code defines this contract. Plainly, Venus Similarity between Guaranty and Suretyship
deposited for safekeeping her vehicle through the hotels
employee. From Venus delivery, when she handed the keys to Both guarantor and surety promise or undertake to answer for the
John, the contract was perfected. Thus, there is the obligation of debt, default or miscarriage of another person.
safely keeping it and returning it. Ultimately, the hotel is liable for
the loss of Venus vehicle (Durban Apartments Corporation v. Guaranty v. Warranty
Pioneer Insurance Surety Corporation, G.R. No. 179419, January 12,
2011). GUARANTY WARRANTY
A contract by which a person An undertaking that the title,
Right of retain given to hotel-keeper or inn-keeper
is bound to another for the quality or quantity of the
fulfillment of a promise or subject matter of a contract is
The hotel-keeper has a right to retain the things brought into the
undertaking of a third person what it is represented to be,
hotel by the guest, as a security for credits on account of lodging,
and relates to some
and supplies usually furnished to hotel guests (Art. 2004, NCC).
agreement made ordinarily by
the party who makes the
JUDICIAL DEPOSIT
warranty
Judicial deposit
Characteristics of Guaranty
Judicial deposit (sequestration) take place when an attachment or
1. Accessory
seizure of property in litigation is ordered by a court (Art. 2005,
2. Consensual
NCC).
3. Conditional

CIVIL LAW
4. Unilateral liability, thereby transforming the obligation from a natural
5. Nominate into a civil one.
6. Cannot be presumed 5. Conditional obligations Only in case of suspensive condition
7. Subsidiary because upon its happening, it gives rise to the principal and
8. Covered by the Statute of Frauds hence, gives rise also to the accessory obligation.
9. Gratuitous
Validity of the principal contract
NOTE: In case of guaranty, the guarantor must be a person distinct from the
debtor because a person cannot be the personal guarantor of himself. A A valid principal obligation necessary in contract of guaranty since
person cannot be both the primary debtor and the guarantor of his own debt
guaranty is an accessory contract, it is an indispensable condition
as this is inconsistent with the very purpose of a guarantee which is for the
creditor to proceed against a third person if the debtor defaults in his
for its existence that there must be a principal obligation. Hence, if
obligation. the principal obligation is void, it is also void.
Unilateral character of guaranty Statute of fraud in a contract of guaranty
The contract of guaranty may be undertaken without the A contract of guaranty must be expressed and in writing (Art. 1403
knowledge of the principal debtor. It exists for the benefit of the (2), NCC); otherwise, it is unenforceable unless ratified. It need not
creditor and not for the benefit of the principal who is not a party be in a public instrument.
to the contract of guaranty. The creditor has every right to take all
NOTE: Guaranty, as a contract, requires the expression of the consent of the
possible measures to secure the payment of his credit. Hence, it
guarantor in order to be bound. It cannot be presumed because of the
can be constituted without the knowledge and even against the existence of a contract or principal obligation. It shall be unenforceable by
will of the principal debtor. action unless made in writing.
Gratuitous character of guaranty Acceptance of the creditor in a contract of guaranty
A guaranty is gratuitous, unless there is a stipulation to the GR: The acceptance of the creditor is not essential in contract of
contrary (Art. 2048, NCC). guaranty.
Guaranty or surety agreement is regarded valid despite the XPN: When there is a mere offer of a guaranty or a conditional
absence of any direct consideration received by the guarantor or guaranty wherein the obligation does not become binding until it is
surety, such consideration need not pass directly to the guarantor; accepted by the creditor and notice of such acceptance is given to
a consideration moving to the principal will suffice. the guarantor.
Kinds of guaranty Construction of a contract of guaranty or surety
1. General classification GR: In case of doubt, a contract of guaranty or surety should be

a. Personal guaranty where an individual personally strictly construed against the creditor and liberal in favor of the
assumes the fulfillment of the principal obligation; guarantor or surety; terms cannot be extended beyond the
b. Real guaranty is property, movable, or immovable. stipulation.
2. As to its origin
a. Conventional constituted by agreement of the parties XPN: In cases of compensated sureties.
b. Legal imposed by virtue of a provision of law
c. Judicial required by a court to guarantee the eventual PARTIES TO A CONTRACT OF GUARANTY
right of the parties in a case.
3. As to consideration Parties to a contract of guaranty
a. Gratuitous guarantor does not receive any price or
remuneration for acting as such. 1. Guarantor
b. Onerous one where the guarantor receives valuable 2. Creditor
consideration for his guaranty
4. As to person Guarantor
a. Single constituted solely to guarantee or secure
performance by the debtor of the principal obligation. The guarantor is the person who is bound to another for the
b. Double or subguaranty constituted to secure the fulfillment of a promise or undertaking of a third person.
fulfillment of the obligation of a guarantor by a sub-
guarantor Qualifications of a guarantor
5. As to scope and extent
a. Definite where the guaranty is limited to the 1. Possesses integrity;
principal obligation only, or to a specific portion 2. Capacity to bind himself; and
thereof. 3. Has sufficient property to answer for the obligation which he
b. Indefinite or simple where the guaranty included all guarantees.
the accessory obligations of the principal, e.g. costs,
including judicial costs. NOTE: The qualifications need only be present at the time of the perfection
of the contract.
Obligations that may be secured in a contract of guaranty
Loss of qualification of the guarantor
1. Valid obligations
2. Voidable obligations The qualification of the guarantor is lost through conviction of a
3. Unenforceable obligations crime involving dishonesty or insolvency.
4. Natural obligations When the debtor himself offers a
guaranty for his natural obligation, he impliedly recognizes his

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
The supervening loss of required qualifications will not generally 2. Debtors death - His obligation will survive. His estate will be
end the guaranty. However, the creditor is given the right to answerable. If the estate has no sufficient assets, the
demand substitution of guarantor. guarantor shall be liable.
Married woman as a guarantor Jurisdiction in an action based on a contract of guaranty
GR: A married woman can be a guarantor without the consent of The guarantor shall be subject to the jurisdiction of the court of the
her husband but binds only her separate property. place where the obligation is to be complied with.
XPNs: EFFECTS OF GUARANTY: BENEFIT OF EXCUSSION

1. If with her husbands consent, it binds the community or
conjugal partnership property. Benefit of excussion
2. Without husbands consent, in cases provided for by law,
such as when the guaranty has redounded to the benefit of The benefit of excussion is a right by which the guarantor cannot
the family. be compelled to pay the creditor unless the latter has exhausted all
the properties of the principal debtor and has resorted to all legal
Rights of a third person (guarantor or surety) who pays for the remedies against such debtor (Art. 2058, NCC).
debt guaranteed or secured
Requisites of benefit of exhaustion or excussion
1. If payment is made without the knowledge or against the will
of the debtor: 1. The guarantor must set up the right of excussion against the
a. Guarantor can recover only insofar as the payment has creditor upon the latters demand for payment from him; and
been beneficial to the debtor (Art. 1236, NCC) 2. He must point out to the creditor the available property of
b. Guarantor cannot compel the creditor to subrogate him the debtor (not exempted from execution) found within the
in his rights (Art. 1237, NCC) Philippine territory (Art. 2060, NCC).
2. If payment is made with the knowledge or consent of the Effect of the creditors negligence in exhausting the properties of
debtor Subrogated to all the rights which creditor had the debtor
against the debtor.
He shall suffer the loss to the extent of the value of the pointed
Extent of guarantors liability property which was not exhausted by the creditor (Art. 2061, NCC).
1. Where the guaranty is definite It is limited in whole or in NOTE: The article applies when the guarantor has complied with the
part to the principal debt to the exclusion of accessories. conditions of Art. 2060 (requisites of benefit of excussion).
2. Where the guaranty is indefinite or simple It shall comprise
not only the principal obligation but also all its accessories, Filing of complaint against the debtor and guarantor
including the judicial costs provided that the guarantor shall simultaneously to enforce the obligation
only be liable for those cost incurred after he has been
judicially required to pay. A complaint may be filed against the debtor and guarantor
simultaneously in one case before the exhaustion of all the
Situations when a guarantor may lawfully be required to pay properties of the debtor. There is nothing procedurally
more than the original obligation of the principal debtor objectionable in impleading the guarantor as a co-defendant. As a
matter of fact, the Rules of Court on permissive joinder of parties
1. If upon demand, a guarantor fails to pay the obligation, he explicitly allow it. If the creditor obtained a favorable judgment
can be held liable for interest, even if in thus paying, the against the debtor and guarantor, the latter is entitled to a
liability becomes more than that in the principal obligation. deferment of the execution of the said judgment against him until
The increased liability is not because of the contract but all properties of the debtor shall have been exhausted to satisfy
because of the default and the necessity for judicial the latters obligation involved in the case.
collection. It should be noted, however, that the interest runs
NOTE: Just because the guarantor was sued at the same time as the debtor
from the time the complaint is filed, not from the time the
does not mean that the creditor has already made the demand on the
debt becomes due and demandable (Tagawa v. Aldanese, guarantor.
No.18636, Sept. 28, 1922).
Declaration of insolvency and Right of excussion
2. Creditors suing on a surety bond may recover from the
surety, as part of their damages, interest at the legal rate, Just because the debtor has been declared insolvent in insolvency
judicial cost and attorneys fees when appropriate even if the proceeding does not necessarily mean that he cannot pay, for part
surety would thereby become liable to pay more than the of the debtors assets may still be available to the creditor. One
total amount stipulated in the bond (Dino v. CA, G.R. No. good proof of the debtors inability to pay is an unsatisfied writ of
89775, Nov. 26, 1995). execution which has been returned by the implementing sheriff
(Machetti v. Hospicio de San Jose, 43 Phil. 297, Feb. 7, 1920).
3. A penalty clause may also increase the liability of the surety
(General Insurance Surety Co. v. Republic, G.R. No. L-13873, Benefit of excussion shall not take place in the following
Jan. 31, 1963). instances
Effect in case of death of a party 1. Guarantor has expressly renounced it;
2. Guarantor has bound himself solidarily with the Debtor;
1. Guarantors death - His heirs will still liable to the extent of 3. Debtor is insolvent;
the value of the inheritance because the obligation is not 4. Guarantor has absconded, or cannot be sued within the
purely personal and is therefore transmissible. Philippines unless he left a manager or representative;

CIVIL LAW
5. If it may be presumed that an execution on the property of The consequences of the guarantors appearance or non-
the Debtor cannot satisfy the obligation (Art. 2059, NCC); appearance in the case against the debtor:
6. Guarantor does not invoke the benefit against Creditor upon
demand to him for payment and he does not point out 1. If he does not appear and judgment is rendered against the
available property of the Debtor within the Philippines debtor, he cannot set up defenses which he could have set up
sufficient to cover the obligation (Art. 2060, NCC). had he appeared; moreover, he cannot question the decision
7. Guarantor is a judicial bondsman or sub-surety (Art. 2084, anymore;
NCC). 2. If he appears such as by filing an answer in intervention, he
8. A pledge or mortgage of his own property has been given by may lose or may win the case. If he losses, he is still entitled
Guarantor as special security. to the benefit of excussion. There is no waiver of his benefit
9. Guarantor fails to interpose it as a defense before judgment of excussion by his appearance in the case.
is rendered.
Compromise agreement between the creditor and the principal
EFFECTS OF GUARANTY: BENEFIT OF DIVISION debtor
Benefit of division A compromise between the creditor and the principal debtor is
valid if the compromise is beneficial to the guarantor; otherwise, it
The principle of benefit of division is when there are several is not binding upon him (1st sentence, Art. 2063, NCC).
guarantors of only one debtor for the same debt, the obligation to
answer for the same is divided among all (Joint liability) (Art. 2065, Ina compromise between the creditor and the guarantor to the
NCC). principal debtor, if compromise is beneficial to the principal
debtor, it is valid; otherwise, it is not binding upon him (2nd
NOTE: GR: Creditor can claim from the guarantors only up to the extent they sentence, Art. 2063, NCC). To be binding, it must benefit both the
are respectively bound to pay. guarantor and the debtor.
XPN: When solidarity has been stipulated.
EFFECTS OF GUARANTY BETWEEN THE DEBTOR AND THE
GUARANTOR
Should any of the guarantors become insolvent, his share shall be
borne by the other guarantors including the paying guarantor in
Right of indemnity and reimbursement of the guarantor who paid
the same joint proportion in accordance with the rule in solidary
the debt
obligations.
GR: Guarantor is entitled to be reimbursed by debtor for:
The right to be reimbursed from his co- guarantors is acquired ipso
1. Total amount of the debt paid;
jure by virtue of said payment.
2. Legal interest from the time payment was made known to the
debtor;
Payment made by a co-guarantor not by virtue of a judicial
3. Expenses incurred after notifying debtor that demand to pay
demand or by reason of insolvency
was made upon him; and
4. Damages in accordance with law.
The effect of payment made by a co-guarantor not by virtue of a
judicial demand or by reason of insolvency is that he cannot
XPNs:
directly seek reimbursement from the other co-guarantors. He has
to pursue first the claim against the principal debtor alone (Sadaya
1. Guaranty is constituted without the knowledge or against the
v. Sevilla, 126 Phil. 101).
will of the debtor.
Benefit of division v. Benefit of contribution
Effect: Guarantor may only recover so much as was beneficial
to the debtor.
BENEFIT OF DIVISION BENEFIT OF CONTRIBUTION
Controversy between and 2. Payment by third persons who does not intend to be
Controversy is between the co-
among the several co- reimbursed.
guarantors and the creditor
guarantors
There is no payment yet, but There is already payment of Effect: deemed a donation and as such requires the consent
there is merely a claim pressed debt; the paying co-guarantor of debtor.
against one or more co- is seeking the contribution of
guarantors the co-guarantors Right of subrogation
EFFECTS OF GUARANTY BETWEEN THE The guarantor has the right of subrogation after the payment of
GUARANTOR AND THE CREDITOR the debt is made to the creditor. The guarantor is subrogated to all
the rights which the creditor had against the debtor (Art. 2067(1)).
Action of the creditor against the debtor
If the guarantor pays without notice to the debtor, the debtor may
GR: In an action of the creditor against the debtor, only the interpose against the guarantor defenses available to the debtor as
principal debtor should be sued alone. against the creditor at the time payment was made.
XPN: If the benefit of excussion is not available, the guarantor can Notification of payment made by the guarantor
be sued jointly with the debtor.
GR: Guarantor must first notify the debtor before paying,
The guarantor entitled to be notified of the complaint against the otherwise, if the debtor pays again, the guarantor can only collect
debtor. If the guarantor desires to set up defenses as are granted from the creditor and the guarantor will have no cause of action
him by law, he may have the opportunity to do so (Art. 2062, NCC). against the debtor even if the creditor becomes insolvent (Art.
2070, NCC).

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
XPN: Guarantor may still recover from debtor if the following Entitlement to right of excussion
circumstances concur:
1. Guaranty is gratuitous; A sub-guarantor entitled to the right of excussion both with respect
2. Guarantor was prevented by fortuitous event from notifying to the guarantor and to the principal debtor (Art. 2064, NCC).
the debtor; and
3. Creditor was insolvent. CONTINUING GUARANTY
Payment of the guarantor before maturity Continuing guaranty
GR: The guarantor cannot seek reimbursement from the debtor A continuing guaranty or suretyship is one which covers all
until expiration of the period stipulated. The guarantor must wait. transactions, including those arising in the future, which are within
For being subsidiary in character, the guaranty is not enforceable the description or contemplation of the contract of guaranty until
until the debt has become due (Art. 2069, NCC). the expiration or termination thereof.
XPN: If ratified by the debtor. A guaranty may be given to secure even future debts, the amount
of which may not be known at the time the guaranty is executed.
Right of the guarantor to proceed against debtor before payment This is the basis for contracts denominated as continuing guaranty
or suretyship. It is one which covers all transactions, including
GR: Guarantor cannot proceed against the principal debtor even those arising in the future, which are within the description or
before having paidthe creditor. contemplation of the contract of guaranty, until the expiration or
termination thereof (Dino v. CA, G.R. No. 89775, Nov. 26, 1995)
XPNs:
1. When he is sued for payment; GR: It is not limited to a single transaction but contemplates a
2. In case of insolvency of the principal debtor; future course of dealings, covering a series of transactions
3. When the debtor has bound himself to relieve him from the generally for an indefinite time or until revoked.
guaranty within a specified period, and this period has
expired. XPN: A chattel mortgage can only cover obligations existing at the
4. When the debt has become demandable by reason of the time the mortgage is constituted and not to obligations subsequent
expiration of the period of payment; to the execution of the mortgage.
5. After the lapse of ten years, when the principal obligation has
no fixed period for its maturity, unless it be of such nature XPN to the XPN: In case of stocks in department stores, drug
that it cannot be extinguished except within a period longer stores etc.
than ten years;
6. If there are reasonable grounds to fear that the principal Determination of continuing guaranty
debtor intends to abscond; or
7. If the principal debtor is in imminent danger of becoming A guaranty shall be construed as continuing when by the terms
insolvent. thereof it is evident that the object is to give a standing credit to
the principal debtor to be used from time to time either
NOTE: In all these cases, the cause of action of the guarantor is either to indefinitely or until a certain period, especially if the right to recall
obtain release from the guaranty, or to demand a security that shall protect the guaranty is expressly reserved (Dino v. CA, G.R. No. 89775, Nov.
him from any proceedings by the creditor and from the danger of insolvency
26, 1995).
of the debtor (Art. 2071, NCC).
Q: PAGRICO submitted a Surety Bond issued by R&B Surety to

Purpose of the right of guarantor to proceed against debtor
secure an increase in its credit line with PNB. For consideration of
before payment
the Surety Bond, Cochingyan and Villanueva entered into an
Indemnity Agreement with R&B Surety and bound themselves
The purpose of this right is to enable the guarantor to take
jointly and severally to the terms and conditions of the Surety
measures for the protection of his interest in view of the
Bond. When PAGRICO defaulted, PNB demanded payment to R&B
probability that he would be called upon to pay the debt (De Leon,
Surety; R&B Surety, in turn, demanded payment to Cochingyan
2010).
and Villanueva. R&B sued them. Villanueva argued that the
complaint was premature because PNB had not yet proceeded
Remedy of a guarantor of a third person at request of another
against R&B Surety to enforce the latter's liability under the
Surety Bond. Is the contention correct?
The remedy of a person who becomes a guarantor at the request
of another for the debt of a third person who is not present is the
A: No. Indemnity Agreements are contracts of indemnification not
option of suing either the principal debtor or the requesting party
only against actual loss but against liability as well. While in a
(Art. 2072, NCC).
contract of indemnity against loss an indemnitor will not be liable
NOTE: The provision applies when the guarantor has actually paid the debt.
until the person to be indemnified makes payment or sustains loss,
in a contract of indemnity against liability, as in this case, the
SUB-GUARANTY indemnitor's liability arises as soon as the liability of the person to
be indemnified has arisen without regard to whether or not he has
Sub-guaranty suffered actual loss. Accordingly, R & B Surety was entitled to
proceed against petitioners not only for the partial payments
Double or sub-guaranty is one constituted to guarantee the already made but for the full amount owed by PAGRICO to the PNB
obligation of the guarantor. (Cochingyan, Jr. v. R&B Surety and Ins. Co., GR.No.L-47369, June 30,
1987).
NOTE: In case of insolvency of the guarantor for whom he bound himself, he
is responsible to the co-guarantors in the same terms as the guarantors (Art.
2075, NCC).

CIVIL LAW
EXTINGUISHMENT OF GUARANTY A bondsman is a surety offered in virtue of a provision of law or a

judicial order. He must have the qualifications required of a
Grounds for extinguishing a contract of guaranty: guarantor and in special laws like the Rules of Court.
1. Principal obligation is extinguished The necessary qualifications of sureties to a property bond shall be
2. Same causes as all other obligations as follows:
3. If creditor voluntarily accepts immovable or other properties
in payment of the debt (even if he should afterwards lose the 1. Each of them must be a resident owner of real estate within
same through eviction or conveyance of property) (Art. 2077, the Philippines;
NCC) 2. Where there is only one surety, his real estate must be worth
4. Release in favor of one of the guarantors, w/o consent of the at least the amount of the undertaking;
others, benefits all to the extent of the share of the guarantor 3. In case there are two or more sureties, they may justify
to whom it has been granted (Art. 2078, NCC) severally in amounts less than that expressed in the
5. Extension granted to debtor by creditor without consent of undertaking, if the entire sum justified is equivalent to the
guarantor (Art. 2079, NCC) whole amount of bail demanded (Sec. 12, Rule 114, Rules of
6. When by some act of the creditor, the guarantors even Court).
though they are solidarily liable cannot be subrogated to the
rights, mortgages, and preferences of the former (Art. 2080, Nature of bond
NCC)
All bonds including judicial bonds are contractual in nature.
MATERIAL ALTERATION OF CONTRACT Bonds exist only in consequence of a meeting of minds under the
conditions essential to a contract.
Material alteration of contract
Judicial bond
An alteration is considered material when there is a change which
imposes an obligation or added burden on the party promising or Judicial bonds constitute merely as a special class of contracts of
which takes away some obligation already imposed, changing the guaranty, characterized by the fact that they are given in virtue of a
legal effect of the original contract and not merely the form judicial order.
thereof.
Liability of the surety if the creditor was negligent in collecting
NOTE: the debt
a. The increase in the interest rates without the guarantors consent
does not release the guarantor where the creditor is demanding only A surety is still liable even if the creditor was negligent in collecting
the original and not the increased rate of interest rate. from the debtor. The contract of suretyship is not about the oblige
b. Assignment of the creditor without the knowledge or consent of will seeing to it that the principal pays the debt or fulfills the
surety is not material alteration of the contract
c. Change in the technical specifications of the items to be purchased but
contract, but that the surety will see that the principal pay or
their amount, length, and quality remained unchanged, and the perform (PNB v. Manila Surety & Fidelity Co., Inc., 14 SCRA 776,
period for payment and the amount of liability of principal debtor and 1965).
surety were untouched is not material.
Violation by the creditor of the terms of the surety agreement
Effect of material alteration of contract
A violation by the creditor of the terms of the surety entitles the
Any agreement between the creditor and the principal debtor surety to be released therefrom (Associated Ins. & Surety Co. v.
which essentially varies the terms of the principal contract without Bacolod Murcia Milling Co., GR. No. L-12334, May 22, 1959).
the consent of the surety will release the surety from liability.
Material alteration would constitute a novation or change of the The effect of the violation of a surety bond filed for an alien staying
principal contract and which is consequently extinguished. in the country is that its subsequent unauthorized cancellation thru
mistake or fraud does not relieve the surety. A bond surrendered
LEGAL AND JUDICIAL BONDS thru mistake or fraud may, therefore, be considered as a valid and
subsisting instrument (Far Eastern Surety and Ins. Co., v. CA, GR No.
Bond L-12019, Oct 16, 1958).
A bond, when required by law, is commonly understood to mean When the performance of a bond is rendered impossible
an undertaking that is sufficiently secured, and not cash or
currency. Whenever surety bonds are submitted, they are subject If the performance of a bond is rendered impossible, it is the
to any objections as to their sufficiency or as to the solvency of the suretys duty to inform the court of the happening of the event so
bondsman. that it may take action or decree in the discharge of the surety
when the performance of the bond is rendered impossible by an
Bondsman act of God, or the obligee, or the law (People v. Otiak Omal & Luzon
Co., Inc., GR. No. L-14457, June 30, 1961).

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
PLEDGE, MORTGAGE, AND ANTICHRESIS

Pledge v. Mortgages v. Antichresis
PLEDGE CHATTEL MORTGAGE REAL ESTATE MORTGAGE ANTICHRESIS

Definition
An accessory contract whereby a debtor Chattel mortgage is a It is a contract whereby the debtor A contract whereby the CR
delivers to the creditor or a third person contract by virtue of secures to the creditor the acquires the right to receive
a movable or personal property, or which a personal property fulfillment of a principal obligation, the fruits of an immovable of
document evidencing incorporeal rights, is recorded in the Chattel specially subjecting to such the debtor, with the
to secure the fulfillment of a principal Mortgage Register as a security, immovable property or obligation to apply them to
obligation with the condition that when security for the real rights over immovable the payment of interest, if
the obligation is satisfied, the thing performance of an property, in case the principal owing, and thereafter to the
delivered shall be returned to the obligation. obligation is not paid or complied principal of his credit.
pledgor with all its fruits and accessions, with at the time stipulated.
if any.
Object of the contract

Movable or personal property, or Personal property Immovable property or real rights Fruits of an immovable
document evidencing incorporeal rights over immovable property
Necessity of delivery
Property must be delivered Delivery is not necessary Delivery is not necessary Property is delivered to the
creditor
Similarities of pledge and mortgage

GR: A third person who pledged and mortgaged his property is not
1. Both are accessory contracts; liable for any deficiency.
2. Both pledgor and mortgagor must be the absolute owner of
the property; XPN: If the third party pledgor or mortgagor expressly agreed to be
3. Both pledgor and mortgagor must have the free disposal of bound solidarily with the principal debtor.
their property or be authorized to do so; and
4. In both, the thing proffered as security may be sold at public Property acquirable in the future cannot be mortgaged
auction, when the principal obligation becomes due and no
payment is made by the debtor. Where the mortgagor mortgaged a property and in the contract he
agreed to mortgage additional properties which he may acquire in
Indivisibility of pledge, mortgage and antichresis the future, there was no valid mortgage as to the latter because he
was not yet the owner of the properties at the time of the
GR: A pledge, mortgage or antichresis is indivisible. mortgage (Dilag v. Heirs of Ressurrecion, No. 48941, May 6, 1946).
NOTE: The mortgage is indivisible even if the obligation of the debtor is joint Mortgage constituted to secure future advances
and not solidary. Generally, the divisibility of the principal obligation is not
affected by the indivisibility of the pledge or mortgage. Mortgage constituted to secure future advances is valid. It is a
continuing security and not discharged by repayment of the
XPNs: amount named in the mortgage, until the full amount of the
1. Where each one of several things guarantees determinate advances is paid. However, a chattel mortgage can only cover
portion of the credit (Art. 2089, NCC). obligations existing at the time the mortgage is constituted and not
2. Where only a portion of the loan was released. to obligations subsequent to the execution of the mortgage.
3. Where there was failure of consideration.
Nature of an assignment of rights to guarantee an obligation of a
Obligations that can be secured by pledge, mortgage and debtor
antichresis
An assignment of rights to guarantee an obligation of a debtor is in
1. Valid obligations effect a mortgage and not an absolute conveyance of title which
2. Voidable obligations confers ownership on the assignee (Manila Banking Corp. v.
3. Unenforceable obligations Teodoro, Jr., G.R. No. 53955, Jan. 13, 1989).
4. Natural obligations
5. Conditional obligations ACCOMMODATION MORTGAGE
Rules common to pledge and mortgage Accomodation Mortgagor
1. Constituted to secure the fulfillment of a valid principal An accommodation mortgagor is a third person who is not a party
obligation. to a principal obligation and secures the latter by mortgaging or
2. Pledgor or mortgagor must be the absolute owner of the pledging his own property.
thing pledged or mortgaged.
3. They must have the free disposal of their property, and in the The liability of an accommodation mortgagor extends up to the
absence thereof, that they be legally authorized for such loan value of their mortgaged property and not to the entire loan
purpose. itself.
4. Debtor retains ownership of the thing given as a security.
NOTE: Accommodation is also applicable to pledge since the law provides
Limited liability of a third person as a pledgor or mortgagor that third parties who are not parties to the principal obligation may secure

CIVIL LAW
the latter by pledging or mortgaging their own property (Art. 2085, Civil the mortgagor. The bank has to sell the property and apply
Code). It is also applicable to antichresis since Art. 2139 states that the last the proceeds to the indebtedness.
paragraph of Art. 2085 shall be applicable to a contract of antichresis.
Q: Spouses Uy Tong purchased seven motor vehicles from
PACTUM COMMISSORIUM Bayanihan Investment payable in installments. It was agreed that
if the spouses should fail to pay their obligation, Bayanihan will
Pactum commisorium automatically be the owner of the apartment which the spouses
has a leasehold right. The spouses after paying the
Pactum commisorium is a stipulation whereby the thing pledged or downpayment, failed to pay the balance, hence, Bayanihan filed
mortgaged or subject of antichresis shall automatically become the an action for specific performance against the spouses. The
property of the creditor in the event of non-payment of the debt judgment provided that in case the spouses failed to pay the
within the term fixed. Such stipulation is null and void. obligation within 30 days from notice, they are to execute a Deed
of Absolute Sale over the apartment and/or leasehold rights. Is
Elements of Pactum Commissorium the stipulation a pactum commissorium?
1. There is a pledge, mortgage or antichresis of a property by A:No. The questioned agreement evinces no basis for the
way of security; and application of pactum commissorium. There is no contract of
2. There is an express stipulation for the automatic pledge or mortgage entered into by the parties. Bayanihan sought
appropriation by the creditor of the property in case of non- the intervention of the court by filing an action for specific
payment performance. Hence there was no automatic appropriation of the
property (Uy Tong v. CA, G.R. No. 77465, May 21, 1988).
NOTE: What are prohibited are those stipulations executed or made
simultaneously with the original contract, and not those subsequently
entered into. Q: X borrowed money from Y and gave a piece of land as security
by way of mortgage. It was expressly agreed between the parties
Q: ABC loaned to MNO P40,000 for which the latter pledged 400 in the mortgage contract that upon nonpayment of the debt on
shares of stock in XYZ Inc. It was agreed that if the pledgor failed time by X, the mortgaged land would already belong to Y. If X
to pay the loan with 10% yearly interest within four years, the defaulted in paying, would Y now become the owner of the
pledgee is authorized to foreclose on the shares of stock. As mortgaged land? Why?
required, MNO delivered possession of the shares to ABC with
the understanding that the shares would be returned to MNO A:No, Y would not become the owner of the land. The stipulation is
upon the payment of the loan. However, the loan was not paid on in the nature of pactum commissorium which is prohibited by law.
time. A month after 4 years, may the shares of stock pledged be The property should be sold at public auction and the proceeds
deemed owned by ABC or not? Reason. (2004 Bar Question) thereof applied to the indebtedness. Any excess shall be given to
the mortgagor.
A: The shares of stock cannot be deemed owned by ABC upon
default of MNO. They have to be foreclosed. Under Article 2088, Q: Suppose in the preceding question, the agreement between X
NCC, the creditor cannot appropriate the things given by way of and Y was that if X failed to pay the mortgage debt on time, the
pledge. And even if the parties have stipulated that ABC becomes debt shall be paid with the land mortgaged by X to Y. Would your
the owner of the shares in case MNO defaults on the loan, such answer be the same as in the preceding question? Explain. (1999
stipulation is void for being a pactum commissorium. Bar Question)
Q: To secure a loan obtained from a rural bank, Purita assigned A: No, the answer would not be the same. This is a valid stipulation
her leasehold rights over a stall in the public market in favor of and does not constitute pactum commissorium. In pactum
the bank. The deed of assignment provides that in case of default commissorium, the acquisition is automatic without need of any
in the payment of the loan, the bank shall have the right to sell further action. In the instant problem another act is required to be
Purita's rights over the market stall as her attorney-in-fact, and to performed, namely, the conveyance of the property as payment
apply the proceeds to the payment of the loan. (dacion en pago).
1. Was the assignment of leasehold rights a mortgage or a PLEDGE

cession? Why?
2. Assuming the assignment to be a mortgage, does the Pledge
provision giving the bank the power to sell Purita's rights
constitute pactum commissorium or not? Why? (2001 Bar Pledge is a contract whereby the debtor delivers to a creditor or
Question) third person a movable or document evidencing incorporeal right
for the purpose of securing fulfillment of a principal obligation with
A: the understanding that when the obligation is fulfilled, the thing
1. The assignment was a mortgage, not a cession, of the delivered shall be returned with all its fruits and accessions.
leasehold rights. A cession would have transferred ownership
to the bank. However, the grant of authority to the bank to Pledge v. Chattel Mortgage
sell the leasehold rights in case of default is proof that no
such ownership was transferred and that a mere BASIS CHATTEL MORTGAGE PLEDGE
encumbrance was constituted. There would have been no Delivery is not Delivery is necessary
Delivery necessary
need for such authority had there been a cession.
Procedure for the Art. 2112, NCC
2. No, the clause in question is not a pactum commissorium. It is sale of the thing given
pactum commissorium when default in the payment of the Governing
as security is
loan automatically vests ownership of the encumbered Law
governed by Sec. 14,
property in the bank. In the problem given, the bank does not Act No. 1508
automatically become owner of the property upon default of

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
If the property is If the property is sold, or a third person designated by the parties by common
foreclosed, the excess the debtor is not consent (Art. 2093, NCC).
Excess goes to the debtor entitled to the excess
unless otherwise NOTE: If Art. 2093 is not complied with, the pledge is void.
agreed.
Continuous possession is required in pledge
The creditor is The creditor is not
entitled to recover entitled to recover The mere taking of the property is not enough in pledge. There
the deficiency from the must be continuous possession of the thing. However, the pledgee
Recovery the debtor except if deficiencynotwithsta is allowed to temporarily entrust the physical possession of the
of the the chattel mortgage nding any stipulation thing pledged to the pledgor without invalidating the contract. But
deficiency is a security for the to the contrary. here, the pledgor would be in possession as a mere trustee and his
purchase of property possession is subject to the order of the pledgee.
in installments
When possession or delivery of the thing pledged was not made
Possession remains Possession is vested
Possession with the debtor in the creditor An agreement to constitute a pledge only gives rise to a personal
Contract Formal contract Real contract action between the contracting parties. Unless the movable given
Must be recorded in a Must be in a public as a security by way of pledge be delivered to and placed in the
public instrument to instrument possession of the creditor or of a third person designated by
Recording bind third persons containing common agreement, the creditor acquires no right to the property
in a public description of the because pledge is merely a lien and possession is indispensable to
instrument thing pledged and the the right of a lien.
date thereof to bind
third persons When the pledge fails to take the property pledged into his
possession
Pledge v. Real Estate Mortgage
PLEDGE REAL ESTATE MORTGAGE If a pledgee fails or neglects to take the property pledged into his
Real contract Consensual contract possession, he is presumed to have waived the right granted him
Subject matter is personal Subject matter is real by the contract (U.S. v. Terrel, 2 Phil. 222).
property property
Pledge must be embodied in a public instrument to affect third
Possession of the thing Possession of the thing
persons
pledged is vested in the mortgaged remains with the
creditor debtor
The requisite in Art. 2096 that the pledge must be in a public
Pledgee has the right to
instrument does not affect its validity. It is still valid between the
receive the fruits of the thing
parties, but it will not bind third person if the said provision is not
pledged, with the obligation
Mortgagee does not possess complied with.
of applying the same to the
such right
interest of the debt, if owing,
When the contract of pledge is not recorded in a public instrument,
and the balance, if any, to the
it is void as against third persons; the buyer of the thing pledged is
principal
a third person. The fact that the person claiming as pledgee has
Sale at public auction of the
Sale may be judicial or taken actual physical possession of the thing sold will not prevent
thing pledged is always
extrajudicial the pledge from being declared void insofar as the innocent
extrajudicial
stranger is concerned (Tec Bi & Co. v. Chartered Bank of India,
Description of the thing and Must be registered, Australia and China, 16 O.G. 908; Ocejo, Perez and Co. v.
the date of pledge must otherwise, it is not valid International Bank, 37 Phil. 631).
appear in a public instrument against third persons
otherwise, it is not valid as to although binding between Requisites to bind third persons in a contract of pledge
third person the parties
Real right and real property The following must appear in the public instrument in order to
Not a real right
by itself affect third persons
Kinds of pledge 1. A description of the thing pledged; and

2. Statement of date when the pledge was executed (Art. 2096,
1. Conventional -By agreement of parties NCC).
2. Legal -By operation of law
Effect of undated instrument of pledge
NOTE: A thing lawfully pledged to one creditor, cannot be pledged to
another as long as the first pledge subsists (Mission de San Vicente v. Reyes
19 Phil 524).
An undated instrument of pledge cannot ripen into a valid pledge
(Betita v. Ganzon, 49 Phil. 87).
Requisites of a contract of pledge
Effect if no public instrument is made
1. Constituted to secure the fulfillment of a principal obligation;
2. Pledgor is the absolute owner of the thing pledged; The purpose of the requirements is to forestall fraud, because a
3. Persons constituting the pledge have the free disposal of debtor may attempt to conceal his property from his creditors
their property, and in the absence thereof, that they be when he sees it in danger of execution by simulating a pledge
legally authorized for the purpose (Art. 2085, NCC). thereof with an accomplice (Tec Bi & Co. v. Chartered Bank of India,
4. A contract of pledge is perfected when the thing pledged is 41 Phil. 576).
placed in the actual possession of or delivered to the pledgee

CIVIL LAW
Constructive/symbolic delivery in a contract of pledge RIGHTS AND OBLIGATIONS OF THE
PLEDGOR AND THE PLEDGEE
GR: Constructive or symbolic delivery of the thing is not sufficient
to constitute pledge. Parties in a contract of pledge
XPN: If the pledge consists of goods stored in a warehouse for 1. Pledgor the debtor; the one who delivers the thing pledged
purposes, of showing the pledgees control over the goods, the to the creditor
delivery to him of the keys to the warehouse is sufficient delivery 2. Pledgee the creditor; the one who receives the thing
of possession (constructive/symbolic delivery). pledged
The type of delivery will depend upon the nature and peculiar Rights of a pledgee
circumstances of each case (Yuliongsiu v. PNB, G.R. No. L-19227,
Feb. 17, 1968). 1. Retain the thing until debt is paid (Art. 2098, NCC).
2. To be reimbursed for the expenses made for the preservation
Pledge of incorporeal rights of the thing pledged (Art. 2099, NCC).
3. Creditor may bring any action pertaining to the pledgor in
Incorporeal rights evidenced by proper document can be pledged. order to recover it from or defend it against a third person
It is, however, required that the actual instrument be delivered to (Legal Subrogation) (Art. 2103, NCC).
the pledgee. More, if the instrument is a negotiable document, it
must be indorsed. Obligations of a pledgee
Q: Pablo owns a tractor which he left with his son Mike for 1. Take care of the thing pledged with the diligence of a good
safekeeping. Mike then offered the said tractor to Calibo as father of a family (Art. 2099, NCC).
security for the payment of his debt. When Pablo came back and
learned that the tractor was in the custody of Calibo, he NOTE: Pledgee is liable for the loss or deterioration of the thing by
demanded its return. Calibo, however, refused. Calibo alleged reason of fraud, negligence, delay, or violation of the terms of the
that the tractor was pledged to him, and in the alternative, the contract.
tractor was left with him in the concept of deposit and he may
validly hold on to it until Mike pays his obligation. Is Calibo 2. GR: Pledgee cannot deposit the thing pledged to a third
correct? person.
A: No. There is no valid pledge because Mike is not the absolute XPN: Unless there is stipulation to the contract (Art. 2100,
owner of the property pledged. He who is not the owner or NCC).
proprietor of the property pledged or mortgaged to guarantee the
fulfillment of a principal obligation, cannot legally constitute such a NOTE: Pledgee is liable for the loss or deterioration of the thing
guaranty as may validly bind the property in favor of his creditor, pledged caused by the acts or negligence of the agents or employees
of the pledgee.
and the pledgee or mortgagee in such a case acquires no right
whatsoever in the property pledged or mortgaged. There is
3. Apply the fruits, income, dividends, or interests produced or
likewise no valid deposit, in this case, where the principal purpose
earned by the property, to interests or expenses first, then to
for receiving the object is not safekeeping (Calibo Jr. v. CA, G.R. No.
the principal (Art. 2102, NCC).
120528, Jan. 29, 2001).
4. GR: Cannot use the thing pledged without authority (Art.
2104, NCC).
Right of an owner of personal property pledged without authority
XPNs:
An owner of personal property pledged without authority may
a. If the pledgor had given him authority or permission to
invoke Art. 559, NCC. The defense that pawnshop owner acquired
use it;
ownership of the thing in good faith is not available.
b. If the use of the thing is necessary for its preservation
but only for that purpose.
Art. 559 reads as:
The possession of movable property acquired in good faith is
5. Return the thing pledged to the pledgor when the principal
equivalent to a title. Nevertheless, one who has lost any movable or
obligation is fulfilled or satisfied it.
has been unlawfully deprived thereof, may recover it from the
person in possession of the same.
When the thing pledged is expropriated by the State
If the possessor of a movable lost or of which the owner has been
The debtor is no longer the owner of the thing in case the same is
unlawfully deprived, has acquired it in good faith at a public sale,
expropriated by the State as ownership is transferred to the
the owner cannot obtain its return without reimbursing the price
expropriating authority.
paid therefore
NOTE: The creditor may bring actions pertaining to the owner of the thing
When two or more things are pledged pledged in order to recover it from, or defend it against a third person (Art.
2103, NCC).
When two or more things are pledged, the pledgee may choose
which he will cause to be sold, unless there is a stipulation to the Return of the pledge, when demandable
contrary (1st sentence, Art. 2119, NCC).
GR: A debtor cannot ask for the return of the thing pledged against
The restriction on the right of the pledgee under the 1st sentence the will of the creditor.
of Art. 2119 is that he may only demand the sale of only as many of
the things as are necessary for the payment of the debt (2nd XPNs:
sentence, Art. 2119, NCC). 1. If the debtor has paid the debt and its interest, with
expenses in a proper case (Art. 2105, NCC).

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
2. If the thing is in danger of destruction or impairment considered as a depositor and the pledgee shall become a
provided, the pledgor offers an acceptable substitute for it depositary of the thing. Accordingly, the law on deposit will apply.
which is of the same kind and not of inferior quality and
without prejudice to the application of Art. 2108 whenever Q: Santos made time deposits with OBM. IRC, through its
warranted (Art. 2107, NCC). president Santos, applied for a loan with PNB. To secure the loan,
Santos executed a Deed of Assignment of the time deposits in
When the pledgee may cause the sale of the thing even if the favor of PNB. When PNB tried to collect from OBM, the latter did
obligation is not yet due not pay the CTDs. PNB then demanded payment from Santos and
IRC, but the latter refused payment alleging that the obligation
If, without the fault of the pledgee, there is a danger of was deemed paid with the irrevocable assignment of the CTDs.
destruction, impairment, or diminution in value of the thing
pledged, he may cause the same to be sold at public auction. The 1. Is the liability of IRC deemed paid by virtue of the deed of
proceeds of the auction shall be security for the principal obligation assignment?
in the same manner as the thing originally pledged (Art. 2108, 2. Is OBM liable for damages
NCC).
A:
Rights of the creditor who is deceived on the substance or quality 1. No. For all intents and purposes, the deed of assignment in
of the thing pledged this case is actually a pledge. Where a CTD in a bank, payable
at a future time, was handed over by a debtor to his creditor,
To demand: it was not payment, unless there was an express agreement
1. From the pledgor an acceptable substitute of the thing; or on the part of the creditor to receive it as such.
2. The immediate payment of the principal obligation (Art. 2109,
NCC). 2. Yes. While it is true that no interest shall be due unless it has
been expressly stipulated in writing, this applies only to
NOTE: The remedies are alternative and not cumulative. Only one may be interest for the use of money. It does not comprehend
chosen. The law used the conjunctive or. Either one is more convenient interest paid as damages. Santos has the right to recover
than annulment. damages resulting from the default of OBM and the measure
of such damages is interest at the legal rate of 6% per annum
Return of the thing pledged on the amounts due and unpaid at the expiration of the
periods respectively provided in the contracts (Integrated
The return of the thing pledged to the pledgor by the pledgee shall Realty Corp. v. PNB, G.R. No. 60705, June 28, 1989)
extinguish the pledge. Any stipulation to the contrary shall be void
(Art. 2110, NCC). Rights of the pledgor
Presumption of return to the pledgor/owner by the pledgee 1. Right to dispose the thing pledged, provided there is consent
of the pledgee (Art. 2097, NCC)
There is a prima facie presumption that the thing pledged has been
returned by the pledgee to the pledgor or owner, in any of the NOTE: The pledge however, shall continue in possession.
following circumstances:
2. Right to ask that the thing pledged be deposited (Art. 2104
1. If the thing is found in the possession of the pledgor or owner and Art. 2106, NCC)
after the pledge had been perfected; or 3. Right to substitute thing pledged (Art. 2107, NCC)
2. If the thing is found in the possession of a third person who
received it from the pledgor or owner after the perfection of Right to ask that the thing pledged be deposited
the pledge (Art. 2110 (2), NCC).
The owner ask that the thing pledged be deposited judicially or
NOTE: It is presumed that the accessory obligation of pledge has been extrajudicially in the following instances:
remitted when the thing pledged, after its delivery to the creditor, is found
in the possession of the debtor, or of a third person who owns the thing (Art.
1. If the creditor uses the thing without authority
1274, NCC). 2. If he misuses the thing in any other way
3. If the thing is in danger of being lost or impaired because of
Renunciation of the pledge by the pledgee the negligence or willful act of the pledge (Art. 2106, NCC)
The renunciation or abandonment of the pledge by the pledgee Right to demand the return of thing pledged against the will of
requires a statement in writing to that effect (1st sentence, Art. creditor
2111, NCC).
The pledgor does not have the right to demand the return of the
NOTE: The renunciation of the pledge is not contrary to law, public order, thing pledged against the will of the creditor. He cannot ask for its
public policy, morals or good customs. Further, Art. 1356 of the NCC, which return until the obligation is fully paid including interest due
speaks of the form of contracts, must be complied with. thereon and expenses incurred for its preservation (Art. 2105, NCC)
Necessity of acceptance in renunciation Requisites before the pledgor may substitute the thing pledged
with another thing
Acceptance or return of the thing is not necessary for the validity
of the renunciation under Art. 2111. It is not a case of donation 1. Pledgor has reasonable grounds to fear the destruction or
where acceptance is necessary to make the donation valid. impairment of the thing pledged;
2. No fault on the part of the pledge
Necessity of return in extinguishment of pledge 3. Pledgor is offering in place of the thing, another thing in
pledge which is of the same kind and quality as the former;
Even if the thing was not returned, as long as there is an effective and
renunciation, abandonment or waiver, the pledge is already 4. Pledgee does not choose to exercise his right to cause the
extinguished even if the thing is not returned. The pledgor will be thing pledged to be sold at public auction (Art. 2107, NCC).

CIVIL LAW
expenses. This shall be executed by 1the pledgee after
FORECLOSURE appropriating the thing in case a no sale was made in a second
auction.
Foreclosure of the thing pledged
Application of the proceeds of the sale
A pledgee foreclose the thing pledged when there is no payment of
the debt on time, the object of the pledge may be alienated for the The pledgee may collect and receive the amount due when what
purpose of satisfying the claims of the pledgee. has been pledged is a credit. He shall apply the same to the
payment of his claim, and deliver the surplus, should there be any,
Right of the pledge or mortgagor to foreclose to the pledgor (Art. 2118, NCC).
If the debtor failed to pay on maturity date, the thing pledged or PLEDGE BY OPERATION OF LAW
mortgaged may be sold at public auction as provided by law so that
the proceeds may be used for payment of the obligation. Legal pledge
Options of an unpaid creditor Pledge by operation of law or legal pledges are those constituted
or created by operation of law. This refers to the right of retention.
1. Foreclose the thing pledged; or
2. Abandon the pledge and file a claim for collection Rules that apply to legal pledge
Procedure for the public sale of a thing pledged 1. The rules governing conventional pledge applies to legal
pledge.
1. The obligation must be due and unpaid 2. There is no definite period for the payment of the principal
2. The sale of the thing pledged must be at public auction obligation. The pledge must, therefore, make a demand for
3. There must be notice to the pledgor and owner, stating the the payment of the amount due him. Without such demand,
amount for which the sale is to be held he cannot exercise the right of sale at public auction (De
4. The sale must be conducted by Notary Public. Leon).
Who can bid in a public auction Instances of legal pledges where there is right of retention
The following can bid in the public auction 1. Art. 546 Right of the possessor in good faith to retain the
1. The public thing until refunded of necessary expenses.
2. Pledgor/owner/debtor Shall be preferred if same terms as 2. Art. 1707 Lien on the goods manufactured or work done by
the highest bidder is offered a laborer until his wages had been paid.
3. Pledgee/creditor He must not be the only bidder, 3. Art. 1731 Right to retain of a worker who executed work
otherwise, his bid is invalid and void upon a movable until he is paid.
4. Art. 1914 Right of an agent to retain the thing subject of the
Third person paying pledgors debt agency until reimbursed of his advances and damages (Arts.
1912 and 1913, NCC).
A third person pay the pledgors debt if he has any interest in the 5. Art. 1994 Right of retention of a depositary until full
fulfillment of the principal obligation (Art. 2117, NCC). payment of what is due him by reason of the deposit.
6. Art. 2004 Right of the hotel-keeper to retain things of the
Effect of sale of the thing pledged guest which are brought into the hotel, until his hotel bills
had been paid.
The sale of the thing pledged extinguishes the principal obligation.
The extinction is automatic regardless of whether or not the Sale of the thing pledged
proceeds realized from the public auction sale are more or less
than the amounts of the principal obligation and other incidental Before the pledgee may cause sale of the thing pledged he must
expenses. first make a demand of the amount for which the thing is retained.
After the demand, the pledgee must proceed with the sale of the
If the price of the sale is more than the amount of the debt, the thing within thirty (30) days. Otherwise, the pledgor can require of
excess will go the pledgee. This is to compensate him for the him the return of the thing retained.
eventuality where the purchase price is lesser than the amount of
the debt, wherein he cannot retrieve any deficiency unless there is The remainder of the price of sale shall be delivered to the obligor
a contrary agreement. (Art. 2121, NCC).
Effect when the thing pledged was not sold at the first public Effects of sale of the thing pledged
auction
1. Extinguish the principal obligation even if the proceeds of the
When the property was not sold at the first auction (such as when sale do not satisfy the whole amount of the obligation.
there are no participating bidders), there will be another setting for 2. If proceeds from the sale exceed the amount due, the debtor
the second auction following the same formalities. is not entitled to the excess, the excess goes to the pledgee.
This is to compensate him for the eventuality where the
The pledgee is allowed to appropriate the thing pledged if no sale purchase price is lesser than the amount of the debt, wherein
was effected on the second auction. This is an exception to the he cannot receive any deficiency unless there is a contrary
prohibition against pactum commissorium. agreement or in case of legal pledge, the pledgor is entitled
to the excess
Deed of acquittance 3. If the proceeds of the sale is less than the amount due, the
creditor has no right to recover the deficiency and the
A deed of acquittance is a document of the release or discharge of pledgor is not liable for the deficiency even if there is a
the pledgor from the entire obligation including interests and stipulation that he be so liable. Such stipulation is void.

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
to its registration, and he cannot be permitted to revoke it
REAL MORTGAGE unilaterally.
Real Estate Mortgage Mortgage as a real and inseperable right
Real estate mortgage (REM) is a contract whereby the debtor Mortgage is a real and inseparable right. The mortgage directly and
secures to the creditor the fulfillment of the principal obligation, immediately subjects the property upon which it is imposed,
specially subjecting to such security immovable property or real whoever the possessor may be, to the fulfillment of the obligation
rights over immovable property in case the principal obligation is for whose security it was constituted (Art. 2126, NCC).
not fulfilled at the time stipulated.
Things that are deemed included in the mortgage
Essence of a contract of mortgage
1. Natural accessions
The essence of a contract of mortgage indebtedness is that a 2. Improvements
property has been identified or set apart from the mass of the 3. Growing fruits
property of the debtor-mortgagor as security for the payment of 4. Rents
money or the fulfillment of an obligation to answer the amount of 5. Income
indebtedness in case of default of payment. 6. Insurance proceeds
7. Expropriation price (Art. 2127, NCC)
Laws that govern contract of real mortgage
Attachment of mortgage lien on new or future improvements
1. New Civil Code
2. Mortgage Law The mortgage lien attach in case of new or future improvements
3. Property Registration Decree (PD 1529) on the date of the registration of the mortgage (Luzon Lumber and
4. Sec. 194, as amended by Act No. 3344, Revised Hardware Co., Inc, v. Quiambao, G.R. No. L-5638, Mar. 20, 1954).
Administrative Code (Phil. Bank of Commerce v. De Vera, G.R.
No. L-18816, Dec. 29, 1962) Dragnet clause
5. R.A. 4882 law governing aliens who become mortgagees.
A dragnet clause is a mortgage provision which is specifically
Kinds of real mortgages phrased to subsume all debts of past or future origin. It is a valid
and legal undertaking, and the amounts specified as consideration
1. Conventional mortgages constituted voluntarily by the in the contracts do not limit the amount for which the pledge or
contracting parties. mortgage stands as security, if from the four corners of the
2. Legal mortgage required by law. instrument, the intent to secure future and other indebtedness can
3. Equitable mortgage intention of the parties is to make the be gathered. A pledge or mortgage given to secure future
immovable as a security for the performance of the advancements is a continuing security and is not discharged by the
obligation but the formalities of a real mortgage are not repayment of the amount named in the mortgage until the full
complied with. amount of all advancements shall have been paid (Premiere
Development Bank v. Central Surety & Insurance, Inc., G.R. No.
Requisites for a valid constitution of a real mortgage 176246 [2009]).
1. It covers only immovable property and alienable real rights NOTE: It is a clause which operates as a convenience and accommodation to
imposed upon immovables the borrowers as it makes available additional funds without their having to
2. It must appear in a public instrument execute additional security documents, thereby saving time, travel, loan
closing costs, costs of extra legal services, recording fees etc.
3. Registration in the Registry of Property is necessary to bind
third persons
Interpretation of dragnet clause
Real estate mortgage v. Contract of sale with right of repurchase
Dragnet clause must be carefully scrutinized and strictly construed
particularly where the mortgage contract is one of adhesion.
SALE WITH RIGHT OF
REAL ESTATE MORTGAGE
REPURCHASE NOTE:
Principal and independent 1. A mortgage must sufficiently describe the debt sought to be secured,
Accessory contract
contract and an obligation is not secured by a mortgage unless it comes fairly
There is no transfer of title There is transfer of title and within the terms of the mortgage.
and possession of the possession of the property, 2. Where the intention of the mortgagor is to secure a larger amount,
the action to foreclose may be for the larger amount.
property although conditional
3. But where the obligation is not a series of indeterminate sums
Creditor has no right to the The vendee a retro is entitled incurred over a period of time but 2 specific amounts procured in a
fruits of the property during to the fruits even during the single instance, what applies is the general rule state above that an
the pendency of the mortgage period of redemption action to foreclose a mortgage must be limited to the amount
As soon as there is a mentioned in the mortgage.
If the debtor fails to pay his 4. A mortgage given to secure future advancements is a continuing
consolidation of title in the
debt, the creditor cannot security and is not discharged by the repayment of the amount named
vendee a retro, he may
appropriate the property in the mortgage, until the full amount of the advancements is paid. It
dispose of it as an absolute permitted the mortgagor to take the money as it is needed and thus
mortgaged nor dispose of it
owner avoid the necessity of paying interest until the necessity for its use
actually arises.
Registration of mortgage
Registration of mortgage is a matter of right. By executing the

mortgage, the mortgagor is understood to have given his consent

CIVIL LAW
Statement of the amount in a mortgage contract in a dragnet Nature of judicial foreclosure
clause
A judicial foreclosure is an action quasi in rem (Ocampo v.
The amount stated in the contract is not controlling in case of Domalanta, 20 SCRA 1136).
mortgage securing future advancements. The amount named in
the contract does not limit the amount for which the mortgage Action for foreclosure of mortgage survive the death of
stand as a security, if, from the four corners of the instrument the mortgagor
intent to secure future and other indebtedness can be gathered.
An action for foreclosure of mortgage survive the death of
Q: Petitioner obtained a loan of P20K from defendant Rural Bank mortgagor because the claim is not a pure money claim but an
of Kawit. The loan was secured by a REM over a parcel of land. action to enforce a mortgage lien. Being so, the judgment rendered
The mortgage contract states that the mortgage will cover the therein may be enforced by a writ of execution. The action may be
payment of the loan of P20K and such other loans or other prosecuted by the interested person against the executor or
advances already obtained or to be obtained by the mortgagors administrator independently of the testate or intestate
from the bank. The loan of P20k was fully paid. Thereafter they proceedings of the settlement of the mortgagors estate for the
again obtained a loan of P18K, secured by the same mortgage. reason that such claims cannot in any just sense be considered
The spouses defaulted. The bank extra judicially foreclosed the claims against the estate, but the right to subject specific property
mortgage. Was the foreclosure sale valid? to the claim arises from the contract of the debtor whereby he has
during life set aside certain property for its payment, and such
A:Yes. It has long been settled that mortgages given to secure property does not, except in so far as its value may exceed the
future advancements are valid and legal contracts; that the debt, belong to the estate (Testamentaria de Don Amadeo Matute
amounts named as consideration in said contract do not limit the Olave v. Canlas, No. L-12709, Feb. 28, 1962).
amount for which the mortgage may stand as security, if from the
four corners of the instrument the intent to secure future and Remedies of the mortgagee in case of death of the debtor
other indebtedness can be gathered. A mortgage given to secure
advancement is a continuing security and is not discharged by 1. To waive the mortgage and claim the entire debt from the
repayment of the amount named in the mortgage, until the full estate of the mortgagor as an ordinary claim;
amount of the advancements is paid (Mojica v. CA, G.R. No. 94247, 2. To foreclose the mortgage judicially and prove any deficiency
Sept. 11, 1991). as an ordinary claim; or
3. To rely on the mortgage exclusively, foreclosing the same at
Alienation or assignment of mortgage credit any time before it is barred by prescription, without right to
file claim for any deficiency (Maglaque v. Planters
Mortgage credit bemay be alienated or assigned to a third person Development Bank, GR No. 109472, May 18, 1999).
in whole or in part, with the formalities required by law (Art. 2128,
NCC). Necessity for confirmation of court in foreclosure sale (Judicial
Foreclosure)
Assignment of credit, right or action shall be in a public
instrument in order to affect third persons A foreclosure sale (in judicial foreclosure) is not complete until it is
confirmed and before such confirmation, the court retains control
An assignment of a credit, right or action shall produce no effect as of the proceedings by exercising sound discretion in regard to it
against third persons, unless it appears in a public instrument, or either granting or withholding confirmation as the rights and
the instrument is recorded in the Registry of Property in case the interests of the parties and the ends of justice may require (Rural
assignment involves real property (Art. 1625, NCC). Bank of Oroquieta v. CA, No. 53466, Nov. 10, 1980).
Possession by third person of the property mortgaged There can be no redemption of the property after confirmation.
Such confirmation retroacts to the date of the auction sale. After
The creditor may claim from the third person in possession of the the confirmation, the previous owners lose any right they may
property payment of the credit up to the extent secured by the have had over the property, which rights in turn vested on the
property which the third party possesses, in terms and with the Purchaser of the property (Lonzame v. Amores, No. L-53620, Jan.
formalities which the law establishes (Art. 2129, NCC). 31, 1985).
A stipulation forbidding the owner from alienating the immovable Extrajudicial foreclosure
mortgaged is not valid. The prohibition to alienate is contrary to
public good inasmuch as the transmission of property should not An extrajudicial foreclosure may only be effected if in the mortgage
be unduly impeded (Report, Code Commission, p. 58). contract covering a real estate, a clause is incorporated therein
giving the mortgagee the power, upon default of the debtor, to
FORECLOSURE foreclose the mortgage by an extrajudicial sale of the mortgage
property (Sec. 1, Act No. 3135, as amended by Act No. 4148).
Foreclosure
Authority to sell
Foreclosure is a remedy available to the mortgagee in which he
subjects the mortgaged property to the satisfaction of the The authority to sell may be done in a separate document but
obligation. annexed to the contract of mortgage. The authority is not
extinguished by the death of the mortgagor or mortgagee as it is
Kinds of foreclosure an essential and inseparable part of a bilateral agreement (Perez v.
PNB, No. L-21813, July 30, 1966).
1. Judicial Governed by Rule 68, Rules of Court
2. Extrajudicial Mortgagee is given a SPA to sell the mortgaged
property (Act No. 3135)

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
How to initiate an extrajudicial foreclosure bona fide subscription list of paying subscribers, and that it is
published at regular intervals. The newspaper must be available to
An extrajudicial foreclosure initiated by filing a petition with the the public in general, and not just to a select few chosen by the
office of the sheriff. It may also be initiated through a Notary Public publisher. Otherwise, the precise objective of publishing the notice
commissioned in the place where the property is situated. of sale in the newspaper will not be realized (Metropolitan Bank
and Trust Company, Inc. v. Eugenio Peafiel, G.R. No. 173976, Feb.
NOTE: Notice containing the place and date is required before an auction 27, 2009).
sale is made in extrajudicial foreclosure (Sec. 3, Act No. 3135).
Enjoining the implementation of writ possession
Notice of sheriffs sale
As a rule, any question regarding the validity of the mortgage or its
The notice of sheriffs sale must contain the correct number of the foreclosure cannot be a legal ground for refusing the issuance of a
certificate of title and the correct technical description of the real writ of possession. Regardless of whether or not there is a pending
property to be sold (San Jose v. CA, GR No. 106953, Aug. 19, 1993). suit for annulment of the mortgage or the foreclosure itself, the
purchaser is entitled to a writ of possession, without prejudice to
Publication and posting requirements cannot be waived because the outcome of the case. Hence, an injunction to prohibit the
they are imbued with public policy considerations and any waiver issuance of writ of possession is entirely out of place. Prohibition
thereon would be inconsistent with the intent and letter of the does not lie to enjoin the implementation of a writ of possession.
law. It would thus be converting into a private sale what ought to Once the writ of possession has been issued, the trial court has no
be a public auction. alternative but to enforce the writ without delay (Sps. Ong v. CA,
G.R. No. 121494, June 8, 2000).
The purpose of notice of sale is to inform the public of the nature
and condition of the property sold, and of the time, place and Recovery of the deficiency
terms of the sale.
The mortgagee recover the deficiency if there be a balance due to
Place of posting of notice of sale him after applying the proceeds of the sale, the mortgagee is
entitled to recover the deficiency (DBP v. Mirang, G.R. No. L-29130,
The notice of sale should be posted in at least 3 public places in the Aug. 8, 1975).
city or municipality where the property is situated
NOTE: In judicial foreclosure, the Rules of Court specifically gives the
1. Sheriffs Office; mortgagee the right to claim for deficiency in case a deficiency exists (Sec. 6,
2. Assessors Office; and Rule 70).
3. Register of Deed
While Act No. 3135 governing extrajudicial foreclosures of mortgage does
not give a mortgagee the right to recover deficiency after the public auction
Publication of notice of sale in newspaper of general circulation sale, neither does it expressly or impliedly prohibit such recovery.
The publication of the notice of sale in a newspaper of general Stipulation for upset price
circulation alone is more than sufficient compliance with the
notice-posting requirement of law considering that such Stipulation of upset price is a stipulation of minimum price at which
newspaper which is distributed nationwide, has a readership of the property shall be sold to become operative in the event of a
more people than notice posted in a public bulletin board, no foreclosure sale at public auction. It is null and void.
matter how strategic its location may be, which caters only to a
limited few. REDEMPTION
Requisites for a newspaper to be deemed of general circulation Redemption
1. It must be published for the dissemination of local news and Redemption is a transaction by which the mortgagor reacquires or
general information; buys back the property which may have passed under the
2. It must have a bona fide subscription list of paying mortgage or divests the property of the lien which the mortgage
subscribers; may have created.
3. It must be published at regular intervals; and
4. It must be available to the public in general and not just to a Kinds of redemption:
select few chosen by the publisher, otherwise, the precise
objective of publication of notice of sale will not be realized; 1. Equity of redemption Right of mortgagor to redeem the
5. It must not be devoted to the interests or published for the mortgaged property after his default in the performance of
entertainment of a particular profession, trade, calling, race the conditions of the mortgage but before the sale of the
or religion. mortgaged property or confirmation of sale. It applies in
cases of judicial foreclosure.
Q: MBTC granted a loan to spouses Peafiel, who mortgaged their 2. Right of redemption Right of the mortgagor to redeem the
two (2) parcels of land in Mandaluyong. The spouses defaulted in mortgaged property within one year from the date of
the payment. MBTC instituted an extrajudicial foreclosure registration of the certificate of sale. It applies in case of
proceeding under Act No. 3135. The Notice of Sale was published extrajudicial foreclosure.
in Maharlika Pilipinas, which has no business permit in
Mandaluyong and its list of subscribers shows that there were no Q: X and Y, judgment creditors of A, obtained the transfer of the
subscribers from Mandaluyong. Did MBTC comply with the title of the mortgaged property in their names. Earlier, A
publication requirement under Section 3, Act No. 3135? executed a mortgage over the same property in favor of FGU
Insurance. The latter mortgage was registered. When A defaulted,
A:No. Maharlika Pilipinas is not a newspaper of general circulation FGU foreclosed the property. A certificate of sale was thereafter
in Mandaluyong where the property is located. To be a newspaper issued in FGUs favor, which was confirmed by the RTC. However,
of general circulation, it is enough that it is published for the before the new TCT could be issued, X and Y filed their respective
dissemination of local news and general information, that it has a motion for intervention and to set aside the judgment alleging

CIVIL LAW
that they are the new owners of the property and the failure of
FGU to implead X and Y in the action for foreclosure deprived the Q: D obtained a loan from C secured by a REM over a parcel of
latter of due process. Is the contention of X and Y correct? land. When D defaulted, C extrajudicially foreclosed the property.
C was declared the highest bidder in the auction. On October 29,
A:No. Subordinate lien holders acquire only a lien upon the equity 1993, C caused the registration of the certificate of sale. On
of redemption vested in the mortgagor, and their rights are strictly November 9, 1994 D filed a complaint for annulment of the
subordinate to the superior lien of the mortgagee. Such equity of extrajudicial foreclosure and auction sale. Can D redeem the
redemption does not constitute a bar to the registration of the property beyond the one year redemption period?
property in the name of the mortgagee. Registration may be
granted in the name of the mortgagee but subject to the A: No. D lost any right or interest over the subject property
subordinate lien holders equity of redemption, which should be primarily because of his failure to redeem the same in the manner
exercised within ninety (90) days from the date the decision and within the period prescribed by law. His belated attempt to
becomes final. This registration is merely a necessary consequence question the legality and validity of the foreclosure proceedings
of the execution of the final deed of sale in the foreclosure and public auction must accordingly fail (Sps. Landrito v. CA, G.R.
proceedings (Looyuko v. CA, G.R. No. 102696, July 12, 2001). No. 133079, Aug. 9, 2005).
A mortgagor, whose property has been extrajudicially foreclosed

Requisites for valid right of redemption: and sold, can validly execute a mortgage contract over the same
property in favor of a third party during the period of redemption.
1. Must be made within one year from the time of the The purchaser at the foreclosure sale merely acquires an inchoate
registration of the sale. right to the property which could ripen into ownership only upon
2. Payment of the purchase price of the property plus 1% the lapse of the redemption period without his credit having been
interest per month together with the taxes thereon, if any, discharged, it is illogical to hold that during that same period of
paid by the purchaser with the same rate of interest twelve months the mortgagor was "divested" of his ownership,
computed from the date of registration of the sale; and since the absurd result would be that the land will consequently be
3. Written notice of the redemption must be served on the without an owner although it remains registered in the name of
officer who made the sale and a duplicate filed with the the mortgagor. Such mortgage does not involve a transfer, cession
proper Register of Deeds (Rosales v. Yboa, G.R. No. L-42282, or conveyance of the property but only constitutes a lien thereon
Feb. 28, 1983). (Medida v. CA, G.R. No. 98334, May 8, 1992).
NOTE: The redemptioner should make an actual tender in good faith of the Q: DBP guaranteed LCDs loan. When LCD defaulted, DBP paid it
full amount of the purchase price as provided above, i.e., the amount fixed and sought reimbursement. LCD failed to reimburse DBP, hence
by the court in the order of execution or the amount due under the
mortgage deed, as the case may be, with interest thereon at the rate
DBP extrajudicially foreclosed the REM, where it was the highest
specified in the mortgage, and all the costs, and judicial and other expenses bidder. The Sheriffs certificate of sale was annotated in the
incurred by the bank or institution concerned by reason of the execution and certificate of titles on April 30, 1976. La Campana failed to
sale and as a result of the custody of said property less the income received redeem the properties. The court, among others, ordered LCD to
from the property (Heirs of Quisimbing v. PNB, G.R. No. 178242, Jan. 20, pay such sums of money unlawfully collected or received by way
2009). of rentals and/or fruits from the subject properties to DBP. When
should the period for the remittance of collected/received
Period of redemption is not a prescriptive period rentals/fruits from the properties, of LCD to DBP start?
The period of redemption is not a prescriptive period but a A: In foreclosure proceedings, the buyer becomes the absolute
condition precedent provided by law to restrict the right of the owner of the property purchased if it is not redeemed during the
person exercising redemption. prescribed period of redemption, which is one year from the date
of registration of the sale. The Sheriffs certificate of sale was
If a person exercising the right of redemption has offered to annotated in the certificate of titles on April 30, 1976. DBP became
redeem the property within the period fixed, he is considered to the absolute owner of the properties on May 1, 1977. Thus, the
have complied with the condition precedent prescribed by law and period to be considered in determining the amount of collection
may thereafter bring an action to enforce redemption. should start from May 1, 1997 up to the time when the possession
of the properties are actually and completely surrendered to DBP
If, on the other hand, the period is allowed to lapse before the (La Campana Development Corporation v. DBP, G.R. No. 146157,
right of redemption is exercised, then the action to enforce Feb. 13, 2009).
redemption will not prosper, even if the action is brought within
the ordinary prescriptive period.

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
Flowchart for Judicial Foreclosure of Real Estate

Mortgage
(Rule 68, 1997 Rules of Civil Procedure)
Complaint with the court. Include subsequent

lien holders, otherwise equity of redemption will Entry of judgment
Hearing Judgment
not be divested. (Lampin v. IAC, No. L-70987,
Sept. 29, 1988))
Upon failure to pay,

Mortgagee to file 90 days 120 days from entry of
mortgagee to file motion for
motion for confirmation Execution sale judgment for mortgagor to pay
execution foreclosing
of sale his debt, as determined by court
mortgage
Issuance of order confirming the sale

Cancellation of the title of the
(order is appealable) (Ocampo v. Registration of the order
mortgagor/issuance of new title to the
Dimalanta, No. L-21011, Aug. 30, 1967) confirming the sale
mortgagee
Wait for finality of order
* If mortgagee/bidder is bank or credit institution,

Secure a writ of possession, by
mortgagor has one more year from registration of
motion, from the same court that
order confirming the sale + certificate of sale to
ordered the foreclosure
redeem the property.
Note:
GR:In judicial foreclosure, there is only equity of redemption.
XPN: If the mortgagee is a bank or credit institution, there is one year right of redemption.
Equity of redemption right of the mortgagor not to be divested of the ownership of the mortgaged property and to stop the
foreclosure sale by paying the mortgagee debt within 90-120 days from entry of judgment and even beyond, until finality of order
confirming the sale.

CIVIL LAW
ANTICHRESIS There is an express stipulation There is no such obligation on

that the creditor shall apply the part of the mortgagee
Antichresis the fruits to the payment of
the interest, if owing, and
Antichresis is a contract whereby the creditor acquires the right to thereafter to the principal of
receive the fruits of an immovable of the debtor, with the the debt.
obligation to apply them to the payment of interest, if owing, and
thereafter to the principal of his credit. Antichresis v. Pledge
Characteristics of antichresis Antichresis Pledge

Refers to real property Personal property
1. Accessory contract. Formal Real
2. Formal contract the amount of the principal and of the Principal and interest must be Need not be in writing, oral
interest must both be in writing; otherwise the contract of specified in writing, otherwise evidence may be allowed to
antichresis is void. contract is void prove the same.
3. It deals only with immovable property.
4. It is a real right. Antichresis v. Pacto de retro sale
5. The creditor has the right to receive the fruits of the
immovable.
Antichresis Pacto de retro sale
6. It is a real contract.
Creditor is given the right to Creditor does not have such
7. It can guarantee all kinds of valid obligations.
enjoy the fruits and apply right
them to the payment of the
NOTE: It is not essential that the loan should earn interest in order that it can
be guaranteed with a contract of antichresis. Antichresis is susceptible of interest and to the principal of
guaranteeing all kinds of obligations, pure or conditional [Javier v. Valliser, the loan
(CA) N. 2648-R, Apr. 29, 1950; Sta. Rosa v. Noble, 35 O.G. 27241]
Availability of acquisitive prescription to the antichretic creditor
Stipulation authorizing for appropriation of property upon non-
payment of the debt Prescription is not as a mode of acquiring ownership available to
the creditor in antichresis because the possession of the property is
A stipulation authorizing the antichretic creditor to appropriate the not in the concept of an owner but that of a mere holder during
property upon the non-payment of the debt within the period the existence of the contract (Ramirez v. CA, G.R. No. L-38185,
agreed upon is void (Art. 2038, NCC). September 24, 1986).
Form of a contract of antichresis and its contents Determination of the amount paid in antichresis
1. Covers only the Fruits of real property The amount of payment in antichresis is determined the actual
2. Delivery of the property necessary so that CR may receive the market value of the fruits at the time of the application thereof to
fruits therefrom the interest and the principal shall be the measure of such
application (Art. 2133, NCC).
NOTE: Delivery of the property to the creditor is required only in order
that the creditor may receive the fruits and not for the validity of the Parties to a contract of antichresis
contract.
1. Antichretic creditor One who receives the fruits on the
3. Amount of principal and interest must be specified in writing, immovable property of the debtor.
otherwise, the contract shall be void. 2. Antichretic debtor One who pays his debt through the
4. Express agreement that debtor will give Possession to the CR application of the fruits of his immovable property.
and that CR will apply the fruits to the interest and then to
the principal. Obligations of an antichretic creditor
NOTE: The fruits of the immovable which is the object of the
antichresis must be appraised at their actual market value at the time
1. Pay the taxes and charges assessable against the property like
of the application (Art. 2138, NCC).The property delivered stands as a real estate taxes and others;
security for the payment of the obligation of the debtor in antichresis. 2. Bear the necessary expenses for the preservation of the
Hence, the debtor cannot demand its return until the debt is totally property;
paid. 3. Bear the expenses necessary for the repair of the property;
and
Antichresis v. Real Estate Mortgage 4. Apply the fruits received for payment of the outstanding
interests, if any, and thereafter of the principal.
ANTICHRESIS REAL ESTATE MORTGAGE
Property is delivered to Debtor usually retains NOTE: The creditor be exempted from the obligations imposed by Art. 2135
creditor possession of the property by compelling the debtor to re-enter into the property.
Creditor acquires only the Creditor has no right to
right to receive the fruits of receive fruits, but mortgage Rule on the application of the fruit upon the debt
the property; does not creates real right against the
produce a real right unless property The application of the fruit upon the debt must be expressly agreed
registered in the Registry between the creditor and the debtor that the former, having been
Property given possession of the properties given as security, is to apply
Creditor obliged to pay the Creditor has no such their fruits to the payment of interest, if owing, and thereafter to
taxes and charges upon the obligation the principal of his credit (Art. 2132, NCC).
estate unless stipulated
otherwise

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
Return of the property of the antichretic debtor 4. Revised Penal Code (Art. 319)
5. Other special laws (i.e. Motor vehicle law)
The antichretic debtor can only demand the return of the property 6. Ship Mortgage Decree of 1978 (P.D. No. 1521)
after having fully paid his obligations to the creditor. It is not fair
for the debtor to regain the possession of the property when his Similarities between chattel mortgage and pledge
debt has not been fully paid. Until there is full payment of the
obligation, the property shall stand as security therefor 1. Both are executed to secure performance of a principal
(Macapinlac v. Gutierrez Repide, No. 18574, Sept. 20, 1922). obligation;
2. Both are constituted only on personal property;
Remedy of the creditor in case of nonpayment of his credit 3. Both are indivisible;
4. Both constitute a lien on the property;
1. File an action for collection; or 5. In both cases, the creditor cannot appropriate the property to
2. File a petition for the public sale of the property (Barretto v. himself in payment of the debt;
Barretto, No. 11933, Dec. 1, 1917). 6. When the debtor defaults, the property must be sold for the
payment of the creditor
CHATTEL MORTGAGE 7. Extinguished by the fulfillment of the principal obligation or
by the destruction of the property pledged or mortgaged.
Chattel Mortgage
Subject matter of chattel mortgage
Chattel mortgage is a contract by virtue of which personal property
is recorded in the Chattel Mortgage Register as a security for the 1. Shares of stock in a corporation;
performance of an obligation. 2. Interest in business;
3. Machinery and house of mixed materials treated by parties as
Characteristics of chattel mortgage personal property and no innocent third person will be
prejudiced thereby (Makati Leasing and Finance Corp. v.
1. It is a formal contract because it must be embodied in a Weaver Textile Mills, Inc., No. L-58469, May, 16, 1983);
public instrument and recorded in the Chattel Mortgage 4. Vessels, the mortgage of which have been recorded with the
Register; Philippine Coast Guard in order to be effective as to third
2. It is an accessory contract because its existence depends persons;
upon an existing valid principal obligation; 5. Motor vehicles, the mortgage of which had been registered
3. It is a unilateral contract because the obligation is only on the both with the Land Transportation Commission and the
part of the creditor to free the chattel from encumbrance Chattel Mortgage Registry in order to affect third persons;
upon the payment of the principal obligation; 6. House which is intended to be demolished; or
4. It does not convey dominion but is only a security (In re: Du 7. Growing crops and large cattle (Sec. 7 (2)(3), Act No. 1508).
Tec Chuan, No. 11156, March 28, 1916);
5. It creates a real right or a lien which is being recorded and Affidavit of good faith
follows the chattel wherever it goes (Northern Motors, Inc. v.
Coquia, No. L-40018, Dec. 15, 1975). An affidavit of good faith is an oath in a contract of chattel
mortgage wherein the parties severally swear that the mortgage
Requisites in a chattel mortgage is made for the purpose of securing the obligation specified in the
conditions thereof and for no other purposes and that the same is
1. GR: It covers only movable property a just and valid, existing obligation and one not entered into for the
purpose of fraud.
XPN: When the parties treat as personalty that which is
according to its nature realty. The absence of the affidavit vitiates the mortgage only as against
third persons without notice like creditors and subsequent
2. Registration with the Chattel Mortgage Register. encumbrances, but its absence is not fatal between the parties.
3. Description of the property.
Chattel mortgage v. Real Estate Mortgage
NOTE: Section 7 of the Chattel Mortgage Law does not demand
specific description of every chattel mortgaged in the deed of CHATTEL MORTGAGE REAL ESTATE MORTGAGE
mortgage, but only requires that the description of the mortgaged
Subject matter
property be such as to enable the parties to the mortgage or any other
person to identify the same after a reasonable investigation and Personal property Real property
inquiry (Saldana v. Phil. Guaranty Co., Inc., No. L-13194, Jan. 29, 1960); As to Guaranty of Future Obligations
otherwise, the mortgage is invalid. Cannot guaranty future
May guaranty future
obligations because it requires
4. Accompanied by an affidavit of good faith to bind third obligations
immediate recording
persons.
REGISTRATION
NOTE: The absence of an affidavit of good faith does not affect the
validity of the contract.
Registration of the Chattel mortgage
Laws that govern chattel mortgages
Registration is tantamount to the symbolic delivery of the
mortgage to the mortgagee, which is equivalent to actual delivery
1. Chattel Mortgage Law (Act No. 1508)
(Meyers v. Thein, No. 5577, Feb. 21, 1910).
2. Provisions of the Civil Code on pledge
NOTE: In case of conflict between nos. 1 and 2, the former shall Registration period of the chattel mortgage
prevail.
The law does not provide period within which the registration
3. Revised Administrative Code should be made. Yet, the law is substantially and sufficiently

CIVIL LAW
complied with where the registration is made by the mortgagee is binding only between them and not on third parties. As far as
before the mortgagor has complied with his principal obligation third parties are concerned, the chattel mortgage does not exist.
and no right of innocent third persons is prejudiced.
Recovery of deficiency
Registration in Real Estate Mortgage and Registration in Chattel
Mortgage GR: CR may recover deficiency if the redemption price is less than
the debt secured in case of foreclosure sale in chattel mortgage.
The difference in registration of real mortgage and chattel
mortgage is that a deed of real estate mortgage is considered XPN: When the chattel mortgage is used to secure the purchase of
registered once recorded in the entry book. However, chattel personal property in installments (Recto Law).
mortgage must be registered not only in the entry book but also in
the Chattel Mortgage Register (Associated Insurance and Surety Co. QUASI-CONTRACTS
v. Lim Ang, (CA) 52 Off. Gaz. 5218).
Quasi Contracts
Increase in mortgage credit
Quasi-contracts are lawful, voluntary, and unilateral acts which
If the parties to a chattel mortgage take an oath that the debt, generally require a person to reimburse or compensate another in
honestly due and owing from the mortgagor to the mortgagee, it is accordance with the principle that no one shall be unjustly
obvious that a valid mortgage cannot be made to secure a debt to enriched at the expense of another (Art. 2142, NCC).
be thereafter contracted (11 C.J. 448). A mortgage that contains a
stipulation in regard to future advances in the credit will take effect Bases for quasi-contracts
only from the date of the mortgage. The increase in the mortgage
credit becomes a new mortgage (Belgian Catholic Missionaries v. 1. No one must unjustly enrich himself at anothers expense
Magallanes Press, No. 25729, Nov. 24, 1926). 2. If one benefits, he must reimburse
3. Justice and equity
Abandoment of mortgage lien 4. Presumed consent of the person obliged to compensate
(Pineda, 2006)
The mortgage lien is deemed abandoned by obtaining a personal
judgment on the mortgage lien. Kinds of quasi-contract
Offenses involving chattel mortgage 1. Negotiorum Gestio

2. Solutio Indebiti
1. Knowingly removing any personal property mortgaged under 3. Other kinds of quasi-contract
the Chattel Mortgage Law to any province or city other than a. When, without the knowledge of the person obliged to
the one in which it was located at the time of the execution give support, it is given by a stranger, the latter shall
of the mortgage without the written consent of the have a right to claim the same from the former, unless it
mortgagee; or appears that he gave it out of piety and without
2. Selling or pledging personal property already mortgaged, or intention of being repaid (Art. 2164, NCC).
any part thereof, under the terms of the Chattel Mortgage b. When funeral expenses are borne by a third person,
Law without the consent of the mortgagee written on the without the knowledge of those relatives who were
back of the mortgage and duly recorded in the Chattel obliged to give support to the deceased, said relatives
Mortgage Register (Art. 319, RPC). shall reimburse the third person, should the latter claim
reimbursement (Art. 2165, NCC).
FORECLOSURE c. When the person obliged to support an orphan, or an
insane or other indigent person unjustly refuses to give
Procedure in foreclosure of a chattel mortgage support to the latter, any third person may furnish
support to the needy individual, with right of
The mortgagee may, after thirty (30) days from the time of the reimbursement from the person obliged to give
default or from the time the condition is violated, cause the support. The provisions of this article apply when the
mortgaged property to be sold at public auction by a public officer father or mother of a child under eighteen years of age
(Sec. 14, Act No. 1508). unjustly refuses to support him (Art. 2166, NCC).
d. When through an accident or other cause a person is
The 30-day period to foreclose a chattel mortgage is the minimum injured or becomes seriously ill, and he is treated or
period after violation of the mortgage condition for the mortgage helped while he is not in a condition to give consent to a
contract, he shall be liable to pay for the services of the
The creditor has at least ten (10) days notice served to the physician or other person aiding him, unless the service
mortgagor has been rendered out of pure generosity (Art. 2167,
NCC).
The notice of time, place and purpose of such sale, is posted e. When during a fire, flood, storm, or other calamity,
property is saved from destruction by another person
After the sale of the chattel at public auction, the right of without the knowledge of the owner, the latter is bound
redemption is no longer available to the mortgagor (Cabral v. to pay the former just compensation (Art. 2168, NCC).
Evangelista, 28 L-26860, July 30, 1969). f. When the government, upon the failure of any person
to comply with health or safety regulations concerning
Legal consequences of mortgaging a building erected not by the property, undertakes to do the necessary work, even
owner of the land over his objection, he shall be liable to pay the expenses
(Art. 2169, NCC).
A building is immovable or real property whether it is erected by g. When in a small community a majority of the
the owner of the land, by a usufructuary, or by a lessee. It may be inhabitants of age decide upon a measure for protection
treated as a movable by the parties to a chattel mortgage but such against lawlessness, fire, flood, storm or other calamity,
anyone who objects to the plan and refuses to

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
contribute to the expenses but is benefited by the SOLUTIO INDEBITI
project as executed shall be liable to pay his share of
said expenses (Art. 2174, NCC). Solutio indebiti
h. Any person who is constrained to pay the taxes of
another shall be entitled to reimbursement from the Solutio indebiti is the quasi-contract that arises when a person is
latter (Art. 2175, NCC). obliged to return whatever was received by him through error or
mistake or received by him although there was no right to demand
NEGOTIORUM GESTIO it.
Negotiorum Gestio NOTE: If the payer was in doubt whether the debt was due, he may recover
if he proves that it was not due (Art. 2156, NCC). The responsibility of two or
more payees, when there has been payment of what is not due, is solidary
Negotiorum Gestio is a kind of quasi-contract where someone (Art. 2157, NCC).
called the gestor takes the management of the business or
property of another person known as owner without the consent Requisites for solutio indebiti
or authority of the latter.
1. Receipt of something.
Essential requisites for negostiorum gestio 2. There was no right to demand it
3. Undue delivery was because of mistake.
1. Taking charge of anothers business or property
2. The property or business must have been abandoned or NOTE: It is presumed that there was a mistake in the payment if something
which had never been due or had already been paid was delivered; but he
neglected
from whom the return is claimed may prove that the delivery was made out
3. The officious manager (gestor) must not have been expressly of liberality or for any other just cause (Art. 2163, NCC).
or implicitly authorized
4. The officious manager (gestor) must have voluntarily taken Application of solutio indebiti in difficult or doubtful question of
charge law
5. The officious manager or gestor must not be acting
erroneously on the belief that he is the owner of the property Solutio indebiti can be applied if there is doubtful or difficult
or business. question of law. There can be payment because of doubtful or
difficult question of law may lead to solutio indebiti because of
Required diligence from the gestor the mistake committed (Art. 2155, NCC).
Diligence of a good father of a family (Art. 2145, NCC) is the Liabilities of a person who accepts an undue payment in bad faith
required diligence from a gestor. Hence, a gestor is liable for the
acts or negligence of his employees (MRR Co. v. Compania 1. He shall pay legal interest if a sum of money is involved, or
Transatlantica, 38 Phil. 875). shall be liable for fruits received or which should have been
received if the thing produces fruits.
Liability of two or more gestors 2. He shall furthermore be answerable for any loss or
impairment of the thing from any cause, and for damages to
GR: If there are two or more officious managers, their liability for the person who delivered the thing, until it is recovered (Art.
their acts is solidary. 2159, NCC).
XPN: When the management was assumed by the officious Effect of acceptance in good faith if there was mistake in the
managers to save the property or business from imminent danger, payment
in which case, the liability is only joint.
1. In case of impairment or loss, liability is only to the extent of
Ratification of the owner benefit (Art. 2160, NCC).
2. In case of alienation, the price is to be reimbursed, or in case
Ratification of the owner of the business produces the effect of an of credit, the same should be assigned (Art. 2160, NCC).
express agency; and this is true even if the business is not 3. He shall be exempt from the obligation to restore if he
successful (Art 2149, NCC). destroyed the document, or allowed the action to prescribe,
or gave up the pledges, or cancelled the guaranties for his
Liabilities of the owner even if there is no ratification right (Art. 2162, NCC).
NOTE: He who paid unduly may proceed only against the true debtor
1. Liability for the obligation incurred in his interest. or the guarantors with regard to whom the action is still effective (Art.
2. Liability for necessary and useful expenses and for damages. 2162, NCC).
3. Damages suffered by the gestor while performing his duties
as such (Art 2150, NCC). When property is wrongfully delivered or money is wrongfully
paid
Minority of the owner
When the property delivered or money paid belongs to a third
person, the payee shall comply with the provisions of article 1984
If the owner is a minor, he is still liable under the article for he
(Art. 2158, NCC).
should not be unjustly enriched at anothers expense (Rotea v.
Delupio, 67 Phil. 330). NOTE: Art. 1948 states that the depositary cannot demand that the
depositor prove his ownership of the thing deposited. Nevertheless, should
Causes for extinguishment of management he discover that the thing has been stolen and who its true owner is, he
must advise the latter of the deposit. If the owner, in spite of such
information, does not claim it within the period of one month, the
1. Repudiation or termination of the management by the owner depositary shall be relieved of all responsibility by returning the thing
himself; deposited to the depositor. If the depositary has reasonable grounds to
2. Withdrawal of gestor from the management; and believe that the thing has not been lawfully acquired by the depositor, the
3. Death, civil interdiction, insanity or insolvency of either party. former may return the same.

CIVIL LAW
CONCURRENCE AND PREFERENCE OF CREDITS
Summary:
Concurrence of credit 1. Taxes
2. Malversation by public officials
Concurrence of credit implies the possession by two or more 3. Vendors lien
creditors of equal rights or privileges over the same property or all 4. Pledge, chattel mortgage
the property of a debtor. 5. Mechanics lien
6. Laborers wages
Preference of credit 7. Salvage
8. Tenancy
Preference of credit is a right held by a creditor to be preferred in 9. Carriers lien
the payment of his claim above others out of the debtors assets. 10. Hotels lien
11. Crop loan
NOTE: The rules apply when two or more creditors have separate and 12. Rentals one year
distinct claims against the same debtor who has insufficient property. 13. Deposit
Preference of credit and lien Preferred credits on specific immovables as provided in Art. 2242
are as follows:
Preference of credit applies only to claims which do not attach to
specific properties while a lien creates a charge on a particular 1. Taxes due upon the land or building;
property. 2. For the unpaid price of real property sold upon the
immovable sold;
Preferred credits on specific movables as provided in Art. 2241 3. Claims of laborers. Masons, mechanics and other workmen,
as well as of architects, engineers and contractors, engaged in
1. Duties, taxes and fees due thereon to the state or any the construction, reconstruction or repair of buildings, canals
subdivision thereof; or other works, upon said buildings, canals or other works;
2. Claims arising from misappropriation, breach of trust, or 4. Claims of furnishers of materials used in the construction,
malfeasance by public officials committed in the performance reconstruction, or repair of buildings, canals, and other
of their duties, on the movables, money or securities works, upon said buildings, canals or other works;
obtained by them; 5. Mortgage credits recorded in the Registry of Property, upon
3. Claims for the unpaid price of movable sold, on said the real estate mortgage;
movables, so long as they are in the possession of the debtor, 6. Expenses for the preservation or improvement of real
up to the value of the same, and if the movable has been property when the law authorizes reimbursement, upon the
resold by the debtor and the price is still unpaid, the lien may immovable preserved or improved;
be enforced on the price; this right is not lost by the 7. Credits annotated in the Registry of Property, by virtue of a
immobilization of the thing by destination, provided it has not judicial order, by attachments or executions, upon the
lost its form, substance and identity; neither is the right lost property affected, and only as to later credits;
by the sale of the thing together with other property for a 8. Claims of co-heirs for warranty in the partition of an
lump sum, when the price thereof can be determined immovable among them, upon the real property thus divided;
proportionally; 9. Claims of donors or real property for pecuniary charges or
4. Credits guaranteed with a pledge so long as the things other conditions imposed upon the donee, upon the
pledged are in the hands of the creditor, or those guaranteed immovable donated;
by a chattel mortgage upon the things mortgaged, up to the 10. Credits of insurers, upon the property insured, for the
value thereof; insurance premium for two years.
5. Credits for making repairs or preservation or personal
property on the movable thus made, repaired, kept or Summary:
possessed; 1. Taxes
6. Claims for laborers wages, on the goods manufactured or the 2. Vendors lien
work done; 3. Contractors lien
7. For expenses of salvage, upon the goods salvaged; 4. Lien of materialmen
8. Credits between the landlord and the tenant arising from the 5. Mortgage
contract of tenancy on shares, on the share of each in the 6. Expenses of preservation
fruits or harvest; 7. Recorded attachments
9. Credits for transportation, upon the goods carried, for the 8. Warranty in partition
price of the contract and incidental expenses, until their 9. Conditional donations
delivery and for thirty days thereafter; 10. Premiums for 2 year insurers
10. Credits for lodging and supplies usually furnished to travelers
by hotelkeepers, on the movables belonging to the guest as Properties exemptfrom execution and sale
long as such movables are in the hotel, but not for money
loaned to the guests; 1. GR: Family home constituted jointly by husband and wife or
11. Credits for seeds and expenses for cultivation and harvest by unmarried head of a family (Art. 152, FC).
advanced to the debtor, upon the fruits harvested;
12. Credits for rent for one year, upon the personal property of XPNs: For:
the lessee existing on the immovable leased on the fruits of a. Non-payment of taxes;
the same, but not on money or instruments of credit; b. Debts incurred prior to the constitution of the family
13. Claims in favor of the depositor if the depository has home;
wrongfully sold the thing deposited, upon the price of the c. Debts secured by mortgages on the premises before or
sale. after such constitution; and
NOTE: In the foregoing cases, if the movables to which the lien or preference d. Debts due to laborers, mechanics, architects, builders,
attaches have been wrongfully taken, the creditor may demand them from material men and others who have rendered service or
any possessor within thirty (30) days from the unlawful seizures. furnished material for the construction of the building

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
12. Damages for death or personal injuries caused by a quasi-
2. Right to receive Support as well as any money or property delict;
obtained as such support (Art. 205, FC). 13. Gifts due to public and private institutions of charity or
3. Tools and implements necessarily used by him in his trade or beneficence;
employment; 14. Credits which without special privilege, appear in (a) a public
4. Two horses, or two cows, or two carabaos or other Beasts of instrument; or (b) in the final judgment, if they have been the
burden, such as the debtor may select, not exceeding one subject of litigation. These credits shall have preference
thousand pesos in value and necessarily used by him in his among themselves in the order of priority of the dates of the
ordinary occupation; instruments and of the judgments, respectively (Art. 2244 in
5. His necessary Clothing and that of all his family. relation to Art. 110 of the Labor Code).
6. Household Furniture and utensils necessary for housekeeping
and used for that purpose by the debtor, such as the debtor Summary:
may select, of a value not exceeding one thousand pesos; 1. Wages of employees
7. Provisions for individual or family use insufficient for three 2. Funeral expenses
months; 3. Expenses of last illness
8. The professional libraries of attorneys, judges, physicians, 4. Workmens compensation
pharmacists, dentist, engineers, surveyors, clergymen, 5. Support for one year
teachers and other professionals, not exceeding three 6. Support during insolvency
thousand pesos in value; 7. Fines in crimes
9. One fishing Boat and net, not exceeding the total value of one 8. Legal expenses administration
thousand pesos, the property of any fisherman, by the lawful 9. Taxes
use of which he earns a livelihood; 10. Tort
10. So much of the Earnings of the debtor for his personal 11. Donations
services within the month preceding the levy as are necessary 12. Appearing in public instrument or final judgment
for the support of his family;
11. Lettered gravestones; Effect of Article 110 of the Labor Code to the Preference of
12. All Moneys, benefits, privileges or annuities accruing or in any Credits
manner growing out of any life insurance, if the annual
premiums paid do not exceed five hundred pesos, and if they Article 110 of the Labor Code does not purport to create a lien in
exceed the sum, a like exemption shall exist which shall bear favor of workers or employees for unpaid wages either upon all of
the same proportion to the moneys, benefits privileges and the properties or upon any particular property owned by their
annuities so accruing or growing out of such insurance that employer. It is but a preference of credit in their favor that do not
said five hundred pesos bears to the whole premiums paid; attach to specific properties. Claims for unpaid wages do not
13. Copyrights and other properties especially exempted by law therefore fall at all within the category of specially preferred claims
(Sec. 12, Rule 39) established under Articles 2241 and 2242 of the Civil Code, except
14. Property under Legal custody and of the public dominion. to the extent that such claims for unpaid wages are already
covered by Article 2241, number 6: claims for laborer wages, on
Order of preference with respect to other properties of the the goods manufactured or the work done, or by Article 2242,
debtor under Art. 2244: number 3: "claims of laborers and other workers engaged in
construction, reconstruction or repair of buildings, canals and
1. In the event of bankruptcy or liquidation of an employer's other works, upon said buildings, canals and other works." To the
business, his workers shall enjoy first preference as regards extent that claims for unpaid wages fall outside the scope of Article
wages due them for services rendered during the period prior 2241, number 6 and Article 2242, number 3, they would come
to the bankruptcy or liquidation (as amended by the Labor within the ambit of the category of ordinary preferred credits
Code) under Article 2244 (Republic v. Peralta, 150 SCRA 37).
2. Proper funeral expenses for the debtor, or children under his
or her parental authority who have no property of their own, NOTE: Article 110 of the Labor Code has modified Article 2244 of the Civil
when approved by the court; Code in two respects: (a) firstly, by removing the one year limitation found in
3. Expenses during the last illness of the debtor or of his or her Article 2244, number 2; and (b) secondly, by moving up claims for unpaid
wages of laborers or workers of the Insolvent from second priority to first
spouse and children under his or her parental authority, if priority in the order of preference established by Article 2244 (Republic v.
they have no property of their own; Peralta, 150 SCRA 37).
4. Compensation due to the laborers of their dependents under
laws providing for indemnity for damages in cases of labor CLASSIFICATION OF CREDITS
accident or illness resulting from the nature of the
employment; General categories of credit
5. Credits and advancements made to the debtor for support of
himself or herself, and family, during the last preceding 1. Special preferred credits those listed in Arts. 2241-2242,
insolvency; NCC shall be considered mortgages and pledges of real and
6. Support during the insolvency proceedings, and for three personal property or liens (Art. 2243). Hence, they are not
months thereafter; included in the insolvent debtors assets.
7. Fines and civil indemnification arising from a criminal offense; 2. Ordinary preferred credits those listed in Art 2244, NCC as
8. Legal expenses, and expenses incurred in the administration amended by Art. 110 of the Labor Code
of the insolvents estate for the common interest of the 3. Common credits those listed under Art. 2245, NCC, which
creditors, when properly authorized and approved by the shall be paid pro rata regardless of dates.
court;
9. Taxes and assessments due the national government, other NOTE: Art. 2245 states that credits of any other kind or class, or by any other
those mentioned in Articles 2241, No. 1, and 2242, No. 1; right or title not comprised in the four preceding articles (Art. 2241-2244,
10. Taxes and assessments due any province, other than those NCC), shall enjoy no preference; hence, they are called common credits
mentioned in Articles 2241, No. 1 and 2242, No. 1; which can be paid only after the preferred credits are satisfied.
11. Taxes and assessments due any city or municipality other
than those mentioned in Articles 2241, No.1 and 2242, No. 1;

CIVIL LAW
Extent of liability of a debtor for his obligations The term debtor does not include banks, insurance companies,
pre-need companies and national and local government agencies
The liability of a debtor for his obligations extends to all of his or units.
property, present and future, for the fulfillment of his obligations,
subject to the exemptions provided by law (Art. 2236, NCC). Classes of creditors
ORDER OF PREFERENCE OF CREDIT 1. Secured creditors

2. Unsecured creditors
1. Those credits which enjoy preference with respect to specific 3. Trade creditors and suppliers
movable, excluded all others to the extent of the value of the 4. Employees of the debtor
personal property to which the preference refers (Art. 2246,
NCC). Tests to determine insolvency
2. If there are two or more credits with respect to the same
specific movable property, they shall be satisfied pro-rata, 1. Equity test A state of inability of a person to pay his debts at
after the payment of duties, taxes, and fees due the State or maturity.
any subdivision thereof (Art. 2247, NCC). 2. Balance sheet test The assets, if all made immediately
3. Those credits which enjoy preference in relation to specific available, would not be sufficient to discharge the balance.
real property or real rights, exclude all others to the extent of
the value of the immovable or real right to which the Remedies of an insolvent debtor
preference refers (Art. 2248, NCC).
4. If there are two or more credits with respect to the same 1. Petition the court to suspend payments of his debts; or
specific real property or real rights, they shall be satisfied pro 2. To be discharged from his debts and liabilities by voluntary or
rata, after the payment of the taxes and assessments upon involuntary insolvency proceedings (Sec. 1)
the immovable property or real right (Art. 2249, NCC).
5. The excess, if any, after the payment of the credits which Effect of insolvency proceedings filed by individual debtors
enjoy preference with respect to specific property, real or
personal, shall be added to the free property which the 1. Suits pending in court
debtor may have, for the payment of the other credits (Art. a. Secured obligations suspended until assignee appointed
2250, NCC). b. Unsecured obligations terminated except to fix amount
6. Those credits which do not enjoy any preference with respect of obligation
to specific property and those which enjoy preference, as to c. Foreclosure suits pending continue
the amount not paid, shall be satisfied according to the 2. Suits not yet filed cannot be filed anymore but claims may
following rules: be presented to assignee.
a. In the order established in Article 2244;
b. Common credits referred to in Article 2245 shall enjoy NOTE: The result is different if the petitioner is a corporation because under
no preference and shall be paid pro rata regardless of the Revised Rules on Corporate Recovery, all claims whether secured or
unsecured are stayed.
dated (Art. 2251, NCC).
Rule regarding obligation arising from transactions utilizing ATM Three modes of rehabilitation under FRIA law
networks
1. Court-supervised rehabilitation
The rule regarding obligation arising from transactions utilizing 2. Pre-negotiated rehabilitation
ATM networks is based on Sec. 16 of E-Commerce Act which 3. Out of court or informal restructuring agreements or
provides for the rule regarding electronic transactions made rehabilitation plans
through networking among banks or linkages with other entities.
The obligation arising therefrom is considered absolute and not COURT-SUPERVISED REHABILITATION
subjected to preference of credit (Sec. 16, IRR).
Kinds of proceedings in court-supervised rehabilitation
INSOLVENCY LAW
Financial Rehabilitation and Insolvency Act (FRIA) 1. Voluntary The debtor, at its initiative, files a petition in
court, and states, among others, the fact and cause of its
Insolvency insolvency, its schedule of liabilities, and proposed
rehabilitation plan.
Insolvency is the state of a person whose liabilities are more than 2. Involuntary The petition is filed by any creditor or a group
his assets. The term is frequently used in the more restricted sense of creditors with a claim of at least 1 million pesos or 25% of
to express inability of a person to pay his debts as they become the debtors subscribed capital stock or partners
due in the ordinary course of his business. contribution, whichever is higher.
Debtors under the FRIA Initiation of court-supervised rehabilitation proceeding
The debtors under FRIA law, unless specifically excluded by a A court-supervised rehabilitation proceeding is initiated by filing a
provision of this Act, are as follows: petition for rehabilitation with the court.
1. A sole proprietorship duly registered with the Department of
Trade and Industry (DTI) If the court finds the petition to be sufficient in form and
2. A partnership duly registered with the Securities and substance, it shall, issue a Commencement Order, which, among
Exchange Commission (SEC) others, shall declare that the debtor is under rehabilitation,
3. A corporation duly organized and existing under Philippine appoint a rehabilitation receiver, and includes Stay or Suspension
laws, or Order.
4. An individual debtor who has become insolvent as defined
NOTE: The effects of the Commencement Order and the Stay or Suspension
herein. Order shall apply to government financial institutions.

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
Appointment of a rehabilitation receiver
Effects of suspension order
The court shall initially appoint the rehabilitation receiver, who
a. It suspends all actions or proceedings, in court or otherwise, may or may not be from among the nominees of the petitioner.
for the enforcement of claims against the debtor;
b. Suspends all actions to enforce any judgment, attachment or NOTE: If a qualified natural person or entity is nominated by more than fifty
other provisional remedies against the debtor; percent (50%) of the secured creditors and the general unsecured creditors,
the court shall appoint the creditors' nominee.
c. Prohibits the debtor from selling, encumbering, transferring
or disposing in any manner any of its properties except in the
ordinary course of business; and Powers of the rehabilitation receiver
d. Prohibits the debtor from making any payment of its liabilities
outstanding as of the commencement date except as may be The rehabilitation receiver shall be deemed an officer of the court
provided herein. with the principal duty of:
Preserving and maximizing the value of the assets of the
Exceptions to the Stay or Suspension Order debtor during the rehabilitation proceedings,
Determining the viability of the rehabilitation of the debtor,
It shall not apply to: Preparing and recommending a Rehabilitation Plan to the
1. Cases already pending appeal in the Supreme Court as of court, and
commencement date Provided, That final and executory Implementing the approved Rehabilitation Plan and other
judgment from such appeal shall be referred to the court for powers provided in FRIA.
appropriate action;
2. Subject to the discretion of the court, to cases pending or NOTE: The rehabilitation receiver shall not take over the management and
control of the debtor but may recommend the appointment of a
filed at a specialized court or quasi-judicial agency;
management committee over the debtor. However, the court may appoint
3. Enforcement of claims against sureties and other persons and direct the rehabilitation receiver to assume the powers of management
solidarily liable with the debtor, and third party or of the debtor, or appoint a management committee that will undertake the
accommodation mortgagors as well as issuers of letters of management of the debtor.
credit, where the property subject of mortgage is necessary
for the rehabilitation. (In other words, claims may be Grounds for removal of the rehabilitation receiver
enforced despite issuance of suspension order if the property
is not necessary for rehabilitation); 1. Incompetence, gross negligence, failure to perform or failure
4. Any form of action of customers or clients of a securities to exercise the proper degree of care;
market participant to recover or otherwise claim moneys and 2. Lack of a particular or specialized competency required by the
securities entrusted to the latter in the ordinary course of the specific case;
latter's business; 3. Illegal acts or conduct in the performance of his duties and
5. The actions of a licensed broker or dealer to sell pledged powers;
securities of a debtor pursuant to a securities pledge or 4. Lack of qualification or presence of any disqualification;
margin agreement; 5. Conflict of interest that arises after his appointment; and
6. The clearing and settlement of financial transactions through 6. Manifest lack of independence.
the facilities of a clearing agency; and
7. Any criminal action against individual debtor or owner, NOTE: The rehabilitation receiver may be removed at any time by the court
partner, director or officer of a debtor shall not be affected either motu proprio or upon motion by any creditor/s holding more than fifty
by any proceeding commend under this Act. percent (50%) of the total obligations of the debtor.
Creditors failure to file notice of claim Sale or disposal of encumbered property of the debtor and assets
of third parties held by debtor
A creditor whose claim is not listed in the schedule of debts and
liabilities and who fails to file a notice of claim but subsequently The court may authorize the sale, transfer, conveyance or disposal
files a belated claim shall not be entitled to participate in the of encumbered property of the debtor, or property of others held
rehabilitation proceedings but shall be entitled to receive by the debtor pertaining to third parties under a financial, credit or
distributions arising therefrom. other similar transactions if (a) such sale or disposal is necessary
for the continued operation of the debtor's business; and (b) the
Rehabilitation receiver debtor has made arrangements to provide a substitute lien or
ownership right that provides an equal level of security for the
Rehabilitation receiver shall refer to the person or persons, natural counter-party's claim or right.
or juridical, appointed as such by the court and which shall be
NOTE: Third parties who have in their possession or control property of the
entrusted with such powers and duties (Sec. 4 (hh), RA 10142).
debtor shall not transfer, conveyor otherwise dispose of the same to persons
other than the debtor, unless upon prior approval of the rehabilitation
Qualifications of a rehabilitation receiver receiver.
1. A citizen of the Philippines or a resident of the Philippines in Procedure after preparation to approval of rehabilitation plan
the six (6) months immediately preceding his nomination;
2. Of good moral character 1. Consultation with Debtor and Creditors.
3. Has knowledge of insolvency and other relevant commercial 2. Creditor Approval of Rehabilitation Plan - The Plan is deemed
laws, rules and procedures, and the relevant training; and to have been approved by a class of creditors if members of
4. Has no conflict of interest (such conflict of interest may be the said class holding more than fifty percent (50%) of the
waived) total claims of the said class vote in favor of the Plan.
3. Submission of Rehabilitation Plan to the Court.
NOTE: If the rehabilitation receiver is a juridical entity, it must designate a 4. Filing of Objections to Rehabilitation Plan by creditor under
natural person who possesses all the qualifications above.
the following grounds:
a. The creditors' support was induced by fraud;

CIVIL LAW
b. The documents or data relied upon in the Rehabilitation
Plan are materially false or misleading; or OUT OF COURT OR INFORMAL RESTRUCTURING
c. The Rehabilitation Plan is in fact not supported by the AGREEMENTS OR REHABILITATION PLANS
voting creditors.
5. Hearing on the Objections. Minimum requirements of out-of-court or informal restructuring
6. Confirmation of the Rehabilitation Plan The court may agreements and rehabilitation plans
confirm the Rehabilitation Plan notwithstanding unresolved
disputes over claims if the Rehabilitation Plan has made 1. The debtor must agree to the out-of-court or informal
adequate provisions for paying such claims. restructuring/workout agreement or Rehabilitation Plan;
7. Termination of proceedings. 2. It must be approved by creditors representing at least sixty-
seven (67%) of the secured obligations of the debtor;
Effect of confirmation of the rehabilitation plan 3. It must be approved by creditors representing at least
seventy-five percent (75%) of the unsecured obligations of
1. It shall be binding upon the debtor and all persons who may the debtor; and
be affected by it, including the creditors; 4. It must be approved by creditors holding at least eighty-five
2. The debtor shall comply with the provisions of the percent (85%) of the total liabilities, secured and unsecured,
Rehabilitation Plan and shall take all actions necessary to of the debtor.
carry out the Plan;
3. Payments shall be made to the creditors in accordance with SUSPENSION OF PAYMENTS
the provisions of the Rehabilitation Plan;
4. Contracts and other arrangements between the debtor and Suspension of payments
its creditors shall be interpreted as continuing to apply to the
extent that they do not conflict with the provisions of the Suspension of payments is the postponement, by court order, of
Rehabilitation Plan; the payment of debts of one who, while possessing sufficient
5. Any compromises on amounts or rescheduling of timing of property to cover his debts, foresees the impossibility of meeting
payments by the debtor shall be binding on creditors them when they respectively fall due.
regardless of whether or not the Plan is successfully
implement; and The remedy of suspension of payments is available when the
6. Claims arising after approval of the Plan that are otherwise debtor who, possessing sufficient property to cover all his debts,
not treated by the Plan are not subject to any Suspension foresees the impossibility of meeting them when they respectively
Order. fall due, may petition that he be declared in the state of suspension
of payments by the court of the province or city in which he has
Period for confirmation of the rehabilitation plan resided for six months next preceding the filing of his petition (Sec.
2 [1]).
The court shall have a maximum period of one (1) year from the
date of the filing of the petition to confirm a Plan, Otherwise, it Taking effect of suspension
may upon motion or motu propio, be converted into one for the
liquidation of the debtor. The suspension shall take effect upon the filing of the petition. The
suspension order shall lapse when three (3) months shall have
PRE-NEGOTIATED REHABILITATION passed without the proposed agreement being accepted by the
creditors or as soon as such agreement is denied (Sec. 96, FRIA).
Initiation of pre-negotiated rehabilitation
Steps in suspension of payments
An insolvent debtor, by itself or jointly with any of its creditors,
may file a verified petition with the court for the approval of a pre- 1. Filing of the petition by the debtor (Sec. 94);
negotiated Rehabilitation Plan which has been endorsed or 2. Issuance by the court of an order calling a meeting of
approved by creditors holding at least two-thirds (2/3) of the total creditors (Sec.95);
liabilities of the debtor, including secured creditors holding more 3. Publication of the order and service of summons;
than fifty percent (50%) of the total secured claims of the debtor 4. Meetings of creditors for the consideration of the debtors
and unsecured creditors holding more than fifty percent (50%) of proposition (Sec. 97);
the total unsecured claims of the debtor. The petition shall include 5. Approval by the creditors of the debtors proposition (Sec. 8,
as a minimum: [20]);
(a) A schedule of the debtor's debts and liabilities; 6. The Double Majority Rule applies. To obtain a majority vote,
(b) An inventory of the debtor's assets; it is necessary that:
(c) The pre-negotiated Rehabilitation Plan, including the names a. At least 2/3 of the creditors must vote on the same
of at least three (3) qualified nominees for rehabilitation proposition, and
receiver; and b. Said 2/3 represent at least 3/5 of the total liabilities of
(d) A summary of disputed claims against the debtor and a report the debtor.
on the provisioning of funds to account for appropriate 7. Objections, if any, to the decision must be made within 10
payments should any such claims be ruled valid or their days following the meeting (Sec. 100);
amounts adjusted. 8. Issuance of order by the court directing that the agreement
be carried out in case the decision is declared valid, or when
Period of approval of rehabilitation plan no objection to said decision has been presented (Sec. 101)
The court shall have a maximum period of one hundred twenty Documents that should accompany the petition
(120) days from the date of the filing of the petition to approve the
Rehabilitation Plan. If the court fails to act within the said period, 1. A verified schedule containing a full and true statement of the
the Rehabilitation Plan shall be deemed approved. debts and liabilities of the petitioner together with a list of
creditors (Secs. 15, 2);
The effect of approval of a Plan shall have the same legal effect as 2. A verified inventory containing a list of creditors, an accurate
confirmation of a Plan. description of all the property of the petitioner including

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
property exempt from execution and a statement as to the LIQUIDATION
value of each item of property, its location, and
encumbrances thereon, if any (Secs. 16, 2); Steps in Liquidation of INSOLVENT JURIDICAL DEBTORS
3. A statement of his assets and liabilities (Sec. 2); and (not in
FRIA) A. Voluntary Liquidation
4. The proposed agreements he requests of his creditors (Ibid.)
1. Filing of verified petition for liquidation with the court
Effects of filing of the petition containing the following:
a. A schedule of the debtor's debts and liabilities including
1. No disposition in any manner of his property may be made by a list of creditors with their addresses, amounts of
the petitioner except insofar as concerns the ordinary claims and collaterals, or securities, if any;
operations of commerce or of industry in which he is engaged b. An inventory of all its assets including receivables and
[(Sec. 95 (e)]; claims against third parties; and
2. No payments may be made by the petitioner except in the c. The names of at least three (3) nominees to the position
ordinary course of his business or industry [(Sec. 95 (f)]; and of liquidator.
3. Upon motion, the court may issue an order suspending any 2. If the court finds the petition sufficient in form and substance
pending execution against the individual debtor. Provide, it shall, within five (5) working days issue the Liquidation
That properties held as security by secured creditors shall not Order.
be the subject of such suspension order (Sec. 96). 3. Publication of the petition or motion in a newspaper of
general circulation once a week for two (2) consecutive
NOTE: No creditor shall sue or institute proceedings to collect his claim from weeks.
the debtor from the time of the filing of the petition for suspension of 4. Election/Appointment of Liquidator
payments and for as long as proceedings remain pending except: 5. Determination of claims.
1. Those creditors having claims for personal labor, maintenance,
expense of last illness and funeral of the wife or children of the debtor
6. Submit Liquidation Plan.
incurred in the sixty (60) days immediately prior to the filing of the 7. Implementation of the Plan (e.g. Selling of assets at public
petition; and auction, payment of claims)
2. Secured creditors. 8. Discharge of Liquidator.
Creditors affected by filing of the petition B. Involuntary Liquidation
Only creditors included in the schedules filed by the debtor shall be 1. Three (3) or more creditors the aggregate of whose claims is
cited to appear and to take part in the meeting (Sec. 5). Hence, at least either One million pesos (Php1,000,000,00) or at least
those who did not appear because they were not informed of the twenty-five percent (25%0 of the subscribed capital stock or
proceedings are unaffected by filing of the petition. partner's contributions of the debtor, whichever is higher,
may apply for and seek the liquidation of an insolvent debtor
Creditors not affected by order of suspension of payments by filing a petition for liquidation of the debtor with the
court. The petition shall show that:
1. Those having claims for personal labor, maintenance, a. There is no genuine issue of fact or law on the claims/s
expenses of the last illness and funeral of wife or child of of the petitioner/s, and that the due and demandable
debtor, incurred during the 60 days immediately preceding payments thereon have not been made for at least one
the filing of the petition; and hundred eighty (180) days or that the debtor has failed
2. Those having legal or contractual mortgages. (Sec. 9) change generally to meet its liabilities as they fall due; and
to: secured creditors who failed to attend the meeting or b. There is no substantial likelihood that the debtor may
refrained from voting therein. be rehabilitated.
Q: Who may refrain from voting during the creditors meeting? 2. If the petition or motion is sufficient in form and substance,
the court shall issue an Order:
A: Persons who may refrain from voting during the creditors a. Directing the publication of the petition or motion in a
meeting are creditors who are unaffected by the Suspension Order newspaper of general circulation once a week for two
may refrain from attending the meeting and from voting therein. (2) consecutive weeks; and
Such persons shall not be bound by any agreement determined b. Directing the debtor and all creditors who are not the
upon at such meeting, but if they should join in the voting they petitioners to file their comment on the petition or
shall be bound in the same manner as are the other creditors (Sec. motion within fifteen (15) days from the date of last
98). publication.
When the petition for suspension of payments is deemed 3. If, after considering the comments filed, the court determines
rejected that the petition or motion is meritorious, it shall issue the
Liquidation Order
A petition for suspension of payments shall be deemed rejected 4. Publication of the petition or motion in a newspaper of
when the number of creditors representing at least 3/5 of the general circulation once a week for two (2) consecutive
liabilities not attend (Secs. 8, 10); or when the two majorities weeks.
required are not in favor of the proposed agreement (Sec. 10). 5. Election/Appointment of Liquidator
6. Determination of claims.
Effect of disapproval of the petition 7. Submit Liquidation Plan.
8. Implementation of the Plan (e.g. Selling of assets at public
If the decision of the meeting be negative as regards the proposed auction, payment of claims)
agreement or if no decision is had in default of such number or of 9. Discharge of Liquidator.
such majorities, the proceeding shall be terminated without
recourse. In such case, the parties concerned shall be at liberty to NOTE: During the pendency of or after a rehabilitation court-supervised or
enforce the rights which correspond to them (Sec. 99). pre-negotiated rehabilitation proceedings, three (3) or more creditors whose
claims is at least either One million pesos (Php1,000,000.00) or at least

CIVIL LAW
twenty-five percent (25%) of the subscribed capital or partner's Acts of insolvency
contributions of the debtor, whichever is higher, may also initiate liquidation
proceedings. 1. Such person is about to depart or has departed from the
Philippines, with intent to defraud his creditors;
INSOLVENCY OF INDIVIDUAL DEBTORS 2. Being absent from the Philippines, with intent to defraud his
creditors, he remains absent;
VOLUNTARY INSOLVENCY 3. He conceals himself to avoid the service of legal process for
purpose of hindering or delaying or defrauding his creditors;
Persons who may apply for voluntary liquidation and ways to 4. He conceals, or is removing, any of his property to avoid its
apply it being attached or taken on legal process;
5. He has suffered his property to remain under attachment or
An individual debtor whose properties are not sufficient to cover legal process for 3 days for the purpose of hindering or
his liabilities, and owing debts exceeding Php500,000.00, may delaying or defrauding his creditors;
apply to be discharged from his debts and liabilities by filing a 6. He has confessed or offered to allow judgment in favor of any
verified petition with the court of the province or city in which he creditor or claimant for the purpose of hindering or delaying
has resided for six (6) months prior to the filing of such petition or defrauding any creditor or claimant;
with the following attachments: 7. He has willfully suffered judgment to be taken against him by
1. A schedule of debts and liabilities and default for the purpose of hindering or delaying or defrauding
2. Inventory of assets. his creditors;
8. He has suffered or procured his property to be taken on legal
Procedure for voluntary insolvency process with intent to give a preference to one or more of his
creditors and thereby hinder, delay, or defraud any one of his
1. Filing of the petition by the debtor praying for the declaration creditors;
of insolvency (Sec. 103); 9. He has made any assignment, gift, sale, conveyance, or
2. Issuance Liquidation order (Sec. 104); transfer of his estate, property, rights, or credits with intent
3. Publication of petition or motion in a newspaper of general to delay, defraud, or hinder his creditors;
circulation once a week for two consecutive weeks [Sec. 112 10. He has, in contemplation of insolvency, made any payment,
(d)]; gift, grant, sale, conveyance, or transfer of his estate,
4. Election and appointment of Liquidator [Sec. 112 (j)]; property, rights, or credits;
5. Liquidation of the debtors assets and payment of his debts 11. Being a merchant or tradesman he has generally defaulted in
(Sec. 119); the payment of his current obligations for a period of 30 days;
6. Composition, if agreed upon (Sec. 63); 12. For a period of 30 days he has failed after demand, to pay any
7. Discharge of Liquidator (Sec 122) moneys deposited with him or received by him in a fiduciary
8. Appeal capacity; and
13. An execution having been issued against him on final
Documents to accompany the petition judgment for money, he shall have been found to be without
sufficient property subject to execution to satisfy the
1. A verified schedule must contain: judgment (Sec. 105).
2. A full and true statement of all debts and liabilities of the
insolvent debtor; and Procedure in involuntary insolvency
3. An outline of the facts giving rise or which might give rise to a
cause of action against such insolvent debtor (Sec. 15); 1. Filing of petition by creditor or group of creditors and posting
of bond (Sec. 105);
Contents of a verified inventory 2. Issuance of order requiring the debtor to show cause why he
should not be adjudged insolvent (Sec. 106);
1. An accurate description of all the personal and real property 3. Service of order to show cause;
of the insolvent exempt or not from execution including a 4. Filing of answer or motion to dismiss;
statement as to its value, location and encumbrances 5. Hearing of the case (Sec. 107);
thereon; and 6. Issuance of Liquidation order
2. An outline of the facts giving rise or which might give rise to a 7. Publication of petition or motion in a newspaper of general
right of action in favor of the insolvent debtor (Sec. 16). circulation once a week for two consecutive weeks [Sec. 112
(d)];
Effect of filing of the petition 8. Election and appointment of Liquidator [Sec. 112 (j)];
9. Liquidation of the debtors assets and payment of his debts
The effect of filing petition is that the petition ipso facto takes (Sec. 119);
away and deprives the debtor petitioner of the right to do or 10. Discharge of Liquidator (Sec 122)
commit any act of preference as to creditors, pending the final 11. Appeal
adjudication (Philippine Trust Co. v. National Bank, 42 Phil 413).
NOTE: Assets of the insolvent which are not exempt from execution will then
INVOLUNTARY INSOLVENCY be distributed among his creditors in accordance with the rules of
concurrence and preference of credits in the Civil Code.
Persons who may file for involuntary liquidation
Voluntary Insolvency v. Involuntary Insolvency
Any creditor or group of creditors with a claim of, or with claims
aggregating at least Php500, 000.00 may file a verified petition for VOLUNTARY INSOLVENCY INVOLUNTARY INSOLVENCY
liquidation with the court of the province or city in which the Filed by the debtor. Filed by any creditor or group
individual debtor resides. of creditors.
Only 1 creditor is required. 3 or more creditors are
NOTE: A surety for the debtor is not a creditor, he cannot institute required.
involuntary proceedings. All he can do is to prove his claim.
No requirement for creditors. Requirements for creditors:

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
1. Residents of the contest. If the liquidator contests or disputes the claim, the
Philippines; court shall allow, hear and resolve such contest except when
2. Their credits or demands the case is already on appeal. In such a case, the suit may
must have accrued in the proceed to judgment, and any final and executor judgment
Philippines; and therein for a claim against the debtor shall be filed and
3. Must not have been a allowed in court; and
creditor by assignment (e) No foreclosure proceeding shall be allowed for a period of
within 30 days prior to the one hundred eighty (180) days.
filing of the petition.
Venue: where he has resided Where the debtor has Rights of secured creditors
6 months prior to the filing of residence or has his principal
petition. place of business. The Liquidation Order shall not affect the right of a secured
No need for the commission Debtor must have committed creditor to enforce his lien in accordance with the applicable
of any of the acts of any of the acts of insolvency. contract or law. A secured creditor may:
insolvency. (a) Waive his right under the security or lien, prove his claim in
Amount of debts must exceed Amount of debts must not be the liquidation proceedings and share in the distribution of
P500,000.00. less than P500,000.00. the assets of the debtor; or
Debtor deemed insolvent Debtor is considered insolvent (b) Maintain his rights under the security or lien:
through an order of upon the issuance by the
adjudication after filing of the court of an order after due If the secured creditor maintains his rights under the security or
petition; adjudication may be hearing declaring him lien:
granted ex parte. insolvent; adjudication (1) The value of the property may be fixed in a manner agreed
granted only after hearing. upon by the creditor and the liquidator. When the value of
Bond is not required. Bond is required. the property is less than the claim it secures, the liquidator
may convey the property to the secured creditor and the
Assignee in insolvency latter will be admitted in the liquidation proceedings as a
creditor for the balance. If its value exceeds the claim
An assignee in insolvency is a person elected by the creditors or secured, the liquidator may convey the property to the
appointed by the court to whom an insolvent debtor makes an creditor and waive the debtor's right of redemption upon
assignment of all his property for the benefit of his creditors. receiving the excess from the creditor;
(2) The liquidator may sell the property and satisfy the secured
NOTE: The assignee must be a person elected by the majority of the creditor's entire claim from the proceeds of the sale; or
creditors who have proven their claims, such majority being in number and (3) The secure creditor may enforce the lien or foreclose on the
amount. property pursuant to applicable laws.
Creditors not entitled to vote in the election of assignee Declaration of insolvency of a partnership
1. Those who did not file their claims at least 2 days prior to the A partnership may be declared insolvent by a petition of the
time appointed for such election; partners and may be done during the continuation of the
2. Those whose claims are barred by the statute of limitations; partnership business or after its dissolution and before the final
3. Secured creditors unless they surrender their security or lien settlement thereof.
to the sheriff or receiver or unless they shall first have the
value of such security; and A partnership may be declared insolvent notwithstanding the
4. Holders of claims for unliquidated damages arising out of solvency of the partners constituting the same (Campos Rueda &
pure tort. Co. v. Pacific Commercial Co., G.R. No. L-18703 Aug. 28, 1922).
Bond requirement of the assignee Persons who may petition for declaration of insolvency of a
partnership
The assignee is required to give a bond for the faithful performance
of his duties after his election 1. Voluntary insolvency By all the partners or any of them;
2. Involuntary insolvency By one or more of the partners or
NOTE: Courts have the power to appoint receivers to hold the property of three or more creditors of the partnership.
individuals or corporations although no insolvency proceedings are involved.
A receiver appointed by a court before the institution of the insolvency
Properties included in the insolvency proceedings
proceedings may be appointed the permanent assignee in such proceedings.
1. All the property of the partnership; and

Effects of liquidation order
2. All the separate of each of the partners except:
a. Separate properties of limited partners (Art. 1843, NCC)
(a) The juridical debtor shall be deemed dissolved and its
b. Properties which are exempt by law
corporate or juridical existence terminated;
(b) Legal title to and control of all the assets of the debtor,
Effect of insolvency of partnership or any partner
except those that may be exempt from execution, shall be
deemed vested in the liquidator or, pending his election or
1. A partnership may be declared insolvent notwithstanding the
appointment, with the court;
solvency of the partners constituting the same.
(c) All contracts of the debtor shall be deemed terminated
2. A partnership is not necessarily insolvent because one of its
and/or breached, unless the liquidator, within ninety (90)
members is insolvent. The solvent members are bound to
days from the date of his assumption of office, declares
wind up the partnership affairs.
otherwise and the contracting party agrees;
3. Under the law, a partnership is automatically dissolved by the
(d) No separate action for the collection of an unsecured claim
insolvency of any partner or of the partnership.
shall be allowed. Such actions already pending will be
transferred to the Liquidator for him to accept and settle or

CIVIL LAW
Q: In filing claims in an insolvency proceeding, what debts may an offset, a claim owned by the insolvent which he has
and may not be proved? purchased after the insolvency.
A: Alternative rights of a secured creditor
DEBTS THAT MAY BE DEBTS THAT MAY NOT BE 1. To maintain his rights under his security or lien and ignore the
PROVED PROVED insolvency proceedings, in which case, it is the duty of the
The debts which may be The following debts are not assignee to surrender to him the property encumbered;
proved against the estate of provable or allowed in 2. To waive his right under the security or lien and thereby
the debtor in insolvency insolvency proceedings: share in the distribution of the assets of the debtor; or
proceedings are the 3. To have the value of the encumbered property appraised and
following: 1. Claims barred by the then share in the distribution of the assets of the debtor with
statute of limitations respect to the balance of his credit.
1. All debts due and payable (Sec. 29, 73);
from the debtor at the 2. Claims of secured Discharge
time of adjudication of creditors with a mortgage
insolvency (Sec. 53, or pledge in their favor Discharge, under the Insolvency Law, is the formal and judicial
Insolvency Law); unless they surrender the release of an insolvent debtor from his debts with the exception of
2. All debts existing at the security (Sec. 59); those expressly reserved by law.
time of the adjudication 3. Claims of creditors who
of insolvency but not hold an attachment or NOTE: Only natural persons may ask for discharge; corporations cannot ask
payable until a future execution on the for discharge. (Sec. 52) When granted, takes effect not from its date, but
from the commencement of the proceedings in insolvency.
time, a discount being property of the debtor
made if no interest is duly recorded and not Application for discharge
payable by the terms of dissolved (Sec. 32);
the contract; 4. Claims on account of A debtor may apply to the RTC for a discharge at any time after the
3. Any debt of the insolvent which a fraudulent expiration of 3 months from the adjudication of insolvency, but not
arising from his liability as preference was made or later than 1 year from such adjudication of insolvency, unless the
indorser, surety, bail or given (Sec. 61); property of the insolvent has not been converted into money (Sec.
guarantor, where such 5. Support, as it does not 64) without his fault, thereby delaying the distribution of dividends
liability became absolute arise from any business among the creditors in which case the court may extend the
after the adjudication of transaction but from the period.
insolvency but before the relation of marriage; and
final dividend shall have 6. A claim for unliquidated Any creditor may oppose the discharge by filing his objections
been declare (Sec. 54); damages arising out of a thereto, specifying the grounds of his opposition. After the debtor
4. Other contingent debts pure tort, which neither has filed and served his verified answer, the court shall try the
and contingent liabilities constitutes a breach of an issue or issues raised (Sec. 66).
contracted by the express contract nor
insolvent if the results in any unjust Requisites for discharge
contingency shall happen enrichment of the
before the order of final tortfeasor that may form 1. Compliance with statutory requirements regarding surrender
dividend (Sec. 55); and the basis of an implied of his assets for the benefit of the creditors and regarding the
5. Any debt of the insolvent contract. rendition of an account of his assets and liabilities;
arising from his liability to
any person liable as bail, NOTE: A discharge in insolvency is a matter of legislative grace or
surety, or guarantor or favour to the debtor, to be obtained only by a strict compliance with
otherwise, for the the conditions prescribed by the statute.
insolvent, ho shall have
paid the debt in full, or in 2. Application for discharge should be filed after the expiration
part (Sec. 56). of 3 months from the adjudication of insolvency, but not later
than 1 year (Sec. 64); and
Contingent claim 3. Insolvent debtor must not have committed any of the acts of
insolvency preventing discharge.
Contingent claim is a claim in which liability depends on some
future event that may or may not happen and which makes it Acts of debtor or grounds which will prevent discharge
uncertain whether there will be any liability.
No discharge shall be granted, or if granted, shall be valid, to the
NOTE: After the close of the insolvency proceedings and the happening of following cases:
the contingency, the creditor may pursue any available remedy for the 1. False swearing;
collection of his claim. 2. Concealment of any part of his estate or effects;
3. Fraud or willful neglect in the care of his property or in the
Q: How are claims arising or acquired after insolvency treated? delivery thereof to the assignee;
4. Procuring his properties to be attached or seized on
A: Claims arising or acquired after insolvency is treated: execution within 1 month before the commencement of
insolvency proceedings;
1. A claim which arose after commencement of proceedings 5. Destruction, mutilation, alteration or falsification of his
An obligation coming in force after the initiation of the books, documents, and papers;
proceedings is not generally a proper claim to be proved. 6. Giving fraudulent preference to a creditor;
2. Claim owned by insolvent purchased after insolvency One 7. Non-disclosure of the assignee of a proven false or fictitious
indebted to an insolvent will not be permitted to interpose as debt within 1 month after acquiring knowledge;
8. Being a merchant, failure to keep proper books or accounts;

2014 GOLDEN NOTES
CREDIT TRANSACTIONS
9. Influencing the action of any creditor, at any state of the 2. Who has discovered facts constituting the fraud subsequent
proceedings, by pecuniary consideration; to the discharge and fraudulent transfer; and provided,
10. Effecting any transfer, conveyance or mortgage in 3. The petition is filed within 1 year after the date of the
contemplation of insolvency; discharge (Sec. 69).
11. Conviction of any misdemeanor under the Insolvency Law:
12. In case of voluntary insolvency, he has received the benefit of
insolvency within 6 years next preceding his application for
discharge; and
13. If insolvency proceeding in which he could have applied are
pending by or against him in the RTC of any other province or
city (Sec. 65).
Effects of discharge
1. It releases the debtor from all claims, debts, liabilities and

demand set forth in the schedule or which were or might
have been proved against his estate in insolvency (Sec. 69).
Hence, non-provable debts are not affected whether or not
they were properly scheduled;
2. It operates as a discharge of the insolvent and future
acquisitions, but pemits mortgagees and other lien creditors
to have their satisfaction out of the mortgage or subject of
the lien;
3. It is a special defense which may be pledged and be a
complete bar to all suits brought on any such debts, claims,
liabilities or demands (Ibid.).
4. It does not operate to release any person liable for the same
debt, for or with the debtor, either as partner, joint
contractor, indorser, surety or otherwise; (Sec. 68)
5. The certificate of discharge is prima facie evidence of the fact
of release, and the regularity of such discharge.
NOTE: Where a debtor is judicially declared insolvent, the remedy of

the guarantor or surety would be to file a contingent claim in the
insolvency proceeding, if his rights as such guarantor or sureties are
not to be barred by the subsequent discharge of the insolvent debtor
from all his liabilities.
Debts and obligations not affected by discharge of insolvent
1. Taxes or assessments due the Government, whether national

or local;
2. Any debt created by the fraud or embezzlement of the
debtor;
3. Any debt created by the defalcation of the debtor as a public
officer or while acting in a fiduciary capacity;
4. Debt of any person liable for the same debt, for or with the
insolvent debtor, either as partner, joint contractor, indorser,
surety or otherwise (Sec. 68);
5. Debts of a corporation (Sec. 52);
6. Claim for support;
7. Discharged debt but revived by a subsequent new promise to
pay;
8. Debts which have not been duly scheduled in time for proof
and allowance, unless the creditors had notice or actual
knowledge of the insolvency proceedings, are not discharged
as to such creditors;
9. Claims for unliquidated damages arising out of a pure tort;
10. Claims of secured creditors (Sec. 59);
11. Claims not in existence or not mature at the time of the
discharge;
12. Claims that are contingent at the time of discharge.
Revocation of discharge
A discharge may be revoked by the court which granted it on

petition of any creditor:
1. Whose debt was proved or provable against the estate in
insolvency on the ground that the discharge was fraudulently
obtained;

CIVIL LAW
LEASE
NOTE: Contract of lease becomes a contract of salewhen a lease of personal
property with option to buy is entered into, and the title is transferred at the
Contract of Lease end of the contract provided rents have been fully paid.
A contract by which one of the parties agrees to give the other for Contract of lease v. Usufruct
a fixed time and price the use or profit of a thing or of his service to
another who undertakes to pay some rent, compensation or price.
BASIS LEASE USUFRUCT
Ownership of the
A contract of lease is a consensual, bilateral, onerous and Ownership on the
As to ownership of thing on the part
commutative contract by which one person binds himself to grant part of the lessor is
the thing of the grantor is
temporarily, the use of a thing or the rendering of some service to not necessary
necessary
another who undertakes to pay some rent, compensation, or
price(4 Sanchez Roman 736). GR: Personal right
As to nature of right Real right
XPN: Real right
Characteristics of a Contract of Lease Includes all
Limited to the use
possible uses and
As to extent of use specified in the
1. Consensual enjoyment of the
contract
2. Bilateral thing
3. Commutative Lessor places and
4. Principal As to the owners maintains the Owner allows the
5. Nominate obligation to respect lessee in the usufructuary to
6. Onerous the possession of the peaceful use and enjoy the
7. Subject matter must be within the commerce of man lessee and usufruct enjoyment of the property
8. Purpose is to allow enjoyment or use of a thing thing
9. Purpose to which the thing will be devoted should not be May be for an
As to duration Definite period
immoral indefinite period
10. Period is temporary Created by Created by law,
As to mode of
11. Period may be definite or indefinite contract as a contract, last will
creation
12. Lessor need not be the owner general rule or prescription
Usufructuary has
As to duty to make Lessee has no duty
Kinds of lease duty to make
repairs to make repairs
repairs
1. Lease of things (immovable/movable) One of the parties As to duty to pay Lessee has no duty Usufructuary has a
binds himself to give to another the enjoyment or use of a taxes to pay taxes duty to pay taxes
thing for a price certain. Lessee cannot
As to the constitution Usufructuary may
constitute a
of a sublease or sub- constitute a
Period: definite or indefinite but not more than 99 years (Art. usufruct of the
usufructuary sublease
1634, NCC). property leased
NOTE: It may be made orally but if the lease of real property is for Persons disqualified to become lessee
more than one year, it must be in writing. (Statute of Frauds)
Persons disqualified to buy referred to in Arts. 1490 and 1491, are
2. Lease of work (contract for a piece of work) One of the also disqualified to become lessees of the things mentioned
parties binds himself to produce a result out of his work or therein (Art. 1646, NCC).
labor for a certain price.
NOTE:Foreigners are disqualified to lease lands in the Philippines except for
NOTE: Duties of a contractor who furnishes work and materials: residential purposes(Smith, Bell and Co. vs. Register of Deeds, 96 Phil 53).
a. To deliver
b. To transfer ownership
Form required in a contract of lease of things
c. To warrant eviction and hidden defects
Lease may be made orally, but if the lease of real property is for
3. Lease of service One party binds himself to render to the
more than a year, it must be in writing.
other some service for a price certain.
Where the written contract of lease called for the erection by the
Contract of lease v. Contract of sale tenant, of a building of strong wooden materials, but what he
actually did construct on the leased premises was semi-concrete
BASIS LEASE SALE edifice at a much higher cost, in accordance with a subsequent oral
Only the use or agreement with the lessor, oral evidence is admissible to prove the
As to transfer of Ownership is
enjoyment is verbal modification of the original terms of the lease (Paterno v.
ownership transferred
transferred Jao Yan, GR. No. L-12218, February 28, 1961).
As to status of Transfer is Transfer is
transfer temporary permanent Purpose of recording a lease
Seller must be the
As to ownership Lessor need not to
owner at the time A lease does not have to be recorded in the Registry of Property to
of the thing be the owner
of delivery be binding between the parties; registration is useful only for the
The price of the purpose of notifying strangers to the transaction (Art. 1648, NCC).
object
Usually, the selling
As to price (distinguished from However, if a purchaser has actual knowledge of the existence of
price is mentioned
the rent) is usually the lease, which knowledge is equivalent to registration, he is
not mentioned

2014 GOLDEN NOTES
LEASE
bound by the lease (Quimson vs. Suarez, 45 Phil. 901, dissenting 4. If rent is paid weekly, lease is from week to week.
opinion of J. John). 5. If rent paid monthly, lease is from month to month.
6. If rent is paid yearly, lease is from year to year.
Proper Authority
Entitlement of the lessee for the reduction of rent
Proper authority means a power of attorney to constitute the
lease. GR:The lease is entitled for a reduction of rent in case of the loss of
more than one-half of the fruits through extraordinary and
Q: When is proper authority required? unforeseen fortuitous events.
A: XPN: Stipulation to the contrary.

1. Husband with respect to the paraphernal real estate of the
wife NOTE: It is applicable only to lease of rural lands.
NOTE: The husband is not the administrator of the paraphernal real Rules on extension of lease period
property unless such administration has been transferred to him by
virtue of a public document, which shall be recorded in the registry of
property of the place the property is located (Art. 110, FC).
1. A lease contract for definite terms allows lessee to duly notify
lessor of his desire to so extend the term, unless the contrary
2. Father or Guardian with respect to the property of the is stipulated.
minor or the ward 2. May be extended as stipulation lessee can extend without
3. Manager with respect to the property under administration lessors consent but lessee must notify lessor.
3. May be extended for 6 years agreed upon by both parties
A Manager is an administrator of: as stipulation this must be interpreted in favor of the
lessee. Hence, ordinarily the lessee, at the end of the original
period, may either:
1. Administrator of a conjugal property
a. Leave the premises
2. Administrator of a co-ownership
b. Remain in possession
3. Administrator of state patrimonial property 4. In co-ownership, assent of co-owner is needed, otherwise, it
is void or ineffective as against non-consenting co-owners.
Q: A husband was properly given by his wife the authority to 5. Where according to the terms of the contract, the lease can
administer herparaphernal real property. Does this necessarily be extended only by the written consent of the parties
mean that just because the husband is now the administrator, he thereto, no right of extension can rise without such written
can lease said property without any further authority? consent.
6. If the option is given to the lessor, the lessee cannot renew
A: It depends. the lease against the formers refusal
1. If the lease will be for one year or less, no other authority is 7. The lessor may impose additional conditions after the
required. expiration of the original period
2. If the lease on the real property will be for more than a year, 8. Par. 2, Art. 1687, NCC provides that in the event that the
then a special power of attorney (aside from the public lessee has occupied the leased premises for over a year,
instrument transferring administration) is required (Art.1878, courts may fix a longer term of lease
NCC).
3. Furthermore, whether it be a) or b), if the lease is to be NOTE: The power of the courts to establish a grace period is potestative or
recorded, there must be a special power of attorney (Art. discretionary, depending on the particular circumstances of the case.
1647, NCC).
Perpetual Lease
NOTE: If it is the wife who is administering her paraphernal real property,
the husband has no authority whatsoever, to lease, in any way, or administer A lease contract providing that the lessee can stay in the premises
the property. for as long as he wants and for as long as he can pay the rentals
and its increase.
Q: If a father, who is administering the real estate of his minor son, wants
to record the lease, should he ask for judicial permission?
An agreement that the duration of lease shall subsist for an
A:A father who is administering the real estate of his minor son should ask indefinite period, provided that the payment of rentals is up-to-
for judicial permission if he wants to record the lease (Art. 1647, NCC). But datetakes the form of a perpetual lease which is not valid.It is a
even if no judicial authorization is asked, such defect cannot be invoked by a purely potestative condition because it leaves the effectivity and
lessee who has dealt with him (Summers v. Mahinay, [CA] 40 O.G. [11th S] enjoyment of leasehold rights to the sole and exclusive will of the
No. 18, p.40). Only the son or his own heirs may question the validity of the lessee.
transaction.
TacitaReconducion (Implied New Lease)
DURATION OF LEASE
A lease that arises if at the end of the contract the lessee should
Duration of lease continue enjoying the thing leased for 15 days with the
acquiescence of the lessor, unless a notice to the contrary had
1. With determinate or fixed period Lease will be for the said previously been given by the either party.
period and it ends on the day fixed without need of a
demand. Requisites for TacitaReconducion
2. No fixed period
a. For rural lands (Art. 1682, NCC) It shall be all time 1. The term of the original contract has expired
necessary for the gathering of fruits which the whole 2. The lessor has not given the lessee a notice to vacate
estate may yield in 1 year, or which it may yield once. 3. The lessee continued enjoying the thing leased for at least 15
b. For urban lands days with the acquiescence of the lessor
3. If rent is paid daily, lease is from the day to day.

CIVIL LAW
NOTE: This acquiescence may be inferred from the failure of the lessor NOTE:Lease of properties belonging to the public domain is void.
to serve notice to vacate upon the lessee. This principle is provided for
under Article 1670 of the Civil Code. Thus, after the expiration of the Principal obligation of a lessor
contract of lease, the implied new lease should have only been in a
monthly basis (Zosima Inc. v. Salimbagat, G.R. No. 174376. September
12, 2012).
To deliver the thing leased to the lessee.
There is no implied new lease when Remedies in case of breach of contract of lease
1. Before or after the expiration of the term, there is a notice to 1. Action for Specific Performance
vacate given by either party. 2. Damages
2. There is no definite fixed period in the original lease contract
as in the case of successive renewals. Properties that may be leased
Effectsof an implied new lease 1. By Filipinos public domain with an area of 500 hectares and
may acquire not more than 12 hectares.
1. The period of the new lease is not that stated in the original 2. By corporations If at least 60% Filipinos-owned public
contract; but in the legal periods established by law in Art. domain for a period of 25 years, renewable for another 25
1682 of NCC, if the lease is rural lease, or Art. 1687 of NCC, if years; the area not to exceed more than 1,000 hectares.
the lease is urban lease.
Rules on lease of things when lessee is an alien
NOTE:
1. Personal property 99 year limit applies.
Art. 1682. The lease of a piece of rural land, when its duration has not 2. Aliens cannot lease public lands, and cannot acquire private
been fixed, is understood to have been for all the time necessary for lands except through succession
the gathering of the fruits which the whole estate leased may yield in 3. If lease of real property (private lands), maximum of 25 years
one year, or which it may yield once, although two or more years have renewable for another 25 years (P.D. 713)
to elapse for the purpose.
4. Under the Investors Lease Act of 1995, the 25 year period
Art. 1687. If the period for the lease has not been fixed, it is was extended to 50 years provided the following conditions
understood to be from year to year, if the rent agreed upon is annual; are met:
from month to month, if it is monthly; from week to week, if the rent a. Lessee must make investments
is weekly; and from day to day, if the rent is to be paid daily. b. Lease is approved by DTI
c. If terms are violated, DTI can terminate it
2. Accessory obligations contracted by a third person are
extinguished (Art. 1672, NCC). NOTE: The ILA did not do away with P.D. 713, under ILA the consent of
3. Other terms of the original contract are revived. DTI is required, while in P.D. 713 no consent is required.
NOTE: The terms that are revived are only those which are germane to Rent
the enjoyment of possession, but not those with respect to special
agreements which are by nature foreign to the right of occupancy or It is the amount paid for the use or occupancy of a residential unit
enjoyment inherent in a contract of lease.
whether payment is made on a monthly or other basis (Sec. 4,
RA934 Rent Control Act).
LEASE OF THINGS
Requisites of rent
Q: Is lease of real property a real right?
1. Not fictitious or nominal, otherwise the contract becomes
A:
gratuitous;
2. Capable of determination; and
GR: Lease of a real property is a personal right
3. May be in the form of products, fruits, or construction, as
long as it has value.
XPNs: It is a real right:
1. If it is for more than one year and to be enforceable must NOTE: Owner has the right to fix the rent because the contract is consensual
be writing and not imposed by law, but increasing the rent is not an absolute right of
2. If it is registered with Registry of Property - regardless of its the lessor. The new rate must be reasonable and in no case shall the lessor
period be allowed to increase the rental when the term has not yet expired, unless,
the tenant consents(Paras, p. 262).
Effects if the lease of real property is not registered
If the rent is fixed for the first time, courts cannot interfere, but if it is a
1. It is not binding on third persons. renewal, the courts can settle the disagreements.
2. Such third person is allowed to terminate the lease in case he
buys the property from the owner-lessor. Right of a purchaser of a leased property
3. Actual knowledge of existence and duration of lease is
equivalent to registration. GR: Purchaser of thing leased can terminate the lease.
4. A stranger who knows of the existence of the lease, but was
led to believe that the lease would expire soon or before the XPNs:
new lease in favor of him begins, the stranger can still be 1. Lease is recorded in Registry of Property
considered innocent. 2. There is a stipulation in the contract of sale that the
purchaser shall respect the lease
Subject matter of a lease of things 3. Purchaser knows the existence of the lease
4. Sale is fictitious
Things within the commerce of man. 5. Sale is made with a right of repurchase.

2014 GOLDEN NOTES
LEASE
SUBLEASE The sublessee is subsidiarily liable to the lessor for any rent due
from the lessee. However, the sublessee shall not be responsible
Sublease beyond the amount of the rent due form him.
It is an agreement between a sublessor and sublessee whereby the As to the lessee, the latter shall still be responsible to the lessor for
former grants temporarily the enjoyment or use of the same thing, the rents; bring to the knowledge of the lessor every usurpation or
service or work subject of the original contract of lease to the latter untoward act which any third person may have committed or may
in exchange for compensation or price, respecting the terms and be openly preparing to carry out upon the thing leased; advise the
conditions of original contract of lease between the lessor and owner the need for all repairs; to return the thing leased upon the
lessee. termination of the lease just as he received it, save what has been
lost or impaired by the lapse of time or by ordinary wear and tear
Lessee cannot assign the lease without consent of lessor unless or from an inevitable cause; responsible for the deterioration or
there is a stipulation to the contrary (Art. 1649, NCC). loss of the thing leased, unless he proves that it took place without
his fault.
Juridical relationships in a sublease arrangement
Responsibility of the lessee to the lessor in case he subleases the
1. Principal lease property
2. Sublease
By express provision of Article 1650, NCC, the lessee is still
These relationships co-exist and are intimately related to each responsible for the performance of his obligations toward the
other but are distinct from one another(Albano, p. 748). lessor.
Nature of Sublease Responsibilities of a sublessee to the lessor
It is a separate and distinct contract of lease wherein the original GR: There is no juridical relationship between lessor and sublessee
lessee becomes a sublessor to a sublessee. andtherefore, no responsibility arises.
Q: Alfonso was the owner of a building being leased to Beatriz. XPNs:

The contract allowed subleasing of the building, thus, Beatriz 1. All acts which affect the use and preservation of the thing
subleased it to Charlie. Charlie directly paid his rent to Alfonso leased
after the lease expired. Was Charlie correct? 2. For any rent due to the lessor from the lessee which the
latter failed to pay, the lessor must collect first from the
A: No. There are two (2) distinct leases involved, the principal lease lessee, and if the lessee is insolvent, the sublessee becomes
and the sublease. In such agreement, the personality of the lessee liable (subsidiary liability)
does not pass on to or is acquired by the sublessee. Thus, the
payment to the lessor was not payment to the sublessor. Alfonso Extent of the subsidiary liability of the sublessee
was a stranger to the sublease agreement (Blas vs. CA, G.R. No.
82813 December 14, 1989). The sublessee shall be responsible only to the amount of rent due
from him, in accordance with the terms and conditions of the
Parties to a Sublease sublease contract, at the time the demand was made by the
lessor(Art. 1652, NCC).
1. Lessor
2. Sublessor (original lessee in the contract of lease) Failure of the lessee to pay rentals
3. Sublessee
Mere failure of the lessee to pay rentals is insufficient to make the
Right of the lessee/sublessor to sublease the property sublesseesubsidiarily liable to the lessor. There must be a judgment
cancelling the lessees principal lease contract or ousting the lessee
The lessee has the right to sublease the property, unless expressly from the premises before the sub-lessee becomes subsidiarily
stipulated. liable (Wheelers Club Intl, Inc. vs. Bonifacio, Jr.,G.R. No. 139540,
June 29, 2005).
If the prohibition to sublease is not express but only implied, the
sublease will still be allowed (Art.1650, NCC). Assignment of lease
NOTE: The duration of sublease cannot be longer than that of the lease to It exists when the lessee made an absolute transfer of his leasehold
which it is dependent rights in a contract, and he has disassociated himself from the
original contract of lease (Pineda, p. 451).
Q: May a lessee sublease a leased property without the consent
of the lessor? (1999 Bar Question) The assignment has the effect of novation consisting in the
substitution. There being a novation, the consent of lessor is
A: Yes,providedthat there is no express prohibition against necessary to effect assignment unless the contract of lease allows
subleasing. Under the law, when in the contract of lease of things, the lessee to assign (Pineda, p. 452).
there is no express prohibition, the lessee may sublease the thing
leased without prejudice to his responsibility for the performance Effect of assignment of lease
of the contract toward the lessor (Art. 1650, NCC).
The personality of the original lessee disappears and there only
In case there is a sublease of the premises being leased, the remain in the juridical relation of two persons: the lessor and the
sublessee is bound to the lessor for all the acts which refer to the assignee, who is converted into a lessee (Pineda, p. 451).
use and preservation of the thing leased in the manner stipulated
between the lessor and the lessee (Art. 1651, NCC).

CIVIL LAW
Sublease v. Assignment of lease
LEASE OF WORK OR SERVICES
ASSIGNMENT
BASIS SUBLEASE Contract for Lease of Services
OF LEASE
As to number of There are 2 leases and 2 There is only
juridical distinct juridical one juridical A contract whereby one party binds himself to render some service
relationship relationships although relationship, to the other party consisting his own free activity of labor, and not
immediately connected that of the its result and the other party binds himself to pay a remuneration
and related to each lessor and the therefor (Pineda, 2002).
other assignee, who
is converted Contract for Piece of Work
into a lease
As to presence of Personality of the Personality of A contract whereby one of the parties binds himself to produce a
lessees lessee does not the lessee result out of his work or labor and the other party binds himself to
personality disappear disappears pay remuneration therefor.
As to absolute Lessee does not Lessee
Lease of services v. Agency
transfer of rights transmit absolutely his transmits
rights and obligations to absolutely his
the sublessee rights to the LEASE OF SERVICES AGENCY
assignee Based on employment the
Based on representation
As to direct Sublessee, generally, Assignee has a lessor of services does not
agent represent his principal
action against does not have any direct action represent his employer nor
and enter into juridical acts
the lessor direct action against the against the does he execute juridical acts
lessor lessor Principal contract Preparatory contract
REMEDIES IN SUBLEASE Contract of piece of work as v. Contract of lease services
Accion Directa BASIS PIECE OF WORK LEASE OF SERVICES

Object of contract
A direct action which the lessor may bring against a sublessee who is the result of the Object of contract is
misuses the subleased property. As to object of work without the service itself and
contract considering the not the result which it
Remedies when either the lessor or the lessee did not comply labor that generates
with his obligations produced it
If the result
1. Rescission and damages; promised is not Even if the result
2. Damages only (contract will be allowed to remain in force); or accomplished, the intended is not
As to payment of
3. Ejectment lessor or attained, the services
compensation
promissory is not of the lessor must still
Grounds for ejectment entitled to be paid.
compensation.
1. When the period agreed upon has expired
2. Lack of payment of the price stipulated Q: What if the value has not been agreed upon in a contract of
3. Violation of any of the conditions agreed upon in the contract lease of service?
4. When the lessee devotes the thing leased to any use or
service not stipulated which caused the deterioration thereof A: When no rate has been fixed, the same shall be determined by
(Art. 1673, NCC). the courts according to the uses and customs of the place and the
evidence, unless the services by agreement were to be rendered
Grounds for judicial ejectment under the Rental Reform Act of gratuitously (Pineda, 2002).
2002
RIGHTS AND OBLIGATIONS OF LESSORS AND LESSES
1. Assignment of lease or subleasing of residential units in
whole or in part, including the acceptance of boarders or Obligations of the lessor
bedspacers, without the written consent of the lessor;
2. Rental payment in arrears for 3 months; Provided, that in 1. To deliver the things in such condition as to render it fit for
case of refusal by the lessor to accept the payment of the the use intended (cannot be waived).
rent, the lessee may deposit the amount in court or with the 2. GR: To make, during the lease all the necessary repairs in
city or municipal treasurer, as the case may be, or in the bank order to keep it suitable for the use to which it has been
in the name of and with notice to the lessor, within one devoted.
month after the refusal of the lessor to accept payment.
XPN: Stipulation to the contrary.
Q: Jane leased a truck to Ed for 2 years. After 1 year from
delivery, the truck was destroyed by a strong typhoon. What is 3. To maintain the lessee in the peaceful and adequate
the effect of the destruction of the truck with respect to the enjoyment of the lease for the entire duration of the
lease? contract.
4. Cannot alter the form of the thing leased.
A: It depends. If the thing leased is totally destroyed by a
fortuitious event, the lease is extinguished. If the destruction is
partial, the lessee may choose between: proportional reduction of
rent or, rescission of lease (Art. 1655, NCC).

2014 GOLDEN NOTES
LEASE
Rules on changing the form of thing leased refuse to reimburse (Art. 1678, NCC; SulosaNayon Inc. vs. Nayong
Pilipino, G.R. No. 170923, January 20, 2009).
1. Lessor can alter the thing leased provided there is no
impairment of the use to which the things are devoted under Effect of the destruction of the thing leased
the terms of the lease.
2. Alteration can be made by lessee provided the value of 1. Total destruction by fortuitous event Lease is extinguished.
property is not substantially impaired. 2. Partial destruction
a. Proportional reduction of rent; or
Rulesif urgent repairs are necessary b. Rescission of the lease.
1. Lessee is obligated to tolerate the work, although it may be Right to suspend the payment of rents
annoying to him and although during the same time he may
be deprived of a part of the premises, if repairs last for not The lessee may suspend the payment of rents when the lessor fails
more than 40 days. to:
2. If repairs last for 40 days or more, lessee can ask for reduction 1. Undertake urgent repairs; or
of the rent in proportion to the time including the 1st 40 2. Maintain the lessee in peaceful and adequate enjoyment of
days and the part of the property of which he is deprived. the property leased.
NOTE: In either case, rescission may be availed of if the main purpose of the NOTE: For the intervening period, the lessee does not have to pay the rent.
lease is to provide a dwelling place and the property becomes uninhabitable.
The right begins:
Effects if the lessor fails to make urgent repairs 1. In the case of repairs from the time of the demand and it
went unheeded
The lessee may: 2. In case of eviction from the time the final judgment for
1. order repairs at the lessors cost eviction becomes effective
2. sue for damages
3. suspend the payment of the rent Kinds of trespass in lease
4. ask for rescission, in the case of substantial damage to him
1. Trespass in the fact (perturbation de mere hecho) physical
If the contract of lease is silent as to who will pay for repair enjoyment is reduced. Lessor will not be liable.
expenses 2. Trespass in the law (perturbation de derecho) a 3rd person
claims legal right to enjoy the premises. Lessor will be held
1. Major Repairs Lessor liable.
2. Minor Repairs Lessee
Alternative remedies of the aggrieved party in case of non-
Remedy of the lessee if the lessor fails to make major or fulfillment of duties
necessary repairs
1. Rescission and damages
Lessee may ask for: 2. Damages only, allowing the contract to remain in force
1. Rescission of contract and indemnification for damages. (specific performance)
2. Indemnification only, while the contract remains in force (Art.
1659, NCC). Remedies of the lessee if the lessor refuses to accept rentals
Obligations of the lessee 1. Tender of payment

2. Consignation
1. Pay the price of the lease according to the terms stipulated
2. Use the thing leased as a diligent father of a family devoting it Effect of failure to comply with the requirements by the lessee
to the use stipulated, and in the absence of stipulation, to
that which may be inferred from nature of thing leased, It is a ground for ejectment of the lessee (Alfonso vs. CA, G.R. No.
according to the custom of the place 76824, December 20, 1988).
3. Pay the expenses of the deed of lease
4. Notify the lessor of usurpation or untoward acts SPECIAL RULES FOR LEASE OF RURAL AND URBAN LANDS
5. To notify the lessor of need for repairs
6. To return the property leased upon termination of the lease RURAL LANDS
in the same condition as he receive it except when what has
been lost or impaired by lapse of time, ordinary wear and Rural land (Product-Producing Lands)
tear or inevitable cause/ fortuitous event
7. Tolerance of urgent repairs which cannot be deferred until Regardless of site, if the principal purpose is to obtain products
the end of lease (Art. 1662 (1), NCC). from the soil, the lease is of rural lands. Hence, as used here, rural
lands are those where the lessee principally is interested in soil
Q: A leased his land to B. B made useful improvements on the products.
land. Upon the expiration of the lease contact, B seeks for
reimbursement of the useful improvements from A. Should A Effect of sterility of land in case of rural lease
reimburse B?
There is no reduction. The fertility or sterility of the land has
A: The lessormay pay for one-half (1/2) of the value of the already been considered in the fixing of the rent.
improvements which the lessee made in good faith, which are
suitable for the use for which the lease is intended, and which have Effect of damage caused by a fortuitous event on the rural lease
not altered the form and substance of the land. On the other
hand, the lessee may remove the improvements should the lessor

CIVIL LAW
1. Ordinary fortuitous event no reduction. The lessee being the Grounds for ejectment of the tenant on shares
owner of crops must bear the loss. Res perit domino
2. Extraordinary fortuitous event 1. Voluntary surrender of the land
a. More than one-half of the fruits were lost, there is a 2. Bona fide intention of the landholders to cultivate the land
reduction (XPN: specific stipulation to the contrary) himself personally or thru the employment of farm
b. Less than one-half, or if the loss is exactly one-half, machineries
there is no reduction 3. Tenant violates or fails to comply with the terms and
conditions of the contract or the RA 1199
NOTE: The rent must be reduced proportionately. 4. Failure to pay the agreed rental or deliver the landholders
share
Rule for reduction of rent 5. Tenant uses the land for different purpose
6. Share-tenant fails to follow farm practices which will
The reduction of rent can be availed of only if the loss occurs contribute towards the proper care and increased production
before the crops are separated from their stalk, root, or trunk. If 7. Negligence permits serious injury to land which will impair its
the loss is afterwards, there is no reduction of rent. productive capacity
8. Conviction by a competent court of a tenant or any member
Duration of rural lease with an unspecified duration of his immediate family or farm household of a crime against
the landholder or a member of his immediate family.
The lease of a piece of rural land, when its duration has not been
fixed, is understood to have been for all the time necessary for the Sale of land subject to tenancy
gathering of the fruits which the whole estate leased may yield in
one year, or which it may yield once, although two or more years Sale of the land does not extinguish the tenancy relationship. The
have to elapse for the purpose (Art. 1682, NCC). purchaser or the transferee shall assume the rights and obligations
of the former landholder in relation to the tenant.
Q: A rural lease was agreed upon to last for a certain definite
period. But the tenant planted fruit trees which would require a Effect of expiration of the period of tenancy
long period of time to bear fruit, as well as introduce certain
more or less valuable improvements. Has this act of the tenant Expiration of the period of the contract of tenancy fixed by the
changed the duration of the contract? parties does not extinguish the relationship. The landlord is
required by law, if the tenant does not voluntarily abandon the
A: No, the duration of the lease has not been changed. There was a land or turn it over to him, to ask the court for an order of
fixed period for the lease and therefore the nature of the fruit dispossession of the tenant (Sec. 49, RA 1199, as amended by RA
trees or valuable improvements is immaterial (Iturralde v. 2263).
Garduno, 9 Phil. 605).
Extinguishment of the tenancy relationship due to death
NOTE:If there is no stipulation to the contrary, pending crops at the end of
the lease belong to the lessee.
1. Death of tenant extinguishes relationship but heirs and
members of his immediate farm household may continue to
Rule for land tenancy on shares
work on the land until the close of the agricultural year.
2. Death of landholder does not extinguish the relationship
This refers to the contracts of aparceria. Land tenancy on shares
because his heirs shall assume his rights and obligation.
are primarily governed by special laws (ex: Agricultural Tenancy
Act, RA 1199), and suppletorily, by the stipulations of the parties,
URBAN LANDS
the provisions on partnership, and the customs of the place.
Urban land (Non-Product Producing Lands)
Tenant
Lands leased principally for purposes of residence are called urban
A person, who, himself, and with the aid of available from within
lands.
his immediate farm household, cultivates the land belonging to, or
possessed by another, with the latters consent for the purpose of
Rules applicable to repairs forwhich an urban lessor is liable
production, sharing the produce with the landholder under the
share tenancy system, or paying to the landlord a price certain or
1. Special stipulation
ascertainable in produce, or in money or both, under the leasehold
2. If none, custom of the place.
tenancy system (Pangilinan v. Alvendia, G.R. No.L-10690, June 28,
1957).
Rules when the duration of lease is not fixed
Immediate farm household
1. If there is a fixed period - the lease would be for the said
period.
This includes the members of the family of the tenant, and such
2. If there are no fixed period - apply the following:
other person/s, whether related to the tenant or not, who are
a. Rent paid daily lease is from day to day
dependent upon him for support, and who usually help him
b. Rent paid weekly lease is from week to week
operate the farm enterprise.
c. Rent paid monthly lease from month to month
d. Rent paid yearly lease from year to year
Q: Can a tenant work for different landowners?
A:It is prohibited for a tenant, whose holding is 5 hectares or more,

to contract work at the same time on two or more separate
holdings belonging to different landholders without the knowledge
and consent of the landholder with whom he had first entered into
the tenancy relationship (Sec. 24, RA 1199).

2014 GOLDEN NOTES
LEASE
TERMINATION OF LEASE assignment, he sued Joel, Conrad and Ernie for rescission of the
contract of lease and for damages.
Q: When does immediate termination of lease apply?
1. Will the action prosper? If so, against whom? Explain.
A: 2. In case of rescission, discuss the rights and obligations of the
parties. (2005 Bar Question)
1. Dwelling places or any other building intended for human
habitation. A:
2. Even if at the time the contract was perfected, the lessee 1. Yes, the action for rescission of the lease will prosper because
knew of the dangerous condition or waived the right to Joel cannot assign the lease to Ernie without the consent of
rescind the contract on account of this condition. Victor (Art. 1649, NCC). But Joel may sublet to Conrad
because there is no express prohibition (Art. 1650, NCC;
Grounds for termination of lease Alipio v. CA, G.R. No. 134100, September 29, 2000).
1. Expiration of the period Victor can rescind the contract of lease with Joel, and the
2. Resolution of the right of lessor (i.e.: when the lessor is a assignment of the lease to Ernie, on the ground of violation of
usufructuary and the usufruct is terminated) law and of contract. The sub-lease to Conrad remained valid
3. By the will of the purchaser or transferee of the thing for 2 years from January 1, 1991, and had not yet lapsed
4. Loss of the thing when the action was filed on May 15, 1992.
5. Rescission due to the performance of the obligations of one
of the parties stated under art. 1654 and 1657. 2. In case of rescission, the rights and obligations of the parties
6. The dwelling place or any other building is unfit for human should be as follows: At the time that Victor filed suit on May
habitation and is dangerous to life or health. 15, 1992, the assignment had not yet lapsed. It would lapse
on December 1, 1994, the very same date that the 5-year
Q: Will the death of the lessee extinguish the lease agreement? basic lease would expire. Since the assignment is void, Victor
(1997 Bar Question) can get the property back because of the violation of the
lease. Both Joel and Ernie have to surrender possession and
A: No. The death of the lessee will not extinguish the lease are liable for damages. But Conrad has not yet incurred any
agreement, since lease is not personal in character and the right is liability on the sublease which still subsisted at the time of
transmissible to the heirs (Heirs of Dimaculangan v. IAC, G.R. No.L- the filing of the action on May 15, 1992.
68021, Feb. 20, 1989).
Ernie can file a cross-claim against Joel for damages on
Remedies of the aggrieved party in case of non-compliance of the account of the rescission of the contract of assignment.
other partys obligations under Arts.1654 (obligations of lessor) Conrad can file a counter-claim against Victor for damages for
and 1657 (obligations of lessee) lack of causes of action at the time of the filing of the suit.
1. Rescission with damages Q: A is the owner of a lot on which he constructed a building in

2. Damages only allowing the lease to subsists the total cost of P10, 000,000. Of that amount B contributed P5,
000,000 provided that the building as a whole would be leased to
Restrictions in exercising the right to rescind him (B) for a period of ten years from January 1, 1985 to
December 31, 1995 at a rental of P100,000 a year. To such
1. Breach must be substantial and fundamental (de minimis non condition, A agreed. On December 20, 1990, the building was
curatlex the law is not concerned with trifles). totally burned. Soon thereafter, As workers cleared the debris
2. It requires judicial action. and started construction of a new building. B then served notice
3. It can be filed only by the aggrieved party. upon A that he would occupy the building being constructed upon
completion, for the unexpired portion of the lease term,
In case of action to rescind, the other party cannot validly request explaining that he had spent partly for the construction of the
for time within which to comply with his duties. The aggrieved building that was burned. A rejected Bs demand. Did A do right
party seeking rescission will prevail. Under Article 1659, NCC, the in rejecting Bs demand? (1993 Bar Question)
court has no discretion to refuse rescission, unlike the situation
covered by Art. 1191, NCC, in the general rules on obligations A: Yes, A was correct in rejecting the demand of B. As a result of
(Bacalla v. Rodriguez, et. al., C.A. 40 O.G. (supp.), Aug. 30, 1941). the total destruction of the building by fortuitous event, the lease
was extinguished (Art. 1655, NCC).
Amount of damages
Difference between the rents actually received and that amount

stipulated in the contract representing the true rental value of the
premises(A. Maluenda and Co. vs. Enriquez, 49 Phil. 916).
Q: Under a written contract dated December 1, 1989, Victor

leased his land to Joel for a period of five (5) years at a monthly
rental of P1,000.00, to be increased to P1,200.00 and P1,500.00
on the third and fifth year, respectively. On January 1, 1991, Joel
subleased the land to Conrad for a period of 2 years at a monthly
rental of P1,500.00. On December 31, 1992, Joel assigned the
lease to his compadre, Ernie, who acted on the belief that Joel
was the rightful owner and possessor of the said lot. Joel has
been faithfully paying the stipulated rentals to Victor. When
Victor learned on May 15, 1992 about the sublease and

CIVIL LAW
LAND TITLES AND DEEDS 3. Department of Justice (DOJ) through the Land Registration
Authority (LRA) and its Register of Deeds
TORRENS SYSTEM 4. Department of Land Reform (DLR)
5. Department of Agriculture (DAR)
Torrens System
CERTIFICATE OF TITLE
It is a system for registration of land under which, upon the
landowners application, the court may, after appropriate Certificate of Title
proceedings, direct the Register of Deeds for the issuance of a
certificate of title. It is the transcript of the decree of registration made by the
Register of Deeds in the registry. It accumulates in one document a
Purposes in adopting the Torrens System of land registration precise and correct statement of the exact status of the fee simple
title which an owner possesses.
To:
1. Avoid possible conflicts of title regarding real property; and Types of certificates of title
2. Facilitate transactions relative thereto by giving the public the
right to rely on the face of the Torrens certificate of title and 1. Original Certificate of Title (OCT) The first title issued in the
to dispense with the need of inquiring further. name of the registered owner by the Register of Deeds
covering a parcel of land which had been registered under
Note: The Government has adopted the Torrens system due to its being the the Torrens system by virtue of a judicial or administrative
most effective measure to guarantee the integrity of land titles and to proceeding. It consists of one original copy filed in the
protect their indefeasibility once the claim of ownership is established and Register of Deeds, and the owners duplicate certificate
recognized (Casimiro Development Corporation v. Nato Mateo, G.R. No. delivered to the owner.
175485, July 27, 2011). 2. Transfer Certificate of Title (TCT) The title issued by the
Register of Deeds in favor of a transferee to whom the
Nature of the proceeding for land registration under the Torrens ownership of a registered land has been transferred by any
System legal mode of conveyance (e.g. sale, donation). It also
consists of an original and an owners duplicate certificate.
The Torrens system is judicial in character and not merely
administrative. Under the Torrens system, the proceeding is in rem, Differentiate title over land, land title, certificate of title, and
which means that it is binding upon the whole world. deed.
Accordingly, all occupants, adjoining owners, adverse claimants, Titleis a juridical act or a deed which is not sufficient by itself to
and other interested person are notified of the proceedings, by transfer ownership but provides only for a juridical justification for
publication of the notice of initial hearing, and have a right to the effectuation of a mode to acquire or transfer ownership.
appear in opposition to such application.
Land title is the evidence of the owners right or extent of interest,
NOTE: In a registration proceeding instituted for the registration of a private
by which he can maintain control, and as a rule, assert right to
land, with or without opposition, the judgment of the court confirming the
title of the applicant or oppositor, as the case may be, and ordering its exclusive possession and enjoyment of property.
registration in his name, constitutes, when final, res judicata against the
whole world. Certificate of title is the transcript of the decree of registration
made by the Register of Deeds in the registry. It accumulates in
A decree of registration that has become final shall be deemed conclusive one document a precise and correct statement of the exact status
not only on the questions actually contested and determined but also upon of the fee simple title which an owner possesses.
all matters that might be litigated or decided in the land registration
proceedings.
A deedis the instrument in writing, by which any real estate or
interest therein is created, alienated, mortgaged or assigned, or by
Bodies that implement land registration under the Torrens
which title to any real estate may be affected in law or equity.
system
Title v. Ownership
1. Courts
Titleis a juridical act or a deed which is not sufficient by itself to
GR:Regional Trial Courts have plenary jurisdiction over land
transfer ownership but provides only for a juridical justification for
registration cases
the effectuation of a mode to acquire or transfer ownership. It
provides the cause for the acquisition of ownership (i.e. sale = title;
XPN: Metropolitan Trial Courts, Municipal Trial Courts in
delivery = mode of acquisition of ownership).
Cities, Municipal Trial Courts and Municipal Circuit Trial
Courts have delegated jurisdiction to hear and determine
Ownership, on the other hand, is an independent right of exclusive
cadastral or land registration cases in the following instances:
enjoyment and control of the thing for the purpose of deriving
therefrom all advantages required by the reasonable needs of the
a) Where the lot sought to be registered is not the subject
owner and the promotion of the general welfare but subject to the
of controversy; or
restrictions imposed by law and the rights of others (Art. 427, NCC)
b) Where the lot is contested but the value thereof does
not exceed P100,000.00, such value to be ascertained
Note: Registration under the Torrens system, not being a mode of acquiring
by the affidavit of the claimant or by the agreement of ownership, does not create or vest title. The Torrens certificate of title is
the respective claimants, if there be more than one, or merely an evidence of ownership or title in the particular property described
from the corresponding tax declaration of the real therein. In that sense, the issuance of the certificate of title to a particular
property. person does not preclude the possibility that persons not named in the
certificate may be co-owners of the real property therein described with the
2. Department of Environment and Natural Resources (DENR) person named therein, or that the registered owner may be holding the

2014 GOLDEN NOTES
property in trust for another person (Casimiro Development Corporation v. certificates of title purport to include the same land, whether
Nato Mateo, G.R. No. 175485, July 27, 2011). wholly or partly, the better approach is to trace the original
certificates from which the certificates of titles were derived.
Q: St. Judes Enterprise, Inc. is the registered owner of a parcel of
land located in Caloocan City. It then subdivided the said land and Having, thus, traced the roots of the parties respective titles
was later on found to have expanded and enlarged with an supported by the records of the Register of Deeds of Malaybalay
increase of 1, 421 square meters. Subsequently, St. Jude sold the City, the courts a quo were correct in upholding the title of the
lots to several individuals. Thus, the Solicitor General filed an Heirs of Adolfo as against TCT No. T-10567 of Bangis,
action seeking the annulment and cancellation of the TCT issued notwithstanding its earlier issuance on August 18, 1976 or long
in the name of St. Jude. Is the government estopped from before the Heirs of Adolfo secured their own titles on May 26,
questioning the approved subdivision plan which expanded the 1998. To paraphrase the Courts ruling in Mathay v. Court of
areas covered by the TCTs in question? Appeals: where two (2) transfer certificates of title have been
issued on different dates, the one who holds the earlier title may
A: The general rule is that the State cannot be put in estoppel by prevail only in the absence of any anomaly or irregularity in the
the mistakes or error of its officials or agents. However, like all process of its registration, which circumstance does not obtain in
general rules, this is also subject to exceptions, viz.: this case (Aniceto Bangis, substituted by his heirs, namely Rodolfo
B. Bangis, et al. vs. Heirs of Serafin and Salud Adolfo, namely: Luz A.
Estoppels against the public are little favored. They should not be Banniester, et al.; G.R. No. 190875, June 13, 2012).
invoked except in rate and unusual circumstances, and may not be
invoked where they would operate to defeat the effective Modes of acquiring title over land
operation of a policy adopted to protect the public. They must be
applied with circumspection and should be applied only in those 1. By possession of land since time immemorial
special cases where the interests of justice clearly require 2. By possession of alienable and disposable public land
it. Nevertheless, the government must not be allowed to deal
dishonorably or capriciously with its citizens, and must not play Note: Under the Public Land Act (CA No. 141), citizens of the
an ignoble part or do a shabby thing; and subject to limitations x Philippines, who by themselves or through their predecessors-in-
x x, the doctrine of equitable estoppel may be invoked against interest have been in open, continuous, exclusive and notorious
public authorities as well as against private individuals. possession and occupation of alienable and disposable agricultural
land of the public domain under a bona fide claim of ownership since
June 12, 1945, or earlier, (except when prevented by war or force
In the case at bar, for nearly twenty years petitioner failed to majeure), shall be conclusively presumed to have performed all the
correct and recover the alleged increase in the land area of St. conditions essential to a government grant and shall be entitled to a
Jude. Its prolonged inaction strongly militates against its cause, as certificate of title.
it is tantamount to laches, which means the failure or neglect, for
an unreasonable and unexplained length of time, to do that which 3. By sale, donation, and other modes of acquiring ownership
by exercising due diligence could or should have been done earlier;
it is negligence or omission to assert a right within a reasonable Modes of acquiring ownership over land
time, warranting a presumption that the party entitled to assert it
either has abandoned it or declined to assert it. 1. Occupation
2. Law
Likewise time-settled is the doctrine that where innocent third 3. Donation
persons, relying on the correctness of the certificate of title, 4. Tradition
acquire rights over the property, courts cannot disregard such 5. Intellectual creation
rights and order the cancellation of the certificate. Such 6. Prescription
cancellation would impair public confidence in the certificate of 7. Succession
title, for everyone dealing with property registered under the
Torrens system would have to inquire in every instance whether Note: Registration of a piece of land under the Torrens System does not
the title has been regularly issued or not. This would be contrary create or vest title, because it is not a mode of acquiring ownership. A
to the very purpose of the law, which is to stabilize land certificate of title is merely an evidence of ownership or title over the
titles. Verily, all persons dealing with registered land may safely particular property described therein. Thus, notwithstanding the
indefeasibility of the Torrens title, the registered owner may still be
rely on the correctness of the certificate of title issued therefor, compelled to reconvey the registered property to its true owners (Heirs of
and the law or the courts do not oblige them to go behind the Tanyag vs. Gabriel, et. al.; G.R. No. 175763, April 11, 2012).
certificate in order to investigate again the true condition of the
property. They are only charged with notice of the liens and Possession v. Occupation
encumbrances on the property that are noted on the certificate
(Republic of the Philippines v. Court of Appeals and Spouses POSSESSION OCCUPATION
Catalino Santos, et al., G.R. No. 116111, January 21, 1999). It applies to properties whether It applies only to property
with or without owner without owner
Q: Spouses Serafin were the original registered owners of a lot in By itself does not confer
Bukdnon. This property was then mortgaged to the DBP and upon It confers ownership
ownership
default in the payment of the loan obligation, it was foreclosed
There can be possession There can be no occupation
and ownership was consolidated in DBPs name. Serafin Adolfo
without ownership without ownership
however, repurchased the same in 1971, after his wife died. In
1975, he allegedly mortgaged the subject property to Aniceto
Acquisition of land titles
Bangis who took possession of the land. Yet, this transaction was
not reduced into writing. In 1998, the heirs of Adolfo expressed
1. Public grant
their intention to redeem the property from Bangis but the latter
2. Emancipation patent or grant
refused claiming that the transaction was one of sale evidenced
3. Reclamation
by TCT No. T-10567 issued in 1967. Decide with reason.
4. Adverse possession / acquisitive prescription
5. Private grant or voluntary transfer
A: As held in the case of Top Management Programs Corporation v.
6. Accretion
Luis Fajardo and the Register of Deeds of Las Pias City: if two

CIVIL LAW
7. Involuntary alienation accordance with law. The issue of the validity of the title of the
8. Descent or devise respondents can only be assailed in an action expressly instituted
for that purpose. Whether or not petitioner has the right to claim
Torrens title ownership over the property is beyond the power of the trial court
to determine in an action for unlawful detainer.
It is a certificate of ownership issued under the Torrens system of
registration by the government, through the Register of Deeds (RD) Given the foregoing, the petitioners attempt to remain in
naming and declaring the owner in fee simple of the real property possession by casting a cloud on the respondents title cannot
described therein, free from all liens & encumbrances, except as prosper.
may be expressly noted there or otherwise reserved by law.
Neither will the sheer lapse of time legitimize the petitioners
Q: Filomena allegedly bought a parcel of unregistered land from refusal to vacate the subject area or bar the respondents from
Hipolito. When she had the property titled and declared for tax gaining possession thereof. As ruled in Spouses Ragudo v. Fabella
purposes, she sold it. The Mapilis question the transfer, saying Estate Tenants Association, Inc., laches does not operate to deprive
that Filomena falsely stated in her Affidavit of Transfer of Real the registered owner of a parcel of land of his right to recover
Property that Hipolito sold it to her in 1949, since by that time, he possession thereof (Heirs of Jose Maligaso, Sr., etc. vs. Sps. Simon
is already dead. Filomena maintains that she is the lawful owner D. Encinas and Esperanza E. Encinas; G.R. No. 182716, June 20,
of such by virtue of the issuance of the Torrens certificate and tax 2012).
declarations in her name. Is Filomena the lawful owner of such
property? Probative value of a Torrens title
A:No. Torrens certificate pertaining to the disputed property does Torrens title may be received in evidence in all courts of the
not create or vest title, but is merely an evidence of an indefeasible Philippines and shall be conclusive as to all matters contained
and incontrovertible title to the property in favor of the person therein, principally as to the identity of the land owner except so
whose name appears therein. Land registration under the Torrens far as provided in the Land Registration Act (LRA)
system was never intended to be a means of acquiring ownership.
A Torrens certificate is an evidence of indefeasible title of property
Neither does the existence of tax declarations create or vest title. It in favor of the person in whose name appears therein such
is not a conclusive evidence of ownership, but a proof that the holder is entitled to the possession of the property until his title is
holder has a claim of title over the property. (Larena v. Mapili, et. nullified.
al., G.R. No. 146341, Aug. 7, 2003)
Q: Hadji Serad Lantud filed an action to quiet title with damages
Effects of the issuance of a Torrens title with the RTC of Lanao del Sur. Accordingly, Datu Kiram Sampaco
with several armed men, forcibly and unlawfully entered his
1. The land is placed under the operation of torrens system; property and destroyed the nursery buildings, cabbage seedlings
2. Land is relieved from all claims except those noted thereon and other improvements. Datu Kiram however denied the
and provided by law; material allegationos of Hadji Lantud asserting that he and his
3. The land becomes incontrovertible and indefeasible; predecessors-in-interest are the ones who had been in open,
4. Title to the land becomes non-prescriptible; and public, continuous, and exclusive possession of the property in
5. The certificate of title is not subject to collateral attack. dispute. He also alleged that he inherited the land in 1952 from
his father and had been in adverse possession and ownership of
Q: Spouses Encinas are the registered owner of a lot in Sorsogon. the subject lost, cultivating and planting trees and plants. He also
The controversy involves a potion of the said lot which the Heirs declared the land for taxation purposes and paid real estate
of Jose Maligaso, Sr. continue to occupy despite having received 2 taxes. Who is the rightful owner of the subject property?
notices to vacate. In 1929, accordingly, an OCT covering such lot
was issued in the name of Maria Ramos, petitioners aunt. In A: Datu Kiram is the rightful owner. The Torrens title is conclusive
1965, Maria sold it to the respondents which led to the issuance evidence with respect to the ownership of the land described
of a TCT in favour of the latter. therein, and other matters which can be litigated and decided in
land registration proceedings. Tax declarations and tax receipts
In 1998 or 30 years from the time they purchased the lot, cannot prevail over a certificate of title which is an incontrovertible
respondents issued 2 demand letters to the petitioners asking proof of ownership. An original certificate of title issued by the
them to vacate the contested area. The petitioners refused to Register of Deeds under an administrative proceeding is as
leave. Hence, respondents filed a complaint for unlawful detainer indefeasible as a certificate of title issued under judicial
against them. Accoding to the petitioners however, their proceedings. However, indefeasibility of title does not attach to
occupation remained undisturbed for more than 30 years and the titles secured by fraud and misrepresentation.Nonetheless, fraud
respondents failure to detal and specifies their supposedly and misrepresentation, as grounds for cancellation of patent and
tolerated possession suggest that they are aware of their claim annulment of title, should never be presumed, but must be proved
over the subject area. Decide with reason. by clear and convincing evidence, mere preponderance of evidence
not being adequate. Fraud is a question of fact which must be
A: In Soriente v. Estate of the Late Arsenio E. Concepcion, a similar proved. Thus, respondents Torrens title is a valid evidence of his
allegation possession of the property in dispute since time ownership of the land in dispute (Datu Kiram Sampaco v. Hadji
immemorial was met with rebuke as such possession, for Serad Mingca Lantud, G.R. No. 163551, July 18, 2011).
whatever length of time, cannot prevail over a Torrens title, the
validity of which is presumed and immune to any collateral attack. Q: Ruben C. Corpuz filed a complaint against Spouses Hilarion and
Justa Agustin on the allegation that he is the registered owner of
The validity of respondents certificate of title cannot be attacked 2 parcels of land in Laoag City. Accordingly, his father bought it
by petitioner in this case for ejectment. Under Section 48 of from Elias Duldulao and then allowed spouses Agustin to occupy
Presidential Decree No. 1529, a certificate of title shall not be the subject properties. Despite demand to vacate, the Agustins
subject to collateral attack. It cannot be altered, modified or refused to leave the premises.
cancelled, except in a direct proceeding for that purpose in

2014 GOLDEN NOTES
Ruben alleged that he has better right to possess the property Resources, under the signature of the President of the Philippines
having acquired the same from his father through a Deed of in accordance with law.
Quitclaim in 1971. Spouses Agustin however contends that they
are the rightful owners as evidenced by a Deed of Absolute Saale The date of issuance of the patent, therefore, corresponds to the
in their favor. Decide who between the parties has the right to date of the issuance of the decree in ordinary registration cases
possession of the disputed properties. because the decree finally awards the land applied for registration
to the party entitled to it, and the patent issued by the Director of
A: Indeed, a title issued under the Torrens system is entitled to all Lands equally and finally grants, awards, and conveys the land
the attributes of property ownership, which necessarily includes applied for to the applicant.
possession. Petitioner is correct that as a Torrens title holder over
the subject properties, he is the rightful owner and is entitled to NOTE: A certificate of title issued under an administrative proceeding
possession thereof. In this case, the Quitclaim executed by the pursuant to a homestead patent is as indefeasible as a certificate of title
elder Corpuz in favor of petitioner was executed ahead of the Deed issued under a judicial registration proceeding, provided the land covered by
said certificate is a disposable public land within the contemplation of the
of Sale of respondents. Thus, the sale of the subject properties by Public Land Law.
petitioners father to respondents cannot be considered as a prior
interest at the time that petitioner came to know of the Mirror doctrine
transaction. (Ruben C. Corpuz v. Spouses Hilarion Agustin and Justa
Agustin, G.R. No. 183822, Jan. 18, 2012) All persons dealing with a property covered by Torrens certificate
of title are not required to go beyond what appears on the face of
Indefeasibility and incontrovertibility of certificates of title the title. Where there is nothing on the certificate of title to
indicate any cloud or vice in the ownership of the property, or any
The certificate, once issued, becomes a conclusive evidence of the encumbrance thereon, the purchaser is not required to explore
title/ownership of the land referred to therein. What appears on further than what the Torrens title upon its face indicates in quest
the face of the title is controlling on questions of ownership of the for any hidden defect or inchoate right that may defeat his right
property in favor of the person whose name appears therein and thereto. However, this doctrine is unavailing when the party
such cannot be defeated by adverse, open, and notorious concerned has actual knowledge of facts and circumstances that
possession; neither can it be defeated by prescription. should imply a reasonably cautious man to make such further
inquiry.
Rules as regarding the indefeasibility and incontrovertibility of
Torrens Title NOTE: Stated differently, an innocent purchaser for value relying on the
Torrens title issued is protected.
1. The certificate of title serves as evidence of an indefeasible
title to the property in favor of the person whose name Application of mirror doctrine
appears therein.
2. After the expiration of the one (1) year period from the GR: Mirror Doctrine applies when a title over a land is registered
issuance of the decree of registration upon which it is based, under the Torrens system
it becomes incontrovertible.
3. Decree of registration and the certificate of title issued XPN: Mirror Doctrine cannot be invoked where:
pursuant thereto may be attacked on the ground of actual 1. The purchaser or mortgagee is a bank/financing institution;
fraud within one (1) year from the date of its entry and such 2. The owner still holds a valid and existing certificate of title
an attack must be direct and not by a collateral covering the same property because the law protects the
proceeding.The validity of the certificate of title in this regard lawful holder of a registered title over the transfer of a
can be threshed out only in an action expressly filed for the vendor bereft of any transmissible right;
purpose. 3. The purchaser is in bad faith;
4. The purchaser purchases land with a certificate of title
NOTE: The defense of indefeasibility of a Torrens title does not extend to a containing a notice of lis pendens;
transferee who takes it with notice of a flaw in the title of his transferor. To
5. There are sufficiently strong indications to impel closer
be effective, the inscription in the registry must have been made in good
faith. A holder in bad faith of a certificate of title is not entitled to the
inquiry into the location, boundaries and condition of the lot;
protection of the law, for the law cannot be used as a shield for fraud 6. The purchaser had full knowledge of flaws and defects in the
(Adoracion Rosales Rufloe, et al., v. Leonarda Burgos et al., G.R. No. 143573, title; or
Jan. 30, 2009). 7. A person buys land not from the registered owner but from
whose rights to the land has been merely annotated on the
Q: There is no specific provision in the Public Land Law (CA No. certificate of title.
141, as amended) or the Land Registration Act (Act 496), now P.D.
1529, fixing the one (1) year period within which the public land Q: Cipriana Delgado was the registered owner of a lot situated in
patent is open to review on the ground of actual fraud as in Cebu. Meanwhile, she and her husband entered into an
Section 38 of the Land Registration Act, now Section 32 of PD agreement with Cecilia Tan (buyer) for the sale of the said
1529, and clothing a public land patent certificate of title with property for a consideration of P10.00/sq.m. It was agreed that
indefeasibility. What is the effect of such absence? the buyer shall make partial payments from time to time and pay
the balance when the Spouses are ready to execute the deed of
A:None. The rule on indefeasibility of certificates of title was sale and transfer title to her. Cecilia was already occupying a
applied by the Court in Public Land Patents because, according to portion of the property where she operates a bihon factory while
the Court, such application is in consonance with the spirit and the rest was occupied by tenants which the Spouses undertook to
intent of homestead laws. clear prior to full payment. After paying the total amount and
being ready to pay the balance, Cecilia demanded the execution
The Court held that the pertinent pronouncements in cases clearly of the deed which was refused. Cecilia, at this point, learned of
reveal that Sec. 38 of the Land Registration Act, now Sec. 32 of PD the sale of the property to the Dys and its subsequent mortgage
1529 was applied by implication by this Court to the patent issued to petitioner Philippine Banking Corporation (Philbank). Thus, a
by the Director of Lands duly approved by the Secretary of Natural complaint for annulment of the Certificate of title and for specific
performance and/or reconveyance with damages was filed

CIVIL LAW
against Spouses Delgado, the Dys and Philbank. However, annulment of OCT No. 375 and TCT No. 4576 on the ground that
Philbank contends that it is a mortgagee in good faith. Is the Nestor obtained the Free Patent through fraud. Eddie filed a
banks contention correct? motion to dismiss on the ground that he was an innocent
purchaser for value and in good faith and as such, he has acquired
A: Primarily, it bears noting that the doctrine of mortgagee in a title to the property which is valid, unassailable and
good faith is based on the rule that all persons dealing with indefeasible. Decide the motion. (2000 Bar Question)
property covered by a Torrens Certificate of Title are not required
to go beyond what appears on the face of the title. This is in A: Nestors motion to dismiss the complaint for annulment of OCT
deference to the public interest in upholding the indefeasibility of a No. 375 and TCT No. 4576 should be denied for the following
certificate of title as evidence of lawful ownership of the land or of reasons:
any encumbrance thereon. In the case of banks and other financial
institutions, however, greater care and due diligence are required 1. Eddie cannot claim protection as an innocent purchaser for
since they are imbued with public interest, failing which renders value nor can he interpose the defense of indefeasibility of
the mortgagees in bad faith. Thus, before approving a loan his title, because his TCT is rooted on a void title. Under Sec.
application, it is a standard operating practice for these institutions 91, CA No. 141, as amended, otherwise known as the Public
to conduct an ocular inspection of the property offered for Land Act, statements of material facts in the applications for
mortgage and to verify the genuineness of the title to determine public land must be under oath. Sec. 91 of the same act
the real owner(s) thereof. The apparent purpose of an ocular provides that such statements shall be considered as
inspection is to protect the true owner of the property as well as essential conditions and parts of the concession, title, or
innocent third parties with a right, interest or claim thereon from a permit issued, any false statement therein, or omission of
usurper who may have acquired a fraudulent certificate of title facts shall ipso facto produce the cancellation of the
thereto (Philippine Banking Corporation v. Arturo Dy, et al., G.R. concession. The patent issued to Nestor in this case is void ab
No. 183774. November 14, 2012). initio not only because it was obtained by fraud but also
because it covers 30 hectares which is far beyond the
Purchaser in good faith and for value maximum of 24 hectares provided by the free patent law.
A purchaser in good faith and for value is one who buys property of 2. The government can seek annulment of the original and
another, without notice that some other person has a right to, or transfer certificates of title and the reversion of the land to
interest in, such property, and pays a full and fair price for the the State. Eddie's defense is untenable. The protection
same, at the time of such purchase, or before he has notice of the afforded by the Torrens System to an innocent purchaser for
claim or interest of some other person in the property. Good faith value can be availed of only if the land has been titled thru
is the opposite of fraud and of bad faith, and its non-existence judicial proceedings where the issue of fraud becomes
must be established by competent proof. Sans such proof, a buyer academic after the lapse of one (1) year from the issuance of
is deemed to be in good faith and his interest in the subject the decree of registration. In public land grants, the action of
property will not be disturbed. A purchaser of a registered property the government to annul a title fraudulently obtained does
can rely on the guarantee afforded by pertinent laws on not prescribe such action and will not be barred by the
registration that he can take and hold it free from any and all prior transfer of the title to an innocent purchaser for value.
liens and claims except those set forth in or preserved against the
certificate of title (Philippine Charity Sweepstakes Office (PCSO) vs. Q: Spouses Angel and Adoracion Ruflor acquired a parcel of land
New Dagupan Metro Gas Corporation, et al.; G.R. No. 173171, July located at Muntinlupa. However, in 1978 Elvira Delos Reyes
11, 2012). forged the signatures of the spouses in Deed of Sale to make it
appear that the disputed property was sold to her by the former.
NOTE: An innocent purchaser for value includes a lessee, mortgagee, or On the basis of the said deed of sale, Delos Reyes succeeded in
other encumbrances for value. obtaining title in her name. hence, the Rufloes filed a complaint
for damages against Delos Reyes alleging that the Deed of Sale
Purchaser in good faith and for value is the same as an innocent purchaser
for value.
was falsified as their signatures appearing thereon was forged.
Good faith consists in an honest intention to abstain from taking any During the pendency of the case, Delos Reyes sold the subject
unconscious advantage of another. property to the Burgos siblings. Correspondingly, they sold the
same to their aunt, Leonarda Burgos. However, the sale in favor
Q: If the land subject of the dispute was not brought under the of Leonarda was not registered. Thus, no title was issued in her
operation of the Torrens system, will the concept of an innocent name. The subject property remained in the name of the Burgos
purchaser for value apply? siblings who also continued paying the real estate taxes thereon.
A: If the land in question was not brought under the operation of a. Are the sales of the subject property to Delos Reyes to the
Torrens system because the original certificate of title is null and Burgos siblings and the subsequent sale to Leonarda valid
void ab initio, the concept of an innocent purchaser for value does and binding?
not apply. b. Who is an innocent purchaser for value?
c. Are the respondents considered as innocent purchasers in
NOTE: Good faith and bad faith is immaterial in case of unregistered land. good faith and for value despite the forged deed of sale of
One who purchases an unregistered land does so at his peril. their transferor Delos Reyes?
Q: In 1979, Nestor applied for and was granted a Free Patent over A:
a parcel of agricultural land with an area of 30 hectares, located a. It is undisputed that the forged deed of sale was null and
in General Santos City. He presented the Free Patent to the void and conveyed no title. It is a well-settled principle that
Register of Deeds, and he was issued a corresponding Original no one can give what one does not have, nemo dat quod non
Certificate of Title (OCT) No. 375. Subsequently, Nestor sold the habet. One can sell only what one owns or is authorized to
land to Eddie. The deed of sale was submitted to the Register of sell, and the buyer can acquire no more right than what the
Deeds and on the basis thereof, OCT No. 375 was cancelled and seller can transfer legally. Due to the forged deed of sale,
Transfer Certificate of Title (TCT) No. 4576 was issued in the name Delos Reyes acquired no right over the subject property
of Eddie. In 1986, the Director of Lands filed a complaint for

2014 GOLDEN NOTES
which she could convey to the Burgos siblings. All the
transactions subsequent to the falsified sale between the Also, the extrajudicial settlement was recorded in the Register of
spouses Rufloe and Delos Reyes are likewise void, including Deeds. Registration in the public registry is notice to the whole
the sale made by the Burgos siblings to their aunt, Leonarda. world. (Guaranteed Homes, Inc. v. Heirs of Valdez, Heirs of Tugade,
Heirs of Gatmin, Hilaria Cobero and Alfredo and Siony Tepol, G.R.
b. An innocent purchaser for value is one who buys the property No. 171531, Jan. 30, 2009)
of another without notice that some other person has a right
to or interest in it, and who pays a full and fair price at the Q: Spouses X and Y mortgaged a piece of registered land to A,
time of the purchase or before receiving any notice of delivering as well the OCT to the latter, but they continued to
another persons claim. The burden of proving the status of a possess and cultivate the land, giving 1/2 of each harvest to A in
purchaser in good faith and for value lies upon one who partial payment of their loan to the latter. A however, without
asserts that status. This onus probandi cannot be discharged the knowledge of X and Y, forged a deed of sale of the aforesaid
by mere invocation of the ordinary presumption of good land in favor of himself, got a TCT in his name, and then sold the
faith. land to B.
c. The evidence shows that the Rufloes caused a notice of B bought the land relying on A's title, and thereafter got a TCT in
adverse claim to be annotated on the title of Delos Reyes as his name. It was only then that the spouses X and Y learned that
early as November 5, 1979. The annotation of an adverse their land had been titled in B's name. May said spouses file an
claim is a measure designed to protect the interest of a action for reconveyance of the land in question against B?
person over a piece of real property, and serves as a notice Reason. (1999 Bar Question)
and warning to third parties dealing with said property that
someone is claiming an interest on the same or may have a A: The action of X and Y against B for reconveyance of the land
better right than the registered owner thereof. Despite the will not prosper because B has acquired a clean title to the
notice of adverse claim, the Burgos siblings still purchased the property being an innocent purchaser for value.
property in question. Equally significant is the fact that Delos
Reyes was not in possession of the subject property when she A forged deed is an absolute nullity and conveys no title. The fact
sold the same to the Burgos siblings. It was Amado Burgos that the forged deed was registered and a certificate of title was
who bought the property for his children, the Burgos siblings. issued in his name, did not operate to vest upon A ownership over
the property of X and Y. The registration of the forged deed will not
In the same vein, Leonarda cannot be categorized as a cure the infirmity. However, once the title to the land is registered
purchaser in good faith. Since it was the Rufloes who in the name of the forger and title to the land thereafter falls into
continued to have actual possession of the property, the hands of an innocent purchaser for value, the latter acquires a
Leonarda should have investigated the nature of their clean title thereto. A buyer of a registered land is not required to
possession (Adoracion Rosales Rufloe, et al., v. Leonarda explore beyond what the record in the registry indicates on its face
Burgos et al., G.R. No. 143573, Jan. 30, 2009) in quest for any hidden defect or inchoate right which may
subsequently defeat his right thereto. This is the "mirror principle"
Q: Duran owned two parcels of land which were made subject of of the Torrens system which makes it possible for a forged deed to
a deed of sale in favor of Fe, her mother. After obtaining title in be the root of a good title.
her name, Fe mortgaged the property to Erlinda. With Fes failure
to redeem, Erlinda acquired the property at public auction. Besides, it appears that spouses X and Y are guilty of contributory
Duran, claiming that the deed of sale is a forgery, sought to negligence when they delivered the OCT to the mortgagee without
recover the property. Erlinda invokes the defense of being a annotating the mortgage thereon. Between them and the innocent
purchaser in good faith. Is Erlinda a purchaser in good faith? purchaser for value, they should bear the loss.
A:Yes. Erlinda, in good faith, relied on the certificate of title in the REGALIAN DOCTRINE
name of Fe. A fraudulent or forged document of sale may become
the root of a valid title if the certificate of title has already been Regalian doctrine (jura regalia)
transferred from the name of the true owner to the name of the
forger or the name indicated by the forger. (Duran v. IAC, G.R. No. A time-honored constitutional precept that all lands of the public
L-64159, Sept. 10, 1985) domain belong to the State, and that the State is the source of any
asserted right to ownership in land, and charged with the
Q: Cipriano, one of Pablos heirs, executed an extrajudicial conservation of such patrimony.
settlement of a sole heir and
confirmation sales, declaring himself as the only heir and Under the Regalian doctrine, land that has not been acquired from
confirmed the sales made in favor of the spouses Rodolfo. the government, either by purchase, grant, or any other mode
Consequently, a certificate of title was issued in the name of the recognized by law, belongs to the State as part of the public
spouses, who then sold the property to Guaranteed Homes. domain. Thus, it is indispensable for a person claiming title to a
Pablos other descendants seek reconveyance of the property public land to show that his title was acquired through such means.
sold to the spouses alleging that the extrajudicial settlement was To prove that the subject property is alienable and disposable land
forged. Who is the rightful owner of the property? of the public domain, respondents presented the Community
Environment and Natural Resourtces Office Certificate (CENRO).
A:Guaranteed Homes is the rightful owner, even assuming that However, a CENRO or PENRO Certification is not enough to certify
the extrajudicial settlement was a forgery. Generally a forged or that a land is alienable and disposable. The applicant for land
fraudulent deed is a nullity and conveys no title. There are, registration must prove that the DENR Secretary had approved the
however, instances when such a fraudulent document may land classification and released the land of the public domain as
become the root of a valid title. One such instance is where the alienable and disposable, and that the land subject of the
certificate of title was already transferred from the name of the application for registration falls within the approved area per
true owner to the forger, and while it remained that way, the land verification through survey by the PENRO or CENRO. In addition,
was subsequently sold to an innocent purchaser. For then, the the applicant for land registration must present a copy of the
vendee had the right to rely upon what appeared in the certificate.

CIVIL LAW
original classification approved by the DENR Secretary and certified part of the forest reserve must be rejected (Saad Agro-Industries,
as a true copy by the legal custodian of the official records. Inc. v. Republic of the Philippines, G.R. No. 152570, Sept. 27, 2006).
Although the survey and certification were done declaring certain Coordination of the 3 departments in their goals in achieving the
portions of the public domain situated in Cebu City as alienable and objectives in the conservation and utilization of natural resources
disposable, an actual copy of such classification, certified as true by
the legal custodian of the official records, was not presented in The legislature has the authority to implement the constitutional
evidence. Unfortunately, respondents were not able to discharge provision classifying the lands of the public domain; the executive,
the burden of overcoming the presumption that the land they administers our public lands pursuant to their duty to ensure that
sought to be registered forms part of the public domain (Republic laws be faithfully executed and in accordance with the policy
of the Philippines vs. Gloria Jaralve (deceased), substituted by Alan prescribed; lastly, the judiciary steps into the picture if the rules
Jess Jaralve-Document, Jr., et al. G.R. No. 175177. October 24, laid down by the legislature are challenged or if it is claimed that
2012). they are not being correctly observed by the executive branch.
Application of the Regalian doctrine CITIZENSHIP REQUIREMENT
All lands not otherwise appearing to be clearly within private Persons qualified to acquire private lands
ownership are presumed to belong to the State. Incontrovertible
evidence must be shown that the land is alienable or disposable in 1. Filipino citizens;
order to overcome such presumption. 2. Filipino corporations and associations as defined in Sec. 2,
Article XII of the Constitution and by exceptionl;
NOTE: It does not negate native title to lands held in private ownership since 3. Aliens, but only by hereditary succession;
time immemorial (Cruz v. Secretary of Environment and Natural Resources, 4. A natural-born citizen of the Philippines who has lost
G.R. No. 135385, Dec. 6, 2000). citizenship under the terms and Section 8.
Native title NOTE: Filipino citizens can both acquire or otherwise hold lands of public
domain.
It refers to a pre- conquest rights to lands and domains which, as
far back as memory reaches, have been held under a claim of Acquisition of private land by an alien
private ownership by Indigenous Cultural Communities of
Indigenous Peoples, have never been public lands and are thus GR: An alien cannot acquire private lands.
indisputably presumed to have been held that way before Spanish
conquest. XPN: Acquisition by aliens is allowed when it is thru hereditary
succession.
Time immemorial possession for native title
NOTE: Under R.A. No. 4726, foreign nationals can own Philippine real estate
It refers to a period of time as far back as memory can go, certain through the purchase of condominium units or townhouses. It expressly
Indigenous Cultural Communities of Indigenous Peoples are known allows foreigners to acquire condominium units and shares in condominium
to have occupied, possessed in the concept of owner, and utilized a corporations up to not more than 40% of the total and outstanding capital
stock of a Filipino owned or controlled corporation. The land is owned by the
defined territory devolved to them, by operation of customary law condominium corporation and the unit owner is simply a member in this
or inherited from their ancestors, in accordance with their customs condominium corporation.
and tradition.
Q: Spouses Pinoy and Pinay, both natural-born Filipino citizens,
Q: Socorro Orcullo was a grantee of a Free Patent for a parcel of purchased property in the Philippines. However, they sought its
land in Cebu. Subsequently, the subject lot was sold to SAAD registration when they were already naturalized as Canadian
Agro-Industries, Inc. by one of Orculoos heirs. Yet, in 199, the citizens. Should the registration be denied on the ground that
Solicitor General filed a complaint for the annulment of the title they cannot do so being foreign nationals?
and reversion of the said lot on the ground that the issuance of
the free patent and title was irregular and erroneous, following A: No.For the purpose of transfer and/or acquisition of a parcel of
the discovery that the lot is allegedly part of the timberland and residential land, it is not significant whether they are no longer
forest reserve. Decide on the case. Filipino citizens at the time they purchased or registered the
parcels of land in question. What is important is that they were
A: Under the Regalian doctrine or jura regalia, all lands of the formerly natural-born citizens of the Philippines, and as transferees
public domain belong to the State, and the State is the source of of a private land, they could apply for registration in accordance
any asserted right to ownership in land and charged with the with the mandate of Section 8, Article XII of the Constitution which
conservation of such patrimony.In instances where a parcel of land states that Notwithstanding the provisions of Section 7 of this
considered to be inalienable land of the public domain is found Article, a natural-born citizen of the Philippines who has lost his
under private ownership, the Government is allowed by law to Philippine citizenship may be a transfereeof private lands, subject
file an action for reversion, which is an action where the ultimate to limitations provided by law(Republic v. CA and Lapina,G.R. No.
relief sought is to revert the land to the government under the 108998, Aug. 24, 1994).
Regalian doctrine.
Q: Joe, an alien, invalidly acquired a parcel of land in the
Nevertheless, in applying this doctrine, we must not lose sight of Philippines. He subsequently transferred it to Jose, a Filipino
the fact that in every claim or right by the Government against one citizen.
of its citizens, the paramount considerations of fairness and due
process must be observed. Respondent in this case failed to show a.) What is the status of the transfer?
that the subject lot is part of timberland or forest reserve it b.) If Joe had not transferred it to Jose but he, himself, was
adverted to. In the face of the uncontroverted status of Free later naturalized as a Filipino citizen, will his acquisition
Patent No. 473408 and OCT No. 0-6667 as valid and regular thereof remain invalid?
issuances, respondents insistence on the classification of the lot as

2014 GOLDEN NOTES
A: 2. Restricted as to extent reasonably necessary to enable it to
a.) If a land is invalidly transferred to an alien who subsequently carry out purpose for which it was created
becomes a Filipino citizen or transfers it to a Filipino, the flaw 3. If engaged in agriculture, it is restricted to 1,024 hectares.
in the original transaction is considered cured and the title of
the transferee is rendered valid.Since the ban on aliens is Patrimonial property of the State (Sec. 3, Art. XII, 1987
intended to preserve the nations land for future generations Constitution)
of Filipinos, that aim is achieved by making lawful the 1. Lease (cannot own land of the public domain) for 25
acquisition of real estate by aliens who became Filipino years renewable for another 25 years
citizens by naturalization or those transfers made by aliens to 2. Limited to 1,000 hectares
Filipino citizens. As the property in dispute is already in the 3. Applies to both Filipinos and foreign corporations.
hands of a qualified person, a Filipino citizen, there would be
no more public policy to be protected. The objective of the Q: May a corporation apply for registration of a parcel of land?
constitutional provision to keep our lands in Filipino hands
has been achieved(Borromeo v. Descallar, G.R. No. 159310, A: Yes, through lease not exceeding 1,000 hectares. Such lease
Feb. 24, 2009) shall not exceed twenty five (25) years and renewable for not more
than twenty five (25) years. (Sec. 3, Art. XII, 1987 Constitution)
b.) No. If a land is invalidly transferred to an alien who
subsequently becomes a Filipino citizen, the flaw in the NOTE: Determinative of this issue is the character of the parcels of land
original transaction is also considered cured and the title of whether they were still public or already private when the registration
the transferee is rendered valid (Borromeo v. Descallar, G.R. proceedings were commenced.If they are already private lands, the
constitutional prohibition against acquisitions by a private corporation would
No. 159310, Feb. 24, 2009). not apply.
Maximum area that may be acquired by a natural born citizen ORIGINAL REGISTRATION
who has lost his Philippine citizenship
Laws that govern land registration
A natural born citizen who has legal capacity to enter into a
contract under Philippine laws may be a transferee of a private 1. Property Registration Decree (PD 1529, as amended)
land up to a maximum area of 5,000 square meters in the case of
urban land or 3 hectares in the case of rural land to be used by him Note: Amended and superseded C.A. No. 496.
for business or other purposes. In the case of married couples, one
of them may avail of the privilege herein granted, but if both shall 2. Cadastral Act (Act 2259, as amended)
avail of the same, the total area acquired shall not exceed the 3. Public Land Act (CA No. 141,as amended)
maximum area fixed (Sec. 10, R.A. 7042; Agcaoili, Reviewer in 4. Emancipation Decree (PD 27, as amended)
Property Registration and Related Proceedings, 2008 ed.). 5. Comprehensive Agrarian Reform Law of 1988 (R.A. 6657)
6. Indigenous Peoples Rights Act (R.A. 8371)
Persons not allowed to file an application for registration
Purposes of land registration
1. A public land sales applicant insofar as the land covered by
his sales application is concerned To:
1. Quiet title to the land and to stop forever any question as t ao
Reason: He acknowledged that he is not the owner of the the legality of said title;
land and that the same is a public land. 2. Relieve land of unknown claims;
3. Guarantee the integrity of land titles and to protect their
2. An antichretic creditor cannot acquire by prescription the indefeasibility once the claim of ownership is established and
land surrendered to him by the debtor. recognized;
4. Give every registered owner complete peace of mind;
Reason: His possession is not in the concept of an owner but 5. Issue a certificate of title to the owner which shall be the best
mere holder placed in possession of the land by its owners. evidence of his ownership of the land; and
6. Avoid conflicts of title in real estate and to facilitate
3. A mortgagee or his successor in interest to the mortgage, transactions.
notwithstanding the lapse of the period for the mortgagor to
pay the loan secured to redeem it Original registration
Reason: Such act would amount to a pactum commissorium, It is a proceeding brought before the MTC where there is no
which is against good morals and public policy. controversy or opposition, or contested lots where the value of
which does not exceed P100,000.00 (Sec. 4, R.A. 7691) or in the
4. A person or entity whose claim of ownership to land had RTC (as a land registration court) when the value exceeds P100,000
been previously denied in a reivindicatory action. to determine title or ownership of land on the basis of an
application for registration or answer/opposition by a claimant in a
Acquisition of lands by a corporation cadastral registration.
Corporation sole can acquire by purchase a parcel of private Kinds of original registration
agricultural land without violating the constitutional prohibition
since it has no nationality.
JUDICIAL/ VOLUNTARY/ ADMINISTRATIVE/
ORDINARY INVOLUNTARY/ CADASTRAL
Corporation:
Private Lands
1. At least 60% Filipino (Sec. 7, Art. XII, 1987 Constitution)

CIVIL LAW
Filing with the proper court an Compulsory registration Adverse, continuous, open, public possession in the concept of an
application by the private initiated by the government, owner is a conclusion of law and the burden to prove it by clear,
positive and convincing evidence is on the applicant. A claim of
individual himself to adjudicate ownership of
ownership will not proper on the basis of tax declarations if
land and involuntary on the unaccompanied by proof of actual possession.
under PD 1529 (Property part of the claimants, but they
Registration Decree) are compelled to substantiate The counting of the thirty (30)-year prescriptive period for purposes of
their claim or interest through acquiring ownership of a public land under section 14(2) can only start
under Sec. 48 of CA 141 an answer. from the issuance of DARCO conversion order. Before the property
(Public Land Act) was declared patrimonial by virtue of such conversion order, it cannot
be acquired by prescription. (Jean Tan, et al. v. Republic of the
Philippines; G.R. No. 193443, April 16, 2012.)
Registrable lands
3. Those who have acquired ownership of private lands or
1. Alienable and disposable public agricultural lands; and abandoned river beds by right of accession or accretion under
2. Private lands. the existing laws.
4. Those who have acquired ownership of land by any other
General incidents of a registered land manner provided for by law.
Registered land or the owners are not relieved from the following: Where the land is owned in common, all the co-owners shall file
1. Any rights incident to the relation of husband and wife, the application jointly. (Sec. 14, PD 1529)
landlord and tenant;
2. Liability to attachment or levy on execution; Persons qualified for registration in case the land is subject to:
3. Liability to any lien of any description established by law on
the land and buildings thereon, or in the interest of the 1. Pacto de retro sale
owner in such land or building;
4. Any right or liability that may arise due to change of the law GR: Vendor a retro may apply for registration.
of descent;
5. The rights of partition between co-owners; XPN: Vendee a retro should the period for redemption expire
6. The right of government to take the land by eminent domain; during pendency of registration proceedings and ownership
7. Liability to be recovered by an assignee in insolvency or to property is consolidated in vendee a retro.
trustee or bankruptcy under the laws relative to preferences;
and 2. Trust
8. Any other rights or liabilities created by law and applicable to
unregistered land. GR: Trustee may apply for registration.
WHO MAY APPLY XPN: Unless prohibited by the instrument creating the trust.
UNDER P.D. 1529 NOTE: Trusteeship or trust is a fiduciary relationship with respect to
property which involves the existence of equitable duties imposed
Persons qualified for registration in ordinary registration upon the holder of the title to the property to deal with it for the
proceedings: benefit of another
1. Those who by themselves or through their predecessors-in- 3. Reserva troncal

interest have been in open, continuous, exclusive, and
notorious possession and occupation of alienable and Reservista has the right to apply for registration but the
disposable lands of public domain under a bona fide claim of reservable character of the property will be annotated in the
ownership since June 12, 1945 or earlier (OCENCO); title.
2. Those who have acquired ownership of private lands by
prescription under provisions of existing laws; NOTE: In reserva troncal the ascendant who inherits from his
descendant any property which the latter may have acquired by
gratuitous title from another ascendant, or a brother or sister, is
GR: Properties of public dominion cannot be acquired by
obliged to reserve such property as he may have acquired by
prescription. operation of law for the benefit of relatives who are within the third
degree and who belong to the line from which said property came.
XPN: Where the law itself so provides. Thus, patrimonial
property of the state may be the subject of acquisition Eligibility of private corporations to hold alienable lands of the
through prescription. public domain
Under ordinary acquisitive prescription, a person acquires Private corporations may not hold alienable lands of the public
ownership of a patrimonial property through possession for domain. The word persons refers to natural persons who are
at least 10 years, in good faith and with just title. Under citizens of the Philippines. Juridical or artificial persons are
extraordinary acquisitive prescription, a persons excluded. Sec. 3, Art. XII of the 1987 Constitution prohibits private
uninterrupted adverse possession of patrimonial property for corporations or associations from holding alienable lands of the
at least 30 years, regardless of good faith or just title, ripens public domain except by lease.
into ownership.
Private corporations or associations may not hold such alienbale
NOTE: For one to invoke the provisions of Section 14(2) and set up lands of public domain except by lease, for a period not exceeding
acquisitive prescription against the state, it is primordial that the
twenty-five years, renewable for not more than twenty-five years,
status of the property as patrimonial be first established. Furthermore,
the period of possession preceding the classification of the property as
and not to exceed one thousand hectares in area. But where at the
patrimonial cannot be considered in determining the completion of time the corporation acquired land, its predecessor-in-interest had
the prescriptive period. been in possession and occupation thereof in the manner and for
the period prescribed by law as to entitle him to registration in his

2014 GOLDEN NOTES
name, then the proscription against corporation acquiring when it is so conspicuous that it is generally known and talked of
alienable lands of the public domain except through lease does not by public or the people in the neighborhood.
apply for land was no longer public land but private property.
Q: Is adverse possession similar with the possession required in
Q: Noynoy, Erap, Manny and Gibo are co-owners of a parcel of acquisitive prescription?
land. May Manny seek registration in his name of the land in its
entirety? A:Yes. Possession, to constitute the foundation of a prescriptive
right, must be possession under a claim of title or it must be
A: Since a co-owner cannot be considered a true owner of a adverse (Cuaycong v. Benedicto, G.R. No. 9989, Mar. 13, 1918)
specific portion until division or partition is effected, he cannot file
an application for registration of the whole area without joining Q: An Emancipation Patent OCT was issued in Remys favor.
the co-owners as applicants. However, Madarieta filed a complaint for annulment and
cancellation of the OCT against Remy before the DARAB, alleging
Requisites for the filing of an application under Sec. 14(1) of PD. that the Department of Agrarian Reform mistakenly included her
No. 1529? husbands lot as part of Luspos property where Remys house
was constructed. From the facts of the case, what is the nature of
1. That the property is an agricultural land of public domain; Remys possession of the subject land?
2. That it has been classified by a positive act of government as
alienable and disposable (A and D); A: Remy possessed the subject land in the concept of an owner.
3. That the applicant, by himself or through his predecessors-in- No objection was interposed against his possession of the subject
interest has been in open, continuous, exclusive and land and Remy did not employ fraud in the issuance of the
notorious possession and occupation of the land in the emancipation patent and title. In fact, Madarieta faulted the DAR,
concept of owner (OCENCO); and not him (Rementizo v. Heirs of Vda. De Madarieta, G.R. No.
4. That such possession and occupation is under a bona fide 170318, Jan. 15, 2009).
claim of ownership since June 12, 1945 or earlier.
Q: Against whom can acquisition of ownership by prescription not
NOTE: There must be an express declaration by the State that the public be used?
dominion property is no longer intended for public service or the
development of the national wealth or that the property has been converted A: Acquisition of ownership by prescription is unavailing against
into patrimonial. Without such express declaration, the property, even if
classified as alienable or disposable, remains property of the public
the registered owner and his hereditary successors because under
dominion, pursuant to Article 420(2), and thus incapable of acquisition by Section 47 of the Property Registration Decree, registered lands are
prescription. It is only when such alienable and disposable lands are not subject to prescription. No title to registered land in derogation
expressly declared by the State to be no longer intended for public service or of the title of the registered owner shall be acquired by
for the development of the national wealth that the period of acquisitive prescription or adverse possession (Agcaoili, Reviewer in property
prescription can begin to run. Such declaration shall be in the form of a law registration and related proceedings, p. 341, 2008 ed)
duly enacted by Congress or a Presidential Proclamation in cases where
the President is duly authorized by law. ACQUISITION OF TITLE BY LAW
Q: In 1998, Iglesia ni Cristo filed its application for Registration of Acquisition of title by law
Title before the MCTC in Paoay-Currimao. Yet, the Republic filed
an opposition to INCs application. The cadastral court held that 1. Free Patents based on Public Land Act;
the essential elements for judicial confirmation of an imperfect 2. Title to Accretion in river banks;
title over the subject lot have been complied with. The CA also 3. Reclamation; or
held that the INC has been in continuous, open, and peaceful 4. Title by Escheat (Rule 91, Rules of Court)
possession and occupation of the lot for more than 40 years. May
a judicial confirmation of imperfect title prosper when the subject PATENTS UNDER THE PUBLIC LAND ACT
property has been declared as alienable only after June 12, 1945?
Q: What are the different kinds of patents under the Public Land
A: In Naguit, the Court held a less stringent requirement in the Act? To whom are they granted and what are the requirements
application of Sec. 14(1) of PD 1529 in that the reckoning for the for acquisition of such?
period of possession is the actual possession of the property and it
is sufficient for the property sought to be registered to be already A:
alienable and disposable at the time of the application for KIND OF TO WHOM
registration of title is filed. REQUIREMENTS
PATENT GRANTED
Homestead To any Filipino Does not own more than 24
The possession of INC has been established not only from 1952 and Patent citizen over the hectares of land in the
1959 when it purchased the respective halves of the subject lot, age of 18 years Philippines or has not had
but is also tacked on to the possession of its predecessors-in- or head of a the benefit of any
interest. These possessions and occupationfrom Sabuco, family gratuitous allotment of
including those of his parents, to INC; and from Sabuco to more than 24 hectares
Badanguio to INChad been in the concept of owners: open, Must have resided
continuous, exclusive, and notorious possession and occupation continuously for at least 1
under a bona fide claim of acquisition of property. These had not year in the municipality
been disturbed as attested to by respondents witnesses (Republic where the land is situated
of the Philippines v. Iglesia ni Cristo, G.R. No. 180067, June 30, Must have cultivated at
2009). least 1/5 of the land applied
for
Adverse possession of land Free Patent To any natural Does not own more than 12
born citizen of hectares of land
Possession of land is adverse when it is open and notorious. It is the Philippines Has continuously occupied
open when it is patent, visible, and apparent and it is notorious

CIVIL LAW
and cultivated, either by NOTE: When a free patent title is issued to an applicant and the sea water
himself or his predecessors- moves toward the estate of the title holder, the invaded property becomes
part of the foreshore land. The land under the Torrens system reverts to the
in-interest tract/s of
public domain and the title is annulled.
agricultural public land
subject to disposition After a free patent application is granted and the corresponding certificate
Sales Citizens of the To have at least 1/5 of the of title is issued, the land ceased to be part of the public domain and
Patent Philippines of land broken and cultivated becomes private property over which the Director of Lands had neither
lawful age or within 5 years from the date control nor jurisdiction.
such citizens not of the award
of lawful age Shall have established Restrictions on alienation or encumbrance of lands titled
who is head of a actual occupancy, pursuant to patents
family may cultivation and
purchase public improvement of at least 1/5 1. Lands acquired under free patent or homestead patent is
agricultural land of the land until the date of prohibited from being alienated, except if in favor of the
of not more than such final payment government, 5 years from and after the issuance of the
12 hectares patent or grant.
Special To non-Christian Sec. of the DILG shall certify 2. No alienation, transfer or conveyance of any homestead after
Patent Filipinos under that the majority of the five (5) years and before twenty-five (25) years after the
Sec. 84 of the non-Christian inhabitants of issuance of title shall be valid without the approval of the
Public Land Act any given reservation have Secretary of DENR. (C.A. No. 141 as amended by C.A. No. 458)
advanced sufficiently in 3. It cannot be alienated within five (5) years after approval of
civilization such patent application.
4. It cannot be liable for the satisfaction of debt within five (5)
Acquisition of patents years after the approval of such patent application.
5. It is subject to repurchase of the heirs within five (5) years
By: after alienation when such is already allowed.
1. Succession(testate or intestate) 6. No private corporation, partnership or association may lease
a. By descent Title is acquired when an heir succeeds the such land unless it is solely for commercial, industrial,
deceased owner whether by testate or intestate. educational, religious or charitable purposes, or right of way
b. By devise Person acquires land from one who may or (subject to the consent of the grantee and the approval of the
may not be a relative, if he is named in the deceaseds Secretary of the DENR). [The Public Land Act (C.A. No. 141)].
will as devisee for such property.
2. Prescription Possession of land for required number of Exceptions to the restrictions on alienation or encumbrance of
years and assertion of ownership through an uninterrupted lands titled pursuant to patents
actual possession of property within the period of time
prescribed by law (Arts. 712, 1134, 1137, NCC). 1. Actions for partition because it is not a conveyance,
2. Alienations or encumbrances made in favor of the
LAND PATENTS government.
Q: How are public lands suitable for agricultural purposes Proper action in cases of improper or illegal issuance of patents
disposed of?
Reversion suits, the objective of which is the cancellation of the
A: Public Lands suitable for agricultural purposes are disposed as certificate of title and the consequent reversions of the land
follows: covered thereby to the State.
1. Homestead settlement;
2. Sale; Q: Gerardo acquired title over 2 parcels of land located in
3. Lease; Cagayan covered by OCT No. P-311 through the grant of
4. Confirmation of imperfect title or incomplete titles either by Homestead Patent No. V-6269 in his favour on January 12, 1951.
judicial or administrative legalization; or Upon Gherardos death however, respondents discovered that
5. Free title. OCT No. P-311 had been cancelled as the same has been sold to
Juan Binayug. Thus, respondents filed a complaint for
When a homesteader has complied with all the terms and declaration of nullity of title, annulment of instrument, and
conditions which entitle him to a patent for a particular tract of declaration of ownership with damages against the petitioners.
public land, he acquires a vested interest therein, enough to be According to them, the purported sale between Gerardo and Juan
regarded as the equitable owner thereof. Where the right to a was prohibited under CA No. 141 and that the sale violated the 5-
patent to land has once become vested in a purchaser of public year prohibitory period under Sec. 118 of the Public Land Act. Is
lands, it is equivalent to a patent actually issued. The execution and the contention of the respondents correct?
delivery of patent, after the right to a particular parcel of land has
become complete, are the mere ministerial acts of the officer A: Yes.To reiterate, Section 118 of the Public Land Act, as
charged with that duty. Even without a patent, a perfected amended, reads that *e+xcept in favor of the Government or any
homestead is a property right in the fullest sense, unaffected by of its branches, units, or institutions, or legally constituted banking
the fact that the paramount title to the land is still in the corporations, lands acquired under free patent or homestead
government. Such land may be conveyed or inherited. provisions shall not be subject to encumbrance or alienation from
the date of the approval of the application and for a term of five
As evidence of ownership of land, a homestead patent prevails years from and after the date of issuance of the patent or grant x x
over a land tax declaration. (Jose Medina v. Court of Appeals & The x. The provisions of law are clear and explicit. A contract which
Heirs of the Late Abundio Castaares, G.R. No. 137582, August 29, purports to alienate, transfer, convey, or encumber any homestead
2012.) within the prohibitory period of five years from the date of the
issuance of the patent is void from its execution. In a number of
cases, this Court has held that such provision is

2014 GOLDEN NOTES
mandatory (Binayug v. Ugaddan, et al. GR No. 181623, Dec. 5, Nonetheless, a free patent that was fraudulently acquired, and the
2012). certificate of title issued pursuant to the same, may only be
assailed by the government in an action for reversion pursuant to
Q: Respondents are the grantees of agricultural public lands in Section 101 of the Public Land Act. Since it was the Director of
General Santos City through Homestead and Fee patents Lands who processed and approved the applications of the
sometime in 1986 and 1991. Negotiations were made by appellants and who ordered the issuance of the corresponding free
Petitioner sometime in 1995 and eventually a Deed of Conditional patents in their favor in his capacity as administrator of the
Sale of the properties in question was executed in favour of disposable lands of the public domain, the action for annulment
Petitioner Filinvest Land Inc. A few days after the execution of the should have been initiated by him, or at least with his prior
aforestated deeds, respondents came to know that the sale was authority and consent. (Nancy T. Lorzano vs. Juan Tabayag, Jr., G.R.
null and void because it was done within the period they were No. 189647. February 6, 2012.)
not allowed to do so and that the sale did not have the approval
of the secretary of DENR. Thus, they filed a case for declaration of ACCRETION
nullity of the deeds of conditional and absolute sale of the
questioned properties. Will the action prosper? Accretion v. Alluvium
A: The five-year prohibitory period following the issuance of the Alluvium is the soil imperceptibly and gradually deposited on lands
homestead patent is provided under Section 118 of the Public Land adjoining the banks of rivers caused by the current of the water.
Act. It bears stressing that the law was enacted to give the
homesteader or patentee every chance to preserve for himself and Accretion is the process whereby the soil is so deposited.
his family the land that the State had gratuitously given to him as a
reward for his labour in cleaning and cultivating it. Requisites of accretion
In the present case, the negotiations for the purchase of the 1. The deposit of soil or sediment be gradual and imperceptible;
properties covered by the patents issued in 1991 were made in 2. It is the result of the current of the waters (river/sea); and
1995 and, eventually, an undated Deed of Conditional Sale was 3. The land where accretion takes place is adjacent to the banks
executed. Petitioner raises the issue whether by a deed of of rivers or the sea coast.
conditional sale there was alienation or encumbrance within the
contemplation of the law. The prohibition does not distinguish NOTE: In Republic v. CA and Tancinco, the court found that the alleged
between consummated and executory sale. The conditional sale alluvial deposits were artificial and manmade and not the exclusive result fo
entered into by the parties is still a conveyance of the homestead the current of the Merycauayan and Bocaue rivers. The deposits came into
being not because of the sole effect of the current of the rivers but as a
patent; that the formal deed of sale was executed after the result of the transfer of the dike towards the river and encroaching upon it
expiration of the staid period did not and could not legalize a (G.R. No. L-61647, Oct. 12, 1984).
contract that was void from its inception. Nevertheless, petitioner
does not err in seeking the return of the down payment as a Rule on ownership of abandoned river beds by right of accession
consequence of the sale having been declared void. The rule is
settled that the declaration of nullity of a contract which is void ab Under Article 461 of the Civil Code, river beds which are
initio operates to restore things to the state and condition in which abandoned through the natural change in the course of the waters
they were found before the execution thereof. (Filinvest Land, Inc., ipso facto belong to the owners whose lands are occupied by the
Efren C. Gutierrer vs. Abdul Backy, Abehera, Baiya, Edris, et al. G.R. new course in proportion to the area lost. However, the owners of
No. 174715. October 11, 2012) the lands adjoining the old bed shall have the right to acquire the
same by paying the value thereof, which value shall not exceed the
Q: To whom may free patent be issued? value of the area occupied by the new bed.
A: A Free Patent may be issued where the applicant is: Rule on ownership by right of accretion along river banks
1. A natural-born citizen of the Philippines; Article 457 of the Civil Code provides that to the owners of lands
2. Is not the owner of more than twelve (12) hectares of land; adjoining the banks of rivers belong the accretion which they
3. Has continuously occupied and cultivated, either by himself gradually receive from the effects of the current of the waters.
or through his predecessors-in-interest, a tract or tracts of
agricultural public land subject to disposition, for at least 30 Rule on accretion along the banks of creeks, streams and lakes
years prior to the effectivity of Republic Act No. 6940; and
4. Has paid the real taxes thereon while the same has not been Alluvial deposits along the banks of creeks, streams and lakes do
occupied by any person. not form part of the public domain as the alluvial property
automatically belongs to the owner of the estate to which it may
Once a patent is registered and the corresponding certificate of have been added. That the owner of the adjoining property must
title is issued, the land covered thereby ceases to be part of public register the same under the Torrens system otherwise, the alluvial
domain and becomes private property, and the Torrens Title issued property may be subject to acquisition through prescription by
pursuant to the patent becomes indefeasible upon the expiration third persons.
of one year from the date of such issuance.
Rule on accretion on the sea bank
However, a title emanating from a free patent which was secured
through fraud does not become indefeasible, precisely because the Still of public domain, and is not available for private ownership
patent from whence the title sprung is itself void and of no effect until formally declared by the government to be no longer needed
whatsoever. Well-settled is the doctrine that the registration of a for public use (Republic v. Amanda Vda. De Castillo, G.R. No. L-
patent under the Torrens System does not by itself vest title; it 69002 June 30, 1988).
merely confirms the registrants already existing one. Verily,
registration under the Torrens System is not a mode of acquiring Q: If the area of a non-registrable land is increased due to
ownership. accretion, may the alluvial deposits be subjected to private
ownership?

CIVIL LAW
b.) No, the registration of Jessicas and Jennys adjoining
A: No. Non-registrable lands (property of public dominion) are property does not automatically extend to the accretions.
outside the commerce of man, they are not subject to private They have to bring their lands under the operation of the
appropriation. Torrens system of land registration following the procedure
prescribed in P.D. No. 1529.
Q: If the land, the area of which is increased by accretion, has
already been registered, is there still a need to register the c.) Jessica and Jenny cannot validly lay claim to the price of dry
alluvion? land that resulted from the dumping of rocks and earth
materials excavated from their properties because it is a
A: Yes. Accretion does not automatically become registered. It reclamation without authority. The land is part of the
needs a new registration. lakeshore, if not the lakebed, which is inalienable land of the
public domain.
Q: If the land area has been diminished due to accretion, may the
riparian owner claim protection against such diminution based on Q: Alleging continuous and adverse possession of more than 10
the fact of registration of his land? years, respondent Arcadio Santos III applied for registration of Lot
4998-B located in Paraaque City. It was bounded in the
A: Registration does not protect the riparian owner against Northeast by Lot 4079 in the southeast by the Paraaque River.
diminution of land through accretion. Accretions become the Arcadio alleged that the property has been formed through
property of the owners of the banks and are natural incidents to accretion and had been in their joint, open, notorious, public,
land bordering on running streams and the provisions of the Civil continuous and adverse possession for more than 30 years. Can
Code thereon are not affected by the Land Registration Act (now he claim the property by virtue of acquisitive prescription
Property Registration Decree) (Republic v. CA and Tancinco, G.R. pursuant to Sec. 14(1) of the Property Registration Decree?
No. L-61647, Oct. 12, 1984).
A: The principle that the riparian owner whose land receives the
Q: The properties of Jessica and Jenny, who are neighbors, lie gradual deposits of soil does not need to make an express act of
along the banks of the Marikina River. At certain times of the possession, and that no acts of possession are necessary in that
year, the river would swell and as the water recedes, soils, rocks instance because it is the law itself that pronounces the alluvium to
and other materials are deposited on Jessicas and Jennys belong to the riparian owner from the time that the deposit
properties. This pattern of the river swelling, receding and created by the current of the water becomes manifest has no
depositing soil and other materials being deposited on the applicability herein. This is simply because the lot was not formed
neighbors properties have gone on for many years. Knowing this through accretion. Hence the ownership of the land adjacent to the
pattern, Jessica constructed a concrete barrier about 2 meters river bank by respondents predecessor-in-interest did not
from her property line and extending towards the river, so that translate to possession of the subject lot that would ripen to
when the water recedes, soil and other materials are trapped acquisitive prescription.
within this barrier. After several years, the area between Jessicas
property line to the concrete barrier was completely filled with Yet, even conceding, for the sake of argument that respondents
soil, effectively increasing Jessicas property by 2 meters. Jennys possessed the subject lot for more than thirty years in the
property, where no barrier was constructed, also increased by character they claimed, they did not thereby acquire the land by
one meter along the side of the river. prescription or by other means without any competent proof that
the land was already declared as alienable and disposable by the
a.) Can Jessica and Jenny legally claim ownership over the government. Absent that declaration, the land still belonged to the
additional 2 meters and one meter, respectively, of land State as part of its public dominion. (Republic of the Philippines v.
deposited along their properties? Arcadio Ivan Santos III and Arcadio Santos, Jr. G.R. No. 160453.
b.) If Jessicas and Jennys properties are registered, will the November 12, 2012)
benefit of such registration extend to the increased area of
their properties? RECLAMATION
c.) Assume the two properties are on a cliff adjoining the shore
of Laguna Lake. Jessica and Jenny had a hotel built on the Reclamation
properties. They had the earth and rocks excavated from
the properties dumped on the adjoining shore, giving rise to Reclamation is the act of filling up of parts of the sea for conversion
a new patch of dry land. Can they validly lay claim to the to land.
patch of land? (2008 Bar Question)
NOTE: It must be initially owned by the government. It may be subsequently
A: transferred to private owners.
a.) Jenny can legally claim ownership of the lands by right of Q: Who may undertake reclamation projects?
accession (accretion) under Article 457 of the Civil Code. The
lands came into being over the years through the gradual A: Only the National Government may engage in reclamation
deposition of soil and silt by the natural action of the waters projects.
of the river.
Q: To whom does a reclaimed area belong?
Jessica cannot claim the two meter-wide strip of land added
to her land. Jessica constructed the cement barrier two A: Under the Regalian doctrine, the State owns all waters and lands
meters in front of her property towards the river not to of the public domain, including those physically reclaimed.
protect her land from the destructive forces of the water but
to trap the alluvium. In order that the riparian owner may be UNDER C.A. 141
entitled to the alluvium the deposition must occur naturally
without the intervention of the riparian owner (Republic v. CA Persons qualified for registration under Public Land Act or CA No.
132 SCRA 514 [1984]). 141

2014 GOLDEN NOTES
Those who by themselves or through their predecessors-in-interest
have been in open, continuous, exclusive and notorious possession Under CA No. 141, the reckoning point is June 12, 1945. If the
and occupation of alienable and disposable agricultural lands of the predecessors-in-interest of Manna Properties have been in
public domain, under a bona fide claim of acquisition or ownership, possession of the land in question since this date, or earlier, Manna
since June 12, 1945, except when prevented by war or force Properties may rightfully apply for confirmation of title to the
majeure. land. Manna Properties, a private corporation, may apply for
judicial confirmation of the land without need of a separate
NOTE: The following conditions must concur in order that the benefits of the confirmation proceeding for its predecessors-in-interest first
Public Land Act on the confirmation of imperfect or incomplete title may be (Republic v. Manna Properties Inc., G.R. No. 146527, Jan. 31, 2005).
availed of:
1. The applicant must be a Filipino citizen;

Persons qualified for judicial confirmation
2. He must have, by himself or through his predecessors-in-interest,
possessed and occupied an alienable and disposable agricultural 1. Filipino citizens who by themselves or through their
portion of the public domain; predecessors-in-interest have been in open, continuous,
3. Such possession and occupation must have been open, continuous, exclusive and notorious possession and occupation of
exclusive, notorious and in the concept of owner, since June, 12, 1945; alienable and disposable lands of public domain under a bona
and fide claim of acquisition since June 12, 1945 or prior thereto
4. The application must be filed with the proper court.
or since time immemorial;
Public land 2. Filipino citizens who by themselves or their predecessors-in-
interest have been, prior to the effectivity of PD 1073 on
The term is uniformly used to describe so much of the national January 25, 1977, in open, continuous, exclusive and
domain under the legislative power of the Congress as has not notorious possession and occupation of agricultural lands of
been subjected to private right or devoted to public use. the public domain under a bona fide claim of acquisition or
ownership for at least 30 years, or at least since January 24,
Means by which public lands may be disposed of 1947;
3. Private domestic corporations or associations which had
1. For homestead settlement; acquired lands from Filipino citizens who had possessed the
2. By sale; same in the manner and for the length of time indicated in
3. By lease; paragraphs 1 & 2 above; or
4. By confirmation of imperfect or incomplete titles: 4. Natural-born citizens of the Philippines who have lost their
a. By judicial legalization; or citizenship and who has the legal capacity to enter into a
b. By administrative legalization (free patent) contract under Philippine laws may be a transferee of private
land up to a maximum are of 5,000 sq.m., in case of urban
Q: When is a person deemed to possess an imperfect title over land, or 3 hectares in case of rural land to be used by him for
property? business or other purposes.
NOTE: Extended period for filing of application Sec. 1, R.A. 9176 provides in
A: When the applicant for confirmation of imperfect title has part that, The time to be fixed in the entire archipelago for the filing of
shown possession and occupation that is: applications shall not extend beyond December 31, 2020. Provided that the
1. Open, area applied for does not exceed 12 hectares.
2. Continuous,
3. Exclusive and Q: In 1913, Gov. Gen. Forbes reserved for provincial park
4. Notorious purposes a parcel of land which, sometime thereafter, the court
5. In the concept of an owner ordered registered in Palomos name. In 1954, then Pres.
Magsaysay converted the land into the Tiwi Hot Spring National
Effect of possession of an imperfect title Park, under the management of the Bureau of Forest
Development. The area was never released as alienable or
When the conditions set by law are complied with, the possessor disposable. The Palomos, however, continued to possess the said
of the land, by operation of law, acquires a right to government property, had introduced improvements therein as well as paid
grant, without the necessity of a certificate of the title being real estate taxes. The Republic now seeks the cancellation of the
issued. titles over the subject land. Should the cancellation be granted?
Q: RP opposed the application for registration filed by Manna A: Yes. The adverse possession which may be the basis of a grant
Properties under Sec. 48(b), CA No. 141 arguing that, as a private of title in confirmation of imperfect title cases applies only to
corporation, it is disqualified from holding alienable lands of the alienable lands of the public domain. There is no question that the
public domain, except by lease, citing Sec. 3, Art. XII, 1987 lands in the case at bar were not alienable lands of the public
Constitution. On the other hand, Manna Properties claims that domain. The records show that such were never declared as
the land in question has been in the open and exclusive alienable and disposable and subject to private alienation prior to
possession of its predecessors-in-interest since the 1940s, thus, 1913 up to the present (Sps. Palomo, et. al., v. CA, et. al., G.R. No.
the land was already private land when Manna Properties 95608, Jan. 21, 1997).
acquired it from its predecessors-in-interest. Decide.
Q: Bracewell asserts that he has a right of title to a parcel of land
A:Lands that fall under Sec. 48, CA No. 141 are effectively having been, by himself and through his predecessors-in-interest,
segregated from the public domain by virtue of acquisitive in xxx occupation xxx under a bona fide claim of ownership since
prescription. Open, exclusive and undisputed possession of 1908. Thus, he filed an application for registration in 1963 but the
alienable public land for the period prescribed by CA No. 141 ipso he land has been classified as alienable or disposable only on May
jure converts such land into private land. Judicial confirmation in 27, 1972. May his application for confirmation of imperfect title
such cases is only a formality that merely confirms the earlier be granted?
conversion of the land into private land, the conversion having
occurred in law from the moment the required period of A: No. The land was only classified as alienable or disposable on
possession became complete. May 27, 1972. Prior to said date, when the subject parcels of land

CIVIL LAW
were classified as inalienable or not disposable, the same could not 3. Setting of date for initial hearing by the court
be the subject of confirmation of imperfect title. There can be no 4. Transmittal of application and date of initial hearing with all
imperfect title to be confirmed over lands not yet classified as documents or other pieces of evidence attached thereto by
disposable or alienable. In the absence of such classification, the clerk of court to National Land Titles and Deeds Registration
land remains unclassified public land until released and opened to Administration (NALTDRA)
disposition. Indeed, it has been held that the rules on the 5. Publication of notice of filing of application and date and
confirmation of imperfect title do not apply unless and until the place of hearing
land classified as forest land is released in an official proclamation 6. Service of notice by sheriff upon contiguous owners,
to that effect so that it may form part of the disposable agricultural occupants and those known to have interest in the property
lands of the public domain (Bracewell v. CA, G.R. No. 107427, Jan. 7. Filing of answer or opposition to the application by any
25, 2000) person whether named in the notice or not
8. Hearing of case by court
Q: In an application for judicial confirmation of imperfect title 9. Promulgation of judgment by court
filed by Naguit, the OSG argues that the property xxx must first 10. Issuance of a decree by court declaring the decision final, and
be alienable. Since the subject land was declared alienable only instructing the NALDTRA to issue a decree of confirmation
on 1980, Naguit could not have maintained a bona fide claim of and registration
ownership since June 12, 1945, as required by Section 14 of the 11. Entry of decree of registration in NALDTRA
Property Registration Decree, since prior to 1980, the land was 12. Sending of copy of the decree of registration to
not alienable or disposable. Is it necessary under Section 14(1) of corresponding RD
the Property Registration Decree (now Sec. 48 (b) of the Public 13. Transcription of decree of registration in the registration
Land Act) that the subject land be first classified as alienable and book and issuance of owners duplicate original certificate of
disposable before the applicants possession under a bona fide title (OCT) of applicant by RD, upon payment of prescribed
claim of ownership could start? fees
A: No. Section 14(1) merely requires the property sought to be NOTE: After judgment has become final and executory, the issuance of
registered as already alienable and disposable at the time the decree and OCT is ministerial on the part of LRA and RD.
application for registration of title is filed. If the State, at the time
the application is made, has not yet deemed it proper to release Application of Rules of Court in land registration proceedings
the property for alienation or disposition, the presumption is that
the government is still reserving the right to utilize the property; The Rules of Court could be applied in land registration
hence, the need to preserve its ownership in the State irrespective proceedings in a suppletory character or whenever practicable or
of the length of adverse possession even if in good faith. However, convenient.
if the property has already been classified as alienable and
disposable, as it is in this case, then there is already an intention on NOTE: Motion to intervene in a land registration case is not allowed.
the part of the State to abdicate its exclusive prerogative over the
property. (Republic v. CA and Naguit, G.R. No. 144057, Jan. 17, APPLICATION
2005)
Form of the application for registration or judicial confirmation
NOTE: This case is distinguishable from Bracewell v. CA, where the claimant
had been in possession of the land since 1908 and had filed his application in In writing;
1963, or nine (9) years before the property was declared alienable and 1. Signed by the applicant or person duly authorized in his
disposable in 1972. Hence, registration was denied. The Bracewell ruling will behalf;
not apply in this case because here, the application was made years after the 2. Sworn to before an officer authorized to administer oaths for
property had been certified as alienable and disposable. the province or city where the application was actually
A different rule obtains for forest lands,such as those which form part of a
signed; and
reservation for provincial park purposesthe possession of which cannot ripen 3. If there is more than 1 applicant, they shall be signed and
into ownership.It is elementary in the law governing natural resources that sworn to by and in behalf of each.
forest land cannot be owned by private persons. As held in Palomo v.
CA,forest land is not registrable and possession thereof, no matter how Contents of the application
lengthy, cannot convert it into private property, unless such lands are
reclassified and considered disposable and alienable. In the case at bar, the
1. Description of the land applied for together with the buildings
property in question was undisputedly classified as disposable and alienable;
hence, the ruling in Palomo is inapplicable.
and improvements; the plan approved by Director of Lands
and the technical descriptions must be attached
REGISTRATION PROCESS AND REQUIREMENTS 2. Citizenship and civil status of the applicant
a. If married, name of spouse
Modes of registering land titles b. If the marriage has been legally dissolved, when and
how the marriage relation was terminated
There are two modes: 3. Assessed value of the land and the buildings and other
1. Original registration proceedings under the Property improvements based on the last assessment for taxation
Registration Decree (PD 1529), and purposes
2. Confirmation of imperfect or incomplete title under Section 4. Manner of acquisition of land
48(b) of the Public Land Act, as amended. 5. Mortgage or Encumbrance affecting the land or names of
other persons who may have an interest therein, legal or
equitable
Requisites in ordinary registration proceedings and judicial 6. The court may require facts to be stated in the application in
confirmation of imperfect title addition to those prescribed by the Decree not inconsistent
therewith and may require the filing of additional papers
1. Survey of land by Bureau of Lands or any duly licensed private 7. Full names and addresses of all occupants of the land and
surveyor those of the adjoining owners, if known, and if not known,
2. Filing of application for registration by applicant the applicant shall state the extent of the search made to find
them

2014 GOLDEN NOTES
8. If the application describes the land as bounded by a public or proceedings by virtue of the publication of the application, that jurisdiction
private way or Road, it shall state whether or not the attaches to the land or lands mentioned and described in the application.
applicant claims any portion of the land within the limits of
the way or road, and whether the applicant desires to have Q: May publication of the notice of filing of application and date
the line of way or road determined and place of hearing be dispensed with?
9. If the applicant is a non-resident of the Philippines, he shall
file an instrument in due form appointing an agent residing in A: No. Publication of the notice of filing of application and date and
the Philippines and shall agree that service of any legal place of hearing is mandatory.
process shall be of the same legal effect as if made upon the
applicant within the Philippines (Sec.16, PD 1529) Q: Where must the said notice be published?
Documents that must accompany the application A:

1. Once in the Official Gazette (OG) this confers jurisdiction
All muniments of titles and copies thereof with survey plan upon the court; and
approved by Bureau of Lands must accompany the application. 2. Once in a newspaper of general circulation
Muniments of title NOTE: Publication in the Official Gazette is sufficient to confer jurisdiction
upon the court (Sec. 23, P.D. 1529).
They are instruments or written evidence which the applicant

Q: What is considered conclusive proof of publication and notice?
holds/possesses to enable him to substantiate and prove title to his
estate.
A: The certification of the LRA Administrator and of the sheriff to
the effect that the publication of the notice of initial hearing and
Rule regarding application covering two or more parcels
posting as required by law has been complied with.
An application may include two or more parcels of land belonging
Defective publication
to the applicant/s provided they are situated within the same
province or city (Sec 18, P.D. 1529).
There is a defective publication in the following instances:
Q: Where shall the application be filed?
1. Where what was published in the Official Gazette is the
description of a bigger lot which includes the lands subject of
A: If the application covers a single parcel of land situated within:
registration.
1. Only one city or province:
RTC or MTC, as the case may be, of the province or city where
Reasons:
the land is situated.
a. Sec. 15, PD 1529 requires that the application for
2. Two or more provinces or cities:
registration should contain the description of the land
a. When boundaries are not defined In the RTC or MTC of
subject of registration and this is the description to be
the place where it is declared for taxation purposes.
published;
b. When boundaries are defined Separate plan for each
b. It is the publication of specific boundaries of lands to be
portion must be made by a surveyor and a separate
registered that would actually put the interested parties
application for each lot must be filed with the
on notice of the registration proceedings and enable
appropriate RTC or MTC.
them, if they have rights and interests in the property,
NOTE: MeTC, MCTC, and MTC has jurisdiction to decide cadastral and land
to show why the application for registration should not
registration cases, provided: be granted;
1. There is no controversy or opposition (uncontested lots); or c. The adjoining owners of the bigger lot would not be the
2. Value of contested lots does not exceed P100,000 (Sec. 4, R.A. 7691) same owners of the smaller lots subject of registration.
Hence, notice to adjoining owners of the bigger lot is
In other cases, the RTC has jurisdiction. not notice to those of the smaller lots.
Q: Does the RTC acting as a land registration court have general 2. Where the actual publication of the notice of initial hearing
or limited jurisdiction? was after the hearing itself.
A: Sec. 2 of P.D. No. 1529 has eliminated the distinction between Effect of a defective publication
the general and the limited jurisdiction of the registration court. All
conflicting claims of ownership and interest in the land, and related It deprives the court of jurisdiction.
issues submitted to the court with or without the unanimity of the
parties, may now be heard and resolved by the court. The court is GR: If it is later shown that the decree of registration had included
now authorized to hear and decide not only non-controversial land or lands not included in the publication, then the registration
cases but even contentious issues which used to be beyond its proceedings and the decree of registration must be declared null
competence. and void but only insofar as the land not included in the
publication concerned. But the proceedings and the decree of
Purpose of the publication requirement registration, relating to the lands that were included in the
publication, are valid.
To:
1. Confer jurisdiction upon the court over the res. XPN: However, if the difference is not as substantial as would
2. Appraise the whole world of the pending registration case so affect the identity of the land, failure to publish the bigger area
that they may assert their rights or interests in the land, if (insubstantial inclusion) does not perforce affect the courts
any, and oppose the application. jurisdiction.
NOTE: The settled rule is that once the registration court had acquired
Q: When may an amendment of the application be made?
jurisdiction over a certain parcel, or parcels of land in the registration

CIVIL LAW
A: Amendments to the application including joinder, substitution, Requirements in amending the application
or discontinuance as to the parties may be allowed by the court at
any stage of the proceedings upon just and reasonable terms. (Sec. 1. Publication
19, PD 1529)
Mailing of notice Within 7 days after publication of said
notice in the OG to:
a. Every person named in the notice whose address is
known.
b. Secretary of Public Highways, Provincial Governor and
Mayor, if the applicant requests to have the line of a
public way or road determined
c. Secretary of Agrarian Reform, Solicitor General, Director
of Lands, Director of Fisheries, and Director of Mines, if
the land borders on a river, navigable stream, or shore,
or on an arm of the sea where a river or harbor lies
d. Other persons as the court may deem proper
Note: Service of notice upon contiguous owners is indispensable

and lack of service constitutes extrinsic fraud.
2. Posting In conspicuous place on subject land and on bulletin

board of the municipal building for at least fourteen (14) days
before the initial hearing.
Necessity of publication and notice in the amended application
GR: Publication and notice are necessary where the amendment to

the application consists in:
1. Substantial change in the boundaries

2. Increase in the area of the land applied for
3. The inclusion of additional land
NOTE: Without such publication, the registration court cannot acquire

jurisdiction over the area that is added.
XPN: However, publication and notice is not necessary:
1. If the amendment consists in the exclusion of a portion of the

area covered by the original application and the original plan
as previously published, a new publication is not necessary
(Exclusion).
Note: In this case, the jurisdiction of the court is not affected by the
failure of filing a new application.
2. If the amendments to the application involves joinder,

substitution or discontinuance as to the parties.
a. Joinder means joining of two or more defendants or
plaintiffs involved in a single claim, or where two or
more claims or remedies can be disposed of in the same
legal proceedings.
b. Substitution means the replacement of one of the
parties in a lawsuit because of events that prevent the
party from continuing with the trial.
c. Discontinuance means the voluntary termination of
litigation by a plaintiff who has elected not to pursue it
or by both parties pursuant to a settlement.
Note: This may be allowed by the court at any stage of the

proceedings upon just and equitable terms.
3. If the amendment is due to change of name of the applicant.
OPPOSITION
Persons who may oppose the application for registration
Any person claiming an interest, whether named in the notice or

not, may appear and file an opposition on or before the date of
initial hearing, or within such further time as may be allowed by

2014 GOLDEN NOTES
the court. The opposition shall state all the objections to the Q: A judge declared in default an oppositor who had already filed
application and shall set forth the interest claimed by the party with the court an opposition based on substantial grounds for his
filing the same and apply for the remedy desired, and shall be failure to appear at the initial hearing of the application for
signed and sworn to by him or by some other duly authorized registration. Is the default order proper? If not, what is his
person (Sec. 25, PD No. 1529). remedy?
Requisites for a valid opposition A:No, it is not. Failure of the oppositor to appear at the initial
hearing is not a ground for default. In which case, his proper
1. Set forth objections to the application; remedy is to file a petition for certiorari to contest the illegal
2. State interest claimed by oppositor; declaration of order of default, not an appeal.
3. Apply for the remedy desired; and
4. Signed and sworn to by him or by some other duly authorized Effect of an order of default in land registration proceedings
person.
An order of default issued in a land registration case, a proceeding
NOTE: The opposition partakes of the nature of an answer with a in rem, is binding against the whole world, with the exception
counterclaim. only of the parties who had appeared and filed pleadings in the
registration case.
Persons who may oppose the application for registration or
judicial confirmation Effect of the absence of an opposition as regards allegations in
the application
Any person whether named in the notice or not, provided, his claim
of interest in the property applied for is based on a right of When there is no opposition, all allegations in the application are
dominion or some other real right independent of, and not deemed confessed on the part of the opponent.
subordinate to, the rights of the government.
Q: What if a certificate of title was issued covering non-
Persons who may oppose in specific cases registrable lands without the government opposing, is the
government estopped from questioning the same?
The following may be proper oppositors:
1. A homesteader who has not yet been issued his title but who A: The government cannot be estopped from questioning the
had fulfilled all the conditions required by law to entitle him validity of the certificates of title, which were granted without
to a patent. opposition from the government. The principle of estoppel does
2. A purchaser of friar land before the issuance of the patent to not operate against the government for the acts of its agents.
him.
3. Persons who claim to be in possession of a tract of public land Q: If an order of general default is issued, may the court
and have applied with the Bureau of Lands for its purchase. automatically grant the application?
4. The Government relative to the right of foreshore lessees of
public land as the latters rights is not based on dominion or A:No. Even in the absence of an adverse claim, the applicant still
real right independent of the right of the government. has to prove that he possesses all the qualifications and none of
the disqualifications to obtain the title. If he fails to do so, his
Q: May a private person oppose registration on the ground that application will not be granted.
the land sought to be registered is owned by the government?
Remedy of a party who was declared in default in land
A:No. A private person may not oppose an application for registration proceeding
registration on the ground that the land applied for is a property of
the government. 1. Motion to set aside default order A defaulted interested
person may gain standing in court by filing such motion at any
Q: Should an oppositor have title over the disputed land? time after notice thereof and before judgment,upon proper
showing that:
A:No. The oppositor need not show title in himself; he should a. His failure to answer (or file an opposition as in ordinary
however appear to have interest in the property. land registration case) was due to:
i. Fraud
Q: Should an oppositors interest over the land be legal or may it ii. Accident
be merely equitable? iii. Mistake
iv. Excusable Neglect
A: It is immaterial whether his interest is in the character of legal b. And that he has a meritorious defense. (Sec. 3, Rule 9,
owner or is of a purely equitable nature as where he is a Rules of Court)
beneficiary of a trust. 2. Petition for Certiorari Failure of the oppositor to appear at
the initial hearing is not a ground for default. In which case,
Declaration of default in land registration proceedings his proper remedy is to file a petition for certiorari not later
than sixty (60) days from notice of judgment, order or
If no person appears and answers within the time allowed, the resolution to contest the illegal declaration or order of
court shall, upon motion of the applicant, no reason to the default, not an appeal. (Sec. 4, Rule 65, Rules of Court)
contrary appearing, order a default to be recorded and require the
applicant to present evidence. By the description in the notice To NOTE:The petition shall be filed not later than 60 days from notice of
all Whom It May Concern, all the world are made parties the order. In case a motion for reconsideration or new trial is timely
defendant and shall be concluded by the default order filed, whether such motion is required or not, the petition shall be
filed not later than 60 days counted from the notice of the denial of
Where an appearance has been entered and an answer filed, a the motion (Sec. 4, Rule 65, Rules of Court)
default order shall be entered against persons who did not appear
and answer. (Sec. 26, PD 1529)

CIVIL LAW
Q: Can a party who has been declared in default appeal from the Effect of the failure to present the original tracing cloth plan
judgment by default without first filing a motion to set aside the
order of default? While the submission in evidence of the original tracing cloth plan
is a mandatory and even a jurisdictional requirement, the Court
A: Yes. As held in the case of Martinez v. Republic: If it cannot be has recognized instances of substantial compliance with this rule. It
made any clearer, we hold that a defendant party declared in is true that the best evidence to identify a piece of land for
default retains the right to appeal from the judgment by default on registration purposes is the original tracing cloth plan from the
the ground that the plaintiff failed to prove the material allegations Bureau of Lands, but blueprint copies and other evidence could
of the complaint, or that the decision is contrary to law, even also provide sufficient identification. In the case of Republic v.
without need of the prior filing of a motion to set aside the order Ludolfo y Muoz, respondent submitted, among other things, the
of default. We reaffirm that the Lim Toco doctrine, denying such following supporting documents: (1) a blueprint copy of the survey
right to appeal unless the order of default has been set aside, was plan approved by the Bureau of Lands; and (2) the technical
no longer controlling in this jurisdiction upon the effectivity of the descriptions duly verified and approved by the Director of Lands
1964 Rules of Court, and up to this day. (G.R. No. 160895, Oct. 30, (G.R. No. 151910, October 15, 2007).
2005.)
Q: Under what instance may presentation of the original tracing
EVIDENCE REQUIRED cloth plan be dispensed with?
Q: What must the applicant for land registration prove? A: If the survey plan is approved by the Director of Lands and its
correctness has not been overcome by clear, strong and convincing
A: The applicant must prove: evidence, the presentation of the tracing cloth plan may be
1. Declassification The land applied for has been dispensed with. Thus, original tracing cloth plan need not be
declassified from the forest or timber zone and is a presented in evidence. (Republic v. Ludolfo y Muoz, G.R. No.
public agricultural land, is alienable and disposable, or 151910, Oct. 15, 2007).
otherwise capable of registration.
2. Identity of the land; and NOTE: Under LRA Circular 05-2000, only a certified copy of the original
3. Possession and occupation of the land for the length of tracing cloth plan need be forwarded to the LRA.
time and in the manner required by law.
Although mere blue print copies were presented in court as evidence, the
original tracing cloth plan was attached to the application for registration
Proof to establish declassification of land and was available to the court for comparison. Hence, the approval of
registration was proper (Republic v. IAC, G.R. No. L-70594, Oct. 10, 1986)
1. Presidential proclamation
2. Administrative Order issued by the Secretary of Conflict between areas and boundaries
Environment and Natural Resources
3. Executive order GR: Boundaries prevail over area.
4. Bureau of Forest Development (BFD) Land Classification
Map XPNs:
5. Certification by the Director of Forestry, and reports of 1. Boundaries relied upon do not identify land beyond doubt.
District Forester 2. Boundaries given in the registration plan do not coincide with
6. Investigation reports of Bureau of Lands investigator outer boundaries of the land covered and described in the
7. Legislative act, or by statute muniments of title.
Q: The Cenizas applied for registration of their title over a parcel Proof of possession
of public land which they inherited. Without presenting proof
that the land in question is classified as alienable or disposable, To prove possession, it is not enough to simply declare ones
the court granted the application, holding that mere possession possession and that of the applicants predecessors-in-interest to
for a period as provided for by law would automatically entitle have been adverse, continuous, open, public, peaceful and in
the possessor the right to register public land in his name. Was concept of owner for the required number of years. The applicant
the court ruling correct? should present specific facts to show such nature of possession
because bare allegations, without more, do not amount to
A:No. Mere possession for a period required by law is not enough. preponderant evidence that would shift the burden to the
The applicant has to establish first the disposable and alienable oppositor (Diaz v. Republic, G.R. No. 141031, Aug. 31, 2004).
character of the public land, otherwise, public lands, regardless of
their classification, can be subject of registration of private titles, as Specific overt acts of possession which may substantiate a claim
long as the applicant shows that he meets the required years of of ownership
possession. The applicant must establish the existence of a positive
act of the government, such as a presidential proclamation or an 1. Introducing valuable improvements on the property like fruit-
executive order; administrative action; reports of Bureau of Lands bearing trees;
investigators and a legislative act or a statute. (Republic v. Ceniza, 2. Fencing the area;
G.R. No. 127060, Nov. 19, 2002) 3. Constructing a residential house thereon; or
4. Declaring the same for taxation purposes.
Proof to establish the identity of the land sought to be registered
1. Survey plan in general NOTE: Evidence to be admissible must, however, be credible, substantial and
2. Tracing cloth plan and blue print copies of plan satisfactory
3. Technical description of the land applied for, duly signed by a
Geodetic Engineer Insufficient proofs of possession
4. Tax Declarations
1. Mere casual cultivation of portions of the land by claimant.

2014 GOLDEN NOTES
Reason: Possession is not exclusive and notorious so as to evidence required in cases of this nature. Proof of specific acts of
give rise to a presumptive grant from the State. ownership must be presented to substantiate their claim. They
cannot just offer general statements which are mere conclusions of
2. Possession of other persons in the land applied for impugns law than factual evidence of possession.
the exclusive quality of the applicants possession.
3. Mere failure of fiscal representing the State to cross-examine The law speaks of possession and occupation. Possession is broader
the applicant on the claimed possession. than occupation because it includes constructive possession.
4. Tax declaration of land sought to be registered which is not in When, therefore, the law adds the word occupation, it seeks to
the name of applicant but in the name of the deceased delimit the all encompassing effect of constructive possession.
parents of an oppositor. Taken together with the words open, continuous, exclusive and
notorious, the word occupation serves to highlight the fact that for
Reason: Possession of applicant is not completely adverse or an applicant to qualify, his possession must not be a mere fiction.
open, nor is it truly in the concept of an owner.
Actual possession of a land consists in the manifestation of acts of
5. Holding of property by mere tolerance of the owner. dominion over it of such a nature as a party would naturally
exercise over his own property (Republic v. Alconaba, G.R. No.
Reason: Holder is not in the concept of owner and possessory 155012, Apr. 14, 2004).
acts no matter how long do not start the running of the
period of prescription. NOTE: Well-nigh incontrovertible evidence refers to the degree of proof of
registrable rights required by law in registration proceedings.
6. Where applicants tacked their possession to that of their
predecessor-in-interest but they did not present him as Q: Are tax declarations presented by them sufficient proof of
witness or when no proofs of what acts of ownership and possession and occupation for the requisite number of years?
cultivation were performed by the predecessor.
A:No. The records reveal that the subject property was declared
Q: Exequiel Ampil, as representative of heirs of the late Albina for taxation purposes by the respondents only for the year 1994.
Ampil, filed a complaint for ejectment against Perfecto Manahan, While belated declaration of a property for taxation purposes does
et al. Allegedly, Albina was the owner of 2 adjoining residential not necessarily negate the fact of possession, tax declarations or
lots located in Bulacan as evidenced by tax declarations. They realty tax payments of property are, nevertheless, good indicia of
asserted that Albina allowed Perfecto and his family to occupy a possession in the concept of an owner, for no one in his right mind
portion of said properties on the condition that they would would be paying taxes for a property that is not in his actual or, at
vacate the same should the need to use it arise. Despite requests least, constructive possession. (Republic v. Alconaba, G.R. No.
however, Perfecto and his family refuse to vacate the property. 155012, Apr. 14, 2004)
Respondents aver that they had been in peaceful and continuous
possession of the property in the concept of an owner sine time Proofs to establish private ownership of land
immemorial and that Albina was never the owner of the
property. Who between the petitioners and the respondents 1. Spanish title, in case of impending cases.
have the better right to the physical possession of the disputed
property? NOTE: However, Spanish titles are now inadmissible and ineffective as
proof of ownership in land registration proceedings filed after Aug. 16,
1976. It is mere indicia of a claim of ownership that the holder has a
A: The petitioners have the better right to the property in claim of title over the property.
question. The bare allegation of respondents that they had been in
peaceful and continuous possession of the lot in question because 2. Tax declaration and tax payments.
their predecessor-in-interest had been in possession thereof in the
concept of an owner from time immemorial, cannot prevail over NOTE: While tax declarations are not conclusive proof of ownership,
the tax declarations and other documentary evidence presented by they constitute good indicia of possession in the concept of owner and
petitioners. In the absence of any supporting evidence, that of the a claim of title over the subject property for no one in his right mind
petitioners deserves more probative value. A perusal of the records would be paying taxes for a property that is not in his actual or
shows that respondents occupation of the lot in question was by constructive possession.(Charles L. Ong v. Republic of the Philippines,
G.R. No. 175746, March 12, 2008 and Republic of the Philippines v.
mere tolerance. From the minutes of the meeting in the Barangay Teodoro P. Rizalvo, Jr. G.R. No. 172011, March 7, 2011)
Lupon, Perfecto admitted that Albina permitted them to use the
lots on the condition that they would vacate the same should Even if belatedly declared for taxation purposes, it does not negate
Albina need it (Heirs of Albina G. Ampil, namely Precious A. possession especially if there is no other claimant of the land.
Zavalla, Eduardo Ampil, et al. vs. Teresa Manahan and Mario
Manahan G.R. No. 175990. October 11, 2012). Mere failure of the owner of the land to pay the realty tax does not
warrant a conclusion that there was abandonment of his right to the
property.
Q: Mauricio and Carmencita testified to establish their claim over
the subject lots. When the application was granted, the OSG
3. Other kinds of proof. e.g. Testimonial evidence (i.e. accretion
appealed, arguing that weight should not be given to the self-
is on a land adjacent to a river).
serving testimonies of the two; that their tax declaration is not
sufficient proof that they and their parents have been in NOTE: Any evidence that accretion was formed through human
possession of the property for at least thirty years, said tax intervention negates the claim.
declaration being only for the year 1994 and the property tax
receipts presented by them were all of recent dates. Are the said 4. Presidential issuances and legislative acts.
pieces of evidence sufficient to establish actual possession of land
for the period required by law thus warranting the grant of the NOTE: It is constitutive of a fee simple title or absolute title in favor
application? of the grantee.
A:No. Their bare assertions of possession and occupation by their Q: Agustin executed an Affidavit of Transfer of Real Property
predecessors-in-interest are hardly "the well-nigh incontrovertible" where Ducat is to perform all the necessary procedures for the

CIVIL LAW
registration and acquisition of title over several parcels of land property, liens and encumbrances affecting it, and such other
possessed and occupied by Agustin. Before Ducat was able to matters as determined by the court in its judgment.
accomplish his task, Agustin died and Bernardo administered the
properties. Ducat then filed an Application for Free Patent over Q: In a registration case, the court rendered a decision granting
the land, which was granted. The parcels of land were registered Reyes application, hence the Director of Lands appealed. Reyes
in the names of Ducat and Kiong. The heirs of Bernardo sought moved for the issuance of a decree of registration pending
the reconveyance of the land with damages but did not question appeal. May his motion be granted?
the authenticity of the agreement. Who is the rightful owner of
the property? A:No. Innocent purchasers may be misled into purchasing real
properties upon reliance on a judgment which may be reversed on
A: The spouses Ducat and Kiong.The Affidavit of Transfer of Real appeal. A Torrens title issued on the basis of a judgment that is not
Property proved Ducats ownership of the property. It stated that final is a nullity as it violates the explicit provisions of the LRA,
Ducat bought the subject property from Cecilio and Bernardo. The which requires that a decree shall be issued only after the decision
heirs did not question the authenticity and due execution of said adjudicating the title becomes final and executor (Dir. of Lands v.
document. It constitutes an admission against interest made by Reyes, G.R. No. L-27594, Nov. 28, 1975).
Bernardo, petitioners' predecessor-in-interest.
Q: After final adjudication in a land registration proceeding,
Bernardo's admission against his own interest is binding on his Pepito and his family took possession of the land subject of the
heirs. The heirs' predecessor-in-interest recognized Ducat and registration proceedings. Don Ramon moved for their summary
Kiong as the legal owner of the lot in dispute. ouster from the land. Rule on his motion.
Thus, there is no proof that the titling of the subject property was A:It should be denied. Persons who are not parties to registration
fraudulently obtained by Ducat and Kiong in their names (Heirs of proceedings who took possession of the land after final
Bernardo Ulep v. Sps. Cristobal Ducat and Flora Kiong, G.R. No. adjudication of the same cannot be summarily ousted by a mere
159284, Jan. 27, 2009). motion. The remedy is to resort to the courts of justice and
institute a separate action for unlawful entry or detainer or for
Insufficient proofs to establish private ownership or right over reinvidicatory action, as the case may be. Regardless of any title or
land lack of title of said person, he cannot be ousted without giving him
a day in courtin a proper independent proceeding.
1. Compromise agreement among parties to a land registration
case where they have rights and interest over the land and Scope of decree of registration
allocated portions thereof to each of them.
Only claimed property or a portion thereof can be adjudicated. A
NOTE: Assent of Director of Lands and Director of Forest Management land registration court has no jurisdiction to adjudge a land to a
to compromise agreement did not and could not supply the absence person who has never asserted any right of ownership thereof.
of evidence of title required of the applicant.
Partial Judgment in land registration proceedings
2. Decision in an estate proceeding of a predecessor-in-interest
of an applicant which involves a property over which the Where only a portion of the land, subject of registration is
decedent has no transmissible rights, and in other cases contested, the court may render partial judgment provided that a
where issue of ownership was not definitely passed upon. subdivision plan showing the contested land and uncontested
3. Survey plan of an inalienable land. portions approved by the Director of Lands is previously submitted
to the court.
NOTE: Such plan does not convert such land into alienable land, much
less private property.
Effect of a decree of registration
Q: After due hearing for registration, what will the court do?
The decree of registration binds the land, quiets title, subject only
A: If the court, after considering the evidence and report of the to such exceptions or liens as may be provided by law.
LRA, finds that the applicant or the oppositor has sufficient title
proper for registration, it shall render judgment confirming the title It is conclusive upon all persons including the national government
of the applicant, or the oppositor, to the land or portions thereof, and all branches thereof. Such conclusiveness does not cease to
as the case may be (Sec. 29, P.D. 1529). exist when the title is transferred to a successor.
NOTE: Title once registered cannot be impugned, altered, changed,

JUDGMENT AND DECREE OF REGISTRATION modified, enlarged or diminished, except in a direct proceeding permitted by
law.
Q: What must a judgment in land registration proceedings
contain? Res judicata in land registration proceedings
A: When judgment is rendered in favor of the plaintiff, the court The principle of res judicata applies to all cases and proceedings,
shall order the entry of a new certificate of title and the including land registration and cadastral proceedings.
cancellation of the original certificate and owners duplicate of the
former registered owner. Q: In 1950s, the Government acquired a big landed estate in
Central Luzon from the registered owner for subdivision into small
Decree of registration farms and redistribution of bonafide occupants. F was a former
lessee of a parcel of land, five hectares in area. After completion of
It is a document prepared in the prescribed form by the LRA the resurvey and subdivision, F applied to buy the said land in
Administrator, signed by him in the name of the court, embodying accordance with the guidelines of the implementing agency. Upon
the final disposition of the land by the court and such other data full payment of the price in 1957, the corresponding deed of
found in the record, including the name and other personal absolute sale was executed in his favor and was registered, and in
circumstances of the applicant, the technical description of the 1961, a new title was issued in his name. In 1963, F sold the said

2014 GOLDEN NOTES
land to X; and in 1965 X sold it to Y, new titles were successively 2. 1 year after the date of entry, it becomes incontrovertible,
issued in the names of the said purchasers. and amendments will not be allowed except clerical errors. It
is deemed conclusive as to the whole world.
In 1977, C filed an action to annul the deeds of sale to F, X and Y 3. Puts an end to litigation.
and their titles, on the ground that he (C) had been in actual
physical possession of the land, and that the sale to F and the WRIT OF POSSESSION
subsequent sales should be set aside on the ground of fraud. Upon
motion of defendants, the trial court dismissed the complaint, Writ of possession
upholding their defenses of their being innocent purchasers for
value, prescription and laches. Plaintiff appealed. A courts written order, in the name of a state or other competent
legal authority, issued to recover possession of land. (Blacks Law
Is the said appeal meritorious? Explain your answer (1990 Bar Dictionary, 9th edition, 2009)
Question)
Q: In what instances may a writ of possession issue?
A: The appeal is not meritorious. The trial court ruled correctly in
granting defendant's motion to dismiss for the following reasons: A:
1. While there is the possibility that F, a former lessee of the land
was aware of the fact that C was the bona fide occupant 1. In a land registration proceeding, which is a proceeding in
thereof and for this reason his transfer certificate of title may rem;
be vulnerable, the transfer of the same land and the issuance 2. In an extrajudicial foreclosure of a realty mortgage;
of new TCTs to X and Y who are innocent purchasers for value 3. In a judicial foreclosure of mortgage; and
render the latter's titles indefeasible. A person dealing with 4. In execution sales
registered land may safely rely on the correctness of the
certificate of title and the law will not in any way oblige him to Q: How may possession of property be obtained?
go behind the certificate to determine the condition of the
property in search for any hidden defect or inchoate right A: Possession of the property may be obtained by filing an ex parte
which may later invalidate or diminish the right to the land. motion with the RTC court of the province or place where the
This is the mirror principle of the Torrens System of land property is situated. Upon filing of the motion and the required
registration. bond, it becomes a ministerial duty of the court to order the
issuance of a writ of possession in favor of the purchaser. After the
2. The action to annul the sale was instituted in 1977 or more expiration of the one-year period without redemption being
than (10) years from the date of execution thereof in 1957, effected by the property owner, the right of the purchaser to the
hence, it has long prescribed. possession of the foreclosed property becomes absolute (PNB v.
Sanao Marketing Corporation, G.R. No. 153951, July 29, 2005).
Under Sec. 45, Act 496, the entry of a certificate of title shall be
regarded as an agreement running with the land, and binding upon Q: PNCB purchased a parcel of land in a foreclosure sale and
the applicant and all his successors in title that the land shall be and applied for a writ of possession after the lapse of more than 1
always remain registered land. A title under Act 496 is indefeasible year. On appeal, however, it was held that the writ of possession
and to preserve that character, the title is cleansed anew with every cannot be issued because the foreclosure sale, upon which it is
transfer for value (De Jesus v. City of Manila, G.R. No. L-26816, Feb. based, was infirm. Is said ruling correct?
28, 1967; Laperal v. City of Manila, G.R. No. L-16991, Mar. 31, 1964;
Penullar v. PNB, G.R. No. L-32762 Jan. 27, 1983). A:No. Any question regarding the regularity and validity of the sale,
as well as the consequent cancellation of the writ, is to be
Q: Suppose the government agency concerned joined C in filing the determined in a subsequent proceeding as outlined in Sec. 8, Act
said action against the defendants, would that change the result of 3135, as amended by Act 4118. Such question is not to be raised as
the litigation? Explain. (1990 Bar Question) a justification for opposing the issuance of the writ of possession,
since, under the Act, the proceeding is ex parte.
A: Even if the government joins C, this will not alter the outcome of
the case so much because of estoppel as an express provision in Sec. As the purchaser of the properties in the extra-judicial foreclosure
45, Act 496 and Sec. 31, PD 1529 that a decree of registration and sale, the PNCB is entitled to a writ of possession therefore. The
the certificate of title issued in pursuance thereof shall be basis of this right to possession is the purchasers ownership of the
conclusive upon and against all persons, including the national property. Mere filing of an ex parte motion for the issuance of the
government and all branches thereof, whether mentioned by name writ of possession would suffice, and no bond is required. (Sulit v.
in the application or not. CA, G.R. No. 119247, Feb. 17, 1997; Agcaoili,Registration Decree
and Related Laws, p. 508-509)
Reopening of judgment or decree of registration
Q: Against whom may a writ of possession be issued?
The court has no jurisdiction or authority to reopen the judgment
or decree of registration, nor impair the title or other interest of a A: In a registration case, a writ of possession may be issued against:
purchaser holding a certificate for value and in good faith, or his 1. The person who has been defeated in a registration case; and
heirs and assigns, without his or their written consent. 2. Any person adversely occupying the land or any portion
thereof during the land registration proceedings up to the
Effects of the entry of the decree of registration in the National issuance of the final decree.
Land Titles and Deeds Registration Authority (NALDTRA)
Q: Yano filed an application for registration which was granted.
1. This serves as the reckoning date to determine the 1-year Consequently, a writ of possession was issued. Vencelao, who
period from which one can impugn the validity of the occupies the land, contends that he was not the defeated
registration. oppositor in the case, hence a writ of possession may not be
issued against him. May a writ of possession be issued against
Vencelao?

CIVIL LAW
confirmed by the court (Limcoma Multi-Purpose Cooperative v.
A:Yes. In a registration case, the judgment confirming the title of Republic, G.R. No. 167652, July 10, 2007).
the applicant and ordering the registration in his name necessarily
carried with it the delivery of possession which is an inherent Doctrine of non-collateral attack of a decree or title
element of the right of ownership.
A decree of registration and registered title cannot be impugned,
A writ of possession may be issued not only against the person who enlarged, altered, modified, or diminished either in collateral or
has been defeated in a registration case but also against anyone direct proceeding, after the lapse of one year from the date of its
unlawfully and adversely occupying the land or any portion thereof entry.
during the land registration proceedings up to the issuance of the
final decree. (Vencelao v. Yano, G.R. No. 25660, Feb. 20, 1993) Q: Under what instance, will such doctrine not apply?
Q: If the court granted the registration, must the applicant move A: Prohibition against collateral attack does not apply to spurious
for the issuance of a writ of possession in case he is deprived of or non-existent titles, since such titles do not enjoy indefeasibility.
possession over the land subject of the registration proceedings? Well-settled is the rule that the indefeasibility of a title does not
attach to titles secured by fraud and misrepresentation. In view of
A: Yes, if it is against: these circumstances, it was as if no title was ever issued in this case
1. The person who has been defeated in a registration case; and to the petitioner and therefore this is hardly the occasion to talk of
2. Any person adversely occupying the land or any portion collateral attack against a title.(Heirs of Leoncio C. Oliveros,
thereof during the land registration proceedings up to the represented by Aurora B. Oliveros, et al. vs San Miguel Corporation,
issuance of the final decree. et al., G.R. No. 173531. February 1, 2012).
However, if it is against persons who took possession of the land Direct attack v. Collateral attack
after final adjudication of the same in a registration proceeding, in
which case, the remedy is to file a separate action for: DIRECT ATTACK COLLATERAL ATTACK
1. Unlawful entry; It is made when, in another action to
2. Unlawful detainer; or obtain a different relief, an attack on the
3. Reivindicatory action, as the case may be, and only after a The issues are raised judgment is made as an incident in said
favorable judgment can the prevailing party secure a writ of in a direct proceeding action.
possession (Bernas v. Nuevo, G.R. No. L-58438, Jan. 31, 1984) in an action instituted
for that purpose. e.g. Torrens title is questioned in the
Prescription of a writ of possession ordinary civil action for recovery of
possession
GR: A petition for the issuance of a writ of possession does not
prescribe Q: Valentins homestead application was approved. After 19
years of possession, his occupation was interrupted when Arcidio
XPN: If a party has once made use of the benefit of a writ of forcibly entered the land. He filed an action for recovery of
possession, he cannot again ask for it, if afterwards he loses possession which was granted.
possession of the property obtained by virtue of the original writ.
In his appeal, may Arcidio seek the nullity of Valentins title,
Issuance of a writ of possession in a reconstitution case invoking as defense the ruling of the Director of Lands in an
administrative case that Valentin has never resided in said land
Issuance of a writ of possession cannot be issued in reconstitution and declared that the homestead patent was improperly issued
case. Reconstitution does not confirm or adjudicate ownership to him?
over the property covered by the reconstituted title as in original
land registration proceedings where, in the latter, a writ of A:No, a collateral attack is not allowed. It was erroneous for
possession may be issued to place the applicant-owner in Arcidio to question the Torrens OCT issued to Valentin in an
possession. ordinary civil action for recovery of possession filed by the
registered owner Valentin of the said lot, by invoking as
DECREE OF CONFIRMATION AND REGISTRATION affirmative defense in his answer the Order of the Bureau of
Landsissued pursuant to the investigatory power of the Director of
Decree of confirmation and registration Lands under Section 91 of Public Land Law (CA No. 141 as
amended). Such a defense partakes of the nature of a collateral
It is issued by LRA after finality of judgment, and contains technical attack against a certificate of title brought under the operation of
description of land. It is subject only to an appeal. the Torrens system of registration pursuant to Sec. 122, Land
Registration Act, now Sec. 103, P.D. 1259 (Ybanez v. IAC, G.R. No.
It is conclusive evidence of the ownership of the land referred to 68291, Mar. 6, 1991).
therein and becomes indefeasible and incontrovertible after one
year from the issuance of the decree. Q: In a case for recovery of possession based on ownership, is a
third-party complaint to nullify the title of the third-party
Decree of confirmation and registration v. decree of registration. defendant considered a direct attack on the title?
Decree of confirmation and registration of title is issued pursuant A: If the object of the third-party complaint is to nullify the title of
to the Public Land Act, where the presumption is that the land the third-party defendant, the third-party complaint constitutes a
applied for pertains to the State, and that the occupants and direct-attack on the title because the same is in the nature of an
possessors only claim an interest in the same by virtue of their original complaint for cancellation of title.
imperfect title or continuous, open, and notorious possession
Q: If an attack is made thru a counterclaim, should it be
Decree of registration is issued pursuant to the Property disregarded for being a collateral attack?
Registration Decree, where there already exists a title which is

2014 GOLDEN NOTES
A:No. A counterclaim is also considered an original complaint, and acquired through fraudulent means.
as such, the attack on the title is direct and not collateral. 10 years from the date of the issuance of
the OCT or TCT.
REMEDIES IN REGISTRATION PROCEEDINGS
Implied or
It does not apply where the person
Constructive
Remedies of an aggrieved party in registration proceedings enforcing the trust is in actual possession of
Trust
the property because he is in effect seeking
1. Relief from judgment to quiet title to the same which is
2. Appeal imprescriptible.
3. Action for Damages Express Trust Not barred by prescription
4. Action for Compensation from the Assurance Fund Void Contract Imprescriptible
NOTE: If the property has already passed into the hands of an Q: In 1987, an Emancipation Patent OCT was issued in Remys
innocent purchaser for value, the remedy is to file action for damages
favor. In 1998, Madarieta filed a Complaint for Annulment and
from the person who allegedly registered the property from fraud, or
if he had become insolvent or if the action is barred by prescription, to
Cancellation of the OCT against Remy before the DARAB, alleging
file an action for recovery against the Assurance fund within a period that the Department of Agrarian Reform (DAR) mistakenly
of 6 years from the time the right to bring such action accrues. included her husbands lot as part of Luspos property where
Remys house was constructed and that it was only on 1997 that
5. Action for Reconveyance she discovered such mistake. Is Madarietas action barred by
6. Cancellation suits prescription?
7. Criminal Action
8. Annulment of judgment A: Yes.Considering that there appears to be a mistake in the
9. New trial issuance of the subject emancipation patent, the registration of the
10. Quieting of title title to the subject property in Remys name is likewise erroneous,
11. Petition for Review (of a Decree) and consequently, Remy holds the property as a mere trustee. An
action for reconveyance based on an implied or constructive trust
RECONVEYANCE prescribes in 10 years from the issuance of the Torrens title over
the property. The title over the subject land was registered in
Action for reconveyance Remys name in 1987 while Madarieta filed the complaint to
recover the subject lot only in 1998. More than 11 years had
It is an action seeking to transfer or reconvey the land from the lapsed before Madarieta instituted the action for annulment of the
registered owner to the rightful owner. It is a legal and equitable patent OCT, which in essence is an action for reconveyance the
remedy granted to the rightful owner of land which has been remedy of the rightful owner of the erroneously registered
wrongfully or erroneously registered in the name of another for property. It is thus barred by prescription (Rementizo v. Heirs of
the purposes of compelling the latter to transfer or reconvey the Vda. De Madarieta, G.R. No. 170318, Jan. 15, 2009).
land to him (Spouses Exequiel and Eusebia Lopez v. Spouses
Eduardo and Marcelina Lopez, G.R. No. 161925, Nov. 25, 2009). NOTE: In an action for reconveyance, the decree of registration is respected
as incontrovertible but what is sought instead is the transfer of the property
wrongfully or erroneously registered in anothers name to its rightful owner
Purpose of an action for reconveyance? or to one with a better right. The person in whose name the land is
registered holds it as a mere trustee.
An action for reconveyance does not aim or purport to re-open the
registration proceedings and set aside the decree of registration Q: Juan, et. al. seek reconveyance of the property, imputing fraud
but only to show that the person who secured the registration of to Ines, without adducing evidence, saying that she used a forged
the questioned property is not the real owner thereof. The action, affidavit to obtain title over the property despite full knowledge
while respecting the decree as incontrovertible, seeks to transfer that she owned only 1/5 portion thereof. Note that when Ines
or reconvey the land from the registered owner to the rightful applied for a free patent over the property, Juan, et. al. filed their
owner. claims, but when the Bureau of Lands denied their claims, they
did not contest such denial any further. Should the reconveyance
This action may be filed even after the lapse of 1 year from entry of be granted?
the decree of registration as long as the property has not been
transferred or conveyed to an innocent purchaser for value. A: No. It appears that they were notified of Ines application for
free patent and were duly afforded the opportunity to object to
Basic allegations to support an action for reconveyance the registration and to substantiate their claims, which they failed
to do and they never contested the order of the Bureau of Lands
All that must be alleged in the complaint are: (1) that the plaintiff disregarding their claims. This could only mean that they either
was the owner of the land; and (2) that the defendant had illegally agreed with the order or decided to abandon their claims.
dispossessed him of the same.
Also, they failed to prove fraud in the execution of the affidavit
Q: What are the grounds and their corresponding period for filing used by Ines to obtain title to the disputed property. No evidence
an action for reconveyance? was adduced by them to substantiate their allegation that their
signatures therein were forged. It is not for private respondents to
A: deny forgery. The burden of proof that the affidavit of waiver is
GROUNDS PRESCRIPTIVE PERIOD indeed spurious rests on petitioners. Yet, even as they insist on
4 years from the discovery of the fraud forgery, they never really took serious efforts in establishing such
(deemed to have taken place from the allegation by preponderant evidence. Mere allegations of fraud
issuance of the original certificate of title) are not enough. Intentional acts to deceive and deprive another of
Fraud his right or in some manner injure him, must be specifically alleged
Note: The State has an imprescriptible right to and proved (Brusas v. CA, G. R. No. 126875, Aug. 26, 1999).
cause the reversion of a piece of property
belonging to the public domain if title has been

CIVIL LAW
Q: On September 10, 1965, Melvin applied for a free patent
covering two lots - Lot A and Lot B - situated in Santiago, Isabela. Q: Rommel was issued a certificate of title over a parcel of land in
Upon certification by the Public Land Inspector that Melvin had Quezon City. One year later, Rachelle, the legitimate owner of the
been in actual, continuous, open, notorious, exclusive and adverse land, discovered the fraudulent registration obtained by Rommel.
possession of the lots since 1925, the Director of Land approved She filed a complaint against Rommel for reconveyance and
Melvin's application on 04 June 1967. On December 26, 1967, caused the annotation of a notice of lis pendens on the certificate
Original Certificate of Title (OCT) No. P-2277 was issued in the of title issued to Rommel. Rommel now invokes the
name of Melvln. indefeasibility of his title considering that one year has already
elapsed from its issuance. He also seeks the cancellation of the
On September 7, 1971, Percival filed a protest alleging that Lot B notice of lis pendens.
which he had been occupying and cultivating since 1947 was
included in the Free Patent issued in the name of Melvin. The Will Rachelles suit for reconveyance prosper? Explain. (1995 Bar
Director of Lands ordered the investigation of Percival's protest. Question)
The Special Investigator who conducted the investigation found
that Percival had been in actual cultivation of Lot B since 1947. A: Yes, Rachelles suit will prosper because all the elements of an
action for reconveyance are present, namely:
On November 28, 1986, the Solicitor General filed in behalf of the 1. Rachelle is claiming dominical rights over the property;
Republic of the Philippines a complaint for cancellation of the free 2. Rommel procured his title to the land by fraud;
patent and the OCT issued in the name of Melvin and the 3. The action was brought within the statutory period of four
reversion of the land to public domain on the ground of fraud and years from discovery of the fraud and not later than 10 years
misrepresentation in obtaining the free patent. On the same date, from the date of registration of Rommels title; and
Percival sued Martin for the reconveyance of Lot B. 4. Title to the land has not yet passed into the hands of an
innocent purchaser for value.
Melvin filed his answers interposing the sole defense in both cases
that the Certificate of Title issued in his name became Rommel can invoke the indefeasibility of his title if Rachelle had
incontrovertible and indefeasible upon the lapse of one year from filed a petition to re-open or review the decree of registration. But
the issuance of the free patent. Rachelle instead filed an ordinary action in personam for
reconveyance. In the latter action, indefeasibility is not a valid
Given the circumstances, can the action of the Solicitor General defense, because in filing such action, Rachelle is not seeking to
and the case for reconveyance filed by Percival possibly prosper? nullify or to impugn the indefeasibility of Rommels title. She is only
(1997 Bar Question) asking the court to compel Rommel to reconvey the title to her as
the legitimate owner of the land.
A: If fraud be discovered in the application which led to the issuance
of the patent and Certificate of Title, this Title becomes ipso facto DAMAGES
null and void. Thus, in a case where a person who obtained a free
patent, knowingly made a false statement of material and essential Q: When may an action for damages be resorted to in land
facts in his application for the same, by stating therein that the lot in registration cases?
question was part of the public domain not occupied or claimed by
any other person, his title becomes ipso facto canceled and A: After one year from date of the decree and if reconveyance is
consequently rendered null and void. not possible because the property has passed to an innocent
purchaser for value and in good faith, the aggrieved party
It is to the public interest that one who succeeds In fraudulently aggrieved party may bring an ordinary action for damages only
acquiring title to public land should not be allowed to benefit against the applicant or persons responsible for the fraud or were
therefrom and the State, through the Solicitor General, may file the instrumental in depriving him of the property.
corresponding action for annulment of the patent and the reversion
of the land involved to the public domain (Dinero v. Director of Prescription of action for damages in land registration cases
Lands; Kayaban v. Republic L-33307, Aug. 20, 1973; Director of
Lands vs. Animas, L-37682, Mar. 29, 1974). An ordinary action for damages prescribes in ten (10) years after
the issuance of the Torrens title over the property.
With respect to Percival's action for reconveyance, it would have
prescribed, having been filed more than ten (10) years after CANCELLATION SUIT
registration and issuance of an OCT in the name of Melvin, were it
not for the inherent infirmity of the latter's title. Hence, under the Cancellation suit
facts, the statute of limitations will not apply to Percival because
Melvin knew that a part of the land covered by his title actually It is an action for cancellation of title brought by a private
belonged to Percival. So, instead of nullifying in toto the title of individual, alleging ownership as well as the defendants fraud or
Melvin, the court, in the exercise of equity and jurisdiction, may mistake, as the case may be, in successfully obtaining title over a
grant prayer for the reconveyance of Lot B to Percival who has disputed land claimed by the plaintiff.
actually possessed the land under a claim of ownership since 1947.
After all, if Melvin's title is declared void ab initio and the land is Q: When is resort to a cancellation suit proper?
reverted to the public domain, Percival would just the same be
entitled to preference right to acquire the land from the A:
government. Besides, well settled is the rule that once public land 1. When two certificates of title are issued to different persons
has been in open, continuous, exclusive and notorious possession covering the same parcel of land in whole or in part
under a bona fide claim of acquisition of ownership for the period 2. When certificate of title is issued covering a non-registrable
prescribed by Sec. 48, Public Land Act, the same ipso jure ceases to property
be public and in contemplation of law acquired the character of 3. Other causes such as when the certificate of title is issued
private land. Thus, reconveyance of the land from Melvin to Percival pursuant to a judgment that is not final or when it is issued to
would be the better procedure. (Vital v. Anore,G.R. No. L-4136, Feb. a person who did not claim and applied for the registration of
29, 1952; Pena, Land Titles and Deeds, p. 427, 1982 ed) the land covered.

2014 GOLDEN NOTES
valid or effective but is in truth and in fact invalid, ineffective,
Q: What are the rules as regards cancellation of certificates of voidable or unenforceable, and may be prejudicial to said title.
title belonging to different persons over the same land?
Quieting of title is a common law remedy for the removal of any
A: Where two certificates are issued to different persons covering cloud upon, doubt, or uncertainty affecting title to real
the same land, the title earlier in date must prevail. The latter title property. Whenever there is a cloud on title to real property or any
should be declared null and void and ordered cancelled. interest in real property by reason of any instrument, record, claim,
encumbrance, or proceeding that is apparently valid or effective,
Prior est temporae, prior est in jura but is, in truth and in fact, invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may
It is a principle which means he who is first in time is preferred in be brought to remove such cloud or to quiet the title. In such
right. action, the competent court is tasked to determine the respective
rights of the complainant and the other claimants, not only to
Q: Pablo occupied a parcel of land since 1800. In 1820, he was place things in their proper places, and make the claimant, who has
issued a certificate of title over said land. In 1830, however, the no rights to said immovable, respect and not disturb the one so
land was reclassified as alienable and disposable, as it was entitled, but also for the benefit of both, so that whoever has the
originally a forest land. In 1850, Pedro was able to obtain a right will see every cloud of doubt over the property dissipated,
certificate of title over the same land. Upon learning of such, and he can thereafter fearlessly introduce any desired
Pablo sought to have Pedros title declared null and void. Decide. improvements, as well as use, and even abuse the property (Phil-
Ville Development and Housing Corporation v. Maximo Bonifacio,
A: As a general rule, the earlier in date must prevail. However, et al., G.R. No. 167391, June 8, 2011).
this principle cannot apply if it is established that the earlier title
was procured through fraud or is otherwise jurisdictionally flawed Basis of an action for quieting of title
(Republic v. CA and Guido, et. al., G.R. No. 84966, Nov. 21, 1991).
The rule is valid only absent any anomaly or irregularity tainting the n action for quieting of title is essentially a common law remedy
process of registration. Where the inclusion of land in the grounded on equity. The competent court is tasked to determine
certificate of title of prior date is a mistake, the mistake may be the respective rights of the complainant and other claimants, not
rectified by holding the latter of the two certificates to be only to place things in their proper place, to make the one who has
conclusive (Legarda v. Saleeby, G.R. No. 8936, Oct. 2, 1915). Since no rights to said immovable respect and not disturb the other, but
the earlier title was issued when the disputed land was still a non- also for the benefit of both, so that he who has the right would see
registrable property, the same may be challenged through a every cloud of doubt over the property dissipated, and he could
cancellation suit and may be declared as null and void. Pedros title afterwards without fear introduce the improvements he may
must prevail. desire, to use, and even to abuse the property as he deems best
(Dionisio Mananquil, et al. v. Roberto Moico; G.R. No. 180076.
Grounds for amendment or correction of certificate of title November 20, 2012).
When: Persons who may file an action to quiet title

1. Registered interests of any description, whether vested,
contingent or inchoate have terminated and ceased; 4. Registered owner;
2. New interests have arisen or been created which do not 5. A person who has an equitable right or interest in the
appear upon the certificate; property; or
3. Any error, omission or mistake was made in entering a 6. The State.
certificate or any memorandum thereon or on any duplicate
certificate; Requisites in order that an action for quieting of title may prosper
4. The name of any person on the certificate has been changed;
5. The registered owner has been married, or registered as 1. The plaintiff or complainant has a legal or equitable title or
married, the marriage has terminated and no right or interest interest in the real property subject of the action;
of heirs or creditors will thereby be affected; 2. The deed, claim, encumbrance or proceeding claimed to be
6. A corporation, which owned registered land and has been casting cloud on his title must be shown to be in fact invalid
dissolved, has not conveyed the same within 3 years after its or inoperative despite prima facie appearance of validity or
dissolution; or legal efficacy (Phil-Ville Development and Housing
7. There is a reasonable ground for the amendment or Corporation v. Maximo Bonifacio, et al., G.R. No. 167391,
alteration of title. June 8, 2011) (Joaquin G. Chung, Jr. et al., v. Jack Daniel
Mondragon et al., GR No. 179754, November 21, 2012).
Requisites for the amendment or correction of title
Q: May a person who obtains registration through fraud be held
1. It must be filed in the original case; criminally liable?
2. By the registered owner or a person in interest;
3. On grounds enumerated; A: Yes. The State may criminally prosecute for perjury the party
4. All parties must be notified; who obtains registration through fraud, such as by stating false
5. There is unanimity among them; and assertions in the application for registration, sworn answer
6. Original decree must not be opened. required of applicants in cadastral proceedings, or application for
public land and patent.
QUIETING OF TITLE
Action for quieting of title
It is an action that is brought to remove clouds on the title to real

property or any interest therein, by reason of any instrument,
record, claim, encumbrance, or proceeding which is apparently

CIVIL LAW
REMEDY IN CASE OF LOSS OR Jurisdictional requirements in petitions for reconstitution of title

DESRUCTION OF CERTIFICATE OF TITLE
Notice thereof shall be:
Remedy in case a person lost his certificate of title 1. Published twice in successive issues of the Official Gazette;
2. Posted on the main entrance of the provincial building and of
1. If what is lost is the OCT or TCT Reconstitution of certificate the municipal building of the municipality or city, where the
of title; land is situated; and
2. If, however, it is the duplicate of the OCT or TCT 3. Sent by registered mail to every person named in said notice
Replacement of lost duplicate certificate of title.
NOTE: The above requirements are mandatory and jurisdictional.
Reconstitution of certificate of title
Kinds of reconstitution of title
The restoration of the instrument which is supposed to have been
lost or destroyed in its original form and condition, under the 1. Judicial partakes the nature of a land registration
custody of Register of Deeds. proceeding in rem. The registered owners, assigns, or any
person having an interest in the property may file a petition
Purpose of reconstitution of title for that purpose with RTC where property is located. RD is
not the proper party to file the petition.
To have the same reproduced, after proper proceedings, in the 2. Administrative may be availed of only in case of:
same form they were when the loss or destruction occurred. a. Substantial loss or destruction of the original land titles
due to fire, flood, or other force majeure as determined
The reconstitution or reconstruction of a certificate of title literally by the Administrator of the Land Registration Authority
denoted restoration of the instrument which is supposed to have b. The number of certificates of title lost or damaged
been lost or destroyed in its original form and condition should be at least 10% of the total number in the
possession of the Office of the Register of Deeds
Q: Does reconstitution determine ownership of land covered by a c. In no case shall the number of certificates of title lost or
lost or destroyed certificate of title? damaged be less than 500
d. Petitioner must have the duplicate copy of the
A: A reconstituted title, by itself, does not determine or resolve the certificate of title (R.A. 6732)
ownership of the land covered by the lost or destroyed title. The
NOTE: The law provides for retroactive application thereof to cases 15 years
reconstitution of a title is simply the re-issuance of a lost duplicate immediately preceding 1989.
certificate of title in its original form and condition. It does not
determine or resolve the ownership of the land covered by the lost Q: From what sources may a certificate of title be reconstituted?
or destroyed title. A reconstituted title, like the original certificate
of title, by itself does not vest ownership of the land or estate A:
covered thereby(Alonso, et. al. v. Cebu Country Club Inc., G.R. No. Judicial reconstitution
130876, Dec. 5, 2003).
For OCT (in the following order):
Q: Where the title to the land was lost, does it mean that the land 1. Owners duplicate of the certificate of title
ceased to be registered land? 2. Co-owners, mortgagees or lessees duplicate of said
certificate
A: No. The fact that the title to the land was lost does not mean 3. Certified copy of such certificate, previously issued by the
that the land ceased to be a registered land before the Register of Deeds
reconstitution of its title. 4. Authenticated copy of the decree of registration or patent, as
the case may be, which was the basis of the certificate of title
Q: May a writ of possession be issued in a petition for 5. Deed or mortgage, lease or encumbrance containing
reconstitution? description of property covered by the certificate of title and
on file with the Registry of Deeds, or an authenticated copy
A: No, because, reconstitution does not adjudicate ownership over thereof
the property. A writ of possession is issued to place the applicant- 6. Any other document which, in the judgment of the court, is
owner in possession. sufficient and proper basis for reconstitution
Q: What must be shown before the issuance of an order for For TCT (in the following order):
reconstitution? 1. Owners duplicate of the certificate of title
2. Co-owners, mortgagees or lessees duplicate of said
A: certificate
1. That the certificate of title had been lost or destroyed; 3. Certified copy of such certificate, previously issued by the
2. That the documents presented by petitioner are sufficient Register of Deeds
and proper to warrant reconstitution of the lost or destroyed 4. Deed of transfer of other document containing description of
certificate of title; property covered by the transfer certificate of title and on file
3. That the petitioner is the registered owner of the property or with the Registry of Deeds, or an authenticated copy thereof
had an interest therein; 5. Deed or mortgage, lease or encumbrance containing
4. That the certificate of title was in force at the time it was lost description of property covered by the certificate of title and
or destroyed; and on file with the Registry of Deeds, or an authenticated copy
5. That the description, area and boundaries of the property are thereof
substantially the same as those contained in the lost or 6. Any other document which, in the judgment of the court, is
destroyed certificate of title (Republic of the Philippines v. sufficient and proper basis for reconstitution
Apolinaria Catarroja, et al., G.R. No. 171774, Feb. 12, 2010).
Administrative reconstitution
1. Owners duplicate of the certificate of title

2014 GOLDEN NOTES
2. Co-owners, mortgagees or lessees duplicate of said AMENDMENT OR CORRECTION OF CERTIFICATE OF TITLE
certificate
Grounds for amendment or correction of certificate of title
Q: Apolinario Catarroja et al., filed a petition for reconstitution of
title covering 2 lots in Cavite. Accordingly, the Catarrojas When:
inherited these lands from their parents. Allegedly, the LRA 1. Registered interests of any description, whether vested,
issued a certification confirming that the land registration court contingent or inchoate have terminated and ceased;
issued a Decree covering the lots. A copy of the decree however 2. New interests have arisen or been created which do not
was no longer available in the records. It was also claimed that appear upon the certificate;
the owners duplicate copy of the title had been lost while with 3. Any error, omission or mistake was made in entering a
their parents. If you were the judge, will you grant the petition certificate or any memorandum thereon or on any duplicate
for reconstitution of title? certificate;
4. The name of any person on the certificate has been changed;
A: In Republic v. Intermediate Appellate Court, applied the principle 5. The registered owner has been married, or registered as
of ejusdem generis in interpreting Section 2(f) of R.A. 26. Any married, the marriage has terminated and no right or interest
other document refers to reliable documents of the kind of heirs or creditors will thereby be affected;
described in the preceding enumerations. This Court is not 6. A corporation, which owned registered land and has been
convinced that the above documents of the Catarrojas fall in the dissolved, has not conveyed the same within 3 years after its
same class as those enumerated in paragraphs (a) to (e). None of dissolution; or
them proves that a certificate of title had in fact been issued in the 7. There is a reasonable ground for the amendment or
name of their parents. Accordingly, the documents must come alteration of title.
from official sources which recognize the ownership of the owner
and his predecessors-in-interest. None of the documents Requisites for the amendment or correction of title
presented in this case fit such description (Republic of the
Philippines v. Apolinaria Catarroja, et al., G.R. No. 171774, Feb. 12, 1. It must be filed in the original case;
2010). 2. By the registered owner or a person in interest;
3. On grounds enumerated;
Q: If what is lost or destroyed is the DUPLICATE TITLE, is 4. All parties must be notified;
reconstitution the proper remedy? 5. There is unanimity among them; and
6. Original decree must not be opened.
A: No. When the duplicate title of the landowner is lost, the proper
petition is not reconstitution of title, but one filed with the court REVERSION
for issuance of new title in lieu of the lost copy.
Reversion
Persons entitled to a Duplicate Certificate of Title
It is an action instituted by the government, through the Solicitor
1. Registered owner General, for cancellation of certificate of title and the
2. Each co-owner consequential reversion of the land covered thereby to the State.
Requirements for the replacement of lost duplicate certificate of Reversion connotes restoration of public land fraudulently
title awarded or disposed of to the mass of the public domain and may
again be the subject of disposition in the manner prescribed by law
1. Due notice under oath shall be sent by the owner or by to qualified applicants.
someone in his behalf to the Register of Deeds of the
province or city where the land lies as soon as the loss or Reversion v. Escheat proceeding
theft is discovered.
2. Petition for replacement should be filed with the RTC of the An action for reversion is slightly different from escheat
province or city where the land lies. proceeding, but in its effects they are the same. They only differ in
3. Notice to Solicitor General by petitioner is not imposed by procedure. Escheat proceedings may be instituted as a
law but it is the Register of Deeds who should request for consequence of a violation of the Constitution which prohibits
representation by the Solicitor General. transfers of private agricultural lands to aliens, whereas an action
4. A proceeding where the certificate of title was not in fact lost for reversion is expressly authorized by the Public Land Act (Rellosa
or destroyed is null and void for lack of jurisdiction and the v. Gaw Chee Hun, G.R. No. L-1411, Sept. 29, 1953).
newly issued duplicate is null and void.
Action for reversion v. Action for cancellation of title?
SURRENDER OF
WITHHELD DUPLICATE CERTIFICATE OF TITLE ACTION FOR REVERSION ACTION FOR CANCELLATION
Grounds for surrender of withheld duplicate certificate of title Filed by the government Initiated by a private party
through the Solicitor General usually in a case where there are
1. When it is necessary to issue a new certificate of title 2 titles issued to different
pursuant to any involuntary instrument which divests the title persons for the same lot
of the registered owner against his consent;
2. Where a voluntary instrument cannot be registered by reason Q: In the remedy of action for cancellation of title, does the land
of the refusal or failure of the holder to surrender the revert back to the mass of public domain?
owners duplicate certificate of title; or
3. Where the owners duplicate certificate is not presented for A:No. In this action, the land does not revert to the mass of the
amendment or alteration pursuant to a court order. public domain, but is declared as lawfully belonging to the party
whose certificate of title is held superior over the other.
Q: Who initiates the action for reversion?

CIVIL LAW
Q: Explain the process for the filing of Petition for Registration.
A: It is instituted by the Solicitor General, who shall represent the
government, its agencies, and instrumentalities, and its officials A: The Director of Lands, represented by the Solicitor General, shall
and agents in any litigation, proceeding, investigation or matter institute original registration proceedings by filing the necessary
requiring the services of a lawyer. It shall represent the petition in the Regional Trial Court of the place where the land is
government in all registration and related proceedings and situated against the holders, claimants, possessors, or occupants of
institute actions for the reversion to the State of Lands of the such lands or any part thereof, stating that public interest requires
public domain and improvements thereon and all lands held in that the title to such lands be settled and adjudicated and praying
violation of the Constitution. that such titles be settled and adjudicated.
Application of reversion Procedure in cadastral registration
Generally, reversion applies in all cases where lands of public 1. Cadastral survey
domain and the improvements thereon and all lands are held in 2. Filing of petition
violation of the Constitution. 3. Publication of notice of initial hearing
4. Filing of answer
Grounds for reversion of lands covered by a patent 5. Hearing of case
6. Decision
1. Violation of Sec.s 118, 120, 121 and 122, Public Land Act (e.g. 7. Issuance of decree & certificate of title
alienation or sale of homestead executed within the 5 year
prohibitory period) Contents of the petition
2. When land patented and titled is not capable of registration
3. Failure of the grantee to comply with the conditions imposed Petition shall contain:
by law to entitle him to a patent grant a. Description of the lands
4. When the area is an expanded area b. Plan thereof
5. When the land is acquired in violation of the Constitution c. Such other data as to facilitate notice to all occupants and
(e.g. land acquired by an alien may be reverted to the State) persons having claim or interest therein
Q: Luis filed a complaint for annulment of title involving a Extent of authority of cadastral courts
foreshore land which was granted in Flores favor, alleging that
his application therefor was granted by the government. Is Luis The cadastral court is not limited to merely adjudication of
the real party in interest with authority to file a complaint for ownership in favor of one or more claimants. If there are no
annulment of title of foreshore land? successful claimants, the property is declared public land.
A: No. In all actions for the reversion to the Government of lands Cadastral courts do not have the power to determine and
of the public domain or improvements thereon, the Republic of the adjudicate title to a lot already covered by homestead patent to a
Philippines is the real party in interest. The action shall be person other than a patentee.
instituted by the Solicitor General or the officer acting in his stead,
in behalf of the Republic of the Philippines. Petitioners must first Cadastral court possesses no authority to award damages.
lodge their complaint with the Bureau of Lands in order that an
administrative investigation may be conducted under Sec. 91, NOTE: A parcel of forest land is within the exclusive jurisdiction of the
Public Land Act (Manese v. Sps. Velasco, G.R. No. 164024, Jan. 29, Bureau of Forestry and beyond the power and jurisdiction of the cadastral
2009). court to register under the Torrens system.
Private persons have no right or interest over land considered SUBSEQUENT REGISTRATION
public at the time the sales application was filed. They have no
personality to question the validity of the title (Vicente Cawis v. Subsequent registration
Hon. Antonio Cerilles, G.R. No. 170207, April 19, 2010).
It is where incidental matters after original registration may be
NOTE: Indefeasibility of title, prescription, laches and estoppel do not bar brought before the land registration court by way of motion or
reversion suits. petition filed by the registered owner or a party in interest.
CADASTRAL LAND REGISTRATION Q: After registering his land, what conveyances may the
registered owner do?
Cadastral registration
A: An owner of registered land may convey, mortgage, lease,
It is a proceeding in rem, initiated by the filing of a petition for charge or otherwise deal with the same in accordance with existing
registration by the government, not by the persons claiming laws. He may use such forms of deeds, mortgages, leases or other
ownership of the land subject thereof, and the latter are, on the voluntary instruments as are sufficient in law.
pain of losing their claim thereto, in effect compelled to go to court
to make known their claim or interest therein, and to substantiate NOTE:G.R.Such deed, mortgage, lease, or other voluntary instrument shall
such claim or interest. operate only as a contract between the parties and as evidence of authority
to the Register of Deeds to make registration. It is the act of registration
which shall operate to convey or affect the land insofar as third persons are
Purpose of cadastral registration concerned, and in all cases, the registration shall be made in the office of the
Register of Deeds for the province or city where the land lies. The act of
Here, the government does not seek the registration of land in its registration creates a constructive notice to the whole world of such
name. The objective of the proceeding is the adjudication of title to voluntary or involuntary instrument or court writ or process. (Sec. 52, PD
the lands or lots involved in said proceeding. Furthermore, it is to 1529)
serve public interest by requiring that the titles to the lands be
settled and adjudicated (Sec 1 of Act. No. 2259)

2014 GOLDEN NOTES
XPN: A will purporting to convey or affect registered land shall take effect as Rule on registration in case the property conveyed is held in trust
a conveyance or bind the land, not merely as a contract or evidence of
authority of the RD to make registration (Sec. 51, PD 1529). 1. If a deed or other instrument is filed in order to transfer
registered land in trust, or upon any equitable condition or
VOLUNTARY DEALINGS limitation expressed therein, or to create or declare a trust or
other equitable interests in such land without transfer, the
Necessity of registration of voluntary dealings particulars of the trust, condition, limitation or other
equitable interest shall not be entered on the certificate; but
Voluntary Dealings are not required to be registered. Registration only a memorandum thereof shall be entered by the words
is not a requirement for validity of the contract as between the "in trust", or "upon condition", or other apt words, and by a
parties. However, the act of registration shall be the operative act reference by number to the instrument authorizing or
to convey or affect the land insofar as third parties are concerned. creating the same. A similar memorandum shall be made
upon the original instrument creating or declaring the trust or
Requirements for registrability of deeds and other voluntary acts other equitable interest with a reference by number to the
of conveyance certificate of title to which it relates and to the volume and
page in the registration book in which it is registered (Sec. 65,
1. Presentation of owners duplicate certificate whenever any P.D. 1529).
duly executed voluntary instrument is filed for registration;
2. Inclusion of one extra copy of any document of transfer or 2. If the instrument creating or declaring a trust or other
alienation of real property, to be furnished to the city or equitable interest contains an express power to sell,
provincial assessor; mortgage or deal with the land in any manner, such power
3. Payment of prescribed registration fees and requisite shall be stated in the certificate of title by the words "with
documentary stamps; and power to sell", or "power to mortgage", or by apt words of
4. Evidence of full payment of real estate tax as may be due. description in case of other powers (Sec. 66, P.D. 1529).
Effect of registration of such voluntary dealings 3. If a new trustee of registered land is appointed by a court of
competent jurisdiction, a new certificate may be issued to
It: him upon presentation to the Register of Deeds of a certified
1. Creates a lien that attaches to the property in favor of the copy of the order or judicial appointment and the surrender
mortgagee; and for cancellation of the duplicate certificate (Sec. 67, P.D.
2. Constitutes constructive notice of his interest in the property 1529).
to the whole world.
4. Whoever claims an interest in registered land by reason of
Rule on carry over of encumbrances any implied or constructive trust shall file for registration
with the Register of Deeds a sworn statement thereof
If, at the time of any transfer, subsisting encumbrances or containing a description of the land, the name of the
annotations appear in the registration book, they shall be carried registered owner and a reference to the number of the
over and stated in the new certificate or certificates; except so far certificate of title. Such claim shall not affect the title of a
as they may be simultaneously released or discharged (Sec. 59, P.D. purchaser for value and in good faith before its registration
1529). (Sec. 68, P.D. 1529).
Q: If the property that was the subject of mortgage was INVOLUNTARY DEALINGS
subsequently foreclosed, must a new certificate of title be
automatically issued in favour of the purchaser? Necessity of registration of involuntary dealings
A: The answer must be qualified. Involuntary dealings, unlike the voluntary dealings, requires the
registration. It is the act of registration which creates a
1. No right of redemption - the certificate of title of the constructive notice to the whole world of such instrument or court
mortgagor shall be canceled, and a new certificate issued in writ or process and is the operative act that conveys ownership or
the name of the purchaser. affects the land insofar as third persons are concerned.
2. There is right of redemption - the certificate of title of the Involuntary dealings that must be registered
mortgagor shall not be canceled, but the certificate of sale
and the order confirming the sale shall be registered by a 1. Attachment
brief memorandum thereof made by the Register of Deeds 2. Adverse claim
upon the certificate of title. 3. Notice of lis pendens
In the event the property is redeemed, the certificate or deed of Writ of attachment
redemption shall be filed with the Register of Deeds, and a brief
memorandum thereof shall be made by the Register of Deeds on It is used primarily to seize the debtors property in order to secure
the certificate of title of the mortgagor. the debt or claim of the creditor in the event that a judgment is
rendered.
If the property is not redeemed, the final deed of sale executed by
the sheriff in favor of the purchaser at a foreclosure sale shall be Effect of the non-recording of a writ of attachment
registered with the Register of Deeds; whereupon the title of the
mortgagor shall be canceled, and a new certificate issued in the An attachment levied on real state not duly recorded in the
name of the purchaser (Sec. 63, P.D. 1529). Registry of Property is not an encumbrance on the attached
property, nor can such attachment unrecorded in the registry,
serve as a ground for decreeing the annulment of the sale of the
property at the request of another creditor.

CIVIL LAW
Adverse claim Limitations to the registration of an adverse claim
It is a notice to third persons that someone is claiming an interest 1. No second adverse claim based on the same ground may be
on the property or has a better right than the registered owner registered by the same claimant.
thereof, and that any transaction regarding the disputed land is 2. A mere money claim cannot be registered as an adverse
subject to the outcome of the dispute. claim.
Purpose of adverse claim Q: May an adverse claim exist concurrently with a subsequent
annotation of a notice of lis pendens?
The purpose of annotating the adverse claim on the title of the
disputed land is to apprise third persons that there is a controversy A: Yes, an adverse claim may exist concurrently with a subsequent
over the ownership of the land and to preserve and protect the annotation of a notice of lis pendens. When an adverse claim exists
right of the adverse claimant during the pendency of the concurrently with a notice of lis pendens, the notice of adverse
controversy. claim may be validly cancelled after the registration of such notice,
since the notice of lis pendens also serves the purpose of the
Q: When is a claim of interest adverse? adverse claim.
A: Lifespan of a registered adverse claim

1. Claimants right or interest in registered land is adverse to the
registered owner; The adverse claim shall be effective for a period of thirty (30) days
2. Such right or interest arose subsequent to the date of original from the date of registration and it may be cancelled.
registration; or
3. No other provision is made in the decree for the registration Effect of the expiration of the period of effectivity of an adverse
of such right or claim. claim
Formal requisites of an adverse claim for purposes of registration The expiration does not ipso facto terminate the claim. The
cancellation of the adverse claim is still necessary to render it
1. Adverse claimant must state the following in writing: ineffective; otherwise, the inscription will remain annotated and
a. His alleged right or interest; shall continue as a lien to the property.
b. How and under whom such alleged right of interest is
acquired; Q: May the RD cancel an adverse claim?
c. Description of the land in which the right or interest is
claimed; and A: The RD cannot, on its own, automatically cancel the adverse
d. Certificate of title number claim.
2. Such statement must be signed and sworn to before a notary
public; and NOTE: Before the lapse of 30-day period, the claimant may file a sworn
3. Claimant shall state his residence or place to which all notices petition withdrawing his adverse claim, or a petition for cancellation of
adverse claim may be filed in the proper Regional Trial Court
may be served upon him.
Registration of adverse claim Q: What must an interested party do if he seeks the cancellation
of a registered adverse claim?
By filing a sworn statement with the Register of Deeds of the
province where the property is located, setting forth the basis of A: The interested party must file with the proper court a petition
the claimed right together with other data pertinent thereto. for cancellation of adverse claim, and a hearing must also first be
conducted.
NOTE: Entry of the adverse claim filed on the day book is sufficient without
the same being annotated at the back of the corresponding certificate of Notice of lis pendens
title (Director of Lands v. Reyes, G.R. No. L-27594, Feb. 27, 1976)
Lis pendens literally means a pending suit. The doctrine of lis
Q: What claims may be registered as adverse claims? pendens refers to the jurisdiction, power or control which a court
acquires over property involved in a suit, pending the continuance
A: Anyclaim of part or interest in registered land that are adverse of the action, and until final judgment.
to the registered owner, arising subsequent to the date of the
original registration (Sec. 70, PD 1529) It merely creates a contingency and not a lien. It does not produce
any right or interest which may be exercised over the property of
NOTE: A mere money claim cannot be registered as an adverse claim. another. It only protects the applicants rights which will be
determined during trial.
Effect of the registration of an adverse claim
NOTE: It is not a lien or encumbrance under our civil law. It is mere
It renders the adverse claim effective and any transaction cautionary notice to prospective buyers of certain property that said
regarding the disputed land shall be subject to the outcome of the property is under litigation. The annotation of a notice of lis pendens at the
dispute. back of the original copy of the certificate of title on file with the Register of
Deeds is sufficient to constitute constructive notice to purchasers or other
persons subsequently dealing with the same property. One who deals with
Effect of non-registration of an adverse claim property subject of a notice of lis pendens cannot invoke the right of a
purchaser in good faith neither can he acquire better rights that those of his
The effect of non-registration or invalid registration of an adverse predecessors-in-interest.
claim renders it ineffective for the purpose of protecting the
claimants right or interest on the disputed land, and could not
thus prejudice any right that may have arisen thereafter in favor of
third parties.

2014 GOLDEN NOTES
Basis for such notice
Q: When may a notice of lis pendens be cancelled?
Such announcement is founded upon public policy and necessity,
the purpose of which is to keep the properties in litigation within A: A notice of lis pendens may be cancelled in the following cases
the power of the court until the litigation is terminated and to before final judgment upon order of the court:
prevent the defeat of the judgment or decree by subsequent 1. When it is shown that the notice is for the purpose of
alienation (Isabelita Cunanan et al., v. Jumping Jap Trading molesting the adverse party;
Corporation et al., G.R. No. 173834, April 24, 2009). 2. Where the evidence so far presented by the plaintiff does not
bear out the main allegations of the complaint;
Purposes of a notice of lis pendens 3. When it is shown that it is not necessary to protect the right
of the party who caused the registration thereof;
To: 4. Where the continuances of the trial are unnecessarily
1. Protect the rights of the party causing the registration of the delaying the determination of the case to the prejudice of the
lis pendens; and defendant;
2. Advise third persons who purchase or contract on the subject 5. Upon verified petition of the party who caused the
property that they do so at their peril and subject to the registration thereof; or
result of the pending litigation. 6. It is deemed cancelled after final judgment in favor of
defendant, or other disposition of the action, such as to
NOTE: It is an announcement to the whole world that a particular real terminate all rights of the plaintiff to the property involved.
property is in litigation, serving as a warning that one who acquires an
interest over said property does so at his own risk, or that he gambles on the
Cancellation of lis pendens even during the pendency of the case
result of the litigation over the said property. The filing of a notice of lis
pendens charges all strangers with a notice of the particular litigation
referred to therein and, therefore, any right they may thereafter acquire on Though ordinarily a notice of lis pendens cannot be cancelled while
the property is subject to the eventuality of the suit (Isabelita Cunanan et al., the action is still pending and undetermined, the proper court has
v. Jumping Jap Trading Corporation et al., G.R. No. 173834, April 24, 2009). discretionary power to cancel it under peculiar circumstances, as
for instance, where the evidence so far presented by the plaintiffs
Q: When may a notice of lis pendens be made and when may it does not bear out the main allegations of his complaint, and where
not be resorted to? the continuances of the trial, for which the plaintiffs is responsible
are unnecessarily delaying the determination of the case to the
A: prejudice of the defendants (Baranda v. Gustillo, G.R. No. L-81163,
NOTICE OF LIS PENDENS Sept. 26, 1988).
When applicable When Inapplicable
1. Recover possession of real 1. Attachments Q: When is a notice of lis pendens deemed cancelled?
estate 2. Levy or execution
2. Quieting of title 3. Proceedings on A: Under Section 77 of P.D. 1529, a notice of lis pendens shall be
3. Remove clouds upon title probate or wills deemed cancelled only upon the registration of a certificate of the
4. For Partition 4. Administration of the clerk of court in which the action or proceeding was pending
5. Any other proceeding of any real estate of deceased stating the manner of disposal thereof if there was a final judgment
kind in court directly affecting person in favor of the defendant or the action was disposed of terminating
title to the land or its use or 5. Proceedings for the finally all rights of the plaintiff over the property in
occupation or the building recovery of money litigation (Isabelita Cunanan et al., v. Jumping Jap Trading
thereon judgments Corporation et al., G.R. No. 173834, April 24, 2009).
Effects of the annotation of notice of lis pendens Q: Rommel was issued a certificate of title over a parcel of land in
Quezon City. One year later, Rachelle, the legitimate owner of the
The filing of notice of lis pendens has 2 effects: land, discovered the fraudulent registration obtained by Rommel.
1. It keeps the subject matter of litigation within the power of She filed a complaint against Rommel for reconveyance and
the court until the entry of the final judgment to prevent the caused the annotation of a notice of lis pendens on the certificate
defeat of the final judgment by successive alienation; and of title issued to Rommel. Rommel now invokes the
2. It binds a purchaser, bona fide or not, of the land subject of indefeasibility of his title considering that one year has already
the litigation to the judgment or decree that the court will elapsed from its issuance. He also seeks the cancellation of the
promulgate subsequently. notice of lis pendens.
Q: What statutory liens affecting title are not barred even though May the court cancel the notice of lis pendens even before final
not noted in the title? judgment is rendered? Explain. (1995 Bar Question)
A: A: A notice of lis pendens may be cancelled even before final

1. Liens, claims or rights arising or existing under the laws and judgment upon proper showing that the notice is for the purpose
the Constitution, not required by law to appear of record in of molesting or harassing the adverse party or that the notice of lis
the RD; pendens is not necessary to protect the right of the party who
2. Unpaid real estate taxes levied and assessed within two (2) cause it to be registered. (Sec. 77, PD 1529)
years immediately preceding the acquisition of any right over
the land by an innocent purchaser for value without prejudice In this case, it is given that Rachelle is the legitimate owner of the
to right of the government to collect taxes payable before land in question. It can be said, therefore, that when she filed her
that period from the delinquent taxpayer alone; notice of lis pendens her purpose was to protect her interest in the
3. Public highway or private way established or recognized by land and not just to molest Rommel. It is necessary to record the lis
law or any government irrigation canal or lateral thereof; and pendens to protect her interest because if she did not do it, there is
4. Any Disposition of the property or limitation on the use a possibility that the land will fall into the hands of an innocent
thereof by virtue of laws or regulations on agrarian reform purchaser for value and in that event, the court loses control over
(Sec. 44, PD 1529). the land making any favorable judgment thereon moot and

CIVIL LAW
academic. For these reasons, the notice of lis pendens may not be forest land may actually be covered with grass or planted with
cancelled. crops by kaingin cultivators or other farmers. Forest lands do not
have to be on mountains or in out-of-the-way places. The
NON-REGISTRABLE PROPERTIES classification of land is descriptive of its legal nature or status and
does not have to be descriptive of what the land actually looks like
Non-registrable lands (Vicente Yu Chang and Soledad Yu Chang v. Republic, G.R. No.
171726, Feb. 23, 2011).
These are properties of public dominion which, under existing
legislation, are not the subject of private ownership and are Foreshore land
reserved for public purposes.
A strip of land that lies between the high and low water marks and
NOTE: That properties of the public dominion are not susceptible to is alternatively wet and dry according to the flow of tide. It is that
prescription and that only properties of the State that are no longer part of the land adjacent to the sea, which is alternately covered
earmarked for public use, otherwise known as patrimonial, may be acquired and left dry by the ordinary flow of tides.
by prescription are fundamental, even elementary, principles in this
jurisdiction. In Heirs of Mario Malabanan v. Republic, the Supreme Court, in
NOTE: Seashore, foreshoreland, and/or portions of the territorial waters and
observance of the foregoing, clarified the import of Section 14(2) and made
beaches, cannot be registered. Even alluvial formation along the seashore is
the following declarations: (a) the prescriptive period for purposes of
part of the public domain and, therefore, not open to acquisition by adverse
acquiring an imperfect title over a property of the State shall commence to
possession by private persons.
run from the date an official declaration is issued that such property is no
longer intended for public service or the development of national wealth;
and (b) prescription will not run as against the State even if the property has Mangrove swamps
been previously classified as alienable and disposable as it is that official
declaration that converts the property to patrimonial (Republic of the These are mud flats, alternately washed and exposed by the tide, in
Philippines vs. Metro Index Realty and Development Corporation; G.R. No. which grows various kindred plants which will not live except when
198585, July 2, 201). watered by the sea, extending their roots deep into the mud and
casting their seeds, which also germinate there. These constitute
Reason behind their non-registrability the mangrove flats of the tropics, which exist naturally, but which
are also, to some extent cultivated by man for the sake of the
They are intended for public use, public service or development of combustible wood of the mangrove and like trees as well as for the
the national wealth. They are outside the commerce of men and, useful nipa palm propagated thereon (Montano v. Insular
therefore, not subject to private appropriation. Government, G.R. No. 3714, Jan. 26, 1909).
Q: Which lands are non-registrable? Q: Are mangrove swamps disposable?
A: A:No. Mangrove swamps or manglares are forestall and not
1. Property of public domain or those intended for public use, alienable agricultural land.
public service or development of the national wealth.
2. Forest or timber lands Mineral lands
3. Water sheds
4. Mangrove swamps Mineral land means any land where mineral resources are found.
5. Mineral lands Mineral resources, on the other hand, mean any concentration of
6. Parks and plazas mineral/rocks with potential economic value.
7. Military or naval reservations
8. Foreshore lands Q: Can land be partly mineral and partly agricultural?
9. Reclaimed lands
10. Submerged areas A: The rights over the land are indivisible and that the land itself
11. River banks cannot be half agricultural and half mineral. The classification of
12. Lakes land must be categorical; the land must be either completely
13. Reservations for public and semi-public purposes mineral or completely agricultural.
14. Others of similar character
Watershed
Q: In 1913, Gov. Gen. Forbes reserved a parcel of land for
provincial park purposes. Sometime thereafter, the court ordered It is a land area drained by a stream or fixed body of water and its
said land to be registered in Ignacio Palomos name. What is the tributaries having a common outlet for surface runoff.
effect of the act of Gov. Gen Forbes in reserving the land for
provincial park purposes? Watershed reservation
A: As part of the reservation for provincial park purposes, they It is a forest land reservation established to protect or improve the
form part of the forest zone. It is elementary in the law governing conditions of the water yield thereof or reduce sedimentation.
natural resources that forest land cannot be owned by private
persons. It is not registrable and possession thereof, no matter Q: Public Reclamation Authority (formerly Philippine Estate
how lengthy, cannot convert it into private property, unless such Authority or PEA), reclaimed several portions of the foreshore
lands are reclassified and considered disposable and alienable (Sps. and offshore areas of Manila Bay. In 2003, the Paraaque City
Palomo, et. al. v. CA, et. al., G.R. No. 95608, Jan. 21, 1997). Treasurer issued Warrants of Levy of PRAs reclaimed propertied.
PRA filed a petition for prohubiton with prayer for TRO. The RTC
Q: Under what instance is a forested area classified as a forest dismiss PRAs petition and ruled that PRA was not exempt from
land? payment of real property taxes as it was organized as a stock
corporation. Is the ruling correct?
A: A forested area classified as forest land of the public domain
does not lose such classification simply because loggers or settlers A: The subject lands are reclaimed lands, specifically portions of
may have stripped it of its forest cover. Parcels of land classified as the foreshore and offshore areas of Manila Bay. As such, these

2014 GOLDEN NOTES
lands remain public lands and form part of the public domain. In
the case of Chavez v. Public Estates Authority and AMARI Coastal DEALINGS WITH UNREGISTERED LANDS
Development Corporation, the Court held that foreshore and
submerged areas irrefutably belonged to the public domain and Q: Is the transfer of an unregistered land valid?
were inalienable unless reclaimed, classified as alienable lands
open to disposition and further declared no longer needed for A: Yes. It is valid only between the parties and does not bind third
public service. The fact that alienable lands of the public domain persons. Sec. 113 of P.D. 1529 states that no deed, conveyance,
were transferred to the PEA (now PRA) and issued land patents or mortgage, lease, or other voluntary instrument affecting land not
certificates of title in PEAs name did not automatically make such registered under the Torrens system shall be valid, except as
lands private. This Court also held therein that reclaimed lands between the parties thereto, unless such instrument shall have
retained their inherent potential as areas for public use or public been recorded in the manner herein prescribed in the office of the
service (Republic of the Philippines, represented by the Philippine Register of Deeds for the province or city where the land lies.
Reclamation Authority (PRA) vs. City of Paraaque; G.R. No.
191109, July 18, 2012.)
Functions of the RD, LRA and the courts in land registration
RD LRA COURTS
1. Registration of an instrument presented for 1. Assistance to the Department of Jurisdiction over:
registration dealing with real or personal Agrarian Reform, the Land Bank,
property which complies with the requisites and other agencies in the 1. Applications for original registration of
for registration implementation of the land title to lands, including improvements
2. See to it that said instrument bears the proper reform program of the and interests therein
documentary and stamps and that the same government 2. Petitions filed after original
are properly cancelled 2. Assistance to courts in ordinary registration, with power to hear and
3. If the instrument is not registerable: and cadastral land registration determine all questions arising upon
4. deny the registration thereof and inform the proceedings such application or petitions.
presentor of such denial in writing, stating the 3. Central repository of records
ground or reason therefore, and relative to the original
5. advising him of his right to appeal by consulta registration of lands titled under
in accordance with Sec. 117 of PD 1529 the Torrens system, including
6. Prepare and keep an index system which the subdivision and
contains the names of all registered owners consolidation plans of titled
and lands registered lands.
4. Adjudicate appeal en consulta
cases

CIVIL LAW
TORTS AND DAMAGES

This refers to a tort or wrong perpetuated by one who
TORTS intends to do that which the law has declared wrong as
contrasted with negligence in which the tortfeasor fails to
PRINCIPLES exercise that degree of care in doing what is otherwise
permissible (Blacks Law Dictionary, 1990).
Tort
3. Strict liability The person is made liable independent of fault
It is a civil wrong wherein one persons conduct causes a or negligence upon submission of proof of certain facts.
compensable injury the person, property or recognized interest of
another, in violation of a duty imposed by law. According to scope
NOTE:The term tort was not used by the Code Commission and instead used 1. General the catch-all provisions on torts provided for in the
the term quasi-delict because it is broader in coverage as it covers in Civil Code i.e. Articles 19, 20 and 21. The effect is that there
common law countries, acts which are intentional or malicious, which latter is a general duty owed to every person not to cause harm
acts in the general plan of the Philippine legal system are governed by the
Penal Code. However, the case of Barredo v. Garcia made no distinction
either willfully or negligently. Articles 19, 20, and 21 are
between intentional and negligent injuries as it declared that quasi delict provisions on human relations that were intended to expand
include punishable and non-punishable acts or omission (Pineda, 2004). the concept of torts in this jurisdiction by granting adequate
legal remedy for the untold number of moral wrongs which is
Main functions of punishing tort impossible for human foresight to specifically provide for in
the statutes. (Aquino, 2005, citing PNB v. CA, et al. 83 SCRA
1. Compensation and Restitution To compensate persons 237)
sustaining a loss or harm as a result of anothers act or
omission, placing the cost of that compensation on those 2. Specific torts - It includes trespass, assault and battery,
who, in justice ought to bear it. negligence, products liability, and intentional infliction of
2. Prevention To prevent future losses and harm. emotional distress. As defined, torts fall into three different
categories: intentional, negligent and liability (manufacturing
Major purposes of imposing liability arising from tort and selling defective products), product liability tort.
1. To provide a peaceful means for adjusting the rights of a. Art. 19, 20, 21 (catch-all provisions)
parties who might otherwise take the law into their own b. Unjust enrichment (Arts. 22, 23, 2142 & 2143)
hands. c. Violation of right of privacy and family relations
2. Deter wrongful conduct. d. Dereliction of official duty of public officers
3. Encourage socially responsible behavior. e. Unfair competition
4. Restore injured parties to their original condition insofar as f. Malicious prosecution
the court can do this by compensating them for their injury. g. Violation of rights and liberties of another person
h. Nuisance
Civil liabilities which may arise due to an act or omission of one,
causing damage to another THE TORTFEASOR
1. Civil liability ex delicto, under Article 100 of the Revised Penal Persons liable for quasi-delict
Code.
2. Independent civil liabilities, such as those: Defendants in tort cases can either be natural or artificial beings.
(a) Not arising from an act or omission complained of as a
felony, e.g., culpa contractual or obligations arising from A corporation may be held civilly liable in the same manner as
law under Article 31 of the Civil Code (such as breach of natural persons (PNB v. CA, 83 SCRA 237).
contract or tort), intentional torts under Articles 32 and
34, and culpa aquiliana under Article 2176 of the Civil With respect to close corporations, the stockholders who are
Code. personally involved in the operation of the corporation may be
(b) Where the injured party is granted a right to file an personally liable for corporate torts under Section 100 of the
action independent and distinct from the criminal Corporation Code.
action under Article 33 of the Civil Code (in cases of
defamation, fraud and physical injuries). Liability of the owner of a vehicle in case of an accident
Either of these liabilities may be enforced against the offender In motor vehicle mishaps, the owner is solidarily liable with his
subject to the caveat under Article 2177 of the Civil Code that the driver, if the former, who was in the vehicle, could have, by the use
plaintiff cannot recover damages twice for the same act or of the due diligence, prevented the misfortune. It is disputably
omission of the defendant (Santos v. Pizardo, G.R. No. 151452, July presumed that a driver was negligent, if he had been found guilty
29, 2005). or reckless driving or violating traffic regulations at least twice
within the next preceding two months (Art. 2184, NCC).
CLASSIFICATION OF TORTS
Liability of proprietors of buildings
According to manner of commission
a. The proprietor of a building or structure is responsible for the
1. Negligent torts It involves voluntary acts or omissions which damages resulting from its total or partial collapse, if it should
results in injury to others, without intending to cause the be due to the lack of necessary repairs (Art. 2190, NCC).
same. b. Proprietors shall also be responsible for damages caused:
2. Intentional torts The actor desires to cause the 1) By the explosion of machinery which has not been taken
consequences of his act or believes the consequences are care of with due diligence, and the inflammation of
substantially certain to result therefrom.

2014 GOLDEN NOTES
TORTS AND DAMAGES
explosive substances which have not been kept in a safe jointly and severally liable for damages (Pineda, 2009 citing Tiu v.
and adequate place; Arriesgado 437 SCRA 426).
2) By excessive smoke, which may be harmful to persons
or property; ACT OR OMISSION AND ITS MODALITIES
3) By the falling of trees situated at or near highways or
lanes, if not caused by forcemajeure; Quasi-delict
4) By emanations from tubes, canals, sewers or deposits of
infectious matter, constructed without precautions Whoever by act or omission causes damage to another, there
suitable to the place (Art. 2191, NCC). being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual
Liability for collapse of a building relation between the parties (Art. 2176, NCC).
The owner of the building is the one liable for damages when a Act
building collapses. However, the engineer or architect who drew
up the plans and specifications for the building is liable for It is any bodily movement tending to produce some effect in the
damages if within 15 years from the completion of the structure, external world, it being unnecessary that the same be actually
the same should collapse by reason of a defect in those plans and produced, as the possibility of its production is sufficient (People v.
specifications, or due to the defects in the ground. The contractor Gonzales, 183 SCRA 309, 324).
may also be held liable if the edifice falls, within the same period,
on account of defects in the construction of the use of materials of Fault or Negligence
inferior quality furnished by him, or due to any violation of the
terms of the contract (Art. 1723, NCC). It consists in the omission of that diligence which is required by the
nature of the obligation and corresponds with the circumstances of
Rules on liability for collapse of a building: the persons, of the time and of the place (Art. 1173, NCC).
1. The collapse of the building must be within 15 years from the Responsibility arising from negligence in the performance of every
completion of the structure. kind of obligation is demandable, but such liability may be
2. The prescriptive period is 10 years following the collapse. regulated by the courts, according to the circumstances (Art. 1172,
3. If the engineer or architect supervises the construction, he NCC).
shall be solidarily liable with the contractor.
4. The liability applies to collapse or ruin, not to minor defects. When negligence shows bad faith, responsibility arising from fraud
5. Even if payment has been made, an action is still possible is demandable in all obligations (Art. 1171, NCC). Furthermore, in
(Art. 1723, NCC). case of fraud, bad faith, malice or wanton attitude, the obligor shall
be responsible for all damages which may be reasonably attributed
When a building collapses during an earthquake to the non-performance of the obligation (Art. 2201, NCC).
1. No one can be held liable in view of the fortuitous eventif the If the law or contract does not state the degree of diligence
proximate cause of the collapse of the building is an required in the performance of the obligation, that which is
earthquake. expected of a good father of a family must be observed (Art. 1173,
2. HOWEVER, if the proximate cause is the defective designing NCC).
or construction, or directly attributable to the use of inferior
or unsafe material, it is clear that liability exists (Art. 1723, When is negligence excused
NCC; Juan F. Nakpil & Sons v. CA, 144 SCRA 596).
GR: Negligence is excused when events that transpired were
Liability of cities and municipalities unforeseen or, which though foreseen, were inevitable.
Cities and municipalities shall be subsidiarily liable for the neglect XPN:
of duty of a member of a city or municipal police force (Art. 34, 1. In cases specified by law
NCC). 2. When declared by stipulation
3. When the nature of the obligation requires the assumption of
The defense of having observed the diligence of a good father of a risk
family to prevent the damage is not available to the city or
municipality. Q: Rosa was leasing an apartment in the city. Because of the Rent
Control Law, her landlord could not increase the rental as much
Joint Tortfeasors as he wanted to, nor terminate her lease as long as she was
paying her rent. In order to force her to leave the premises, the
All the persons who command, instigate, promote, encourage, landlord stopped making repairs on the apartment, and caused
advice, countenance, cooperate in, aid, or abet the commission of the water and electricity services to be disconnected. The
a tort, or who approve it after it is done, if done for their benefit; difficulty of living without electricity and running water resulted
they are each liable as a principal, to the same extent and in same in Rosa's suffering a nervous breakdown. She sued the landlord
manner as if they have performed the wrongful act themselves for actual and moral damages. Will the action prosper? (1996 Bar
(Worcester v. Ocampo, 22 Phil 42). Question)
They are solidarily liable for the damage caused (Metro Manila A: Yes, based on quasi-delict under the human relations provisions
Transit Corporation v. CA, 298 SCRA 495). of the NCC (Articles 19, 20 and 21) because the act committed by
the lessor is contrary to morals.
In case of injury to a passenger due to the negligence of the driver
of the bus on which he was riding and of the driver of another Moral damages are recoverable under Article 2219(10) in relation
vehicle, the drivers as well as the owners of the two vehicles are to Article 21. Although the action is based on quasi-delict and not

CIVIL LAW
on contract, actual damages may be recovered if the lessee is able VICARIOUS LIABILITY: PARENTS
to prove the losses and expenses she suffered.
Basis of vicarious liability of the parents
Principle of vicarious liability or law on imputed negligence
This liability is made natural as a logical consequence of the duties
Under Art. 2180, a person is not only liable for torts committed by and responsibilities of parents exercising parental authority which
him, but also for torts committed by others with whom he has a includes controlling, disciplining and instructing their children. In
certain relation or for whom he is responsible. this jurisdiction the parents liability is vested by law which
assumes that when a minor or unemancipated child living with
A person or juridical entity is made liable solidarily with a their parent, commits a tortuous act, the parents are presumed
tortfeasor simply by reason of his relationship with the latter. The negligent in the performance of their duty to supervise the children
relationship may either be a parent and child; guardian and ward; under their custody. A presumption which is juris tantum, not juris
employer and employee; school and student. et de jure, and can be rebutted only by showing proof of having
exercised and observed all the diligence of a good father of a family
The presumption of law is that there was negligence on the part of (diligentissimi patris familias) (Tamagro v. CA, 209 SCRA 519).
the master or employer either in the selection of the servant or
employee (culpa in eligendo) or in the supervision over him after Requisites of vicarious liability of the parents
the selection (culpa vigilando), or both.
1. The child is below 21 years of age
NOTE:The presumption is juris tantumand not juris et de jure; consequently,
2. The child committed a tortuous act to the damage and
it may be rebutted. Accordingly, if the employer shows to the satisfaction of
the court that in the selection and supervision of his employee he has
prejudice of another person
exercised the care and diligence of a good father of a family, the 3. The child lives in the company of the parent concerned
presumption is overcome and he is relieved of the liability. whether single or married (Pineda, 2009).
The nature of a vicarious obligors liability is primary and direct, not Minors v. Incapacitated persons
subsidiary. He is solidarily liable with the tortfeasor. His
responsibility is not conditioned upon the insolvency of or prior Minors here refer to those who are below 21 years and not to
recourse against the negligent tortfeasor (De Leon Brokerage v. CA, those below 18 years. While incapacitated persons refer to
G.R. 15247, Feb. 28, 1962). persons beyond 21 years of age but are incapacitated such as those
who are insane or imbecile. The reason is that R.A. 6809, the law
PERSONS VICARIOUSLY LIABLE (F-GOES-T) reducing the age of majority states in Art. 236 that Nothing in this
code shall be construed to derogate from the duty or responsibility
1. Father, or in case of death or incapacity, mother: of parents and guardians for children and wards below 21 years of
a. Damage caused by minor children age mentioned in the second and third paragraphs of Art. 2180 of
b. Living in their company the Civil Code (Pineda, 2009).
2. Guardians:
a. For minors or incapacitated persons Vicarious liability of other persons exercising parental authority
b. Under their authority
c. Living in their company In default of the parents or a judicially appointed guardian,
3. Owners and managers of establishments: parental authority shall be exercised by the following persons in
a. For their employees the order indicated:
b. In the service of the branches in which they are 1. Surviving grandparents;
employed, or; 2. Oldest sibling, over 21 years old unless unfit or unqualified;
c. On the occasion of their functions 3. Childs actual custodian, over 21 years old unless unfit or
4. Employers: disqualified.
a. Damages caused by employees and household helpers
b. Acting within the scope of their assigned tasks Judicially adopted children are considered legitimate children of
c. Even if the employer is not engaged in any business or their adopting parents (Sec. 17, RA 8552 Domestic Adoption Act of
industry 1988). Thus, adopters are civilly liable for their tortuous/criminal
5. State acting through a special agent and not when the acts if the children live with them and are minors.
damage has been caused by the official to whom the task
done properly pertains. The mother is not simultaneously liable with the father. It is only in
6. Teachers or heads of establishments: the case of death or incapacity of the father, that the mother may
a. Of arts and trades be held liable.
b. For damages caused by their pupils and students or
Consequently, the wife as a co-defendant with the husband or if
apprentices
impleaded alone while the husband is alive and well, may move to
c. So long as they remain in their custody (Art. 2180, NCC)
dismiss the case filed against her for being premature (Romano v.
Parinas, 101 Phil. 141).
The actual tortfeasor is not exempted from liability
As for an illegitimate child, if he is acknowledged by the father and
The minor, ward, employee, special agent, pupil, students and live with the latter, the father shall be responsible. However, if he
apprentices who actually committed the delictual acts are not is not recognized by the putative father but is under the custody
exempted by the law from personal responsibility. They may be and supervision of the mother, it is the latter who is the one
sued and made liable alone as when the person responsible for vicariously liable (Pineda, 2009).
them or vicarious obligor proves that he exercised the diligence of
a good father of a family or when the minor or insane person has
no parents or guardians. In the latter instance, they are answerable
with their own property (Pineda, 2009).

2014 GOLDEN NOTES
TORTS AND DAMAGES
VICARIOUS LIABILITY: GUARDIANS Once there is a conviction for a felony, final in character, the
employer under Article 103 of the RPC, is subsidiary liable, if
Minors it be shown that the commission thereof was in the discharge
of the duties of the employee. A previous dismissal of an
Minors here refer to those who are below twenty-one (21) years action based on culpa aquiliana could not be a bar to the
and not to those below 18 years. The law reducing the majority age enforcement of the subsidiary liability required by Art. 103
from 21 to 18 years did not amend these paragraphs (Art. 236 FC RPC (Jocson, et al. v. Glorioso, G.R. L-22686, Jan. 30, 1968)
as amended by RA No. 6809) (Pineda, 2009). (Pineda, pp. 101-102, 2009 ed.).
De facto guardians covered by Art. 2180 Vicarious liability Owners and Managers of Establishment v.
Vicarious liability of Employers
They are liable for acts committed by children while living with
them and are below 21 years of age, the law being applied by Owners/Managers Employers (Par 5)
analogy. De facto guardians are relatives and neighbors who take (Par 4)
upon themselves the duty to care and support orphaned children Requires engagement in The employers need not be
without passing through judicial proceedings (Pineda, 2009). business on the part of the engaged in business or
employers as the law speaks industry.
VICARIOUS LIABILITY: OWNERS AND MANAGERS OF of establishment or
ESTABLISHMENTS AND ENTERPRISES enterprise
Owners and managers Covers negligent acts of Covers negligent acts of

employees committed either employees acting within the
The terms owners and managersare used in the sense of in the service of the branches scope of their assigned tasks
employer and do not include the manager of a corporation who or in the occasion of their
himself is just an employee (Phil. Rabbit Bus Lines v. Phil. American functions
Forwarders, Inc., G.R. No. L-25142, Mar. 25, 1975).
However, a manager who is not an owner but who assumes the

responsibility of supervision over the employees of the owner may Requisites before an employer may be held liable under Article
be held liable for the acts of the employees (Pineda, 2009). 2180 (4) for the act of its employees
To make the employer liable under Art. 2180, it must be 1. The employee was chosen by the employer personally or
established that the injurious or tortuous act was committed at the through another;
time the employee was performing his functions (Marquez v. 2. The service is to be rendered in accordance with orders which
Castillo, 68 Phil 568; Cerf v. Medel, 33 Phil 37). the employer has the authority to give all times;
3. That the illicit act of the employee was on the occasion or by
VICARIOUS LIABILITY: EMPLOYERS reason of the functions entrusted to him (Jayme v. Apostol,
572 SCRA 43).
Employer
Vicarious liability Owners and Managers of Establishment under
An employer includes any person acting directly or indirectly in the Article 2180 (5)
interest of an employer in relation to an employee and shall
include the government and all its branches, subdivisions and It is NOT required that the employer is engaged in some kind of
instrumentalities, all government owned or controlled corporations industry or work. Negligent acts of employees, whether or not the
and institutions, as well as non-profit private institutions, or employer is engaged in a business or industry, are covered so long
organizations (Art. 97, P.D. 442). as they were acting within the scope of their assigned task. For,
admittedly, employees oftentimes wear different hats. They
The employer is presumed to be negligent and the presumption perform functions beyond their office, title or designation but
flows from the negligence of the employee. Once the employees which, nevertheless, are still within the call of duty (Castilex
fault is established, the employer can then be made liable on the Industrial Corporation v. Vasquez, et. al., 321 SCRA 401).
basis of the presumption that the employer failed to exercise
diligentissimi patris familias in the selection and supervision of its It is required that the employee must be performing his assigned
employees (LRTA v. Navidad, G.R. 145804, Feb. 6, 2003). task at the time that the injury is caused.The vicarious liability of
employers attaches only when the tortuous conduct of the
Remedies of the injured party in pursuing the civil liability of the employee relates to, or is in the course of his employment
employer for the acts of his employees (Valenzuela v. CA, G.R. no. 115024 February 7, 1996).
1. If he chooses to file a civil action for damages based on quasi- However, it is not necessary that the task performed by the
delict under Article 2180 and succeeds in proving the employee is his regular job or that which was expressly given to
negligence of the employee, the liability of the employer is him by the employer. It is enough that the task is indispensable to
primary, direct and solidary. It is not conditioned on the the business or beneficial to the employer (Filamer Christian
insolvency of the employee (Metro Manila Transit Corp. v. CA, Institute v. IAC, 212 SCRA 637).
G.R. No. 118069, Nov. 16, 1998).
2. If he chooses to file acriminal case against the offender and Q: OJ was employed as professional driver of MM Transit bus
was found guilty beyond reasonable doubt, the civil liability owned by Mr. BT. In the course of his work, OJ hit a pedestrian
of the employer is subsidiary. The employer cannot use as a who was seriously injured and later died in the hospital as a
defense the exercise of the diligence of a good father of a result of the accident. The victims heirs sued the driver and the
family. owner of the bus for damages. Is there a presumption in this case
that Mr. BT, the owner, had been negligent? If so, is the
presumption absolute or not? (2004 Bar Question)

CIVIL LAW
Employers liability under Art. 2180 NCC v. Employers liability
A: Yes, there is a presumption of negligence on the part of the under Revised Penal Code
employer. However, such presumption is rebuttable. The liability of
the employer shall cease when they prove that they observed the CIVIL CODE RPC
diligence of a good father of a family to prevent damage (Article Liability is direct, primary, and Liability is subisidiary
2180, NCC). When the employee causes damage due to his own solidary - the employer may
negligence while performing his own duties, there arises the juris be sued even without suing
tantum presumption that the employer is negligent, rebuttable the employee
only by proof of observance of the diligence of a good father of a Diligence of a good father of a Diligence of a good father of a
family (Metro Manila Transit v. CA, 223 SCRA 521 [1993]; Delsan family is a defense family is not a defense
Transport Lines v, C&tA Construction, 412 SCRA 524).Likewise, if Employer is liable even if not Petitioner must prove that the
the driver is charged and convicted in a criminal case for criminal engaged in business employer is engaged in
negligence, BT is subsidiarily liable for the damages arising from business
the criminal act. Proof of negligence is by mere Proof beyond reasonable
preponderance of evidence doubt is required
Q: After working overtime up to midnight, Alberto, an executive
of an insurance company drove a company vehicle to a favorite Q: Arturo sold his Pajero to Benjamin for P1M. Benjamin took the
Videoke bar where he had some drinks and sang some songs with vehicle but did not register the sale with the Land Transportation
friends to "unwind". At 2:00 a.m., he drove home, but in doing so, Office. He allowed his son Carlos, a minor who did not have a
he bumped a tricycle, resulting in the death of its driver. May the driver's license, to drive the car to buy pan de sal in a bakery. On
insurance company be held liable for the negligent act of Alberto? the way, Carlos driving in a reckless manner, sideswiped Dennis,
Why? (2001 Bar Question) then riding a bicycle. As a result, he suffered serious physical
injuries. Dennis filed a criminal complaint against Carlos for
A: No. The insurance company is not liable because when the reckless imprudence resulting in serious physical injuries.
accident occurred, Alberto was not acting within the assigned tasks
of his employment. 1. Can Dennis file an independent civil action against Carlos
and his father Benjamin for damages based on quasi-delict?
It is true that under Art. 2180 (5), employers are liable for damages 2. Assuming Dennis' action is tenable, can Benjamin raise the
caused by their employees who were acting within the scope of defense that he is not liable because the vehicle is not
their assigned tasks. However, the mere fact that Alberto was using registered in his name? (2006 Bar Question)
a service vehicle of the employer at the time of the injurious
accident does not necessarily mean that he was operating the A:
vehicle within the scope of his employment. In Castilex Industrial 1. Yes, Dennis can file an independent civil action against Carlos
Corp. v. Vasquez Jr (321 SCRA393 [1999]), the Supreme Court held and his father for damages based on quasi-delict there being
that notwithstanding the fact that the employee did some an act or omission causing damage to another without
overtime work for the company, the former was, nevertheless, contractual obligation. Under Section 1 of Rule 111 of the
engaged in his own affairs or carrying out a personal purpose when 2000 Rules on Criminal Procedure, what is deemed instituted
he went to a restaurant at 2:00 a.m. after coming out from work. with the criminal action is only the action to recover civil
The time of the accident (also 2:00 a.m.) was outside normal liability arising from the act or omission punished by law. An
working hours. action based on quasi-delict is no longer deemed instituted
and may be filed separately (Section 3, Rule 111, Rules of
When a criminal case is filed against the offender, before the Criminal Procedure).
employers subsidiary liability is exacted, there must be proof
that 2. No, Benjamin cannot raise the defense that the vehicle is not
registered in his name. His liability, vicarious in character, is
1. They are indeed the employer of the convicted employee based on Article 2180 because he is the father of a minor who
2. The former are engaged in some kind of industry caused damage due to negligence. While the suit will prosper
3. The crime was committed by the employees in the discharge against the registered owner, it is the actual owner of the
of their duties private vehicle who is ultimately liable (See Duavit v.CA, G.R.
4. That the execution against the latter has not been satisfied No. L-29759, May 18, 1989).The purpose of car registration is
due to insolvency (Philippine Rabbit Bus Lines, Inc. V. People, to reduce difficulty in identifying the party liable in case of
427 SCRA 456). accidents (Villanueva v. Domingo, G.R. No. 144274, Sept. 14,
2004).
Defenses available to an employer
VICARIOUS LIABILITY: STATE
1. Exercise of due diligence in the selection and supervision of
its employees (except in criminal action); Aspects of liability of the State
2. The act or omission was made outside working hours and in
violation of companys rules and regulations. 1. Public/Governmental Where the State is liable only for the
tortuous acts of its special agents.
Q: Would the defense of due diligence in the selection and 2. Private/Non-governmental When the State is engaged in
supervision of the employee available to the employer in both private business or enterprise, it becomes liable as an
instances? (1997 Bar Question) ordinary employer (Fontanilla v. Maliaman; NIA v. Fontanilla,
179 SCRA 685).
A: The defense of diligence in the selection and supervision of the
employee under Article 2180 of the Civil Code is available only to The State is only liable for the negligent acts of its officers, agents
those primarily liable thereunder, but not to those subsidiary liable and employees when they are acting as special agents. The State
under Article 103 of the Revised Penal Code (Yumul v. Juliano, G.R. has voluntarily assumed liability for acts done through special
No. 47690, Apr., 28, 1941). agents (Pineda, 2009, p.105).

2014 GOLDEN NOTES
TORTS AND DAMAGES
The State assumes the role of an ordinary employer and will be A student is in custody of the school authorities
held liable for the special agents torts (Fontanilla v. Malianan). If
the act is performed by an official upon whom previously devoted The student is in the custody of the school authorities as long as he
the duty of doing the act performed, it is the official, not the State, is under the control and influence of the school and within its
who is liable for damages by the act he performed (Pineda, 2004). premises, whether the semester has not ended, or has ended or
has not yet begun. The term custody signifies that the student is
Special Agent within the control and influence of the school authorities. The
teacher in charge is the one designated by the dean, principal, or
A special agent is one who receives a definite and fixed order or other administrative superior to exercise supervision over the
commission, foreign to the exercise of the duties of his office. pupils or students in the specific classes or sections to which they
are assigned. It is not necessary that at the time of the injury, the
An employee who on his own responsibility performs functions teacher is physically present and in a position to prevent it.
inherent in his office and naturally pertaining thereto is not a
special agent (Meritt v. Government of the Philippine Islands, 34 Article 218 of the Family Code v. Article 2180 of the New Civil
Phil 311). Code
If the special agent is not a public official and is commissioned to ARTICLE 218 of the ARTICLE 2180 of the
perform non-governmental functions, then the State assumes the Family Code New Civil Code
role of an ordinary employer and will be held liable as such for the Teachers, head of
tortuous acts of said agent. If the State commissioned a private School, its administrators,
establishment in arts and
individual to perform a special governmental task, it is acting teachers engaged in child care
trades are made expressly
through a special agent within the meaning of the provision (NIA v. are made expressly liable
liable
Fonatanilla, supra).
Liability of school, its
VICARIOUS LIABILITY: TEACHERS AND HEADS OF administrators, teachers is No such express solidary nor
ESTABLISHMENTS OF ARTS AND TRADES solidary and parents are made subsidiary liability is stated
subsidiary liable
Basis of the teachers vicarious liability Students involved must be a Students involved are not
minor necessarily minors
The basis of the teachers vicarious liability is, as such, they acting
in Loco Parentis (in place of parents). However teachers are not The NATURE of the liability of the persons enumerated under Art.
expected to have the same measure of responsibility as that 218 of the Family Code is principally and solidary.
imposed on parent for their influence over the child is not equal in
degree. The parent can instill more lasting discipline on the child Those given authority and responsibility under Art. 218 shall be
than the teacher and so should be held to a greater accountability principally and solidarily liable for damages caused by the acts or
than the teacher or the head for the tort committed by the child. omissions of the unemancipated minor. The parents, judicial
guardians or the persons exercising substitute parental authority
Rationale of vicarious liability of school heads and teachers over said minor shall be subsidiarily liable. The respective liabilities
shall not apply if it is proved that they exercised proper diligence
The rationale of school heads and teachers liability for tortuous required under the particular circumstances (Art 219, FC).
acts of their pupil and students, so long as they remain in custody,
is that they stand, to a certain extent, as to their pupils and Unemancipated minor
students, in loco parentis and are called upon to exercise
reasonable supervision over the conduct of the child. This is The term unemancipated minor found in Art. 221 means children
expressly provided for in Articles 349, 350 and 352 of the Civil Code below 18 years of age. This is in contrast with the minor children
(Pineda, 2009). found in Art. 2180(2) of NCC which refers to children below 21
years. To avoid the overlapping in ages, the better option to settle
Application vicarious liability the conflict is to consider Art 221 as totally superseded by Art
236(FC) as amended by R.A. 6809. Thus:
The application of Article 2180 is NOT limited to school of arts and
trades. It applies to all, including academic institutions where the GR: 18 years of age parental authority ceases (emancipation)
teacher-in-charge is liable for the acts of his students. In the case of
establishments of arts and trades, it is the head thereof, and only XPN: 21 years of age in the following cases
he, who shall be liable (Amadora v CA, 160 SCRA 315). 1. Marriage
2. Art. 2180(2) NCC
There is really no substantial difference between the academic and
non-academic schools in so far as torts committed by their Art. 221 of the Family Code provides that parents and other
students are concerned. The same vigilance is expected from the persons exercising parental authority shall be civilly liable for the
teacher over the student under their control and supervision, injuries and damages caused by the act or omission or their
whatever the nature of the school where he is teaching. unemancipated children living in their company and under parental
authority subject to the appropriate defenses provided by law.
Even if the student has already reached the age of majority, the
liability CAN be imputed to the teacher-in-charge.Under Article Defenses available
2180, age does not matter. Unlike the parent who will be liable
only if the child is still a minor, the teacher is held answerable by These persons identified by law to be liable may raise the defense
the law for the act of the student regardless of the age of the that they exercised proper diligence required under the
student (Pineda, 2009, citing Amadora v. Court of Appeals, 160 circumstances. Their responsibility will cease when they prove that
SCRA 315). they observed all the diligence of a good father of a family to
prevent damage. As regards the employer, if he shows to the
satisfaction of the court that in the selection and in the supervision
of his employees he has exercised the care and diligence of a good

CIVIL LAW
father of a family, the presumption is overcome and he is relieved d. Hindsight Test;
from liability (Layugan v. IAC, G.R. No. L-49542, Sept. 12, 1980). e. Orbit of Risk Test;
f. Substantial Factor Test (Aquino, 2005).
Q: A 15-year-old high school student stabs his classmate who is
his rival for a girl, while they were going out of the classroom CAUSE-IN-FACT TEST
after their last class. Who may be held liable? (2005 Bar Question)
But for Test
A: Under Section 218 of the Family Code, the school, its
administrators and teachers, or the individual, entity or institution This is also known as the sine qua non test. It considers whether
engaged in child care shall have special parental authority and the injury would not have occurred but for the defendant's
responsibility over the minor child while under their supervision, negligent act. Defendants conduct is the cause in fact of the injury
instruction or custody. Authority and responsibility shall apply to all if the damage would not have resulted had there been no
authorized activities whether inside or outside the premises of the negligence on the part of the defendant.
school, entity or institution.
The conduct of the defendant is not the cause of the event if the
PROXIMATE CAUSE event would have occurred without it (Suarez, 2011).
Proximate cause Substantial factor test
Proximate causeisthat cause, which, in natural and continuous It makes the negligent conduct the cause-in-fact of the damage if it
sequence, unbroken by any efficient intervening cause, produces was a substantial factor in producing the injuries. It is important in
the injury, and without which the result would not have occurred. cases where there are concurrent causes (Aquino, 2005).
When the plaintiff's own negligence was the immediate and Principle of concurrent causes
proximate cause of his injury, he cannot recover damages. But if his
negligence was only contributory, the immediate and proximate Where the concurrent or successive negligent acts or omissions of
cause of the injury being the defendant's lack of due care, the two or more persons, although acting independently, are in
plaintiff may recover damages, but the courts shall mitigate the combination with the direct and proximate cause of a single injury
damages to be awarded (Art. 2179, NCC). to a 3rd person, and it is impossible to determine what proportion
each contributed to the injury, either of them is responsible for the
Proximate, immediate, intervening, remote and concurrent whole injury, even though his act alone might not have caused the
causes distinguished entire injury.
Necessary and sufficient test

PROXIMATE INTERVENING REMOTE CONCURRENT
CAUSE CAUSE CAUSE CAUSE
The act or omission is a cause-in-fact if it is a necessary element of
It is the cause One that a sufficient set.
which, in destroys the
causal Causes brought
natural and Natural and probable test
connection about by the
continuous That cause
between the acts and
sequence, which some Where the defendants liability is recognized only if the harm or
negligent act omissions of
unbroken by independent injury suffered is the natural and probable consequence of his act
and injury and third persons
any efficient force merely or omission complained of (Banzon v. CA, 175 SCRA 297).
thereby which makes
intervening took
negatives the defendant
cause, advantage of POLICY TEST
liability. still liable. Here,
produces the to accomplish
the proximate
injury, and something not Foreseeability test
NOTE:Foreseeable cause is not
without which the natural
Intervening causes effect thereof. necessarily the Where the particular harm was reasonably foreseeable at the time
the result
cannot be sole cause of
would not of the defendants misconduct, his act or omission is the legal
considered the accident
have sufficient cause thereof. To be negligent, the defendant must have acted or
occurred. intervening causes failed to act in such a way that an ordinary reasonable man would
have realized that certain interests of certain persons were
Tests to determine whether a cause is proximate unreasonably subjected to a general but definite class of risk which
made the actors conduct negligent, it is obviously the
1. Cause-In-Fact Test It is necessary that there is proof that consequence for the actor must be held legally responsible
defendants conduct is a factor in causing plaintiffs damage. (Pineda, Torts and Damages, 2009, p.53).
a. But For Test / Sine Qua Non Test
b. Substantial Factor Test A prudent man placed in the position of the defendant would have
c. Necessary and Sufficient Test (NESS) (Aquino, 2005) recognized that the course which he will pursue was fraught with
2. Policy test The law limits the liability of the defendant to risk and he should therefore foresee the impending harm that will
certain consequences of his action; if the damage or injury to result if he continues (Suarez, 2011, 117).
the plaintiff is beyond the limit of the liability fixed by law,
the defendants conduct cannot be considered the proximate EFFICIENT INTERVENING CAUSE
cause of the damage.
An efficient intervening cause is one which destroys the causal
NOTE:Such limit of liability is determined by applying these subtests of connection between the negligent act and the injury and thereby
the policy test: negatives liability (Morril v.Morril, 60 ALR 102, 104 NJL 557). It is
a. Foreseeability Test; sometimes called, novus actus interviens.
b. Natural and Probable Consequence Test;
c. Natural and Ordinary or Direct Consequences Test;

2014 GOLDEN NOTES
TORTS AND DAMAGES
There is no efficient intervening causeif the force created by the 8. Violation of Rules and Statutes
negligent act or omission have either: a. Statutes
1. Remained active itself; or b. Administrative Rules
2. Created another force which remained active until it directly c. Private Rules of Conduct
caused the result; or 9. Practice and Custom A practice which is dangerous to
3. Created a new active risk of being acted upon by the active human life cannot ripen into a custom which will protect
force that caused the result (57 Am. Jur. 2d 507). anyone who follows it (Yamada v. Manila Railroad, G.R.
No.10073, Dec. 24, 1915).
CAUSE vs. CONDITION
Intoxification NOT negligence per se
Cause is the active force while condition is the passive situation.
The former is the active cause of the harm and the latter is the Mere intoxication is not negligence per se nor establishes want of
existing conditions upon which the cause operated. ordinary care. But it may be one of the circumstances to be
considered to prove negligence (Wright v. Manila Electric Railroad
If the defendant has created only a passive static condition which & Light Co., GR No. L-7760, Oct. 1, 1914).
made the damage possible, the defendant is said not to be liable.
Contributory negligence
NEGLIGENCE
It is conduct on the part of the injured party, contributing as a legal
Negligence cause to the harm he has suffered, which falls below the standard
to which he is required to conform for his own protection
Negligence is the omission of that degree of diligence which is (Valenzuela v. CA, G.R. No. 115024, Feb. 7, 1996).
required by the nature of the obligation and corresponding to the
circumstances of the persons, time and place (Art. 1173, NCC). A child under nine (9) years of age is conclusively presumed
incapable of contributory negligence as a matter of law (Jarco
Test of negligence Marketing Corp. v. Court of Appeals, 321 SCRA 377).
The test is would a prudent man, in the position of the tortfeasor, The principle of contributory negligence cannot be used as
foresee harm to the person injured as a reasonable consequence of defense in criminal cases through reckless imprudence because
the course about to be pursued? If so, the law imposes a duty on one cannot allege the negligence of another to evade the effects of
the actor to take precaution against its mischievous results, and his own negligence (People v. Quinones, 44 O.G. 1520; People v.
failure to do so constitutes negligence (Picart v. Smith, 37 Phil 809). Orbeto, C.A. 430 O.G. 3173).
Degrees of negligence Doctrine of comparative negligence
1. Simple negligence Want of slight care and diligence only The negligence of both the plaintiff and the defendant are
compared for the purpose of reaching an equitable apportionment
2. Gross negligence There is a glaringly obvious want of of their respective liabilities for the damages caused and suffered
diligence and implies conscious indifference to consequences by the plaintiff (Pineda, 2009)
(Amadeo v.Rio Y Olabarrieta, Inc., 95 Phil 33);pursuing a
course of conduct which would probably and naturally result The relative degree of negligence of the parties is considered in
to injury (Marinduque Iron Mines Agents, Inc. v. The determining whether, and to what degree, either should be
Workmens Compensation Commission, 99 Phil 480). responsible for his negligence (apportionment of damages).
Circumstances to be considered in determining whether an act is LAST CLEAR CHANCE

negligent
Doctrine of last clear chance (doctrine of discovered peril)
1. Person Exposed to the Risk A higher degree of diligence is
required if the person involved is a child. This is also called as the humanitarian negligence doctrine.
2. Emergency The actor confronted with an emergency is not Where both parties are negligent but the negligent act of one
to be held up to the standard of conduct normally applied to succeeds that of the other by an appreciable interval of time, the
an individual who is in no such situation. one who has the last reasonable opportunity to avoid the
3. Social Value or Utility of Action Any act subjecting an impending harm and fails to do so, is chargeable with the
innocent person to unnecessary risk is a negligent act if the consequences, without reference to the prior negligence of the
risk outweighs the advantage accruing to the actor and even other party (Picart vs Smith, 37 Phil. 809).
to the innocent person himself.
4. Time of the day May affect the diligence required of the The doctrine of last clear chance is a theory adopted to mitigate
actor (Art. 1173); e.g. a driver is required to exercise more the harshness of the contributory negligence of the plaintiff
prudence when driving at night (Phoenix Construction Inc. v. IAC, 148 SCRA 353).
5. Gravity of the Harm to be Avoided Even if the odds that an
injury will result are not high, harm may still be considered Requisites
foreseeable if the gravity of harm to be avoided is great.
6. Alternative Cause of Action If the alternative presented to 1. Plaintiff is placed in danger by his own negligent acts and he
the actor is too costly, the harm that may result may still be is unable to get out from such situation by any means;
considered unforeseeable to a reasonable man. More so if 2. Defendant knows that the plaintiff is in danger and knows or
there is no alternative thereto. should have known that the plaintiff was unable to extricate
7. Place A man who should occasion to discharge a gun on an himself therefrom; and
open and extensive marsh, or in a forest would be required to 3. Defendant had the last clear chance or opportunity to avoid
use less circumspection and care, then if he were to do the the accident through the exercise of ordinary care but failed
same thing in an inhabited town, village or city.

CIVIL LAW
to do so, and the accident occurred as a proximate result of Concept of a good father of the family (pater familias)
such failure (Pineda, 2009).
The Supreme Court described a good father of a family by first
Instances when not applicable stating who is not. He is not and is not supposed to be omniscient
of the future; rather, he is one who takes precautions against any
1. When the injury or accident cannot be avoided by the harm when there is something before him to suggest or warn him
application of all means at hand after the peril has been of the danger or to foresee it (Picart v. Smith, G.R. No. L-12406,
discovered; (Pantranco North Expressway v. Baesa, G.R. Nos. Mar. 15, 1918).
79050-51, Nov. 14, 1989)
2. If the defendants negligence is a concurrent cause and which A good father of a family is likewise referred to as the reasonable
was still in operation up to the time the injury was inflicted; man, man of ordinary intelligence and prudence, or ordinary
3. Where the plaintiff, a passenger, filed an action against a reasonable prudent man. In English law, he is sometimes referred
carrier based on contract; (Bustamante v. CA, G.R. No. 89880, to as the man on top of a Clapham omnibus (Aquino, 2005).
Feb. 6, 1991)
4. If the actor, though negligent, was not aware of the danger or Rule in case of fault or negligence of an obligor
risk brought about by the prior fraud or negligent act;
5. In case of a collapse of a building or structure. (De Roy v. CA, Art. 1173 provides that the fault or negligence of the obligor
G.R. No. L-41154, Jan. 29, 1988) consists in the omission of that diligence which is required by the
6. Where both parties are negligent (Philippine National nature of the obligation and corresponds with the circumstances of
Railways v. Brunty, 506 SCRA 685) the persons, of the time and of the place. When negligence shows
7. In case of collision, it applies in a suit between the owners bad faith, the provisions of Articles 1171 and 2201, paragraph 2,
and drivers of colliding vehicles and not where a passenger shall apply.
demands responsibility from the carrier to enforce its
contractual obligations (Pineda, 2009, citing Tiu v. Arriesgado, NOTE:Art. 1171. Responsibility arising from fraud is demandable in all
437 SCRA 426) obligations. Any waiver of an action for future fraud is void.
Art. 2201. In contracts and quasi-contracts, the damages for which the
NOTE: There is a different rule in case of collision of vessels.
obligor who acted in good faith is liable shall be those that are the natural
and probable consequences of the breach of the obligation, and which the
Q: Mr and Mrs R own a burned-out building, the firewall of which parties have foreseen or could have reasonably foreseen at the time the
collapsed and destroyed the shop occupied by the family of Mr obligation was constituted.
and Mrs S, which resulted in injuries to said couple and the death
of their daughter. Mr and Mrs S had been warned by Mr & Mrs R In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
to vacate the shop in view of its proximity to the weakened wall responsible for all damages which may be reasonably attributed to the non-
but the former failed to do so. Mr & Mrs S filed against Mr and performance of the obligation.
Mrs R an action for recovery of damages the former suffered as a
result of the collapse of the firewall. In defense, Mr and Mrs R Application of standard of diligence to children
rely on the doctrine of last clear chance alleging that Mr and Mrs
S had the last clear chance to avoid the accident if only they GR: The action of a child will not necessarily be judged according to
heeded the formers warning to vacate the shop, and therefore the standard of an adult.
Mr and Mrs Rs prior negligence should be disregarded. If you
were the judge, how would you decide the case? (1990 Bar XPN: If the minor is mature enough to understand and appreciate
Question) the nature and consequences of his actions. In such a case, he shall
be considered to have been negligent.
A: I would decide in favor of Mr & Mrs S. The proprietor of a
NOTE: R.A. 9344 (Juvenile Justice and Welfare Act of 2006): 15 years of age
building or structure is responsible for the damages resulting from or younger age of absolute irresponsibility.
its total or partial collapse, if it should be due to the lack of
necessary repairs (Art. 2190, NCC) As regards the defense of last Nevertheless, absence of negligence does not absolutely excuse
clear chance, the same is not tenable because according to the SC the child from liability, as his properties, if any, can be held
in one case (De Roy v. CAL-80718, Jan 29, 1988, 157 S 757) the subsidiarily liable. Nor will such absence of negligence excuse the
doctrine of last clear chance is not applicable to instances covered childs parents vicarious liability.
by Art 2190 of the Civil Code. Further, in Phoenix Construction, Inc.
v. Intermediate Appellate Court (G.R. L-65295, March 10, 1987. 148 Diligence before the fact
SCRA 353) the Supreme Court held that the role of the common
law "last clear chance" doctrine in relation to Art. 2179 of the Civil The conduct that should be examined in negligence cases is prior
Code is merely to mitigate damages within the context of conduct or conduct prior to the injury that resulted or, in proper
contributory negligence. cases, the aggravation thereof.
GOOD FATHER OF A FAMILY OR REASONABLY PRUDENT MAN
General standard of diligence provided for under the NCC
Bonus Pater Familias or that of a good father of a family.
If the law or contract does not state the diligence which is to be

observed in the performance, that which is expected of a good
father of a family shall be required (Art. 1173 (2)).

2014 GOLDEN NOTES
TORTS AND DAMAGES
STANDARD OF CARE the employee (Araneta v. De Joya, G.R. No. 83491, Aug. 27,
1990).
STANDARD OF CONDUCT or DEGREE OF CARE REQUIRED
In General Owners, Proprietors and Possessors of Property
If the law or contract does not state the diligence which is to be GR: The owner has no duty to take reasonable care towards a
observed in the performance, that which is expected of a good trespasser for his protection or even to protect him from
father of a family shall be required (Article 1173, 2nd paragraph, concealed danger.
NCC).
XPN:
NOTE:Diligence of a good father of a family - bonos pater familias - A 1. Visitors Owners of buildings or premises owe a duty of care
reasonable man is deemed to have knowledge of the facts that a man to visitors.
should be expected to know based on ordinary human experience (PNR 2. Tolerated Possession - Owner is still liable if the plaintiff is
v. IAC, GR No. 7054, Jan. 22, 1993). inside his property by tolerance or by implied permission.
However, common carriers may be held liable for negligence
Persons who have Physical Disability to persons who stay in their premises even if they are not
GR: A weak or accident prone person must come up to the passengers
standard of a reasonable man, otherwise, he will be considered 3. Doctrine of Attractive Nuisance
as negligent. 4. State of Necessity A situation of present danger to legally
protected interests, in which there is no other remedy than
XPN: If the defect amounts to a real disability, the standard of the injuring of anothers also legally protected interest.
conduct is that of a reasonable person under like disability.
Doctors
Experts and Professionals If a General Practitioner Ordinary care and diligence in the
GR: They should exhibit the case and skill of one who is application of his knowledge and skill in the practice of his
ordinarily skilled in the particular field that he is in. profession
NOTE: This rule does not apply solely or exclusively to professionals who If a Specialist The legal duty to the patient is generally
have undergone formal education. considered to be that of an average physician.
XPN: When the activity, by its very nature, requires the exercise Lawyers
of a higher degree of diligence An attorney is bound to exercise only a reasonable degree of
e.g. Banks; Common carriers care and skill, having reference to the business he undertakes to
do (Adarne v. Aldaba, Adm. Case No. 80, June 27, 1978).
Insane Persons
The same rule applies under the New Civil Code. The insanity of
a person does not excuse him or his guardian from liability UNREASONABLE RISK OF HARM
based on quasi-delict (Arts. 2180 and 2182, NCC). This means
that the act or omission of the person suffering from mental Q: In determining whether a person has exposed himself to an
defect will be judged using the standard test of a reasonable unreasonable great risk, what must be present?
man.
A: Reasonableness, the elements of which are as follows:
The bases for holding a permanently insane person liable for his 1. Magnitude of the risk
torts are as follows: 2. Principal object
Where one of two innocent person must suffer a loss it 3. Collateral object
should be borne by the one who occasioned it; 4. Utility of the risk
To induce those interested in the estate of the insane 5. Necessity of the risk
person (if he has one) to restrain and control him;
and If the magnitude of the risk is very great and the principal object,
The fear that an insanity defense would lead to false very valuable, yet the value of the collateral object and the great
claims of insanity to avoid liability (Bruenig v. utility and necessity of the risk counterbalanced those
American Family Insurance Co., 173 N.W. 2d considerations, the risk is made reasonable (Prosser and Keeton,
619[1970]). Law of Torts, 1984 Ed., p.173, citing Terry, Negligence, 24 Harv. L.
Rev. 40,42).
NOTE: Under the RPC, an insane person is exempt from criminal liability.
However, by express provision of law, there may be civil liability even
NOTE:In the Philippines, the courts do not use any formula in determining if
when the actor is exempt from criminal liability. An insane person is still
the defendant committed a negligent act or omission. What appears to be
liable with his property for the consequences of his acts, though they
the norm is to give negligence a common sense, intuitive interpretation
performed unwittingly (US v. Baggay, Jr. G.R. No. 6706, Sept. 1, 1911).
(Aquino, 2005).
Employers In the field of negligence, interests are to be balanced only in the

That degree of care as mandated by the Labor Code or other sense that the purposes of the actor, the nature of his act and the
mandatory provisions for proper maintenance of the work place harm that may result from action or inaction are elements to be
or adequate facilities to ensure the safety of the employees. considered. Some may not be considered depending on the
circumstances.
NOTE:Failure of the employer to comply with mandatory
provisions may be considered negligence per se.
Employees
Employees are bound to exercise due care in the performance
of their functions for the employers. Liability may be based on
negligence committed while in the performance of the duties of

CIVIL LAW
The following are circumstances to be considered: Requisites for the application of the doctrine
1. Time 1. The accident was of such character as to warrant an inference

2. Place that it would not have happened except for defendants
3. Emergency negligence;
4. Gravity of harm to be avoided 2. The accident must have been caused by an agency or
5. Alternative course of action instrumentality within the exclusive management or control
6. Social value or utility of activity of the person charged with the negligence complained of;
7. Person exposed to the risk (Aquino, 2005) 3. The accident must not have been due to any voluntary action
or contribution on the part of the person injured (Windvalley
PRESUMPTION OF NEGLIGENCE Shipping Co., Ltd. Vs Court of Appeals, 342 SCRA 214).
Persons are generally presumed to have taken ordinary care of his Some cases where doctrine was held inapplicable
concerns. There are however exceptions when negligence is
presumed: 1. Where there is direct proof of absence or presence of
1. Article 2184. xxx. It is disputably presumed that a driver was negligence;
negligent, if he had been found guilty of reckless driving or 2. Where other causes, including the conduct of the plaintiff and
violating traffic regulations at least twice within the next third persons, are not sufficiently eliminated by the evidence;
preceding two months. xxx 3. When one or more requisite is absent (Aquino, 2005).
2. Article 2185. Unless there is proof to the contrary, it is DEFENSE AGAINST NEGLIGENCE
presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any 1. Due Diligence
traffic regulation. 2. Accident or Fortuitous event
3. Damnum Absque Injuria
NOTE:Proof of traffic violation required. 4. Presumption of Regularity
5. Sudden peril doctrine/ emergency rule - One who suddenly
3. Article 2188. There is prima facie presumption of negligence finds himself in a place of danger, and is required to act
on the part of the defendant if the death or injury results without time to consider the best means that may be
from his possession of dangerous weapons or substances, adopted to avoid the impending danger, is not guilty of
such as firearms and poison, except when possession or use negligence, if he fails to adopt what subsequently and upon
thereof is indispensable in his occupation or business. reflection may have been a better method, unless the
NOTE:Proof of possession of dangerous weapons or substances
emergency in which he finds himself is brought about by his
required. own negligence (Mc Kee v. IAC, 211 SCRA 519) Emergency
rule exempts common carriers from liability.
4. Article 1756. In case of death or injuries of passengers, 6. Assumption of Risk
common carriers are presumed to have been at fault or acted 7. Contributory Negligence
negligently, unless they prove that they observed 8. Volenti non fit injuria
extraordinary diligence prescribed in Articles 1733 and 1755. 9. Last Clear Chance
10. Prescription
5. Captain of the ship doctrine - A surgeon is likened to a captain 11. Waiver
of the ship, in that it is his duty to control everything going on 12. Double Recovery - The plaintiff cannot recover damages
in the operating room. Thus, negligence committed during twice for the same act or omission of the defendant
the operation is attributable to him.
ASSUMPTION OF RISK AND VOLENTI NON FIT INJURIA
RES IPSA LOQUITUR
Volenti non fit injuria
Negligence is proven by
1. Direct evidence This maxim means that to which a person assents is not esteemed
2. Circumtantial evidence in law as injury. Stated otherwise, one is not legally injured if he
3. Res ipsa loquitur has consented to the act complained of or was willing that it shall
occur. This is a specie of assumption of risk by conduct (Pineda,
Res ipsa loquitur 2009).
Res ipsa loquiturmeans the thing speaks for itself. The fact of the Elements of the doctrine of assumption of risk
occurrence of an injury, taken with surrounding circumstances,
may permit an inference or raise a presumption of negligence, or 1. The plaintiff must know that the risk is present;
make out a plaintiffs prima facie case, and present a question of 2. He must further understand its nature; and
fact for defendant to meet with an explanation. 3. His choice to incur it is free and voluntary.
However, res ipsa loquitur is not a rule of substantive law and, as Kinds of assumption of risk
such, does not create nor constitute an independent or separate
ground of liability. Instead, it is considered as merely evidentiary or 1. Express waiver of the right to recover;
in the nature of a procedural rule (Professional Services v. Agana, 2. Implied assumption
513 SCRA 478). a. Dangerous Conditions - A person who, knowing that he
is exposed to a dangerous condition, voluntarily
assumes the risk of such dangerous condition may not
recover from the defendant who maintained such
dangerous condition.

2014 GOLDEN NOTES
TORTS AND DAMAGES
b. Contractual Relations - There may be an implied 3. Presentation defect defects resulting from handling, making
assumption of risk if the plaintiff entered into up, presentation or packing of the products.
contractual relations with the defendant. By entering 4. Absence of Appropriate Warning defect resulting from the
into a relationship freely and voluntarily where the insufficient or inadequate information on the use and hazards
negligence of the defendant is obvious, the plaintiff may of the products.
be found to accept and consent to it, and to undertake
to look out for himself and to relieve the defendant of Defenses of a manufacturer and supplier
the duty.
c. Dangerous Activities - A person who voluntarily Art. 97 of the Consumer Act provides that the manufacturer shall
participates in dangerous activities assumes the risks not be liable when it evidences:
which are usually present in such activities. 1. That it did not place the product on the market;
d. Defendants negligence - When the plaintiff is aware of 2. That although it did place the product on the market such
the risk created by the defendants negligence, yet he product has no defect;
voluntarily proceed to encounter it, there is implied 3. That the consumer or the third party is solely at fault.
assumption of risk on the part of the plaintiff.
On the other hand, Art. 99 of said Act provides that the supplier
shall not be liable when it is proven
SPECIAL LIABILITY ON PARTICULAR ACTIVITIES 1. That there is no defect in the service rendered;
2. That the consumer or the third party is solely at fault.
PRODUCTS LIABILITY
Remedies of a consumer in the Consumer Act
Product and service liability
Sec. 60 of the law expressly provides that the court may grant
Product Liability is the law which governs the liability of injunction restraining the conduct constituting the contravention
manufacturers and sellers for damages resulting from defective of illegal sales act and practices and/or actual damages and such
products. It is meant to protect the consumers by providing other orders as it thinks fit to redress injury to the person affected
safeguards when they purchase or use consumer products. by such conduct.
(Aquino, 2005)
STRICT LIABILITY
General principles to determine product liability
There is strict liability if one is made independent of fault,
1. Regardless of the ground on which liability is asserted, negligence or intent after establishing certain facts specified by
whether negligence, breach of warranty or strict liability in law. It includes liability for conversion and for injuries caused by
tort, a manufacturer or seller of a product cannot be held animals, ultra-hazardous activities and nuisance.
liable for injury allegedly caused in the absence of proof that
the product was defective when it left the defendants POSSESSOR AND USER OF AN ANIMAL
possession or control and that the injury was proximately
caused by the product Liability for damages caused by the animals
2. Misuse of the product is a bar to recovery in a products
liability case based on strict liability in tort GR: The possessor or whoever makes use of the animal is liable
3. Privity of contract is not a requisite to recovery in a products independent of fault.
liability case based on breach of warranty
XPN: When the damage is caused by force majeure or by the
Consumer Act (RA 7394) person who suffered the damage.
Itprohibits fraudulent sales acts or practices. Chapter I of Title III Rules on liability of owners for damage caused by his animals
expressly provides for protection against defective, unfair and
unconscionable sales acts and practices. The Act likewise contains 1. An owner is strictly liable for reasonably foreseeable damage
provisions imposing warranty obligations on the manufacturers done by a trespass of his animals.
and sellers. This Act also imposes liability for defective service 2. An owner is strictly liable to licensees and invitees for injuries
independently of fault. caused by wild animals as long as the injured person did
nothing to bring about the injury.
Persons made liable under the Consumer Act 3. An owner is not strictly liable for injuries caused by domestic
animals unless he has knowledge of that particular animal's
The strict liability under the Act is imposed on the manufacturer. dangerous propensities that are not common to the species.
4. Strict liability will generally not be imposed in favor of
A manufacturer is any person who manufactures, assembles or trespassers in the absence of the owner's negligence. An
processes consumer products, except that if the goods are exception is recognized for injuries inflicted by vicious
manufactured, assembled or processed for another person who watchdogs.
attaches his own brand name to the consumer products, the latter
shall be deemed the manufacturer. In case of imported products, Wild beast theory
the manufacturers representatives or, in his absence, the importer
shall be deemed the manufacturer (Art. 4, RA 7394). A person who for his own purposes brings on his land and collects
and keeps there anything likely to do mischief if it escapes, must
Kinds of defects in product keep it at his peril, and if he does not do so, is prima facie
answerable for all the damages which is the natural consequence
1. Manufacturing defect defects resulting from manufacture, of its escape. It is therefore unnecessary for the plaintiff to prove
construction, assembly and erection. negligence, and it is no defense for a defendant to prove that he
2. Design defect defects resulting from design and formulas. has taken all possible precautions to prevent the damage (Ryland v.
Fletcher, L.R. 1 Ex. 265; Pineda, 2004).

CIVIL LAW
DAMAGES A complaint for damages is personal in nature (personal action)
GENERAL CONSIDERATIONS Kinds (MENTAL)

1. Moral
Damages 2. Exemplary
3. Nominal
Damagesis the pecuniary compensation, recompense or 4. Temperate
satisfaction for an injury sustained or as otherwise expressed the 5. Actual
pecuniary consequences which the law imposes for the breach of 6. Liquidated
some duty or violation of some rights.
ACTUAL/
MORAL NOMINAL
COMPENSATORY
According to purpose
Actual or compensatory damages simply make Awarded only to enable the injured party to Vindicating or recognizing the injured partys
good or replace the loss caused by the wrong. obtain means, diversion or amusement that right to a property that has been violated or
will alleviate the moral suffering he has invaded (Tan v. Bantegui, 473 SCRA 663).
undergone, by reason of defendants culpable
action (Robleza v. CA, 174 SCRA 354).
According to manner of determination

Claimant must produce competent proof or No proof of pecuniary loss is necessary. The No proof of pecuniary loss is necessary. Proof
the best evidence obtainable such as receipts assessment is left to the discretion of the that a legal right has been violated is what is
to justify an award therefore. Actual or court according to the circumstances of each only required. Usually awarded in the absence
compensatory damages cannotbe presumed case. However, there must be proof that the of proof of actual damages.
but must be proved with reasonable certainty defendant caused physical suffering, mental
(People v. Ereno, Feb. 22, 2000). anguish, moral shock, etc. (Compania
Maritima v. Allied Free Workers Union, G.R.
No. L-31379, Aug. 29, 1988).
Actual damages must be substantiated by
documentary evidence, such as receipts, in GR: Factual basis must be alleged. Aside from
order to prove expenses incurred as a result of the need for the claimant to satisfactorily
the death of the victim or the physical injuries prove the existence of the factual basis of the
sustained by the victim (Philippine Hawk damages, it is also necessary to prove its
Corporation v. Vivian Tan Lee,G.R. No. 166869, causal relation to the defendants act (Raagas
Feb. 16, 2010). v. Trava, G.R. No. L-20081, Feb. 27,1968;
People v. Manero, G.R. Nos. 86883-85, Jan. 29,
XPN: Damages for loss of earning capacity may 1993).
be awarded despite the absence of
documentary evidence when: (1) the deceased XPN: Criminal cases. Moral damages may be
is self-employed and earning less than the awarded to the victim in criminal proceedings
minimum wage under current labor laws, in in such amount as the court deems just
which case, judicial notice may be taken of the without need for pleading or proof of the basis
fact that in the deceased's line of work no thereof (People v. Paredes, July 30, 1998). The
documentary evidence is available; or (2) the amount of P50,000 is usually awarded by the
deceased is employed as a daily wage worker Court in case of the occurrence of death
earning less than the minimum wage under
current labor laws (Philippine Hawk
Corporation v. Vivian Tan Lee, G.R. 166869,
Feb. 16, 2010).
Special/Ordinary
Ordinary Special Special
NOTE: Ordinary Damages are those generally NOTE:Special Damages are those which exist
inherent in a breach of a typical contract because of special circumstances and for
which a debtor in good faith can be held liable
if he had been previously informed of such
circumstances.

2014 GOLDEN NOTES
TORTS AND DAMAGES
EXEMPLARY/
TEMPERATE LIQUIDATED
CORRECTIVE
According to purpose
When the court is convinced that there has Liquidated damages are frequently agreed Exemplary or corrective damages are intended
been such a loss, the judge is empowered to upon by the parties, either by way of penalty to serve as a deterrent to serious wrongdoings
calculate moderate damages rather than let or in order to avoid controversy on the (People v. Orilla, 422 SCRA 620).
the complainant suffer without redress (GSIS amount of damages.
v. Labung-Deang, 365 SCRA 341).
According to manner of determination
May be recovered when the court finds that If intended as a penalty in obligations with a 1. That the claimant is entitled to moral,
some pecuniary loss has been suffered but its penal cause, proof of actual damages suffered temperate or compensatory damages; and
amount cannot, from the nature of the case, by the creditor is not necessary in order that
be proved with certainty. No proof of the penalty may be demanded (Art. 1228, 2. That the crime was committed with 1 or
pecuniary loss is necessary. NCC). more aggravating circumstances, or the quasi-
delict was committed with gross negligence,
No proof of pecuniary loss is necessary. or in contracts and quasi-contracts the act
must be accompanied by bad faith or done in
wanton, fraudulent, oppressive or malevolent
manner.
No proof of pecuniary loss is necessary.
Special/Ordinary
Special Special Special
ACTUAL AND COMPENSATORY DAMAGES 2. Forfeiture of bonds in favor of the government for the
purpose of promoting public interest or policy (Far Eastern
Actual or compensatory damages Surety and Insurance Co. v. Court of Appeals, 104 Phil 702)
3. Loss is presumed (Manzanares v. Moreta, 38 Phil 821)
It comprehends not only the value of the loss suffered but also that 4. When the penalty clause is agreed upon in the contract
of the profits which the obligee failed to obtain. The amount between the parties (Art. 1226, NCC).
should be that which would put the plaintiff in the same position as
he would have been if he had not sustained the wrong for which he Civil liability ex delicto v. Actual or compensatory damages
is now getting compensation or reparation. To recover damages, distinguished
the amount of loss must not only be capable of proof but must
actually be proven. Civil Indemnity Actual or Compensatory Damages
Ex Delicto
Kinds of Actual or compensatory damages Can be awarded without To be recoverable must
need of further proof additionally be established with
1. Damnun Emergens (actual damages) the value of the actual than the fact of reasonable degree of certainty
pecuniary loss for what the claimant already possesses before commission of the felony. (People v. Dianos, 297 SCRA 191)
the incident which must be supported by receipts or the best
evidence available. Evidence of Actual Damages
2. Lucrum Cessans (compensatory damages) the expected
profits which were not realized by reason of the act of the It is necessary that the claimant produces competent proof or the
offender or tortfeasor (Pineda, 2009) best evidence obtainable such as receipts to justify an award
therefore. Actual or compensatory damages cannot be presumed
Purpose of the law in awarding actual damages but must be proved with reasonable certainty (People v. Ereno,
Feb. 22, 2000).
Its purpose is to repair the wrong that has been done, to
compensate for the injury inflicted, and not to impose a penalty Any person who seeks to be awarded actual or compensatory
(Algarra v. Sandejas, 27 Phil 284). damages due to acts of another has the burden of proving said
damages as well as the amount thereof. Actual damages cannot be
Proving the loss allowed unless supported by evidence on the record. The court
cannot rely on speculations, conjectures or guesswork as to the
GR: Loss must be proved before one can be entitled to damages. fact and amount of damages (Banas, Jr. v. CA, Feb. 10, 2000).
XPN: Loss need not be proved in the following cases: As a rule, documentary evidence should be presented to
1. Liquidated damages previously agreed upon (Art. 2226, NCC) substantiate the claim for damages for loss of earning capacity. By
way of exception, damages for loss of earning capacity may be
NOTE: Liquidated damages take the place of actual damages except awarded despite the absence of documentary evidence when: (1)
when additional damages are incurred. the deceased
U N IisVself-employed
E R S I T Y O Fand
S Aearning
N T O less
T O than
M A Sthe minimum
CIVIL LAW
wage under current labor laws, in which case, judicial notice may
be taken of the fact that in the deceased's line of work no As provided for in Art 2200, indemnification for damages shall
documentary evidence is available; or (2) the deceased is comprehend not only the value of the loss suffered, or actual
employed as a daily wage worker earning less than the minimum damages (damnum emergens), but also that of the profits which
wage under current labor laws (Philippine Hawk Corporation v. the obligee failed to obtain or compensatory damages (lucrum
Vivian Tan Lee, G.R. 166869, Feb. 16, 2010). cessans). In other words, there are two components to actual
damages (RCPI vs. CA, 103 SCRA 359).
Determination of amount of damages recoverable
ATTORNEYS FEES AND EXPENSES OF LITIGATION
Much is left to the discretion of the court considering the moral
and material damages involved. There can be no exact or uniform Two concepts of Attorneys fees
rule for measuring the value of a human life. The amount
recoverable depends on the particular facts and circumstances of 1. Ordinary
each case. 2. Extraordinary Art. 2208 of the New Civil Code. They are
actual damages due to the plaintiff.
The life expectancy of the deceased or of the beneficiary,
whichever is shorter, is an important factor. Other factors that are ORDINARY EXTRAORDINARY
usually considered are: Nature
1. Pecuniary loss to plaintiff or beneficiary; The reasonable
2. Loss of support; compensation paid to a An indemnity for damages ordered
3. Loss of service; lawyer for the legal services by the court to be paid by the losing
4. Loss of society; rendered to a client who to the prevailing party in litigation
5. Mental suffering of beneficiaries; and has engaged him
6. Medical and funeral expenses. Basis
The fact of employment of
Thus, life expectancy is, not only relevant, but, also, an important Any cases authorized by law
the lawyer by the client
element in fixing the amount recoverable, although it is not the To whom payable
sole element determinative of said amount. Lawyer Client
The formula that has gained acceptance over time has limited
Recovery of attorneys fees as actual damages
recovery to net earning capacity. The premise is obviously that net
earning capacity is the persons capacity to acquire money, less the GR: They are not recoverable.
necessary expense for his own living (Philtranco Service Enterprises
v. Felix Paras and Inland Trailways Inc. G.R. No. 161909, April 25, XPN: (SWISS- MUD- ERC)
2012). 1. Stipulation between parties
2. Recovery of Wages of household helpers, laborers and skilled
Computation of Unearned Income workers
3. Actions for Indemnity under workmen's compensation and
The formula for the computation of unearned income is: net employer liability laws
earning capacity(x) = life expectancy x gross annual income less 4. Legal Support actions
living expenses (50% of gross annual income). Life expectancy is 5. Separate civil action to recover civil liability arising from crime
determined in accordance with the formula 2/3 x (80 age of the 6. Malicious prosecution
deceased) (Art 2206, People vs. Lopez, 312 SCRA 684, Pineda, 7. Clearly Unfounded civil action or proceeding against plaintiff
2009). 8. When Double judicial costs are awarded
9. When Exemplary damages are awarded
Net Earning Capacity = Life Expectancy x (Gross Annual Income 10. Defendant acted in gross & evident bad faith in Refusing to
Living Expenses) satisfy plaintiff's just & demandable claim
Life Expectancy = 2/3 x (80 Age of the Deceased) 11. When defendant's act or omission Compelled plaintiff to
Living Expenses = 50% of gross annual income litigate with 3rd persons or incur expenses to protect his
interest
Heirs cannot claim as damages the full amount of earnings of the
deceased NOTE:If not pleaded and prayed for in the complaint, attorneys fees are
barred (Tin Po v. Bautista, 103 SCRA 388).
Said damages consist, not of the full amount of his earnings, but of
the support they received or would have received from him had he The amount of attorneys fees will NOT affect the jurisdiction of
not died in consequence of the negligence of the bus' agent. Stated the court.
otherwise, the amount recoverable is not loss of the entire earning,
but rather the loss of that portion of the earnings which the If the claim is pursued in the very action where the services were
beneficiary would have received. In other words, only net earnings, rendered, the court may pass upon said claim, even if its amount
not gross earning, are to be considered. were less than the minimum prescribed by law for the jurisdiction
of said court, upon the theory that the right to recover attorneys
In fixing the amount of that support, the "necessary expenses of his fees is but an incident of the case in which the services of the
own living" should be deducted from his earnings. Earning capacity, counsel have been rendered. The rule against multiplicity of suits
as an element of damages to one's estate for his death by wrongful will in effect be subserved (Pan Pacific Co. v. Advt. Corp., 132 Phil
act, is necessarily his net earning capacity or his capacity to acquire 446).
money, less the necessary expense for his own living (Villa Rey
Transit, Inc. v. CA, et al., G.R. No. L-25499, Feb. 18, 1970). NOTE:Moral damages and attorneys fees cannot be consolidated for they
are different in nature and each must be separately determined (Philippine
Veterans Bank v. NLRC, 317 SCRA 510).
Both actual and compensatory damages can be granted at the
same time to the plaintiff.

2014 GOLDEN NOTES
TORTS AND DAMAGES
EXTENT OR SCOPE OF ACTUAL DAMAGES 1. Loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such
IN CONTRACTS AND QUASI-CONTRACTS indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical
Amount of actual damages disability not caused by the defendant, had no earning
capacity at the time of his death;
The amount of actual damagesshould be that which would put the
plaintiff in the same position as he would have been if he had not 2. If the deceased was obliged to give support according to the
sustained the wrong for which he is now getting compensation or provisions of Article 291, the recipient who is not an heir
reparation. called to the decedent's inheritance by the law of testate or
1. Property value at the time of destruction, or market value, intestate succession, may demand support from the person
plus, in proper cases, damages for the loss of use during the causing the death, for a period not exceeding five years, the
period before replacement, value of use of premises, in case exact duration to be fixed by the court;
of mere deprivation of possession.
2. Personal injury- medical expenses; If the qualifying NOTE:The article only mentioned heir. Consequently, it cannot speak
of devisees and legatees who are receiving support from the
circumstance is present to justify the imposition of death
deceased.
penalty, the civil indemnity should be no less than P75,000. If
the rape is simple rape, the civil indemnity is P50,000 (People 3. The spouse, legitimate and illegitimate descendants and
v. Banago, 309 SCRA 417) ascendants of the deceased may demand moral damages for
NOTE: Civil indemnity is mandatory upon the finding of the fact of
mental anguish by reason of the death of the deceased.
rape and is automatically imposed upon the accused without need of
NOTE:The petitioner has correctly relied on the holding in Receiver for North
proof other than the fact of the commission of the rape (People v.
Negros Sugar Company, Inc. v. Ybaez (G.R. No. L-22183, August 30, 1968),
Lacerna, 309 SCRA 250).
to the effect that in case of death caused by quasi-delict, the brother of the
deceased was not entitled to the award of moral damages based on Article
3. Death Wake and burial expenses, P P75,000 by way of civil 2206 of the Civil Code(Sulpicio Lines Inc. v. Curso, et. al., G.R. No. 157009,
indemnity ex delicto which requires no proof other than the Mar. 17, 2010).
fact of death of the victim and the assailants responsibility
therefor (People v.Tabarnero, 693 SCRA 495 ). IMPOSITION OF INTERESTS
4. Physical Injuries Moral damages of P30,000 may be
recovered by way of civil indemnity (Guillang v. Bedania. G.R. If the obligation consists in the payment of a sum of money, and
No. 162987, May 21, 2009). the debtor incurs in delay, the indemnity for damages, there being
no stipulation to the contrary, shall be the payment of the interest
Mitigation of Actual Damages upon, and in the absence of stipulation, the legal interest, which is
6% per annum(Art. 2209, NCC).
Actual damages can be mitigated in the following cases:
No interest shall be adjudged on unliquidated claims or damages
1. For Contracts: except when or until the demand can be established with
a. Violation of terms of the contract by the plaintiff reasonable certainty (Solid Homes, Inc. v. IAC, 508 SCRA 165).
himself;
b. Enjoyment of benefit under the contract by the plaintiff In the landmark case of Eastern Shipping Lines, Inc. v. Court of
himself; Appeals, the Court laid down the guidelines regarding the manner
c. Defendant acted upon advice of counsel in cases where of computing legal interest, to wit:
the exemplary damages are to be awarded such as
under Articles 2230, 2231 and 2232; II. With regard particularly to an award of interest in the concept
d. Defendant has done his best to lessen the plaintiffs of actual and compensatory damages, the rate of interest, as
injury or loss. well as the accrual thereof, is imposed, as follows:
2. For Quasi-contracts:
a. In cases where exemplary damages are to be awarded 1. When the obligation is breached, and it consists in the
such as in Article 2232; payment of a sum of money, i.e., a loan or forbearance of
b. Defendant has done his best to lessen the plaintiffs money, the interest due should be that which may have
injury or loss. been stipulated in writing. Furthermore, the interest due
3. For Quasi-delicts: shall itself earn legal interest from the time it is judicially
a. That the loss would have resulted in any event because demanded. In the absence of stipulation, the rate of
of the negligence or omission of another, and where interest shall be 12% per annum to be computed from
such negligence or omission is the immediate and default, i.e., from judicial or extrajudicial demand under
proximate cause of the damage or injury; and subject to the provisions of Article 1169 of the Civil
b. Defendant has done his best to lessen the plaintiffs Code.
injury or loss (Pineda, 2009). 2. When an obligation, not constituting a loan or forbearance
of money, is breached, an interest on the amount of
IN CRIMES AND QUASI-DELICTS damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however,
Art. 2206 provides that the amount of damages for death caused shall be adjudged on unliquidated claims or damages
by a crime or quasi-delict shall be at least P75, 000, even though except when or until the demand can be established with
there may have been mitigating circumstances (People v. reasonable certainty. Accordingly, where the demand is
Tabarnero, 693 SCRA 495). established with reasonable certainty, the interest shall
begin to run from the time the claim is made. judicially or
In addition to the amount to be awarded, the defendant shall also extrajudicially (Art. 1169, NCC) but when such certainty
be liable for the following cannot be so reasonably established at the time the
demand is made, the interest shall begin to run only from
the date the judgment of the court is made (at which time

CIVIL LAW
the quantification of damages may be deemed to have actual injury suffered and not to impose a penalty on the wrong
been reasonably ascertained). The actual base for the does (Pineda, 2009).
computation of legal interest shall, in any case, be on the
amount finally adjudged. Recovery of moral damages
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, GR: To recover moral damages, the plaintiff must allege and prove:
whether the case falls under paragraph 1 or paragraph 2, 1. The factual basis for moral damages and
above, shall be 12% per annum from such finality until its 2. The causal relation to the defendants act
satisfaction, this interim period being deemed to be by
then an equivalent to a forbearance of credit. XPN: Moral damages may be awarded to the victim in criminal
proceedings without the need for pleading of proof or the basis
Recently, however, the Bangko Sentral ng Pilipinas Monetary Board thereof.
(BSP-MB), in its Resolution No. 796 dated May 16, 2013, approved
the amendment of Section 2 of Circular No. 905, Series of 1982 Moral damages may be recovered in the following and analogous
and, accordingly, issued Circular No. 799, Series of 2013, effective cases:
July 1, 2013, the pertinent portion of which reads: 1. A criminal offense resulting in physical injuries;
2. Quasi-delicts causing physical injuries;
The Monetary Board, in its Resolution No. 796 dated 16 3. Seduction, abduction, rape, or other lascivious acts;
May 2013, approved the following revisions governing the 4. Adultery or concubinage;
rate of interest in the absence of stipulation in loan 5. Illegal or arbitrary detention or arrest;
contracts, thereby amending Section 2 of Circular No. 905, 6. Illegal search;
Series of 1982: 7. Libel, slander or any other form of defamation;
8. Malicious prosecution;
Section 1. The rate of interest for the loan or forbearance 9. Acts mentioned in Article 309; and
of any money, goods or credits and the rate allowed in 10. Actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34,
judgments, in the absence of an express contract as to and 35 (Art. 2219, NCC).
such rate of interest, shall be six percent (6%) per annum.
Art. 2219, NCC speaks provides for criminal offense resulting from
Section 2. In view of the above, Subsection X305.1 of the physical injuries and quasi-delicts causing physical injuries.
Manual of Regulations for Banks and Sections 4305Q.1,
4305S.3 and 4303P.1 of the Manual of Regulations for To award moral damages, a court must be satisfied with proof of
Non-Bank Financial Institutions are hereby amended the following:
accordingly. 1. An injury whether physical, mental or psychological;
2. A culpable act or omission factually established;
Thus, from the foregoing, in the absence of an express stipulation 3. A wrongful act or omission of the defendant as the proximate
as to the rate of interest that would govern the parties, the rate of cause of the injury sustained by the claimant;
legal interest for loans or forbearance of any money, goods or 4. The award of damages predicated on any of the cases stated
credits and the rate allowed in judgments shall no longer be twelve in Art. 2219.
percent (12%) per annum as reflected in the case of Eastern
Shipping Lines and Subsection X305.1 of the Manual of Regulations In criminal proceedings for rape, plaintiff may not prove the factual
for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the basis for moral damages as well as the causal relation to the
Manual of Regulations for Non-Bank Financial Institutions, before defendants act provided that:
its amendment by BSP-MB Circular No. 799 but will now be six 1. There must be an injury whether physical, mental or
percent (6%) per annum effective July 1, 2013. It should be noted, psychological, clearly sustained by the claimant
nonetheless, that the new rate could only be applied prospectively 2. There must be culpable act or omission
and not retroactively. Consequently, the twelve percent (12%) per 3. Such act or omission is the proximate cause of the injury
annum legal interest shall apply only until June 30, 2013. Come July 4. The damage is predicated on the cases cited in Art. 2219
1, 2013 the new rate of six percent (6%) per annum shall be the
prevailing rate of interest when applicable(Nacar vs. Gallery In rape cases, civil indemnity is different from moral damages. It is
Frames and/or Felipe Bordey, Jr.., G.R. No. 189871, August 13, distinct from and should not be denominated as moral damages
2013). which are based on different jural foundations and assessed by the
court in the exercise of sound discretion (People v. Caldona, G.R.
MORAL DAMAGES No. 126019, Mar. 1, 2001).
Moral damages Tortuous acts referred to in Articles 21, 26, 27, 28.29, 32, 34 and 35
of the NCC, wherein the plaintiff may recover moral damages.
It includes physical suffering, mental anguish, fright, serious 1. Willful acts contrary to morals, good customs or public policy
anxiety, besmirched reputation, wounded feelings, moral shock, 2. Disrespect to the dignity, personality, privacy and peace of
social humiliation, and similar injury (Art. 2217, NCC). mind of neighbors and other persons
3. Refusal or neglect of a public servant to perform his official
It is awarded to enable the injured party to obtain means, duty without just cause
diversions or amusement that will serve to alleviate the moral 4. Unfair competition in enterprise or in labor
suffering he has undergone by reason of the defendants culpable 5. Civil action for damages against accused acquitted on
action (Prudenciado v. Alliance Transport System, Inc., 148 SCRA reasonable doubt
440). 6. Violation of civil rights
7. Civil action for damages against city or municipal police force
Nature of moral damages 8. When the trial court finds no reasonable ground to believe
that a crime has been committed after a preliminary
Although incapable of pecuniary estimation, they are in the investigation or when the prosecutor refuses or fails to
category of an award designed to compensate the claimant for institute criminal proceedings.

2014 GOLDEN NOTES
TORTS AND DAMAGES
TEMPERATE OR MODERATE DAMAGES

Psychologically incapacity and moral damages
Temperate damages
By declaring petitioner as psychologically incapacitated, the
possibility of awarding moral damages was negated, which should Temperate damages are those damages, which are more than
have been proved by specific evidence that it was done nominal but less than compensatory, and may be recovered when
deliberately. Thus, as the grant of moral damages was not proper, the court finds that some pecuniary loss has been suffered but its
it follows that the grant of exemplary damages cannot stand since amount cannot be proved with certainty.
the Civil Code provides that exemplary damages are imposed in
addition to moral, temperate, liquidated or compensatory Rationale behind the temperate or moderate damages
damages. Finally, since the award of moral and exemplary damages
is no longer justified, the award of attorney's fees and expenses of The rationale is precisely that from the nature of the case, definite
litigation is left without basis (Buenaventura v. CA,G.R. No. proof of pecuniary loss cannot be offered (Pineda, 2009).
127358, Mar. 31, 2005).
Elements of Temperate Damages
NOMINAL DAMAGES
1. Some pecuniary loss;
Nominal Damages 2. Loss is incapable of pecuniary estimation;
3. The damages awarded are reasonable.
These are damages awarded for the infraction of a legal right,
where the extent of the loss is not shown, or where the right is one LIQUIDATED DAMAGES
not dependent upon loss or damage, as in the case of rights of
bodily immunity or rights to have ones material property Liquidated damages
undistributed by direct invasion. The award of nominal damages is
made as a judicial declaration that the plaintiffs rights has been Liquidated damages are fixed damages previously agreed by the
violated (Blacks Law Dictionary, 2009). parties to the contract and payable to the innocent party in case of
breach by the other (Pineda, 2009).
Purpose of nominal damages
Liquidated damages may be equitably reduced when
In order that a right of the plaintiff which has been violated or
invaded by the defendant may be vindicated or recognized, and 1. Iniquitous or unconscionable
not for the purpose of indemnifying the plaintiff for any loss 2. Partial or irregular performance
suffered by him.
Rule governing in case of breach of contract
Elements of Nominal Damages
Art. 2228, NCC, provides that when the breach of contract
1. Plaintiff has a right; committed by the defendant is not the one contemplated by the
2. Such right is violated; parties in agreeing upon the liquidated damages, the law shall
3. The purpose of awarding damages is to vindicate or recognize determine the measure of damages, and not the stipulation.
the right violated.
EXEMPLARY OR CORRECTIVE DAMAGES
Cases where nominal damages are awarded
Exemplary damages
Nominal damages are small sums fixed by the court without regard
to the extent of the harm done to the injured party. They are Exemplary damages, also known as punitive or vindictive
damages in name only and are allowed simply in recognition of a damages. These are imposed by way of example or correction for
technical injury based on a violation of a legal right. the public good, in addition to the moral, temperate, liquidated or
compensatory damages;
Nominal damages cannot co-exist with actual or compensatory
damages because nominal damages are recoverable when the Rationale behind exemplary damages
damages suffered cannot be proved with reasonable certainty. The
law presumes damage although actual or compensatory damages Exemplary damages are required by public policy, for wanton acts
are not proven. Award of actual, moral, temperate or moderate must be suppressed. They are an antidote so the poison of
damages preclude nominal damages. But it may be awarded wickedness may not run through the body politic (Diaz v. Amante,
together with attorneys fees (Pineda, 2009). 104 Phil 968). They are intended to serve as a deterrent to serious
wrongdoings and as a vindication of undue sufferings and wanton
of invasion of the rights of an injured or a punishment for those
guilty of outrageous conduct (People v. Catubig, 363 SCRA 621).
Cases where exemplary damages may be imposed as accessory

damages
GR: Exemplary damages cannot be recovered as a matter of right

(Art. 2233, NCC)
XPN: They can be imposed in the following cases:
1. Criminal offense when the crime was committed with one

or more aggravating circumstances (Art. 2230, NCC)

CIVIL LAW
2. Quasi-delicts when the defendant acted with gross appreciable weight and moment to induce, or which reasonably
negligence (Art. 2231, NCC) should induce, action to avoid it on the part of a person or a
3. Contracts and Quasi-contracts when defendant acted in reasonably prudent mind.
wanton, fraudulent, reckless, oppressive, or malevolent
manner (Art. 2232, NCC) Rules in graduation of damages in crimes
Requirements for an award of exemplary damages In crimes, the damages to be adjudicated may be respectively
increased or lessened according to the aggravating or mitigating
1. The claimants right to exemplary damages has been circumstances (Art. 2204, NCC).
established
2. Their determination depends upon the amount of Reduction of damages in quasi-delict cases
compensatory damages that may be awarded to the claimant
3. The act must be accompanied by bad faith or done in wanton, In quasi-delictthe contributory negligence of the plaintiff shall
fraudulent, oppressive or malevolent manner (National Steel reduce the damages he may recover (Art. 2214, NCC).
Corp., v. RTC of Lanao del Norte, Br.2, Iligan City, 304 SCRA
597). Reduction of damages in contracts, quasi-contracts and quasi-
delicts
DAMAGES IN CASE OF DEATH
The court can equitably mitigate the damages in contract, quasi-
Damages that can be recovered in case of death (MEA-I3) contracts and quasi-delicts in the following instances other than in
Art. 2214:
1. Moral damages 1. That the plaintiff himself has contravened the terms of the
2. Exemplary damages contract
3. Attomey's fees and expenses for litigation 2. That the plaintiff has derived some benefit as a result of the
4. Indemnity for death contract
5. Indemnity for loss of earning capacity 3. In cases where exemplary damages are to be awarded, that
6. Interest in proper cases the defendant acted upon the advice of counsel
4. That the loss would have resulted in any event
Rules when crimes and quasi-delict has caused death 5. That since the filing of the action, the defendant has done his
best to lessen the plaintiffs loss or injury (Art. 2215, NCC).
The plaintiff is entitled to the amount that he spent during the
wake and funeral of the deceased. However, it has been ruled that Liquidated damages, whether intended as an indemnity or a
expenses after the burial are not compensable. penalty, shall be equitably reduced if they are iniquitous or
unconscionable (Art. 2227, NCC).
The amount of damages for death caused by a crime or quasi-delict
shall be at least three thousand pesos, even though there may MISCELLANEOUS RULES
have been mitigating circumstances. In addition:
1. The defendant shall be liable for the loss of the earning Duty of the injured party
capacity of the deceased, and the indemnity shall be paid to
the heirs of the latter; such indemnity shall in every case be The injured party is obligated to undertake measures that will
assessed and awarded by the court, unless the deceased on alleviate and not aggravate his condition after the infliction of the
account of permanent physical disability not caused by the injury or nuisance. The injured party has the burden of explaining
defendant, had no earning capacity at the time of his death; why he did not do so (Art. 2203, NCC).
2. If the deceased was obliged to give support according to the
provisions of Article 291, the recipient who is not an heir Co-existence of Damages
called to the decedent's inheritance by the law of testate or
intestate succession, may demand support from the person Damages that Damages that must co- Damages that
causing the death, for a period not exceeding five years, the cannot co-exist exist must stand alone
exact duration to be fixed by the court; Exemplary Damages
3. The spouse, legitimate and illegitimate descendants and Nominal Damages must co-exist with
ascendants of the deceased may demand moral damages for cannot co-exist Moral, Temperate, Nominal
mental anguish by reason of the death of the deceased (Art. with Exemplary Liquidated or Damages
2206, NCC). Damages Compensatory
Damages
GRADUATION OF DAMAGES
LEGAL INJURY
Rules in graduation of damages in torts cases
Injury, Damage and Damages
Generally, the degree of care required is graduated according to
the danger a person or property attendant upon the activity which Injury is the illegal invasion of a legal right; damage is the loss, hurt,
the actor pursues or the instrumentality he uses. The greater the or harm which results from the injury; and damagesare the
danger the greater the degree of care required. recompense or compensation awarded for the damage suffered.
However, foreseeability is not the same as probability. Even if Right

there is lesser degree of probability that damage will result, the
damage may still be considered foreseeable. A right is a legally enforceable claim of one person against another,
that the other shall do a given act, or shall not do a given act
The test as respects foreseeability is not the balance of (Pineda, Persons, p. 23).
probabilities, but the existence, in the situation in hand, of some
real likelihood of some damage and the likelihood is of such

2014 GOLDEN NOTES
TORTS AND DAMAGES
Kinds of rights Seven major intentional torts (FITTED CAB)
1. Natural Rights Those which grow out of the nature of man 1. False Imprisonment (Dignitary Tort)
and depend upon personality. 2. Trespass to land
3. Trespass to chattels (Trover)
E.g. right to life, liberty, privacy, and good reputation. 4. Intentional Infliction of Emotional Distress
5. Conversion
2. Political Rights Consist in the power to participate, directly 6. Assault
or indirectly, in the establishment or administration of 7. Battery
government.
Intentional physical harms giving rise to tort liability
E.g. right of suffrage, right to hold public office, right of
petition. 1. Battery
2. Assault
3. Civil Rights Those that pertain to a person by virtue of his 3. False Imprisonment
citizenship in a state or community. 4. Trespass to land
5. Trespass to Chattels
E.g. 6. Conversion
1. Property rights,
2. Marriage, Intentional non- physical harms giving rise to tort liability
3. Equal protection of laws,
4. Freedom of contract, trial by jury (Pineda, Persons, p. 1. Violation of personal dignity
24) 2. Infliction of emotional distress
5. Rights of personalty or human rights; 3. Violation of privacy
6. Family rights; and a. Appropriation
7. Patrimonial rights b. Intrusion
c. public disclosure of private facts
Available remedies for a person whose rights have been violated d. false light in the public eye
4. Malicious prosecution
Legal remedies are either preventive or compensatory. 5. Defamation
6. Fraud or misrepresentation
Every remedy in a certain sense is preventive because it threatens 7. Seduction
certain undesirable consequences to those who violate the rights 8. Unjust dismissal
of others. 9. Violation of rights committed by public officers
The primary purpose of a tort action is to provide compensation to Torts committed against persons
a person who was injured by the tortuous conduct of the
defendant. The remedy of the injured person is therefore primarily 1. Assault,
an action for damages against the defendant (Aquino, 2005). 2. Battery,
3. False imprisonment,
INTENTIONAL TORTS 4. Intentional infliction of emotional distress, and
5. Fraud
Intentional tort
Torts committed against property
Intentional tort is a tort or wrong perpetrated by one who intends
to do that which the law has declared wrong as contrasted with 1. Trespass to land,
negligence in which the tortfeasor fails to exercise that degree of 2. Trespass to chattels, and
care in doing what is otherwise permissible (Blacks Law Dictionary, 3. Conversion
1990).
Torts that cause injury to relations
Intentional torts are those which involve malice or bad faith.
1. Family relations
Intent from the point of view of torts a. Alienation of affection
b. Loss of consortium
Intent from the point of view of torts refers either to a persons c. Criminal conversation (adultery)
desire that certain consequences result from his actions or even his 2. Social relations
knowledge that those results are substantially certain to occur as a a. Meddling with or disturbing family relations
result of his actions (Garratt v. Dailey, 46 Wash 2d 197, 1955). b. Intriguing to cause another to be alienated from his
friends
Doctrine of transferred intent 3. Economic relations
a. Interference with contractual relations
It arises when a person intends to commit a tort against one b. Unfair competition
person and injury to another results instead. For intentional tort 4. Political relations
purposes, the intent will be deemed to be transferred from the a. Violation of right to suffrage
intended victim to the actual one (U.S. v. Maisa, 8 Phil 597). b. Violation of other political rights (freedom of speech,
press, assembly and petition, etc.)

CIVIL LAW
Major defenses to intentional torts (DODD SLASH CORN) Eggshell skull theory
1. Defense of Others It is a legal doctrine that says the wrongdoer takes the victim in the
2. Defense of land/chattels condition he/she finds him. There is no allowance for an already
3. Discipline weakened state of the injured party. If a defendant negligently
4. Self defense injures someone, the defendant is responsible for all the
5. Legal Authority consequences, whether they were foreseeable or not.
6. Shoplifter Detention
7. Consent The term implies that if a person had a skull as delicate as that of
8. Recapture of Chattels the shell of an egg, and a tortfeasor who was unaware of the
9. Necessity condition injured that person's head, causing the skull
unexpectedly to break, the defendant would be held liable for all
INTENTIONAL PHYSICAL HARM damages resulting from the wrongful contact, even if the
tortfeasor did not intend to cause such a severe injury.
BATTERY (PHYSICAL INJURY)
ASSAULT (GRAVE THREAT)
Battery as a basis for tort liability
Assault in the context of torts
It is the intentional, unprivileged, and either harmful or offensive
contact with the person or a third person or an imminent It is the tort of acting intentionally and voluntarily causing the
apprehension of such a contact. reasonable and imminent apprehension of an immediate harmful
or offensive contact.
Elements
Elements
1. There must be a voluntary act;
2. That the person either (a) intended to cause a harmful or 1. That a person committed a voluntary act;
offensive contact with his body or with the body of some 2. That the persons act created in another person an
third person or (b) intended to cause a third person to have apprehension of immediate harmful or offensive contact with
apprehension of such harmful or offensive contact; the latters person;
3. That a harmful or offensive contact with the body of a person 3. That the person intended to cause either a harmful or
actually resulted; offensive contact or an apprehension of such a contact;
4. That the person in some sensed caused the harmful or 4. That there was a causal connection between the attacker and
offensive contact, either because he himself touched another the other persons apprehension;
person or because he set in motion some force that actually 5. The victim lacks consent.
did the touching;
5. That the person did not consent to the contact. Q: When is an actor liable for tort based on assault?
Actual contact is necessary in battery A: An actor is liable for assault if:

1. He acts intending to cause a harmful or offensive contact
Unlike assault, battery involves an actual contact. The contact can with the person of the other, or an imminent apprehension of
be by one person (the tortfeasor) of another (the victim), or the such a contact, and
contact may be by an object brought about by the tortfeasor. For 2. The other is thereby put in such imminent apprehension.
example, the intentional contact by a car is a battery.
NOTE: Assault requires intent. Actual ability to carry out the apprehended
Unlike criminal law, which recognizes degrees of various crimes contact is not necessary.
involving physical contact, there is but a single tort of battery.
Lightly flicking a person's ear is battery, as is severely beating Q: When is an act not considered as an assault?
someone with a tire iron. Neither is there a separate tort for a
battery of a sexual nature. A: An act intended as a step toward the infliction of a future
contact, which is so recognized by the other, does not make the
Some rules in determining liability for tort based on battery actor liable for an assault under the rule.
1. The victim of a battery need not be aware of the act at the Harmful contact
time for the tort to have occurred.
2. Battery is a form of trespass to the person and as such no While the law varies by jurisdiction, contact is often defined as
actual damage (e.g. injury) needs to be proved. Only proof of "harmful" if it objectively intends to injure, disfigure, impair, or
contact (with the appropriate level of intention or negligence) cause pain.
needs to be made.
3. If there is an attempted battery, but no actual contact, that Offensive Act
may constitute a tort of assault.
4. Battery need not require body-to-body contact. Touching an The act is deemed "offensive" if it would offend a reasonable
object "intimately connected" to a person (such as an object persons sense of personal dignity.
he or she is holding) can also be battery.
5. A contact may constitute a battery even if there is a delay Imminence in assault
between the defendant's act and the contact to the plaintiff's
injury. "Imminence" is judged objectively and varies widely on the facts; it
generally suggests there is little to no opportunity for intervening
acts.

2014 GOLDEN NOTES
TORTS AND DAMAGES
Apprehension and fear good faith to appropriate what was built, planted or sown or to
remove the same.
The state of "apprehension" should be differentiated from the
general state of fear, as apprehension requires only that the Liability for damages under the above-cited provisions of the RPC
person be aware of the imminence of the harmful or offensive act. and the NCC requires intent or bad faith (Aquino, 2005).
Actual contact in assault Elements
Actual contact is NOT necessary in assault.As distinguished 1. The defendant committed a voluntary act against the plaintiff
from battery, assault need not to involve actual contactit only 2. The defendant physically invaded the real property owned by
needs intent and the resulting apprehension. Assault may also be the plaintiff
committed by words alone, but this rarely happens. For example, if 3. Intent
a person says to another to duck, intending to make the latter 4. The plaintiff had the immediate right to the possession of the
think that he is about to be hit, that is an assault even though the land (as an owner living there or as a tenant renting it)
former makes no gesture.
NOTE: The possession of real property is not affected by acts of a possessory
A battery can occur without a preceding assault, such as if a person character which are merely tolerated.
is struck in the back of the head. Fear is not required, only
anticipation of subsequent battery. TRESPASS TO CHATTELS (TROVER)
Some defences in assault Trover
Assault can be justified in situations of self-defense or defense of a Trespass to chattelsis where a person intentionally interferes with
third party where the act was deemed reasonable. It can also be personal property in someone elses possession.
justified in situations where consent can often be implied (i.e.
sports competitions). It may also cover cases where the defendant deprived the plaintiff
of personal property for the purpose of obtaining possession of a
FALSE IMPRISONMENT real property (Aquino, 2005 citing Magbanaua vs. IAC, 137 SCRA
(DIGNITARY TORT/ILLEGAL DETENTION) 329).
Elements of false imprisonment as a basis for tort liability In the field of tort, trespass extends to all cases where a person is
deprived of his personal property even in the absence of criminal
1. An act or omission on the part of defendant that confines or liability (Aquino, 2005).
restrains plaintiff
2. That plaintiff is confined or restrained to a bounded area; Elements
3. Intent
4. Causation 1. The defendant took a voluntary act which interfered with the
5. Awareness of the defendant of the confinement that the plaintiffs right of possession in the chattel. It could either be
defendant was actually harmed by it dispossession (taking possession to the exclusion of the
owner) or intermeddling (touching or harming it without
In the case of People v. Bisda, 406 SCRA 454, moral damages may removing it from the owners possession)
be awarded to a victim of illegal arrest and detention, especially if 2. The defendant intended the interference
the victim is a minor, the accused poked a knife at her, forcibly 3. The plaintiff either possessed or had the immediate right to
took her from school, tied her hands and placed scotch tape on her possess the same
mouth. 4. Damages must be proven if the act is intermeddling, but if the
act is dispossession, actual damages need not be proven.
The restraint NEED NOT be physical in order to be liable for false
imprisonment. While it is true that physical restraint is the classic CONVERSION
form of false imprisonment, it can take the form of threats or
duress such as threats to harm the person or his family if he leaves Conversion
the premises.
It is an intentional interference with the plaintiffs personal
TRESPASS TO LAND property that is so substantial that it is fair to require the
defendant to pay the propertys full value.
Trespass to land
Elements
Trespass to real propertyis a tort that is committed when a person
unlawfully invades the real property of another (Aquino, 2005). 1. An act by the defendant that substantially interferes with
plaintiff's right of possession in a chattel in a sufficiently
The Revised Penal Code punishes different forms of trespass. On serious fashion as justify the payment the chattel's full value.
the other hand, Art. 451 of the Civil Code provides that damages 2. Intent on the part of the defendant
may be awarded to the real owner if he suffered such damages 3. Plaintiff was either in possession of the chattel or had the
because he was deprived of possession of his property by a immediate right to possess it
possessor in bad faith or by a person who does not have any right
whatsoever over the property. Conversion may include:
1. Cases where the defendant deprived the plaintiff of personal
Anybody who builds, plants or sows on the land of another property for the purpose of obtaining possession of a real
knowing full well that there is a defect in his title is liable for property, as when a landlord deprived his tenants of water in
damages. The liability is in addition to the right of the landowner in order for them to vacate the lot they were cultivating.
2. Unjustified deprivation of access to property such as
unjustified disconnection of electricity service.

CIVIL LAW
Even if there was no intentional infliction of emotional distress in
Conversion and trespass to chattels one case, the SC recognized the possibility that one may be made
liable for the tort of intentional infliction of emotional distress.
It is the seriousness of the damage. In conversion claim, damage
to the personal property is so egregious as to merit the defendants Extreme and outrageous conduct
paying its full value in damages. Thus, not all trespasses to chattels
are conversions, but all conversions are trespass to chattels (Cf. Extreme and outrageous conductis conduct that is so outrageous in
U.S. v. Calimag, 12 Phil 687). character, and so extreme in degree, as to go beyond all possible
bounds of decency, and to be regarded as atrocious, and utterly
INTENTIONAL NON-PHYSICAL HARMS intolerable in civilized society (Aquino,2005).
VIOLATION OF PERSONAL DIGNITY Emotional distress v. Defamation
Rule with regard to the right of a person to his dignity, An emotional distress tort action is personal in nature. It is a civil
personality, privacy and peace of mind action filed by an individual to assuage the injuries to his emotional
tranquility due to personal attacks on his character.
Every person shall respect the dignity, personality, privacy and
peace of mind of his neighbors and other persons. The following Emotional distress properly belongs to the reactive harm principle
and similar acts, though they may not constitute a criminal offense, while defamation calls for the application of the relational harm
shall produce a cause of action for damages, prevention and other principle (Aquino, 2005).
relief:
The principle of relational harm includes harm to social
1. Prying into the privacy of another's residence; relationships in the community in the form of defamation as
2. Meddling with or disturbing the private life or family relations distinguished from the principle of reactive harm which includes
of another; injuries to individual emotional tranquility (MVRS Publications Inc.,
3. Intriguing to cause another to be alienated from his friends; et al v. Islamic Dawah Council of the Philippines., et al., 396 SCRA
4. Vexing or humiliating another on account of his religious 210).
beliefs, lowly station in life, place of birth, physical defect, or
other personal condition (Art. 26, NCC). Parasitic damage for emotional distress
INFLICTION OF EMOTIONAL DISTRESS These are damages which depend on the existence of another tort
(Aquino, 2005).
Emotional Distress
VIOLATION OF PRIVACY
Emotional distress mean is any highly unpleasant mental reaction
such as extreme grief, shame, humiliation, embarrassment, anger, Zones of privacy under the NCC, RPC, Rules of Court, and special
disappointment, worry, nausea, mental suffering and anguish, laws
shock, fright, horror, and chagrin (Aquino, 2005).
1. That every person shall respect the dignity, personality,
Severe emotional distress in some jurisdictions, refer to any type privacy and peace of mind of his neighbors and other persons
of severe and disabling emotional or mental condition which may and any act of a person of meddling and prying into the
be generally recognized and diagnosed by professionals trained to privacy of another is punishable as an actionable wrong;
do so, including posttraumatic stress disorder, neurosis, psychosis, 2. That a public officer or employee or any private individual
chronic depression, or phobia. shall be liable for damages for any violation of the rights and
liberties of another person, and recognizes the privacy of
The plaintiff is required to show, among other things, that he or letters and other private communications;
she suffered emotional distress so severe that no reasonable 3. The RPC makes a crime the:
person could be expected to endure it; severity of the distress is an i. Violation of secrets by an officer,
element of the cause of action, not simply a matter of damages. ii. Revelation of trade and industrial secrets, and
iii. Trespass to dwelling.
The plaintiff cannot recover merely because of hurt feelings. 4. Invasion of privacy is likewise an offense in special laws such
Liability cannot be extended to every trivial indignity. The plaintiff as the:
must necessarily be expected and required to be hardened to a i. Anti-wiretapping law; and
certain amount of rough language, and to acts that are definitely ii. Secrecy of bank deposits act; and
inconsiderate and unkind. 5. The Rules of Court provisions on privileged communication.
Requisites Standard to be applied in determining the existence of a violation

of the right to privacy
The plaintiff must show that:
1. The conduct of the defendant was intentional or in reckless The right to privacy is not a guaranty to hermitic seclusion. The
disregard of the plaintiff; standard to be applied is that of a person of ordinary sensibilities.
2. The conduct was extreme and outrageous; It is relative to the customs of the time and place, and is
3. There was a causal connection between the defendants determined by the norm of an ordinary person.
conduct and the plaintiffs mental distress; and
4. The plaintiffs mental distress was extreme and severe (MVRS The essence of privacy is the right to be let alone (Pineda, 2009).
Publications Inc., et al v. Islamic Dawah Council of the
Philippines., et al., 396 SCRA 210)

2014 GOLDEN NOTES
TORTS AND DAMAGES
Two-part test in determining the reasonableness of a persons Intrusion and public records
expectation of privacy
Generally, there is no intrusion into the right of privacy of another
1. Whether by his conduct, the individual has exhibited an if the information sought is a matter of public record. This is
expectation of privacy; and especially true in case the persons who are invoking the right to
2. Whether this expectation is one that society recognizes as privacy are public officers and the matter involved is of public
reasonable. concern.
Four general classes of tort actions for invasion of privacy However, if the matter sought to be revealed does not involve
anything of public concern, there can be a violation or the right to
1. Appropriation; privacy (Aquino, 2005).
2. Intrusion;
3. Public disclosure of private facts; and Public disclosure of private facts
4. False light in the public eye (Pineda, 2009).
It consists of a cause of action in publicity, of a highly objectionable
Appropriation kind, given to private information about the plaintiff, even though
it is true and no action would lie for defamation (Melvin v. Reid,
Appropriation consists of appropriation, for the defendants 112 Cal.App. 285, 297 P. 91).
benefit or advantage, of the plaintiffs name or likeness (Carlisle v.
Fawcett Publications, 201 Cal. App.2d 733, 20 Cal,Rptr. 405). The interest sought to be protected in this tort is the right to be
free from unwarranted publicity, from the wrongful publicizing of
The tort of commercial appropriation of likeness has been held to the private affairs and activities of an individual which are outside
protect various aspects of an individuals identity from commercial the realm of legitimate concern (Aquino, 2005 citing Ayer
exploitation: Productions, Ltd. Pty., et.al vs Hon. Ignacio Capulong, et. al. GR No.
1. Name L-82380).
2. likeness
3. Achievements Elements
4. Identifying characteristics
5. Actual performances 1. There must be a public disclosure;
6. Fictitious characters created by a performer 2. The facts disclosed must be a private fact;
7. Phrases and other things associated with an individual. 3. The matter be one which would be offensive and
objectionable to a reasonable person of ordinary sensibilities.
Intrusion
Public figure
Intrusionconsists in the intrusion upon the plaintiffs solitude or
seclusion. Public figureis a person who, by his accomplishments, fame or
mode of living, or by adopting a profession or calling which gives
It includes: the public a legitimate interest in his doings, his affairs, and his
1. The conduct of the defendant was intentional or in reckless character, has become a public personage
disregard of the plaintiff;
2. Prying into the privacy of ones home; However, a governmental agency or officer tasked with, and acting
3. Invading his home; (Ford Motor Co. v. Williams, 108 Ga.App. in, the discharge of public duties is NOT vested with a right to
21, 132, S.E.2d 206) privacy.Said right belongs only to individuals acting in a private
4. Invading ones privacy by looking from outside; capacity (Aquino, 2005).
5. Eavesdropping; (LaCrone v. Ohio Bell Tel. Co., 114 Ohio App.
299, 182 N.E.2d 340, 59 O.O2d 236) or Rule on publication of facts derived from official proceedings
6. Persistent and unwanted telephone calls.
GR: If the facts published are not declared by law to be
The tort of intrusion upon a persons solitude protects a persons confidential, it is not tortuous
sense of locational and psychological privacy.
XPN: Article 357 of the Revised Penal Code prohibits publication of
Intrusion in public places certain acts referred to in the course of official proceedings. It
punishes any reporter, editor, or manager of a newspaper, daily
Generally, there is no invasion of the right to privacy when a or magazine, who shall publish facts connected with private life of
journalist records, photographs, or writes about something that another and offensive to the honor, virtue, and reputation of said
occurs in public places. However, while merely watching a person person, even though said publication be made in connection with
in public places is not a violation, one does not automatically make or under the pretext that it is necessary in the narration of any
public everything that he does in public. It should not be judicial or administrative proceedings wherein such facts have
tantamount to harassment or overzealous shadowing. been mentioned. (Aquino, 2009).
This protection is not limited to public figures. Everyone is False light in the public eye
protected.
It consists of publicity which places the plaintiff in false light in the
Intrusion and administrative investigation public eye (Norman v. City of Las Vegas, 64 Nev. 38, 177 P.2d 442).
There is no intrusion when an employer investigates its employee The interest to be protected in this tort is the interest of the
or when a school investigates its student. In the latter case, the individual in not being made to appear before the public in an
investigation may cover an alleged offense committed outside the objectionable false light or false position.
school premises (Aquino, 2005).

CIVIL LAW
False light in the public eye v. Defamation. In civil cases
In false light, the gravamen of the claim is not reputational harm 1. The defendant filed a civil action against the plaintiff
but rather the embarrassment of a person in being made into previously;
something he is not. 2. The action was dismissed for clear lack of merit or for being
baseless, unfounded, and malicious;
Publication in defamation is satisfied if a letter is sent to a third 3. The defendant who filed the previous complaint as plaintiff
person; while in false light cases, the statement should be actually was motivated by ill-will or sinister design;
made public. 4. The present plaintiff suffered injury or damage by reason of
the previous complaint filed against him (Pineda, 2009).
In defamation, what is published lowers the esteem in which the
plaintiff is held. In false light cases, the defendant may still be held If the action filed by a party is still pending trial, the filing by the
liable even if the statements tell something good about the defendant of an action based on malicious prosecution anchored
plaintiff. on the first case is premature. Its dismissal is in order (Pineda, 2009
citing Cabacungan v. Corrales, 95 Phil 919).
MALICIOUS PROSECUTION
NO liability for malicious prosecution in case a suit is
Tort action for malicious prosecution unsuccessful.
It is an action for damages brought by one against another whom a The mere filing of a suit does not render the plaintiff liable for
criminal prosecution, civil suit, or other legal proceedings has been malicious prosecution should he be unsuccessful. Persons should
instituted maliciously and without probable cause, after the have free resort to the courts. The law does not impose a penalty
termination of such prosecution, suit or proceeding in favor of on the right to litigate (Pineda, 2009).
defendant therein.
However, the repeated filing of a complaint all of which were
Malicious prosecution, both in criminal and civil cases, requires the dismissed shows malicious prosecution entitling the injured party
elements of: (1) malice, and (2) absence of probable cause. (Yasona to an award of moral damages (Pineda, citing Hawpia v. CA, 20
v. De Ramos, 440 SCRA 154). SCRA 536).
The presence of probable cause signifies, as a legal consequence, DEFAMATION

the absence of malice. The absence of malice, therefore, involves
good faith on the part of the defendant. This good faith may even Defamation
be based on mistake of law.
Defamation is tarnishing the reputation of someone; It is a public
Acquittal presupposes that a criminal information is filed on court and malicious imputation of a crime, or of a vice or defect, real or
and final judgment is rendered dismissing the case against the imaginary, or any act, omission, condition, status, or circumstance
accused. It is not enough that the plaintiff is discharged on a writ of tending to cause the dishonor, discredit, or contempt of a natural
habeas corpus and granted bail. Such discharge is not considered or juridical person, or to blacken the memory of one who is dead
the termination of the action contemplated to warrant the (Art. 353, RPC). It has two varieties, slander and libel.
institution of a malicious prosecution suit against those responsible
for the filing of the information against him. Actual damages need not be proved, at least where the publication
is libelous per se, or where the amount of damages is more or less
Nevertheless, it is believed that prior acquittal may include nominal.
dismissal by the prosecutor after preliminary investigation.
Reason for liability
Elements
The liability imposed for defamation is brought about by the desire
In criminal cases to protect the reputation of every individual. The enjoyment of
reputation is one of those rights necessary to human society that
1. The fact of the prosecution and the further fact that the underlie the whole scheme of civilization. It is as much a
defendant was himself the prosecutor, and that the action constitutional right as the possession of life, liberty or property
was terminated with an acquittal; (Worcester v. Ocampo, 22 Phil 42).
2. That in bringing the action, the prosecutor acted without
probable cause; Requistes
3. The prosecutor was actuated or impelled by legal malice
(Yasona v. Ramos, G.R. 156339, Oct. 6, 2004). 1. It must be defamatory;
2. It must be malicious;
The term prosecutor includes the complainant who initiated the 3. It must be given in publicity; and
case; the prosecutor himself; any other public officer authorized to 4. The victim must be identifiable (Alonzo v. Court of Appeals,
file and prosecute the criminal case. 241 SCRA 51)
Mere witnesses are not included, but are liable for false testimony NOTE:in publicity is the communication of the defamatory matter to some
or perjury for their falsehoods. third person or persons.
To constitute malicious prosecution, there must be proof that the Kinds of Defamation
prosecution was prompted by a sinister design to vex and
humiliate a person, and that it was initiated deliberately, knowing 1. Libel - is a defamation committed by means of writing,
that the charges were false and groundless (Pineda, 2009). printing, lithography, engraving, radio, phonograph, painting
or theatrical or cinematographic exhibition, or any similar
means.
2. Slander - is an oral defamation.

2014 GOLDEN NOTES
TORTS AND DAMAGES
3. Slander by deedis a crime committed by any person who Sexual Assault
performs an act that costs dishonor, discredit or contempt
upon the offended party in the presence of other person or The defendant would be liable for all forms of sexual assault. These
persons. include rape, acts of lasciviousness and seduction.
Imputation of criminal intent Gender is immaterial in seduction and sexual assault.
Imputation of criminal intention is NOT libelous because intent to When there is no seduction
commit a crime is not a violation of law.
There is no seduction where the plaintiff, of adult age, maintained
Defense of expressing his opinion or belief intimate sexual relations with the defendant, with repeated acts of
intercourse, such conduct is incompatible with the idea of
Allegation that the offender merely expresses his opinion or belief seduction. Voluntariness and mutual passion, though there was
is NOT a defense in defamation cases.In order to escape criminal artful persuasions and wiles without fulfilling the promise of
responsibility, it is not enough for the offender to say that he marriage is not actionable.
expresses therein no more than his opinion or belief. The
communication must be made in the performance of a legal, UNJUST DISMISSAL
moral, or social duty.
Rule on dismissal of employees
Retraction
It is a basic rule that an employer has a right to dismiss an
When a periodical gives currency, whether innocently or employee in the manner and on the grounds provided for under
otherwise, to a false and defamatory statement concerning any the NCC. If the dismissal is for a valid cause, his dismissal is
person, it is under both a legal and moral duty to check the consistent with the employers right to protect his interest in
propagation of such statement as soon as practicable by publishing seeing to it that his employees are performing their jobs with
a retraction. honesty, integrity and good faith (Aquino, 2005 citing Marilyn
Bernardo v. NLRC, Mar. 15, 1996).
Effect of retraction as regards liability for defamation
However, such exercise of the right to terminate must be
Retraction may mitigate the damages provided that it contains an consistent with the general principles provided for under Articles
admission of the falsity of the libelous publication and evince a 19 and 21 of the New Civil Code. If there is non-compliance with
desire to repair the wrong occasioned thereby. said provisions, the employer may be held liable for damages. The
right to dismiss an employee should not be confused with the
Effect if the publication was by reason of an honest mistake manner in which the right is exercised and the effects flowing
therefrom. If the dismissal is done anti-socially or oppressively then
It only serves to mitigate liability where the article is libelous per the employer should be deemed to have violated Art. 1701, NCC
se. which prohibits acts of oppression by either capital or labor against
the other, and Art. 21 (Quisaba v. Sta. Ines-Melale Veneer and
If the defamatory imputations were made in a privileged Plywood, Inc. ,Aug. 30, 1974).
communication, there is NO liability. An absolutely privileged
communication is one for which, by reason of the occasion on An employer may be held liable for damages if the manner of
which it is made, no remedy is provided for the damages in a civil dismissing the employee is contrary to morals, good customs and
action for slander or libel. public policy. This may be done by false imputation of misdeed to
justify dismissal or any similar manner of dismissal which is done
FRAUD OR MISREPRESENTATION (FORMERLY DECEIT) abusively (Globe Mackay Cable & Radio Corp. v. Court of Appeals,
Aug. 25, 1989).
Elements of misrepresentation in torts cases
VIOLATION OF RIGHTS COMMITTED BY PUBLIC OFFICERS
1. Affirmative misrepresentation of a material fact;
2. Defendant knew that statement being made was false; Instances where a public officer can be liable for damages
3. Intent;
4. Causation; When a member of a city or municipal police force refuses or fails
5. Justifiable reliance; and to render aid or protection to any person in case of danger to life
6. Damages or property, such peace officer shall be primarily liable for damages
(Art. 34, NCC).
NOTE: There is sexual fraud when the accused represented that he was
single and the complainant agreed to marry him based on this An action may be brought by any person suffering from material or
representation. Thereafter, the accused heartlessly abandoned her (Manuel moral loss because a public servant refuses or neglects, without
v. People, 476 SCRA 461). just cause to perform his official duty (Art.27, NCC).
SEDUCTION Requisites
i. defendant is a public officer charged with the
Seduction performance of a duty in favor of the plaintiff
ii. he refused or neglected without just cause to perform
Seduction, by itself, is an act which is contrary to morals, good such duty (ministerial)
customs and public policy. The defendant is liable if he employed iii. plaintiff sustained material or moral loss as
deceit, enticement, superior power or abuse of confidence in consequence of such non-performance
successfully having sexual intercourse with another (Aquino, 2005) iv. the amount of such damages, if material

CIVIL LAW
Intention of making public officers liable under Art 34, NCC NOTE: An action for alienation of affection against the parents of one
consort is does not lie in the absence of proof of malice (Tenchavez v.
Art. 34 is intended to afford a remedy against police officers who Escano, 15 SCRA 355).
connive with bad elements, are afraid of them or simply indifferent
to duty. Some cases where there is no tort liability for alienation of
affections
Public officials ought to act with the highest degree of excellence,
professionalism, intelligence and skill and for failure to act with 1. A woman cannot be made liable for alienation of the
such, he may be held liable for exemplary damages in his personal affections of the husband (of another woman) for being
capacity (Lim v, Ponce de Leon, 492 SCRA 497). merely the object of the affections of said husband. To be
liable, she must have done some active acts calculated to
INTERFERENCE WITH RELATIONS alienate the affections of the husband. She must, in a sense,
be the pursuer, not merely the pursued;
Four kinds of interference 2. A prostitute is not liable for alienation of affections of the
husband for having sexual intimacies with him on a chance
Interference with: occasion.
1. Family relations; 3. When there is no more affection to alienate.
2. Social relations;
3. Economic relations; and
4. Political relations. LOSS OF CONSORTIUM
FAMILY RELATIONS Loss of consortium
ALIENATION OF AFFECTION A spouse has a legal obligation to live with his or her spouse. If a
spouse does not perform his or her duty to the other, he may be
Alienation of affection held liable for damages for such omission because the same is
contrary to law, morals and good customs.
Alienation of affection consists of depriving one spouse of the
affection, society, companionship and comfort of the other Moral damages were awarded because of the wifes refusal to
(Aquino, 2005). perform her wifely duties, her denial of consortium and desertion
of her husband. Her acts constitute a willful infliction of injury upon
The Family Code imposes on the spouses the obligation to live her husbands feelings in a manner contrary to morals, good
together, observe mutual love, respect and fidelity, and render customs or public policy (Tenchaves v. Escao, G.R. No. L-19671,
mutual help and support. (Article 68) Interference with such may July 26, 1966).
result in the tort liability of alienation of affection.
CRIMINAL CONVERSATION (ADULTERY)
The gist of the tort is an interference with one spouses mental
Adultery
attitude toward the other and the conjugal kindness of marital
relations resulting in some actual conduct which materially affects
Adultery is committed by any married woman who shall have
it.
sexual intercourse with a man not her husband and by the man
who has carnal knowledge of her knowing her to be married, even
Scope of alienation of affection
if the marriage was subsequently declared void (Art. 333, RPC).
Alienation of affections extends to all cases of wrongful
Concubinage
interference in the family affairs of others whereby one spouse is
induced to leave the other spouse or to conduct himself or herself
Concubinage is committed by a husband who shall
in a manner that the comfort of married life is destroyed (Thomas
1. Keep a mistress in the conjugal dwelling;
M. Cooley and D. Avery Haggard, Treatise on the Law of Torts, Vol.
2. Have sexual intercourse with her, under scandalous
2, 1932 Ed., p.6).
circumstances, with a woman not his wife; or
3. Cohabit with her in any other place (Art. 334, RPC)
Persons liable for alienation of affection
The defendant who purposely entices the spouse of another, to Liability for adultery or concubinage
alienate his or her affections with his or her spouse, even if there
are no sexual intimacies is liable for damages under this article. Liability for adultery or concubinage based on the law on tortsnot
Likewise, a person who prevented the reconciliation of spouses only moral damages but also for other appropriate damages.
after their separation is liable for alienation of affections.
There is no legal basis for the imposition of moral damages in case
It is not necessary that there is adultery or the spouse is deprived of Bigamy (Pineda, 2009 citing People v. Bondoc, .GR. No. 22573-R,
of household services. Apr. 21, 1959).
Liability of parents for alienation of affections SOCIAL RELATIONS
Parents MAY be liable for alienation of affections. However, The following and similar acts, though they may not constitute a
parents are presumed to act for the best interest of their child. The criminal offense, shall produce a cause of action for damages,
law recognizes the right of a parent to advise his/her child and prevention and other relief
when such advise is given in good faith, the act, even if it results in (1) Prying into the privacy of another's residence;
separation, does not give the injured party a right of action (2) Meddling with or disturbing the private life or family relations
(Aquino, 2005). of another
(3) Intriguing to cause another to be alienated from his friends;

2014 GOLDEN NOTES
TORTS AND DAMAGES
(4) Vexing or humiliating another on account of his religious Rule on business interruption damages
beliefs, lowly station in life, place of birth, physical defect, or
other personal condition (Art. 26, NCC). Liability recognized
In intriguing to cause another to be alienated from his friends a 1. A business owner whose business was interrupted as a result
person who committed affirmative acts intended to alienate the of a contractors delay in completing a construction project
existing friendship of one with his friends is liable for damages could recover economic damages from the contractor even
(Pineda, 2009). though the business owner had not suffered physical injury or
property damage
ECONOMIC RELATIONS 2. A business owner is entitled to recover for business damages
interruption unaccompanied by physical damage against a
INTERFERENCE WITH CONTRACTUAL RELATIONS supplier of electrical power as a result of the wrongful
termination of the business electrical services
Interference with contractual relations 3. A business owner who did not sustain any property damage
as a result of a pollution of a waterway but who suffered an
Any third person who induces another to violate his contract shall interruption of their business could recover damages from
be liable for damages to the other contracting parties (Art.1314, those responsible for the pollution
NCC). 4. Economic damages could also be recovered against people
who cause the obstruction of a wharf or landing
Such interference is tortious because it violates the right of the 5. A threat of a chemical explosion
contracting parties to fulfill the contract and to have it fulfilled, to 6. A tenant in a building who caused leaking sewer line
reap the profits resulting therefrom, and to compel the
performance by the other party (45 Am. Jur. 2d 280-281). Liability not recognized
Elements 1. A business owner cannot maintain a negligence action for

economic damage die to business interruption
1. Existence of a valid contract; unaccompanied by personal injury or property damages
2. Knowledge on the part of the third person of the against the party causing the interruption
existence of the contract; 2. A plaintiff cannot recover in negligence for purely economic
3. Interference of the third person without legal loss in the absence of physical injury against a defendant who
justification or excuse (So Ping Bun v. Court of Appeals, has negligently caused the closing of a public bridge or river
G.R. No. 120554, Sept.21, 1999). 3. A motel owner and waitress employed thereby could not
maintain a claim for purely economic damages arising out of
Interference with prospective advantage a contractor or fabricator of steel bars used in the
construction of a bridge which was closed when cracks were
If there is no contract yet and the defendant is only being sued for discovered
inducing another not to enter into a contract with the plaintiff, the 4. The owners of a barge or tugboat which collided with a bridge
tort committed is appropriately called interference with resulting in the closing of the bridge for two months could
prospective advantage. not be held liable on the theory of negligence for the loss of
business by two shores which resulted from the loss of access
Rule regarding the extent of recovery against defendant found by customers who were unable to cross the bridge.
guilty of interference with contractual relations
UNFAIR COMPETITION
Such defendant cannot be held liable for more than the amount for
which the party who induced to break the contract can be held Unfair competition
liable. It would seem that the rule is consistent with the provisions
of Article 2202 of the New Civil Code only if the contracting party It consists in employing deception or any other means contrary to
who was induced to break the contract was in bad faith. good faith by which any person shall pass off the goods
manufactured by him or in which he deals, or his business, or
However, when there is good faith, the party who breached the services for those of the one having established goodwill, or
contract is only liable for consequences that can be foreseen (Art. committing any acts calculated to produce such result (Sec. 29(2),
2201, NCC). R.A. No. 166).
Nature of the liability of the intermeddler Basis of the award of damages in case of unfair competition
The liability of the intermeddler is solidary because the former has It could either be
committed a tortuous act or quasi-delict where liability is solidary 1. The reasonable profit which the complainant would have
(Art. 2941, NCC). made had the defendant not infringed his rights
2. The profit which the defendant actually made out of the
Malice of the intermeddler infringement
3. Reasonable percentage based upon the amount of gross sales
GR:Malice is essential to make the intermeddler liable. of the defendant of the value of services in connection with
which the mark or trade names was issued in the
XPN: If the intention of the intermeddler is honest and laudable infringement of the complainant.
such as when the interference is intended to protect the
contracting party he is intermeddling for, from danger to his life or Test of unfair competition
property, he should not be made liable for damages for the breach
of the contract. The true test of unfair competition is whether certain goods have
been intentionally clothed with an appearance which is likely to
deceive the ordinary purchaser exercising ordinary care, and not

CIVIL LAW
whether a certain limited class of purchasers with special Purpose of Article 32
knowledge not possessed by the ordinary purchaser could avoid
mistake by the exercise of this special knowledge (U.S. v. Manuel, 7 Its purpose is to provide a sanction to the deeply cherished rights
Phil. 221). and freedoms enshrined in the Constitution. (Pineda, 2009)
Art. 28 of the New Civil Code provides for unfair competition which Judges liability for damages
includes:
1. Passing off or disparagement of products GR: Judges are exempted from damages, if by performing their
2. Interference with contractual relations duties in good faith, they happen to violate or impair the rights and
3. Interference with prospective advantage liberties mentioned in Article 32.
4. Fraudulent misappropriation against a competition
5. Monopolies and predatory pricing XPN: If the judges act or omission constitutes a violation of the
Revised Penal Code or other penal statute, the judge is liable for
Predatory pricing damages aside from criminal liability (Pineda, 2009).
It is a practice of selling below costs in the short run in the hope of DEFENSES
obtaining monopoly gains later, after driving the competition from
the market. Defense on interference
POLITICAL RELATIONS The defendants are free from liability if they can prove that at the
time of the commission, the plaintiff knew of the act of
Article 32 of the New Civil Code: Any public officer or employee, or interference or omission.
any private individual, who directly or indirectly obstructs, defeats,
violates or in any manner impedes or impairs any of the following Defense of privilege in torts cases
rights and liberties of another person shall be liable to the latter for
damages: To say that an act is privileged connotes that the actor owes no
legal duty to refrain from such contact.
1. Freedom of religion;
2. Freedom of speech; Consensual v. non-consensual privilege
3. Freedom to write for the press or to maintain a periodical
publication; Consensual privileges depend on the plaintiff agreeing to the
4. Freedom from arbitrary or illegal detention; defendants otherwise tortious act. On the other hand, non-
5. Freedom of suffrage; consensual privileges shield the defendant from liability for
6. The right against deprivation of property without due process otherwise tortious conduct even if the plaintiff objects to the
of law; defendants conduct.
7. The right to a just compensation when private property is
taken for public use; Consent as a defense in torts cases and its basis
8. The right to the equal protection of the laws;
9. The right to be secure in one's person, house, papers, and Typically, one cannot hold another liable in tort for actions to
effects against unreasonable searches and seizures; which one has consented. This is frequently summarized by the
10. The liberty of abode and of changing the same; phrase "volenti non fit injuria" ("to a willing person, no injury is
11. The privacy of communication and correspondence; done" or "no injury is done to a person who consents"). It operates
12. The right to become a member of associations or societies for when the claimant either expressly or implicitly consents to the risk
purposes not contrary to law; of loss or damage.
13. The right to take part in a peaceable assembly to petition the
government for redress of grievances; Consent is willingness in fact for the conduct to occur.
14. The right to be free from involuntary servitude in any form;
15. The right of the accused against excessive bail; Some rules in determining whether consent is present as a
16. The right of the accused to be heard by himself and counsel, defense
to be informed of the nature and cause of the accusation
against him, to have a speedy and public trial, to meet the 1. It need not be communicated to the defendant
witnesses face to face, and to have compulsory process to 2. In determining whether plaintiff consented, defendant must
secure the attendance of witness in his behalf; reasonably interpret her overt act and manifestations of her
17. Freedom from being compelled to be a witness against one's feelings.
self, or from being forced to confess guilt, or from being
induced by a promise of immunity or reward to make such NOTE: The defendants subjective state is based on the plaintiffs
confession, except when the person confessing becomes a objective actions.
State witness;
18. Freedom from excessive fines, or cruel and unusual 3. Plaintiff has burden of proof to show intent to commit the
punishment, unless the same is imposed or inflicted in act, lack of consent, and harm.
accordance with a statute which has not been judicially
declared unconstitutional; and Consent NOT a defense if the plaintiff or offended party is a
19. Freedom of access to the courts (Art. 32, NCC). minor
The violation of a persons rights under Article III of the 1987 For one to surrender the right to be free from intentional
Constitution as contemplated in Art. 32 constitutes constitutional interference by others, one must have the mental capacity to
tort. consent. Defendant can be liable despite the fact that the plaintiff
was subjectively willing and communicated that willingness to the
defendant.

2014 GOLDEN NOTES
TORTS AND DAMAGES
In common law countries, most courts have applied statutory rape If the intervener is mistaken, even reasonably mistaken, the
statutes in civil cases regardless of proof that the plaintiff was able privilege is unavailable if it would not be available to the person to
to understand the consequences of her act and consent. be protected.
Conduct that injures another does not make the actor liable to The interveners mistake need only be reasonable; there is no need
the other, even though the other has not consented to it if to show that the victim also had the privilege to defend himself.
1. An emergency makes it necessary or apparently necessary to Extent of the privilege to defend his property from intrusions
act before there is opportunity to obtain consent or one
empowered to consent for him, and An actor is privileged to use reasonable force, not intended or
2. The actor has no reason to believe that the other would likely to cause death or serious bodily harm, to prevent or
decline. terminate anothers intrusion upon the actors land if:
1. The intrusion is not privileged;
Consent will not shield the defendant from liability if it is 2. The actor reasonably believes that the intrusion can be
procured by means of fraud or duress. prevented only by the force used; and
3. The actor has first requested the other to desist or the actor
Courts invalidate consent procured by duress when defendants believes such request will be useless or substantial harm will
threaten the plaintiff or plaintiffs loved ones with physical harm. be done before it can be made.
Self-defense as a defense The intentional infliction which is intended or likely to cause death
or serious bodily harm, for the purpose of preventing or
An actor is privileged to use reasonable force, not intended or terminating the others intrusion upon the actors possession of
likely to cause death or serious bodily harm, to defend himself land, is privileged only if the actor reasonably believes that the
against unprivileged harmful contract which he reasonably believes intruder is likely to cause death or serious bodily harm.
that another is about to inflict.
Q: The owner or lawful possessor of a thing has the right to
An actor is privileged to defend himself against another by force exclude any person from the enjoyment and disposal thereof. For
likely to cause death or serious bodily harm when he reasonably this purpose, he may use such force as may be reasonably
believes that: necessary to repel or prevent an actual or threatened unlawful
1. The other is about to inflict upon him an intentional contact physical invasion or usurpation of his property (Art. 429, NCC). Is
and the owners right provided for in the said article an absolute
2. He is thereby put in peril of death or serious bodily harm right?
which can safely be prevented only by immediate use of such
force. A:No. In the following instances, this right may not be invoked by
the owner:
NOTE: Court requires objective and subjective belief (reasonable person 1. One may sacrifice the personal property of another to save
could have seen the situation as dangerous and subject believed that he was his life or the lives of his fellows;
in danger). 2. One is privileged by necessity to trespass when there is a
serious threat to life and no other lifesaving option is
Privilege of self-defense available; and
3. The owner of property may not eject a trespasser if the
EXISTS even if the actor believes he can avoid defending himself by trespasser requires entry to protest himself and his property
from harm.
1. Retreating within his dwelling place, or
2. Permitting the other to intrude upon his dwelling place, or NOTE: In these instances, intrusion is said to be privileged. The necessity
3. Abandoning an attempt to effect a lawful arrest. privilege to enter the land of another in order to avoid serious harm is
coupled with an obligation on the part of the entrant to pay for whatever
DOES NOT EXIST if the actor believes that he can avoid defending harm he caused.
himself by
Recapture of property
1. Retreating in any place other than his dwelling place or
2. Relinquishing the exercise of any right other than his privilege In order for recapture of chattels to be raised as a defense, two
to prevent intrusion onto his dwelling place. things must concur: first, possession by the owner, and, second, a
purely wrongful taking or conversion, without a claim of right
The actor is not privileged to use any means of self-defense which (Kirby v. Foster, 298 F.3d 219).
is intended or likely to cause a bodily harm in excess of that which
the actor correctly or reasonably believes to be necessary for his If personal property is involved, recapture of chattels is a proper
protection. defense, if it is a real property, recapture of land is a defense. Such
recapture of land defense is most frequently present in landlord-
A party claiming self-defense must prove not only that he acted tenant disputes. It is generally held by the courts that no privilege
honestly in using force, but that his fears were reasonable under exists for a landowner to forcibly enter the tenant's premises or
the circumstances, and the means of self-defense were reasonable. interfere with the tenant's person or property.
The self-defense privilege extends to protecting total strangers as Discipline as a defense in intentional torts
well.
Based on a person's status or profession, he may be entitled to use
Self-defense made by an intervener reasonable force in order to discipline others. If a person such as a
teacher, parent, or military official commits a tort which results in
The force that may be used by an intervener to repel an attack on injury to a plaintiff, as long as certain conditions are met, the
another is measured by the force that the other could lawfully use. defense of discipline will excuse him from liability.

CIVIL LAW
Necessity as a defense
Necessity is a tort defense that is used under unusual, emergency

circumstances where a defendant injures a plaintiff in order to
prevent a greater harm. The defendant must prove that the harm
inflicted on the plaintiff's person or property was less than the
harm that was prevented.
Legal authority as a defense
May be invoked by the following:

1. Any person who acts in the fulfillment of a duty or in the
lawful exercise of a right or office because an officer of the
law is protected by the legal system when making an arrest,
permitting that he properly followed the legal process.
2. Any person who acts in obedience to an order issued by a
superior for some lawful purpose (Art. 11(5-6), RPC).
NOTE:Under the RPC, a justifying circumstance relieves the offender not only
from criminal liability but also from civil liability

2014 GOLDEN NOTES

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CIVIL LAW

2014 GOLDEN NOTES

ADDRESS: Academics Committee

TEL. NO.: (02) 731-4027

No portion of this material may be copied or reproduced in books, pamphlets,

Printed in the Philippines, August 2014.

CIVIL LAW STUDENT COUNCIL

ATTY. AL CONRAD B. ESPALDON

WILLIAM RUSSEL S. MALANG SECRETARY GENERAL

KAREN T. ELNAS ADMINISTRATION AND FINANCE

CIVIL LAW COMMITTEE

ATTY. CARLA E. SANTAMARIA-SEA

ATTY. NILO T. DIVINA REV. FR. ISIDRO C. ABAO, O.P.

ATTY. ARTHUR B. CAPILI

ATTY. ELGIN MICHAEL C. PEREZ

JUDGE PHILIP A. AGUINALDO

LENY G. GADANIA, R.G.C.

I. Effect and Application of Laws (Civil Code) 5

I. Persons and Personality (Civil Code) 11

I. Definition and Essential Requisites of a Contract of Sale 178

LAND TITLES AND DEEDS

THE RISK OF USE, MISUSE OR NON-

PRELIMINARY MATTERS 3. Letters of Instruction issued by administrative supervisors on

UNIVERSITY OF SANTO TOMAS

Q: Cheong Boo, a native of China died intestate in Zamboanga. He

UNIVERSITY OF SANTO TOMAS

Retroactive law XPNs: Where the law:

UNIVERSITY OF SANTO TOMAS

Repeal of law Self-lapsing laws

Ways of repealing laws JUDICIAL DECISIONS

1. Express - If the law expressly provides for such Judicial decisions

UNIVERSITY OF SANTO TOMAS

DUTY TO RENDER JUDGMENT c. Insufficient

UNIVERSITY OF SANTO TOMAS

2. Status laws Is the clause above-quoted valid?

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS

NOTE: To constitute seduction there must be some sufficient promise or

Accion in rem verso

It is an action for recovery of what has been paid or delivered

Accion in rem versocan only be availed of if there is no other

1. The defendant has been enriched;

Accion in rem verso v. Solutio Debiti

Mistake is an essential element in solutio indebiti. In accion in rem

Liability without fault or negligence

The NCC recognizes liability without fault or negligence, even when

UNIVERSITY OF SANTO TOMAS

Status XPN: Presumptive/Temporary The law considers the conceived

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS

A: The place of habitual residence is the domicile of a natural person

UNIVERSITY OF SANTO TOMAS

Legal capacity of the parties to marry (ASL) MARRIAGE CEREMONY

1. Age at least 18 years Valid marriage ceremony

NOTE: Philippine laws prohibit marriages by proxy. Since the marriage

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS

FOREIGN NATIONAL 3. Fact of absence of legal impediment must be Present at the

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS

UNIVERSITY OF SANTO TOMAS