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CENTRAL
BAR OPERATIONS 2019
LEILA S. LIM
Bar Review Secretariat
VIVENCIO ABANO
FERDINAND CASIS
J. HECTOR HOFILENA (RET.)
JESS RAYMUND LOPEZ
AMPARITA STA. MARIA
CHRISTINE JOY TAN
TERESA VILLANUEVA-TIANSAY
CIVIL LAW Faculty Advisers
ROSEGAIL ABAS
KARLA NIZZA BUTIU
ANA BETTINA CARONONGAN
ALEEZAH GERTRUDE REGADO
JUSTIN NICHOLAS SY
CIVIL LAW Understudies
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| I. G EN ER A L PR IN C IPLES 4. capacity to
succeed
A. EFFECT AND APPLICATION OF LAWS Laws on Forms and Lex lo c i
Forms and solemnities celebrationis:
Q: Summarize the governing laws or Solemnities of contracts, Law of the
principles. wills, public country in
A: instruments which they are
LAW MATTERS/ GOVERNING executed
.....; -................ PERSONS PRINCIPLE/
BOUND DOCTRINE Exception: If
Penal Laws All those Principle of executed
who live or Territoriality: before
sojourn in Law of the Philippine
Philippine place where diplomatic or
territory crime was consular
committed officials
Status Laws Principle of abroad,
Citizens of
(relating to the Nationality: Philippine laws
family National law of shall govern.
Philippines,
rights and even the person
duties, though Note:
status, living Prohibitive
laws which
condition, abroad
have for their
legal
object public
capacity)
order, public
Property Real and Lex re i sitae:
policy and good
Laws personal Law of the
customs shall
property place where
not be
property is
rendered
situated.
ineffective by
laws or
Exception:
judgments
In intestate and
promulgated,
testamentary
or by
successions, it
determinations
is the national
or conventions
law of the
agreed upon in
person whose
a foreign
succession is
country.
under
consideration,
regardless of Q: A foreigner married to a Filipina had a
the nature and child. When they divorced abroad, the
location of the foreigner refused to support the child stating
property, with that under his country’s law, they are not
respect to: obliged to support a child. Is the foreigner’s
1. order of refusal valid?
succession
2. amount of A: No. While the provisions of the Family Code on
successional support only apply to Filipino citizens, the
rights foreigner in this case did not prove his country’s
3. intrinsic law before the courts. Thus, the doctrine of
validity of will processual presumption applies, that is - if the
foreign law involved is not properly pleaded and
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proved, our courts will presume that the foreign 3. Locus Actus — place where an act has
law is the same as our local or domestic or been done;
internal law. Moreover, the-foreigner’s national 4. Lex Fori— place where judicial or
law would not find applicability in our jurisdiction administrative proceedings are instituted
when such is contrary to an established public or done;
policy of the forum. Prohibitive laws concerning 5. Place where an act is intended to come
persons, their acts or property, and those which into Effect;
have for their object public order, public policy 6. Situs of a thing;
and good customs shall not be rendered 7. Intention of the parties as to the
ineffective by laws or judgments promulgated, or governing law;
by determinations or conventions agreed upon in 8. Flag of a ship. (Saudi Arabian Airlines v.
a foreign country (Del Socorro, v. Van Wilsem, Court o f Appeals, G.R. No. 122191, 1998
G.R. No. 193707,2014 (citing Bank o f America v. )
American Realty Corp. G.R. No. 133876, 1999)).
Q: What is the doctrine of forum non
B, CONFLICTS OF LAW conveniens?
Q: What are the phases involved in judicial A: The doctrine provides that a court, in conflicts
resolution of conflicts-of-law problems? of law cases, may refuse impositions on its
A: jurisdiction where it is not the most “convenient”
1. Jurisdiction;*3 or available forum and the parties are not
------ 2.— Choice of law;---------------------------------------- precluded from—seeking remedies elsewhere.
3. Recognition and enforcement of (Bank of America v. Court of Appeals, G.R. No.
judgments. ( Hasegawa v. Kitamura, G.R. 120135,2003)
No. 149177, 2007)
Q: Under the doctrine of forum non
Q: Define “foreign element.” conveniens, when may a Philippine court or
agency choose to assume jurisdiction?
A: A foreign element is a factual situation that cuts
across territorial lines and is affected by the A:
diverse laws of two or more states. ( Saudi 1. Philippine court is one to which the
Arabian Airlines v. Court of Appeals, G.R. No. parties may conveniently resort to;
122191, 1998) 2. Philippine court is in a position to make
an intelligent decision as to the law and
Q: Discuss the concept of “minimum the facts; and
contacts.” 3. Philippine court has or is likely to have
pow er.to enforce its decision. (The
A: One basic principle underlies all rules of Manila Hotel Corporation v. NLRC, G.R.
jurisdiction in international law, a state does not No. 120077, 2000)
have jurisdiction in the absence of some
reasonable basis it. To be Q: What is the doctrine of “processual
reasonable, the jurisdiction must be based on presumption?”
some minimum contacts that will not offend
traditional notions of fair play and substantial A: The doctrine provides that where a foreign law
justice. (HSBC v. Sherman, G.R. No. 72494, is not pleaded, or even if pleaded is not proved,
1989) the presumption is that foreign law is the same as
ours. (EDI-Staffbuilders International v. NLRC,
Q: What are the “points of contact?” G.R. 145587. 2007)
A: The points of contract are: (DRONS-SAFES-
IF) Q: L, a Filipino and R, a Japanese citizen, were
1. Domicile, Residence, place of Origin, married in in the Philippines in 2009. They
Nationality, or place of Sojourn of a lived together in Japan. During their married
person; life, they would constantly quarrel due to R’s
2. Seat of a legal or juridical person; philandering ways. As such, L and R
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Q: When does a declaration of absence of a Q: What are the grounds that would warrant a
missing person take effect? change of a person’s first name or nickname?
A: 6 months after the publication of the
declaration of absence (CIVIL CODE, ART. 386). A:
1. Petitioner's true and official name is
CIVIL REGISTER ridiculous;
2. Petitioner’s true and official name is
Q: What are the matters recorded in the civil tainted with dishonor
register? 3. Petitioner’s true and official name is
extremely difficult to write or pronounce
A: 4. New first name or nickname has been
1. Acts, events and judicial decrees habitually and continuously used by the
concerning the civil status of persons petitioner and he has been publicly
2. Birth known by the first names and nicknames
3. Marriage in the community
4. Death 5. When the change is necessary to avoid
5. Legal separation confusion (Sec. 4, R.A. 9048)
6. Annulment of marriage
7. Judgments declaring marriage void from With Judicial W ithout Judicial
the beginning Authority A u th o rity .....
8. Legitimation Matters which may be Change of surname
9. Adoption made by the can only be done
10. Acknowledgement of natural children concerned city or through a court
11. Naturalization municipal registrar or proceeding
12. Loss of citizenship consul general (R.A. EXCEPT when the
13. Recovery of citizenship 9048, as amended request for change is
14. Civil interdiction by R.A. 10172): a consequence of a
15. Judicial determination • Clerical or change of status,
16. Voluntary emancipation of a minor typographical such as when a
17. Change of name errors and natural child is
change of first acknowledged or
General Rule: Entries in the civil register may be name or legitimated
changed or altered only upon a judicial order. nickname, the
day and month
Exception: Clerical or typographical errors or in the date of
change in the name or nickname can be changed birth, or sex of a
administratively through verified petition with the person where it is
local office of the civil registrar. patently clear that
there was a
Who may file petition: Any person having direct clerical or
and personal interest in any act, event, order or typographical
decree concerning the civil status of persons or error or mistake
change of name. in the entry
• Petition must be
Q: What are the procedural requirements for a accompanied by
Petition of Change of Name? earliest school
A: record or
1. 3 years residency in the province where documents such
change is sought prior to the filing as but not limited
2. Must not be filed within 30 days prior to to medical
an election records,
3. Petition must be verified baptismal
certificate, and
other documents
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6. When the request for change is a Q: What are the essential requisites of
consequence of a change of status, marriage?
such as when a natural child is
acknowledged or legitimated A: Legal capacity of the contracting parties who
must be a male and a female; and Consent freely
Q: What is usurpation of name? given in the presence of the solemnizing officer
{FAMILY CODE, ART. 2).
A: Implies some injury to the interests of the
owner of the name. It consists in the possibility of Q: Will the irregularity in the formal requisites
confusion of identity between the owner and the affect the validity of the marriage?
usurper. Its elements are:
1. An actual use of another's name by the A: No. An irregularity in the formal requisites (i.e.
defendant authority of solemnizing officer, marriage license,
2. Use is unauthorized marriage ceremony) shall not affect the validity of
3. Use of another's name is to designate the marriage.
personality or to identify a person
The party responsible for the irregularity shall,
however, be civilly, criminally, and
administratively liable (FAMILYCODE, ART. 4).
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Q: Is the venue for the celebration of marriage particularly on divorce of Y, because the
limited to the chambers of the judge or in books presented were not duly authenticated
open court, in church, or chapel? by the Philippine Consul in Japan as required
by Sections 24 and 25 of the Rule 132. Is the
A: No. Art. 8 provides that would-be spouses can RTC correct?
make a written request to the solemnizing officer
for a change in venue. A: Yes. Since our courts do not take judicial notice
of foreign laws and judgment, our law on
Q: What is the concept of Lex Loci evidence requires that both the divorce decree
Celebrationis? and the national law of the alien must be alleged
and proven like any other fact. This means that
A: All marriages solemnized outside the the foreign judgment and its authenticity must be
Philippines, in accordance with the laws in force proven as facts under our rules on evidence,
in the country where they were solemnized, and together with the alien's applicable national law to
valid there, shall also be valid in this country. show the effect of the judgment on the alien
himself or herself. (Medina v. Koike, G.R. No.
EXCEPTIONS: Contracting party under Phil. Law 215723, July 27, 2016.)
a.) has no capacity to marry because of age, is
psychologically incapacitated, because of civil *Starting May 14, 2019 (Effective date of
status (bigamous/ polygamous), is against public the Apostille Convention), Public
policy, incestuous; b.) no consent due to mistake documents executed in Apostille
in identity, c.) non-compliance with Art. 53, and contracting countries and territories
d.) void because no solemnization of marriage. (except for Austria, Finland, Germany
(FAMILYCODE, ART. 26). and Greece) to be used in the Philippines
no longer have to be authenticated bv the
Q: X and Y, both Filipinos, were married. X P h ilip p in e E m b a s s y or Consulate
filed for divorce from Y abroad and sought the General once apostillized.
settlement of their properties in the same
action. Both were granted by the foreign Q: X was married to Y, a Japanese citizen. X
court. X subsequently married Z. Are the and Y submitted a “Divorce by Agreement” in
divorce and the settlement of property valid? Japan, which was eventually approved. Thus,
A: No. X ’s subsequent marriage to Z is void for X filed a petition for recognition of the divorce
being bigamous because the divorce decree decree before the RTC, which denied X’s
obtained abroad between Filipinos is void under petition, invoking the nationality principle
the nationality rule. (Lavadia vs. Heirs of Luna, under Article 26(2) of the FC. The decision
G.R. 171914, 2014).' was grounded on the fact that X admittedly
initiated the divorce proceedings and since X
Hence, any settlement of property between X and is a Filipino citizen whose national laws do not
Y, submitted as an incident of a divorce obtained allow divorce, then the divorce decree
in a foreign country lacks competent judicial obtained in Japan is not binding in the
approval and cannot be enforceable against the Philippines. Is the RTCTcorrect? ~
assets of the husband who contracts a
subsequent marriage. A: No. Pursuant to Republic v. Manalo, foreign
divorce decrees obtained to nullify marriages
Q: X, a Filipino citizen, married Y, a Japanese between a Filipino and an alien citizen may
national. Subsequently, pursuant to the laws already be recognized in this jurisdiction,
of Japan, they were divorced. X filed a petition regardless of who between the spouses initiated
for judicial recognition of foreign divorce and the divorce; provided that the party proves the
declaration of capacity to remarry. X divorce as a fact and demonstrates its conformity
presented several foreign documents, to the foreign law allowing it. In this case, X has
including a duly authenticated Divorce yet to prove the fact of her "Divorce by
Certificate and two books on the Civil Code of Agreement" obtained in Japan, in conformity with
Japan for years 2000 and 2009. The RTC ruled prevailing Japanese iaws on divorce. (Morisono
that X fell short of proving the national law, v. Morisono, G.R. No. 226013, July 2, 2018.)
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part. X fulfilled his duty to support and take care psychological incapacity. (Del Rosario v. D el
of his family, as he categorically stated that he Rosario, G.R No. 222541, February 15, 2017)
loves their children and that he was a good The gravity, juridical antecedence and incurability
provider to them. (Republic v. Romero, G.R. No. of the psychological incapacity must be proven.
209180, 2016) Here, tne-report failed to show that X ’s personality
disorder existed prior the marriage and failed to
Q: X and Y got married but eventually parted explain the juridical antecedence or its
ways because of violent fights and jealous incurability. A clear and understandable
fits. They became even more estranged when causation between the party’s condition and the
Y became focused on his career and party’s inability to perform the essential marital
supported his parents and siblings. Y filed a Covenants must be shown. (Republic v. Tecag,
petition for declaration of nullity of marriage G.R No. 229272, November Ip, 2018)
on the ground of psychological incapacity to Q: X and Y are husband and wife. X filed a
comply with his essential marital obligations. verified complaint for declaration of nullity of
Y argued that he married X not out of love but marriage alleging that Y was psychologically
out of the desire to please the latter's parents incapacitated to comply with her essential
who were kind and accommodating to him. He marital obligations. X testified, among others,
also presented a Psychological Evaluation that after he decidedto join and train with the
Report that he was suffering Obsessive army, Y left their conjugal home and sold their
Compulsive Personality Disorder (OCPD), house without X’s consent. Y entered into two
which made him obsessed with any endeavor separate relationships with other men. From
he chooses. Should the petition be granted? the time Y abandoned X, X was left to take
care of their two daughters and he exerted
A: No. To warrant the declaration of nullity of earnest efforts to save their marriage which,
marriage, the psychological incapacity must: (a) however, proved futile because of Y’s
be grave or serious such that the party would be psychological incapacity that appeared to be
incapable of carrying out the ordinary duties incurable. Should the marriage be nullified?
required in a marriage; (b) have juridical A: No. Psychological incapacity, as a ground to
antecedence, i.e., it must be rooted in the history nullify a marriage under Article 36 of the FC,
of the party antedating the marriage, although the should refer to no less than a mental — not
overt manifestations may emerge only after the merely physical — incapacity that causes a party
marriage; and (c) be incurable, or even if it were to be truly incognitive of the basic marital
otherwise, the cure would be beyond the means covenants thdt concomitantly must be assumed
of the party involved. In this case, the medical and discharged by the parties to the marriage
report did not establish that Y's incapacity existed which, as so expressed in Article 68 of the FC,
long before he entered into marriage. In such among others, include their mutual obligations to
case, any doubt should be resolved in favor of the live together, observe love, respect and fidelity
validity of marriage. Marriages entered into for and render help and support. It is confined in the
other purposes, limited or otherwise, such as most serious cases of personality disorders
convenience, companionship, money, status, and clearly demonstrative of an utter insensitivity or
title, provided thatthey comply with all the legal inability to give meaning and significance to their
requisites, are equally valid. Love, though the marriage. Psychological incapacity must not
ideal consideration in a marriage contract, is not merely due to a person’s youth, immaturity or
the only valid cause for marriage. (Republic v. sexual promiscuity, in this case, the SC found
Romero II, G. R. No. 209180, February 24, 2016.) insufficient factual or legal basis to conclude that
Y ’s emotional immaturity, irresponsibility or even
Psychological incapacity under Art. 36 must be promiscuity, can be equated with psychological
more than just a difficulty, refusal or neglect in the incapacity. (Republic v. De Gracia, G.R. No.
performance of marital obligations; it is not 171557, Feb. 12, 2014).
enough that a party prove that the other failed to
meet the responsibility and duty of a married Q: What are the essential requisites for the
person. There must be proof of a natal or declaration of presumptive death under Art.
supervening disabling factor in the person which 41?
must be linked with the manifestations of the
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A: Both the husband and the wife. In case of A: It is an ordinary donation since it was not given
disagreement, however, the court shall decide. to the bride or groom. Donations by reason of
(FAMILY CODE, ART. 69). marriage or propter nuptias are those made
before its celebration, in consideration of the
E. PROPERTY RELATIONS BETWEEN same, and in favor of one or both of the future
HUSBAND AND WIFE spouses (FAMILYCODE, ART. 82).
•
Q: What governs property relations between Q: Lots A and B are registered in the Torrens
spouses? system under the name of Spouses X (wife)
and Y (husband). X sold the lots to Spouses C
A: Property relations between husband and wife and D. X showed them an SPA executed by Y
are governed in the following order: By the will of
authorizing her to sell the lots. Even after the
the spouses in the marriage settlement: the
execution of a deed of absolute sale, X did not
Family Code and Local Customs. (FAMILY
turn over the owner’s duplicate copy of lot A
CODE, ART. 74) In the absence of a marriage
to C and D. The buyers subsequently
settlement, or when the regime agreed upon is
discovered that the owner’s duplicate copy
void, the system of absolute community of
was actually in the possession of the attorney
property shall govern. (FAMILY CODE, ART. 75)
brother of Y who was given authority by Y to
sell lots A and B. X asked a fake notary public
NOTE: Prior to the effectivity of the Family Code
to notarize the SPA with the forged signature
on August 3, 1988, the system of conjugal
of Y. Attorney Brother wants to get back the
partnership of gains governed the property
properties from C and D saying that Art. 124
relations of husband and wife.
of the Family Code (FC) should apply. C and
D state that they are buyers in good faith. Can
Q: What are the requisites for the Attv. Brother still get the lots?
enforceability of marriage settlements?
A: Yes, Atty. Brother can still get the lots. Article
A: (WSB-TC-CR)
124 of the FC states that if case a spouse is
1. In Writing
incapacitated or otherwise unable to participate in
2. Signed by the parties
the administration of the conjugal properties, the
3. Executed Before the celebration of
other spouse may assume sole powers of
marriage
administration. These powers do not include
4. To fix the Terms and conditions of their
disposition or encumbrance without authority of
property relations
the court or the written consent of the other
5. If the party executing the settlement is
spouse. In this case, no written authority was
under Civil interdiction or any other
obtained from Y.
disability, the guardian appointed by the
court must be made a party to the
In order to be considered as buyers in good faith,
settlement
there following diligence must be shown: (a) the
6. Registration (only to bind 3rd persons)
diligence in verifying the validity of the title
(FAMILY CODE, ART. 77).
covering the property; and (b) the diligence in
inquiring into the authority of the transacting
spouse to sell conjugal property in behalf of the
other spouse. In this case, C and D merely relied
on the SPA given by X and did not do further
questioning despite knowing that the lots were
conjugal property. (Spouses Aggabao v. Dionlsio
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Parulan and Ma. Elena Parulan, G.R. No. services is clearly for the benefit of the principal
165803, 2010). debtor and not for the surety or his family. No
presumption can be inferred that, when a
Q: A and B are husband and wife. As such husband enters into a contract of surety or
they bought a house and cohabited therein, accommodation agreement, it is for the benefit of
but the title is issued only in the name of the the conjugal partnership. Proof must be
husband A and the Torrens title indicated that presented to establish benefit redounding to the
he was single. The relationship of the spouses conjugal partnership (Ayala Investment v. CA,
became strained and B filed a case for G.R. No. 118305, 1998, reiterated in Security
concubinage and legal separation against A. Bank v. Mar Tierra Corp. G.R. No. 143382,
B later learned that her husband had the 2006)).
intention of selling the property to C, their
neighbor, so B then advised C of the Q: What constitutes Conjugal Partnership of
existence of the case and cautioned C against Gains?
buying the property until the cases are closed
and terminated. Nonetheless, A still sold the A: (FOLCHIC)
property to C, without the consent of B. B 1. Fruits of conjugal property due or
contends that the sale is void as it was received during the marriage and net
without her consent. C argues that he is an fruits of separate property
innocent-purchaser for value and had the 2. Those acquired through Occupation
right to rely on the Torrens title. Is C correct? 3. Livestock in excess of what was brought
to the marriage
A: No, the sale is void. One spouse cannot sell 4. Those acquired during the marriage with
community property without the written consent of Conjugal funds
the other spouse or the authority of the court. The 5. Share in Hidden treasure
purchaser was not in good faith. While the law 6. Those obtained from labor, Industry,
does not require a person dealing with registered work or profession of either or both
land to inquire further than what the Torrens Title spouse
on its face indicates (Nobleza v. Nuega G.R. No. 7. Those acquired by Chance (FAMILY
193038, March 11, 2015), this rule shall not apply CODE, ART. 117).
when the party has actual knowledge of facts and
circumstances that would impel a reasonably Q: What are exclusive properties of spouses
cautious person to make inquiry into the status of in a Conjugal Partnership of Gains?
the title of the property, or when the purchaser
has knowledge of a defect or the lack of title in his A: (OGRE)
vendor. Malabanan v. Malabanan (G.R. No. 1. That which is brought to the marriage as
187225, March 6, 2019) his or her Own;
2. That which each acquires during the
Q: D Corp. obtained a loan from C Corp. Mr. X marriage by Gratuitous title;
served as surety for the loan. Since D. Corp. 3. That which is acquired by right of
was unable to pay, Mr. X was ordered by the Redemption, by barter or by exchange
court to pay and as such, three of the conjugal with property belonging to only one of the
properties of Mr. X were auctioned. It is being spouses; and
argued that the said properties should not be 4. That which is purchased with Exclusive
levied because the loan did not redound to the money or wife of the husband (FAMILY
benefit of the family. Is the contention CODE, ART. 109).
correct?
Q: Solomon sold his coconut plantation to
A: Yes. If the money or services are given to Aragon, Inc. for P100 million, payable in
another person or entity, and the husband acted installments of P10 million per month with 6%
only as a surety or guarantor, that contract interest per annum. Solomon married Lorna
cannot, by itself, alone be categorized as falling after 5 months and they chose conjugal
within the context of obligations for the benefit of partnership of gains to govern their property
the conjugal partnership. The contract of loan or relations. When they married, Aragon had an
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unpaid balance of P50 million plus interest in Q: Can an extrajudicial dissolution of the
Solomon’s favor. To whom will Aragon’s conjugai partnership without judicial approval
monthly payments go after the marriage? be valid?
A: The principal shall go to Solomon while the A: An extrajudicial dissolution of the conjugai
interests go to the conjugal partnership. partnership without judicial approval is void. A
notary public should not facilitate the
The fruits, natural, industrial, or civil, due or disintegration of a marriage and the family. In so
received during the marriage from the common doing a notary public may be held accountable
property, as well as the net fruits from the administratively (Rodolfo Espinoso v. Juliet
exclusive property of each spouse are included in Omana, A,C. 9081, 2011).
the coniugal partnership properties (FAMILY
CODE, ART. 117(3)). Q: What constitutes “net profits” for purposes
of the dissolution of property regime?
Q: What is the rule on the ownership of
improvements made on the separate property A: For an absolute community regime, the net
at the expense of the conjugal partnership? profits shall be the increase in value between the
market value of the community property at the
A: When the cost of the improvement made by time of the celebration of the marriage and the
the conjugal partnership and any resulting market value at the time of its dissolution. For a
increase in value are conjugal partnership o f gains regime, the net
1. MORE than the value of the property AT THE profits of the conjugal partnership of gains are ail
TIME OF IMPROVEMENT - entire property of the fruits of the separate properties of the
one of the spouses shall belong to the spouses and the products of their labor and
coniugal partnership industry. In this case, since the petitioner is the
2, LESS than the value of property - said guilty party in the legal separation, his share from
property shall be retained in ownership by the the net profits is forfeited in favor of the common
owner-spouse children. In both regimes (assuming that it was
ACP), petitioner, as the guilty spouse, is not
in both instances: subject to reimbursement of entitled to any property at all. The husband and
the cost of the improvement. (FAMILY CODE, the wife did not have any separate properties.
ART. 120). Therefore, there is no separate property which
may be accounted for in the guilty party’s favor
Q: When may a spouse assume sole powers (Quiao v. Quiao G.R. No. 176556, 2012).
of administration?
Q: When A and 8 married, they chose
A: if one spouse is incapacitated or otherwise conjugal partnership of gains to govern their
unable to participate in the administration of the property relations. After 3 years, B
conjugal properties. Also, If a spouse without just succeeded in getting her marriage to A
cause abandons the other or fails to comply with declared null and void on ground of the
his or her obligation to the family (FAMILY CODE, latter’s psychological incapacity. What
ART. 128). liquidation procedure will they follow in
disposing of their assets?
These powers do not include disposition or
encumbrance without authority of the court or the A: The liquidation of a co-ownership applies since
written consent of the other spouse. the declaration of nullity of the marriage brought
their property relation under the chapter on
NOTE: In the absence of such authority or property regimes without marriage. When a man
consent, the disposition or encumbrance shall be and a woman who are capacitated to marry each
void, but may be perfected as a binding contract other, live exclusively with each other as husband
upon the acceptance by the other spouse or and wife without the benefit of marriage or under
authorization by the court before the offer is a void marriage, their wages and salaries shall be
withdrawn. (FAMILY CODE, ART. 124). owned by them in equal shares and the property
acquired by both of them through their work or
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industry shall be governed by the rules on co- Partnership and prayed for the distribution of
ownership (FAMILY CODE, A RT.147). several properties claimed to be acquired
during the subsistence of their marriage. In
Q: In the property relations based on Art. 148, the trial, X admitted that he is aware of the
is there a presumption that the contributions constitutional prohibition against foreign
to the property between the man and woman ownership of Philippine lands and even
are equal? asseverated that, because of such
prohibition, he and Y registered the subject
A: No. It is necessary for each of the partners to properties in the name of Y. However, X
prove his or her actual contribution to the claimed that he had a right to be reimbursed
acquisition of property in order to be able to lay on the basis of equity. Is X correct?
claim to any portion of it. Presumptions of co- A: No. A similar case, In Re: Petition for
ownership and equal contribution do not apply Separation o f Property-Elena Buenaventura
(Ventura v. Spouses Paulino, G.R. No. 202932, Muller, denied a claim for reimbursement of the
2013). value of purchased parcels of Philippine land
instituted by a foreigner against his former Filipina
Q: X, was the owner of a parcel of land which spouse. The foreigner spouse cannot claim
was sold at a public auction. A redeemed the reimbursement on the ground of equity where it is
same then filed for the issuance of a new title clear that he willingly and knowingly bought the
in its name, which the RTC granted. The property despite the prohibition against foreign
original title states "X, married to Z." ownership of Philippine land enshrined under
Subsequently, Y, claiming to be the legitimate Sec. 7, Art. XII of the 1987 Philippine Constitution.
son of X, filed a Petition for Relief from Clearly, X ’s actuations showed his palpable intent
Judgment, claiming that A fraudulently failed to skirt the constitutional prohibition. (Beumer v.
to implead him and Z, his mother. He Amores, G.R. No. 195670, Dec. 3, 2012).
contended that Z was an indispensable party,
being the owner of half of the subject F. FAMILY
property, which Y claimed to be conjugal in
nature. However, he did not establish that the 1. The family as an institution
subject property was acquired during the
marriage of his parents. Is Y correct? Q: X is a lessee of parcels of land which he co
owns with his sister Y, nephews and nieces.
A: No. Article 160 of the New Civil Code provides In 2003, Y offered to sell to X the said lands to
that all property of the marriage is presumed to which X agreed. However, in 2010, Y decided
belong to the conjugal partnership, unless it is to cancel their agreement and informed X of
proved that it pertains exclusively to the husband her intent to convert X’s partial payments as
or to the wife. However, the presumption refers rentals instead. X disapproved and claimed
only to the property acquired during the marriage that without his consent, Y and her children
and does not operate when there is no showing sold all their shares to Z. The RTC dismissed
as to when the property alleged to be conjugal X’s complaint for failure to comply with Art.
was acquired. The party who asserts this 151 of the Family Code that no earnest efforts
presumption must first prove the said time were made before filing a suit. The CA
element. In this case, the records are bereft of affirmed the decision. Is Art. 151 applicable in
any evidence of the actual date of acquisition of the instant case?
the subject property; therefore, it is considered as
X ’s exclusive property. ( Onstott v. Upper Tagpos A: No. The Court ruled that Art. 151 of the Family
Neighborhood Association, Inc., G.R. No. Code is inapplicable because the instant case
221047, September 14, 2016.) does not exclusively involve members of the
same family. Art. 151 must be construed strictly,
Q: X, a Dutch National, and Y, a Filipina, are it being an exception to the general rule. Here, it
husband and wife. The RTC declared the is undisputed that X and Y are siblings, and the
nullity of their marriage on the basis of children of Y are the nieces and nephews of X. It
psychological incapacity. Subsequently, X then follows that the children of Y are considered
filed a Petition for Dissolution of Conjugal "strangers" to X insofar as Article 151 of the
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Family Code is concerned. (Moreno v. Kahn, G.R waived or be barred by laches by failure to set up
No. 217744, July 30, 2018) and prove the status of the property as a family
home at the time of levy. (De Mesav. Acero, G.R.
Q: Janice and Jennifer are sisters. Janice No. 185064, 2012)
sued Jennifer and Laura, Jennifer’s business
partner for recovery of property with Q: What are the rules regarding subsequent
damages. The complaint did not allege that improvements of family home?
Janice exerted efforts to come to a
compromise with the defendants and such A: Any subsequent improvement of the family
efforts failed. The judge dismissed the home by the persons constituting it, its owners, or
complaint outright for failure to comply with a any of its beneficiaries will still be exempt from
condition precedent. Is the dismissal in execution, forced sale or attachment provided the
order? following conditions obtain:
1. the actual value of the property at the
A: No, since Laura is a stranger to the sisters, time of its constitution is below the
Janice has no moral obligation to settle with her. statutory limit (Php 300,000 in urban
areas and Php 200,000 in rural areas
Art. 151 of the Family Code provides that no suit under FAMILY CODE. ART. 157); and
between members of the same family shall 2. the improvement or does not result in an
prosper unless it should appear from the verified increase in its value exceeding the
complaint or petition that earnest efforts toward a statutory limit.
compromise have been made, but that the same
have failed. If it is shown that no such efforts were Otherwise, the family home can be the subject of
in fact made, the same case must be dismissed. a forced sale, and any amount above the
Under Art. 150, family relations include those: (a) statutory limit is applicable to the obligations
Between husband and wife; (b) Between parents under Articles 155 and 160. To warrant the
and children; (c) Among brothers and sisters, execution sale of a family home under Article 160,
whether of the full or half-blood. ( FAMILY CODE, the following facts should be established:
ART. 150). 1. there was an increase in its actual value;
2. the increase resulted from voluntary
2. The Family Home improvements on the property introduced
by the persons constituting the family
Q: Until when is a family home exempt from home, its owners or any of its
execution? beneficiaries; and
3. the increased actual value exceeded the
A: So long as any of its beneficiaries actually maximum allowable under Article 157.
resides therein (FAMILY CODE, ART. 153). The (Eulogio v. Bell, G.R. No. 186322, 2015)
beneficiaries are: the husband and wife, or an
unmarried person who is the head of a family; and Q: Spouses A and B leased a piece of land
their parents, ascendants, descendants, brothers belonging to B's parents for 25 years. The
and sisters, whether the relationship be legitimate spouses built their house on it worth
or illegitimate, who are living in the family home P300,000,00, Subsequently, in a case that C
and who depend upon the head of the family for filed against A and B, the court found the
legal support (FAMILY CODE, ART. 154). latter liable to C for P200,000.00. When the
sheriff was attaching their house for the
Q: In a forced sale of a family home, when satisfaction of the judgment, A and B claimed
should the exemption from execution of the that it was exempt from execution, being a
family home be invoked? family home. Is this claim correct?
A: The right to exemption from forced sale is a A: No, since the land does not belong to A and B,
personal privilege granted to the judgment debtor it cannot qualify as a family home. The Family
which must be asserted before the public auction. Code provides that the family home must be part
Failure to do so would estop the party from later of the properties of the absolute community or the
claiming on the exemption. It is a right that can be conjugal partnership, or of the exclusive
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properties of either spouse with the latter’s c. If the child was born after the death of the
consent. It may also be constituted by an husband. (FAMILYCODE, A R T . 171)
unmarried head of a family on his or her own
property (FAMILY CODE, ART. 156). Thus, the Q: Is a birth certificate identifying a person as
home must be owned and not merely leased. the father competent evidence to prove
paternity, even though said person denies
By the very definition of the law that the family having something to do with the entries in
home is the dwelling house where a person and said birth certificate?
his family resides and the land on which it is
situated (FAMILY CODE, ART. 152), it is A: No. A certificate of live birth purportedly
understood that the house should be constructed identifying the putative father is not competent
on a land not belonging to another. ( Taneo v. CA, evidence of paternity when there is no showing
G.R. No. 108532, 1999). that the putative father had a hand in the
preparation of said certificate. (Perla v. Baring,
G. PATERNITY AND FILIATION G.R. No. 172471, 2012)
Q: Fidel married Gloria. Before the marriage, Q: What are the periods for impugning the
Gloria confessed to Fidel that she was two legitimacy of a child?
months pregnant with another man who had
left the country for good. When the child was A: If the husband (or his heirs, in proper cases)
born, Fidel could not accept the child. What is resides in the SAME city or municipality -1 year
the status of the child?
If the husband (or his heirs) does not reside in the
A: Legitimate, because the child was born within city / municipality where the child’s birth took
a valid marriage. Article 164 of the Family Code place or recorded but his residence is IN THE
provides that children conceived or born during PHILIPPINES - 2 years.
the marriage of the parents are legitimate
(FAMILYCODE, ART. 164). If the child’s birth took place or was recorded in
the Philippines while the husband has his
Q: Are children conceived as a result of residence abroad, or vice-versa - 3 years
artificial insemination considered legitimate? (FAMILY CODE, A R T 170).
A: Yes, provided both husband and wife Note: The period shall be counted from the
authorized and ratified such insemination in a knowledge of the child’s birth OR its recording in
written instrument executed and signed by them the civil register (Id.).
before the birth of the child (FAMILYCODE, ART.
164). HOWEVER, if the child’s birth was concealed
from or was unknown to the husband or his heirs,
Q: A left B, his wife, in the Philippines to work the period shall be counted from the discovery or
in Egypt but died in that country after a year’s knowledge of the birth of the child or of the act of
continuous stay. Two months after A ’s death, registration of said birth, whichever is earlier
B gave birth to a child, claiming it is A ’s child. (Id.).
Who can assail the legitimacy of the child?
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Q: What are the rules regarding the under the Family Code his action cannot
requirement of affixing the signature of the prosper because he did not bring the action
acknowledging parent in any private for recognition during the lifetime of his
handwritten instrument wherein an admission putative father. If you were the judge in this*
of legitimate or illegitimate child is made? case, how would you rule?
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H. ADOPTION
1. Person below 18 years of age: voluntarily Only a legally-free child the may be the subject
committed to the DSWD or judicially declared (R.A. No. 8043, SEC. 8).
available for adoption
2. Legitimate child of the other spouse. Legally free child is a child who has been voluntarily
3. Illegitimate child, by a qualified adopter to raise or involuntarily committed to the DSWD in
status of legitimacy. accordance to the Child and Youth Welfare Code
4. Person of legal age, if prior to adoption, has (R.A. No. 8043, SEC. 3(F)).
been considered and treated by the adopter(s)
as his or her own child since minority.
5. Child whose adoption was previously
rescinded.
6. Child whose biological or adoptive parent(s)
has died, but no proceeding may be initiated
within 6 months from time of parent’s death.
(R.A. 8552, SEC. 8)*3
Child is one who is below 18 years of age. (Id. Sec. Child is one below 15 years of age. (Id. Sec. 3, Par.
3 (a)) j)
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1. Any Filipino Citizen who is (ARMM-COS): Any alien of Filipino citizen residing abroad if he is
a. Of legal Age (ASC-ME-PUDA):
b. In possession of full civil capacity and legal a. At least 27 years of Age and at least 16 years
Rights older than the child to be adopted except when
c. Of good Moral character the adopter is the parent by nature of the child
d. Not convicted of any crime involving Moral to be adopted or the spouse of such parent
turpitude b. If married, his or her Spouse must jointly file for
e. Emotionally and psychologically Caring for adoption
children c. With the Capacity to act and assume all rights
f. At least 16 years Older than the adoptee but and responsibilities of parental authority under
this requirement can be waived when the his national laws, and he has undergone the
adopter is (1) the biological parent of the appropriate counselling from an accredited
adoptee, or (2) spouse of the adoptee’s counsellor
parent d. Not been convicted of a crime of Moral turpitude
g. Capable to Support and care for his/her child e. Eligible to adopt under his or her national law
in keeping with the means of the family (R.A. f. In the Position to provide the proper care and
8552, SEC. 7(A)) support and to give the necessary moral values
2. Any Alien - with same qualification as Filipinos, and example to all his children
provided (DR-LA): g. Agrees to Uphold the basic rights of the child as
a. His/her country has Diplomatic relations with embodied under Philippine Laws, the U.N.
the Philippines Convention on the Rights of the Child, and to
b. Has been living in the Philippines for at least abide by the rules and regulation in the
3 continuous years prior to filing of adoption provisions of this act
and maintains Residence until adoption h. Comes from a country with whom the
decree is rendered except: Philippines has Diplomatic relations
i. Former Filipino Citizen who seeks to i. Possess All the qualifications and none of the
adopt a relative within the 4th degree disqualifications provided herein (R.A. No.
of consanguinity or affinity; 8043, SEC. 9).
ii. One who seeks to adopt the legitimate
child of his Filipino spouse;
iii. one who is married to a Filipino citizen
and seeks to adopt jointly with his
spouse a relative within the 4th degree
of consanguinity or affinity of the
Filipino Spouse.
c. Has been certified as having Legal capacity
to adopt in his country (requirement is also
waived is adopter falls under the exceptions
for the residency requirement)
d. His government Allows adoptee to enter his
country as his adopted child
3. The Guardian with respect to his ward
a. After termination of guardianship and
b. Clearance of his financial accountabilities.
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Q: In 1984, Eva, a Filipina, went to work as a Q: Supposing that they filed the petition to
nurse in the USA. There she met and fell in adopt Vicky in the year 2000, will the answer
love with Paul, an American citizen, and they be the same? Explain.
got married in 1985. Eva acquired American
citizenship in 1987. During their sojourn in the A: Yes, the answer will be the same. The new
Philippines in 1990, they filed a joint petition Law on Domestic Adoption allows a foreigner to
for the adoption of Vicky, a 7-year-old adopt in the Philippines if he has been residing in
daughter of Eva’s sister. The government, the Philippines for at least 3 years prior to the
through the Office of the Solicitor General, filing of the petition unless the law waives that
opposed the petition on the ground that the residency requirement R.A. No. 8552, SEC.
petitioners, being both foreigners, are 7(B)). Paul and Eva have not resided in the
disqualified to adopt Vicky. Is the Philippines for the last 3 years. However, Eva wili
government’s opposition tenable? Explain. qualify for waiver because she was a former
Filipino citizen who wishes to adopt a relative by
A: Yes, the position of the government is tenable. consanguinity within the 4th degree.
Foreigners are disqualified to adopt unless they Unfortunately, Paul will not qualify to adopt
fall in any of the exceptions provided for in the because he does not fall in any of the instances
law. Eva and Paul are both foreigners. Eva falls for waiver to apply. They -cannot adopt jointly
in one of the exceptions. She is qualified to adopt because one of them is not qualified. Neither may
because she is a former Filipino citizen who Eva adopt alone because she does not fall in any
wishes to adopt a relative by consanguinity. of the exceptions that allow husband and wife to
Unfortunately, Paul is not qualified to adopt adopt separately.
because he does not fall in any of the exceptions.
Hence, they cannot adopt jointly. When husband I. SUPPORT
and wife are adopting jointly, both of them must
be qualified to adopt in their own right. Eva Q: Who are obliged to support each other?
cannot, alone by herself, adopt her niece
because husband and wife must adopt jointly A: (SAPL)
unless they fall in any of the exceptions provided 1. Spouses
for in the law. They cannot adopt separately 2. Ascendants and Descendants
because they do not fall in any of the exceptions. 3. Parents and Legitimate/lllegitimate
Hence, whether separately or jointly, Eva and Children/Descendants
Paul cannot adopt Vicky in the Philippines. (R.A. 4. Legitimate/lllegitimate Brothers and Sisters
No. 8552, SEC. 7). (FAMILY CODE, ART. 195).
Q: Would the answer be the same if they EXCEPTION to (4): When the need for support of
sought to adopt Eva’s illegitimate daughter? brother or sister, being of age, is due to a cause
Explain. imputable to the claimant’s fault or negligence
(FAMILY CODE, ART. 196).
A: No, the answer would be different. Eva is
qualified to adopt her illegitimate daughter, Q: In an action for support, may the court
because she falls in one of the exceptions that make a declaration that the marriage is void?
allow foreigners to adopt. She is a former Filipino
citizen adopting her relative by consanguinity. A: Yes. In an action for support, the court can
Eva can adopt separately her illegitimate child declare a marriage void to determine the rights of
because her case is also an exception to the rule the child to be supported.
that husband and wife should adopt jointly. (R.A.
No. 8552, SEC. 7(C)) In a case for support, there is no need that a
judicial declaration of nullity be filed first before
the lower court can rule that the marriage was
void (De Castro v. Assidao-De Castro, G.R. No.
160172, 2008).
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A: No. In choosing the parent to whom custody is A: The school, its administrators and teachers, or
given, the welfare of the minor should always be the individual, entity or institution engaged in child
the paramount consideration. The “tender-age are shall have special parental authority and
presumption” may be overcome only by responsibility over the minor child while under
compelling evidence of the mother’s unfitness. It their supervision, instruction or custody (FAMILY
is not enough for A to show merely that B was a CODE, ART. 218).
lesbian. A must also demonstrate that B carried
on her purported relationship which is not Q: X filed an action to obtain parental custody
conducive to the child’s proper moral and authority over his illegitimate child Y and
development (Pablo-Gualberto v. Gualberto, also petitioned the change of Y’s surname to
G.R. No. 154994, 2005). that of X’s. May X change the surname of his
illegitimate child?
Q: Is the judgment on custody based on a
compromise agreement stating that the A: Article 176 gives illegitimate children the right
custody of the child is granted to B, the father to decide if they want to use the surname of their
Wilich duly approved by the court attains the father or not. It is not the father or the mother who
effect and authority of res judicata and is granted by law the right to dictate the surname
therefore cannot be changed? of their illegitimate children. The father’s
recognition of his illegitimate children does not
A: No. The matter of custody is not permanent mandate the change of the children’s surname to
and unalterable and can always be re-examined that of their father. (Grande.v. Antonio, G.R. No.
and adjusted. Custody, even if previously granted 206248, 2014).
by a competent court in favor of a parent, is not
permanent. The paramount interest of the child Q: A had a relationship with B. B already had
should always be considered. (Beckett v. a child (Z) with another man when they started
Sarmiento, RTJ-12-2326, 2016). their relationship. During such, B begot two
children fathered by A. Later, A and B married.
Q: Can a judgment for support be modified? They amended the birth certificates of the
three children (including Z) to change their
A: Yes. The amount of support may be reduced civil status to legitimated by virtue of the said
or increased proportionately according to the marriage. A and B later had a falling out. A
reduction or increase of the necessities of the was ordered to pay for support of the children,
recipient and the resources or means of th e. including Z. A claims that Z was not really his
person obliged to support. The right to support is child. B does not dispute this. Can A assert
of such nature that its allowance is essentially this as a defense against the obligation to
provisional; for during the entire period that a support?
needy party is entitled to support, his or her
alimony may be modified or altered, in A: No, A is estopped from claiming that Z is not
accordance with his increased or decreased his child. While it was improper to have Z
needs, and with the means of the giver. It cannot legitimated after the celebration of A and B’s
be regarded as subject to final determination. But marriage. A voluntarily but falsely acknowledged
the value of two expensive cars bought by Z as his son. The principle of estoppel finds
respondent for his children plus their application and it now bars A from making an
maintenance cost, travel expenses, purchases assertion contrary to his previous
through credit card of items other than groceries representations. He should not be allowed to
and dry goods (clothing) should have not been evade a responsibility arising from his own
deducted from the amount of support. (Lim-Lua v. misrepresentations. He is bound by the effects of
Lua, G.R. No. 175279-80, 2013 (citing the legitimation process. Z remains to be A’s son,
Montefalcon v. Vasquez, G.R. No. 165016, 2008; and pursuant to Article 179 of the Family Code,
Advincula v. Advincula, No. L-19065, 1964)). the former is entitled to the same rights as those
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of a legitimate child, including the receipt of his abuse,-otherwise, it is punished under the RPC.
father’s support. Further, the rule is that the civil In this case, although it does not qualify as a
status of a child cannot be attacked collaterally. violation of R.A. No. 7610, The laying of hands
The child’s legitimacy cannot be contested by which was an offshoot of teacher's emotional
way of defense or as a collateral issue in another outrage after being informed that her daughter's
action for a different purpose. Since the instant head was punctured, and whom she thought was
petition sprang out of B’s application for a already dead is rendered punishable under RPC
protection order before the RTC, A’s claim that Z as slight physical injuries. (Jabalde v. People,
is not his biological son is a collateral issue, which G.R. No. 195224, June 15, 2016).
this Court has no authority to resolve now. (BBB
vs AAA G.R. No. 193225, February 9, 2015) Q: During her lifetime, X had 5 children from
her second marriage with Y, in the course of
Q: X, a public school teacher, physically which they acquired several real properties.
maltreated her Grade 1 pupil for having After X died intestate, Z, together with three of
accidentally bumped her knee while she was his children, executed an Extra-Judicial
drowsing on a bamboo sofa. Her Settlement of the Estate with Absolute Deed
maltreatment left the pupil with physical of Sale, in favor of third parties. The other two
injuries. The boy had to transfer schools children, A & B, who were minors, did not
because he was afraid of X. X characterizes participate in this settlement and sale. Later,
her maltreatment as an act of discipline that all of the children sought to annulThesale on
she could reasonably do towards the the ground the properties were sold beyond
development of the child. She insists that her the 5-year prohibitory period from the
act further came under the doctrine of in loco issuance of the homestead patents. In
parentis. Is X’s contention correct?*3 addition, the SC had to consider the effect of
the sale with respect to A and B. Was the sale
A: No. Her infliction of physical injuries on him enforceable insofar as A and B were
was unnecessary, violent and excessive. Article concerned?
233 of the Family Code expressly banned the
infliction of corporal punishment by a school A: No. While the settlement was void, the sale
administrator, teacher, or individual engaged in was valid but only with respect to the sellers’
child care, exercising special parental authority. proportionate shares therein. With respect to A
Further-,-underthe definition of child abuse in Sec. and B who were minors at the time, their natural
3 of R.A. 7610, the maltreatment may consist of guardian and father, Y, represented them in the
an act, by deeds or by words, that debases, transaction, pursuant to Arts. 320 and 326 of the
degrades or demeans the intrinsic worth and Civil Code. However, Y was merely clothed with
dignity of a child as a human being. The act need powers of administration and bereft of any
not be habitual. X went overboard in disciplining authority to dispose of their 2/16 shares in the
her pupil. The physical pain experienced by the estate of their mother. Administration includes all
pupil was aggravated by an emotional trauma acts for the preservation of the property and the
that compelled the boy’s parents to transfer receipt of fruits according to the natural purpose
schools. (Rosaldes v. People, G.R. No. 173988, of the thing. Any act of disposition or alienation,
2014). or any reduction in the substance of the patrimony
of child, exceeds the iimits of administration.
Q: When a teacher struck the neck of a Thus, a father or mother, as the natural guardian
student on the basis that the teacher’s of the minor under parental authority, does not
daughter was hurt when playing with the said have the power to dispose or encumber the
student, is the teacher liable under R.A. No. property of the latter. Consequently, the sale
7610? entered into by Y in behalf of A and B is
unenforceable unless they ratify it upon reaching
A: No. The Court held that only when the laying the age of majority. (Neri v. Uy, G.R. No. 194366,
of hands is shown beyond reasonable doubt to be Oct. 10, 2012)
intended by the accused to debase, degrade or
demean the intrinsic worth and dignity of the child K. EMANCIPATION
as a human being should it be punished as child
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10. Contracts for public works, and 5. Obligations and actions which have for
servitudes and other real rights over their object movables or demandablc
immovable property, (immovable by sums; and
analogy / law) (Art. 415) 6. Shares of stock of agricultural,
commercial and industrial entities,
Q: X and Y stipulate that a building be treated although they may have real estate. (Art.
separately from the land on which it is 416-417)
situated. Can the building be considered as
movable property? B. OWNERSHIP
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The 1st accretion adjoined the southern Q: Summarize the rules when a landowner-
portion of the land and 2nd accretion adjoined buiider/pianter/sower makes constructions
the 1st accretion. C, one of the children of A, with the materials of another.
claimed rights over the entire riparian land
and the two accretions. Who has a right over A:
the riparian land and accretions? Landowner - Owner of
Builder/Planter/Sower Materials (OM)
A: B has the right over the riparian land and the (LO-BPS)
accretions. There is a presumed regularity of the I a , Qood Faith ' / 1
award of the homestead patent to B. As B is the Becomes the owner of 1. Be entitled to full
riparian owner, the law recognizes the the materials, but he payment for
preferential right of the riparian owner to the must pay for their value. value of
foreshore land formed by accretions or alluvial materials; or
deposits. Alluvial deposits along the banks of a 2. Remove
creek or a river do not form part of the public materials,
domain as the alluvial property automatically provided no
belongs to the owner of the estate to which it may detstruction or
have been added. (Heirs of Narvasa, Sr. v. substantial
Imbornal, G.R. No. 182908, August 6, 2014) injury to the
work made.
__ B. Bad Fai|;K ;
Can acquire the 1. Be entitled to full
materials, but he must payment for
pay for their value plus value of
damages. materials, plus
damages; or
2. Remove
materials, even
if there is
destruction or
substantial
injury to work
done, plus
damages.
C. Good Faith - ; ’ Bad Faith i;
1. Acquire the 1. Loses
materials, without materials,
paying for the without
value; and indemnity; and
2. Be entitled to 2. Will be liable for
damages due to damages due to
defects or inferior defects or
quality of materials. inferior quality of
materials.
Faith
Same as A. Same as A.
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Same as A. Same as A.
Note: LO in bad
faith whenever the
act was done with
his knowledge and
w/o opposition.
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Q: Discuss the rules when 3 parties (Landowner, Builder/Planter/Sower, Owner of Materials) are
involved.
I RULES WHEN THREE (3) PARTIES ARE INVOLVED: I
LANDOWNER (LO) BUILDER/PLANTER/SOWER OWNER OF MATERIALS (OM)
(BPS)
A. GOOD FAITH
Option 1: To acquire whatever To receive indemnity from LO To receive indemnity from BPS who
has been built, planted or sown with right of retention over land is primarily liable for materials; if
provided there is payment of until full payment. BPS is insolvent, to proceed against
indemnity (which includes value LO who is subsidiarily liable with no
of what has been built, planted right of retention.
or sown plus value of materials
used).
Option 2: To oblige BP to buy To buy land or to pay proper To receive indemnity from BPS only
land or S to pay proper rent rent. (LO is not subsidiarily liable) with
unless value of land is right of retention until full payment.
considerably more than that of
building or trees. or
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consented or signed the same. While a co-owner In the concept In the concept of a holder
had the right to mortgage or even sell his of an owner
undivided interest in the subject property, he Possession by Acknowledges that another
could not, however, dispose of or mortgage the the owner is the owner(eg. lessee,
subject property in their entirety without the himself or depositary, agent, trustee).
consent of the other co-owners. (Magsano v. those who Acts and possession
Pangasinan Savings and Loan Bank, Inc., G.R. claims and acts merely tolerated, and those
No. 215038, October 17, 2016) as an owner. executed clandestinely and
without the knowledge of
D. POSSESSION the possessor of a thing, or
by violence.
Q: What is possession? Possession in Possession in the name of
one’s own another.
A: It is the holding of a thing or the enjoyment of name.
a right. (Art. 523) Can serve to Cannot ripen into
acquire ownership by acquisitive
Q: What is actual possession? ownership by prescription.
prescription.
A: Actual possession consists in the
manifestation of acts of dominion of such a nature Q: When is a possessor said to be in good
as a party would natural exercise over his own faith?
property. (Republic v. Metro index Realty, G.R.
No. 198585. 2012) A: A possessor is in good faith where he is not
aware of any flaw which invalidates his:
Q: What is the effect of actual possession 1. Title; or
under claim of ownership? 2. Mode of acquisition. (Art. 526)
A: Actual possession under claim of ownership Good faith is always presumed, and upon him
raises a disputable presumption of ownership. who alleges bad faith on the part of a possessor
The true owner must resort to judicial rests the burden of proof. (Art. 527)
proceedings for the recovery of the property.
(CIVIL CODE, Art. 433) Q: What are the rules on possession of
movables?
Q: What is constructive possession?
A: The possession of movable property acquired
A: It is the possession and cultivation of a in good faith is equivalent to a title. Nevertheless,
property under claim of ownership, provided that one who has lost any movable or has been
the property is not in the adverse possession of unlawfully deprived thereof, may recover it from
another person. (Republic v. Metro Index Realty, the person in possession.
G.R. No. 198585, 2012)
If the possessor of a movable lost or which the
Q: Distinguish possession in the concept of owner has been unlawfully deprived, has
an owner from possession in the concept of a acquired it in good faith at a public sale, the owner
holder. cannot obtain its return without reimbursing the
price paid. (Art. 559)
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E. USUFRUCT F. EASEMENTS
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Q: What is the period of prescription for the Q: How are easements extinguished?
acquisition of an easement of light and view?
A: (M-10-EFR2)
A: It shall be counted from time: 1. Merger in the same person of the
1. time of the opening of the window, if it is ownership of the dominant and servient
through a party wall; or estates;
2. time of the formal prohibition upon the 2. Non-use for 10 years;
proprietor of the adjoining land or tenement, 3. Either or both of the Estates fall into such
if the window is through a wall on the condition that the easement cannot be
dominant estate. (Art. 668) used;
Q: What are the restrictions on easements of 4. Expiration of the term or the Fulfillment of
light and view? the condition if the easement is
temporary or conditional;
A: The restrictions are: 5. Renunciation of the owner of the
1. Direct view— distance of 2 meters dominant estate; and
between the wall or the projection and the 6. Redemption agreed upon between the
contiguous property; owners of the dominant and servient
2. Side or Oblique View— distance of 60 estates. (CIVIL CODE, Art. 631)
centimeters between the two properties
(Art. 669). G. NUISANCE
A: A wall used jointly by two parties under A: A nuisance is any act, omission,
easement agreement, erected upon a line establishment, business, condition of property, or
separating two parcels of land, each of which is a anything else, which: (IASOH)
separate estate. (B.P. 220, Sec. 3) 1. Injures or endangers the health or safety
of others;
Q: In what instances is an easement of party 2. Annoys or offends the senses;
wall presumed? 3. Shocks, defies, or disregards decency or
morality;
A: The easement of party wall is presumed in: 4. Obstructs or interferes with the free
1. Dividing walls of adjoining buildings up to passage of any public highway, street, or
the point of common elevation; any body of water; or
2. Dividing walls of gardens or yards 5. Hinders or impairs the use of property.
situated in cities, towns, or in rural (Art. 694)
communities;
3. Fences, walls, and live hedges dividing
rural lands. (Art. 659)
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Q: What are the formal requisites of donations 4. Specification in a deed of the causes
of immovable properties? whereby the act may be revoked indicates
that the donation is inter vivos;
A: The formal requisites are: 5. Designation of the donation as mortis causa
1. To be valid, donation must be: are not controlling criteria and should be
a. In a public document; construed together with the rest of the
b. specifying the property donated instrument; and
and the value of the charges 6. In case of doubt, the conveyance should be
which the donee must satisfy. deemed donation inter vivos rather than
2. Acceptance must be done: mortis causa. (Villanueva v. Spouses
a. in the same deed of donation or Branoco, G.R. No. 172804, 2011)
in a separate public document;
b. during the lifetime of the donor. Q: What are donations /nfer vivos?
If done in a separate instrument, donor shall be
notified in an authentic form and such step is A: When the donor intends that the donation shall
noted in both instruments. (Art. 749) take effect during the lifetime of the donor, though
the property shall not be delivered till after the
Q: What are the rules on the form of donation donor’s death. The fruits of the property from the
of movable properties? time of the acceptance of the donation, shall
pertain to the donee, unless the donor provides
A : (Art. 748) otherwise. (Art. 729)
1. If the value of the property is P5,000 or
less: Q: What is the effect of illegal or impossible
a. Orally, provided simultaneous conditions in simple renumeratory
delivery, of the thing or of the donations?
document representing the right
donated, whether actual or A: They shall be considered as not imposed. (Art.
constructive, is made; or 727)
b. In writing, without need of
simultaneous delivery. Q: What are void donations?
2. if the value of the property exceeds
P5,000
a. Both donation and acceptance 1. Those made between persons who were
must be made in writing. guilty of adultery or concubinage at the time
Otherwise, it is void. of the donation;
2. Those made between persons found guilty of
Q: What are donations mortis causa? the same criminal offense, in consideration
thereof;
A: Donations which are to take effect upon the 3. Those made to a public officer or his wife,
death of the donor partake the nature of descendants and ascendants, by reason of
testamentary provisions and shall be governed by his office. (Art. 739)
the rules on Succession. (Art. 728) 4. Those made to incapacitated persons,
though simulated under the guise of another
Q: What are the distinguishing characteristics contract or through a person who is
of donations mortis causa? interposed. (Art. 743)
Archbishop o f Manila v. Court of Appeals, G.R.. Q: What may not be subject to prescription?
No, 77425, 1991)
A:
Q: What are the grounds for revocation of 1. Public domain;
donations? 2. Intransmissible rights;
3. Movables possessed through a crime;
A: The grounds for revocation of donations are 4. Registered land.
(ICA):
1. Inofficiousness {Art. 760); Q: What is the concept of possession in
2. Failure to comply with any Condition acquisitive prescription?
imposed upon the donee {Art. 764)\
3. Acts of ingratitude by the donee {Art. A: Possession has to be in the concept of an
765): owner, public, peaceful and uninterrupted. (Art.
1118)
Q: When may a donation be revoked by
reason of ingratitude? Q: Define good faith of the possessor.
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Over a Real Property (Still Undivided)”, Q: Who are capacitated to make a will?
succession to either of her parents properties has
not yet been opened since both of them are still A: The following are capacitated to make a will:
living. With respect to the other two requisites, (NES)
both are likewise present considering that the 1. Natural person not expressly prohibited by
property subject matter of Y ’s waiver concededly law to make a will. (Art. 796)
forms part of the properties that she expect to 2. Eighteen (18) years old and above (Art. 797).
inherit from her parents upon their death and, 3. Of Sound mind, at the time of its execution
such expectancy of a right, as shown by the facts, (Art. 798)
is undoubtedly purely hereditary in nature. Y ’s All of these must be present at the time of the
waiver of hereditary rights is not vaiid and cannot execution of the will, (in relation with Art. 801)
be the source of any right or create any obligation.
No contract may be entered into upon a future Q: When is a testator considered to be of
inheritance except in cases expressly authorized sound mind?
by law. (Ferrer v. Diaz, G.R. No. 165300, April 23,
2010) A: To be of sound mind, it is not necessary that
the testator be in fuli possession of all his
B. TESTAMENTARY SUCCESSION / WILLS reasoning faculties, or that his mind be Wholly
unbroken, unimpaired, or unshattered by
1. WILLS disease, injury or other cause. (Art. 799)
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A: The following are the special requirements: Q: Are joint wills allowed in the Philippines?
I. For deaf/deaf-mute testator (Art. 807)
1. If able to read — he must read the will A: No. A joint wHi is a document which constitutes
personally the wills of two or more individuals. Two or more
2. If unable to read — he must designate persons cannot make a will jointly, or in the same
two persons to read the will and instrument, either for their reciprocal benefit or for
communicate to him, in some practicable the benefit of a third person. (Art. 818) These
manner its contents. kinds of wills are void.
II. For blind testator (Art. 808) If there are several documents, each serving as
The will shall be read to him twice, once by one one independent will, even if they are written on
of the subscribing witnesses and another by the the same sheet, they are not joint wills. (Balane,
notary public before whom the will is supra)
acknowledged.
Q: Are joint wills executed by Filipinos abroad
The special requirements for handicapped valid?
testators are mandatory, non-compliance with
Articles 807 or 808 will result in nullity and denial A: No. It shall not be valid in the Philippines, even
of probate. (R alana, s u p ra ) though authorized by the laws of the country
where they may have been executed. (Art. 8 19)
However, reciprocal wills of foreign nationals
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Q: What are the exclusive grounds for (b) Individuality - Heirs collectively instituted are
disallowance of wills? (LIF-P-FRAM) deemed individually named unless a
contrary intent is prove. (Art. 847)
A: Wills may be disallowed based on: (c) Simultaneity - When several heirs are
1. Formalities required by Law were not instituted, they are deemed instituted
complied with; simultaneously and not successively. (Art.
2. Testator was Insane or incapable of 849)
making a will at the time of execution
(lack of testamentary capacity); Q: What is preterition?
3. The will was executed through Force or
under duress, or the influence of fear, or A: Preterition is the total omission of a compulsory
threats; heir from the inheritance. It consists in the silence
4. The will was procured by undue and of the testator with regard to a compulsory heir,
improper Pressure and influence, on the omitting him in his will, either by not mentioning
part of the beneficiary or of some other him at all, or by not giving him anything in the
person; hereditary property but without expressly
5. The testator’s signature was procured disinheriting him, even if he is mentioned in the
through Fraud; and will in the latter case. (Heirs o f Ureta v. Ureta,
6. If the testator acted by Mistake or did not G.R. No. 165748, 2011)
intend that the instrument he signed
should be his will at the time of affixing What constitutes preterition is not mere omission
his signature. in the will, but being completely left out of the
inheritance. (Seangiov. Reyes, G.R. No. 140371-
Once a will is disallowed because of any of the 72, 2006)
following grounds, intestate succession will
ensue. Q: What are the effects of preterition?
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Omitted heir gets not If disinheritance is (e) Fideicommissary Substitution - If the testator
only his legitime, but unlawful or institutes an heir with an obligation to deliver
also his share in the ineffective, for to another the property so inherited. The heir
free portion not absence of one or instituted to such condition is called the first
disposed of by way of other of the heir or fiduciary heir, the one to receive the
legacies or devises requisites, the property is the fideicommissary or second
compulsory heir is heir. (Art. 863)
merely restored to his
rightful share. Q: What are the requisites for a
(Nuguid v. Nuguid, fideicommissary substitution? (1st-2nd-1-PT-
G.R. No. L-23445) LEx-Free)
3. SUBSTITUTION OF HEIRS A:
1. A fiduciary or a FIRST heir who takes the
Q: What is meant by substitution of an heir? property upon the testator’s death. (Art, 863)
2. A fideicommisary or SECOND heir who takes
A: Substitution is the appointment of another heir the property subsequently from the fiduciary.
so that he may enter into the inheritance in default (Art. 863)
of the heir originally instituted. (Art. 857) 3. The second heir must be ONE degree from
the first heir. Thus, the fideicommisary can
Q: Is a substitute subject to the same charges only be a parent or a child of the fiduciary.
and conditions Imposed on the original heir? (Palacios v. Ramirez, G.R. No. 27952, 1982)
4. The dual obligation imposed upon the
A: The substitute shall be subject to the same fiduciary to Preserve the property and to
charges and conditions imposed upon the Transmit it after the lapse of the period to the
instituted heir, unless and testator has expressly fideicommissary heir. (Art. 865)
provided the contrary, or the charges or 5. Both heirs must be Living and qualified to
conditions are personally applicable only to the succeed at the time the testator’s death.
heir instituted. (Art. 862) 6. The fideicommissary substitution must be
Expressly made. (Art. 865)
Q: What are the classes of substitution? 7. The fideicommissary substitution is imposed
on the Free portion of the estate and never
A: Substitution may be: on the legitime. (Art. 864)
(a) Vulgar or Simple - The testator may
designate one or more persons to substitute The following shall not take effect: (Art. 867)
the heir or heirs instituted in case such heir or
heirs should die before him (predecease), or A:
should not wish to be instituted (renunciation) 1. Fideicommissary substitutions which are not
or should be incapacitated to accept the made in an express manner, either by giving
inheritance (Art. 859) them this name, or imposing upon the
(b) Brief - Two or more persons may be fiduciary the absolute obligation to deliver the
substituted for one person (Art. 860) property to a second heir;
(c) Compendious - one person may be 2. Provisions which contain a perpetual
substituted for two or more heirs (Art. 860) prohibition to alienate, and even a temporary
(d) Reciprocal - If heirs instituted in unequal one, beyond the limit fixed in Article 863.
shares should be reciprocally substituted, the 3. Those which impose upon the heir the charge
substitute shall acquire the share of the heir of paying to various persons successively,
who dies, renounces, or incapacitated, beyond the limit prescribed in Article 863, a
unless it clearly appears that the intention of . certain income or pension;
the testator was otherwise. If there are more 4. Those which leave to a person the whole or
than one substitute, they shall have the same part of the hereditary property in order that he
share in the substitution as in the institution. may apply or invest the same according to
(Art. 861) secret instructions communicated to him by
the testator.
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5. LEGITIMES
Q: What is a legitime?
A: Legitime is that part of the testator’s property
which he cannot dispose of because the law has
reserved it for his compulsory heirs. (Art. 886)
IL C - 1 / 3
Surviving Spouse & Illegitimate
1/3
Children
Spouse - 1/3
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six years
Adultery and Concubinage with the V V N/A
spouse of testator
Induce testator to make/change the V V V
will.
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Q: When does renunciation set in? What are The right of representation is not available to
its effects? illegitimate descendants of legitimate children in
A: if the inheritance should be repudiated by the the inheritance of a legitimate grandparent. (Diaz
nearest relative, should there be one only, or by v. Intermediate Appellate Court, G.R. No. L-
all the nearest relatives called by law to succeed, 66574, 1990)
should there be several, those of the following
degree shall inherit in their own right and cannot PERSON TO BE REPRESENTED
represent the person or persons repudiating the ILLEGITIMATE LEGITIMATE CHILD
inheritance. (Art. 969) CHILD
His or her Only his or her
Q: What is Representation? descendant whether legitimate descendants
A: It is a right created by fiction of law, by virtue of
legitimate or can represent him, his
which the representative is raised to the place
illegitimate, may or her illegitimate
and the degree of the person represented, and
represent him. descendants cannot
acquires the rights which the latter would have if
represent him. (Vda.
he were living or if he could have inherited. (Art.
De Crisologo v. Cam
970; Tumbokon v. Legaspi, G.R. No. 153736,
G.R. No. L-44051,
2010) In order that representation may take
1985)
place, it is necessary that the representative
himself be capable of succeeding the decedent.
(Art. 973)
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(continuation)
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Surviving Spouse 1/2 Residue goes to the Whole estate goes to the spouse
Alone 1/3 if marriage is spouse
in articulo mortis
Surviving Spouse Spouse - 1 / 4 1 /4 goes to the Spouse 1/2
and Parents of spouse
Illegitimate Parents of 1/4 goes to the Parents of Illegitimate Children - Va
Children Illegitimate parents of illegitimate
Children- 1 / 4 children
Surviving Spouse Spouse - 1 / 2 1/2 goes to the Spouse - 1 / 2
and Legitimate legitimate brothers
Brothers and and sisters, nephews Legitimate brothers and sisters,
Sisters, Nephews and nieces nephews and nieces - 1/2
and Nieces
Surviving Spouse Spouse - 1/2 1/2 goes to the Spouse - 1 / 2
and Illegitimate illegitimate brothers
Brothers and and sisters, nephews
Sisters, Nephews and nieces Legitimate brothers and sisters,
and Nieces nephews and nieces - 1/2
Parents of 1/2 1/2 goes to the Whole estate divided equally
illegitimate parents of illegitimate
Children Alone children
Parents of Any kind of 1/2 goes to the any Whole estate goes to the children,
illegitimate children - 1 / 2 , kind of children, observing 2:1 ratio, if applicable
Children and observe 2:1 observe 2:1 ratio Parents of illegitimate children are
Children of Any ratio excluded by all kinds of children
Kind
(continuation)
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D. PROVISIONS COMMON TO TESTATE AND A child already conceived at the time of the death
INTESTATE SUCCESSION of the decedent is capable of succeeding
provided it be born later under the conditions
1. RIGHT OF ACCRETION prescribed in Article 41 of the Civil Code. (Art.
Q: What is Accretion? 1025, par 2)
A: Accretion is the right by virtue of which, when The State, provinces, municipal corporations,
two or more persons are called to the same private corporations, organizations, or
inheritance, devise or legacy, the part assigned to associations for religious, scientific, cultural,
the one who renounces or cannot receive his educational, or charitable purposes, and all other
share, or who died before the testator, is added corporations or entities may succeed under a will,
or incorporated to that of his co-heirs, co unless there is a provision to the contrary in their
devisees, or co-legatees. (Art. 1015) charter or the laws of their creation, and always
subject to the same. (Art. 1026)
2. CAPACITY TO SUCCEED BY WILL OR BY
INTESTACY 3. ACCEPTANCE AND REPUDIATION OF
INHERITANCE
Q: Who may inherit?
Q: When should acceptance or repudiation be
A: Both a natural person and a juridical person made?
may inherit (Art 1026) In order to be capacitated
to inherit, the heir, devisee or legatee must be A: Within 30 days after the court has issued an
living at the moment the succession opens, order for the distribution of the estate the heir,
except in case of representation, when it is devisee, or legatee shall signify to the court
/ A -------- nri----- i-----:-
pi wpoi . [/ -M L . I f J C ll I ) lilt? lieu, having jurisdiction whether they accept or
iegatee/aevisee must not be incapacitated or repudiate the inheritance. If they do not do so
disqualified by law to succeed. (Art. 1024, par. 1)
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over the years. XYZ, Corp. expressed interest Conditional Deed of Sale violate the principle
in buying the scrap metal. A MOA was drawn of mutuality of contracts?
between abc, Corp. under which XYZ, Corp
obligated itself to purchase the scrap metal A: No. The Court distinguished between a
for a total consideration of #34,000,000.00. condition imposed on the perfection of a contract
Unfortunately, XYZ, Corp. reneged on all its and a condition imposed merely on the
obligations under the MOA. ABC, Corp. performance of an obligation. While failure to
asservated that their failure to pay their comply with the first condition results in the failure
outstanding loan obligations to W Bank must of a contract, failure to comply with the second
be considered as force majeure because merely gives the other party the option to either
XYZ’s default was beyond their control. refuse to proceed with the sale or to waive the
Should XYZ’s default be considered force condition. In the present case, the Conditional
majeure? Deed of Sale stipulated that Y shall pay the
balance of the purchase price when he has
A: (PERLAS-BERNABE) No. Fortuitous events successfully secured a road right of way. This
by definition are extraordinary events not stipulation is not a condition on the perfection of
foreseeable or avoidable. It is therefore, not the contract nor on the validity of the entire
enough that the event should not have been contract or its compliance. It is a condition
foreseen or anticipated, as is commonly believed imposed only on Y ’s obligation to pay the
but it must be one impossible to foresee or to remainder of the purchase price. The condition is
avoid. The mere difficulty to foresee the not purely potestative as it is also dependent on
happening is not impossibility to foresee the the will of third persons who own the adjacent
same. land and from whom the right of way shall be
negotiated. (Rolando T. Catungal, Jose T.
To constitute a fortuitous event, the following Catungal, Jr., Carolyn T. Catungal and Erlinda
elements must concur: Catungal-Wesselv. Angel S. Rodriguez, G.R. No.
(a) the cause of the unforeseen and unexpected 146839, March 23, 2011)
occurrence or of the failure of the debtor to
comply with obligations must be independent of 3. KINDS OF OBLIGATIONS
human will;
(b) it must be impossible to foresee the event that I. PURE AND CONDITIONAL
constitutes the caso fortuito or, if it can be
foreseen, it must be impossible to avoid; 0: A applied for a position with Company B.
(c) the occurrence must be such as to render it After passing the interview and online
impossible for the debtor to fulfill obligations in a examination, he was offered a job by
normal manner; and Company B which he accepted on June 8,
(d) the obligor must be free from any participation 2011. In the letter of confirmation of offer, the
in the aggravation of the injury or loss. (Metro terms and conditions of his employment
Comcast Steel Corp v. Allied Bank Corp, G.R. No. required background, bankruptcy checks,
177921, December 4, 2013) reference checks and visas which if not
satisfactory to Company B, Company B may
Q: X entered into a Contract to Sell with Y, choose not to employ him or to terminate his
which was Subsequently “upgraded” to a employment, without any liability to pay
Conditional Deed of Sale, which stipulated compensation. He failed his background
that Y shall pay the balance of the purchase checks and on the last day he was to report to
price when he has successfully secured a Company B, or on July 11, 2011, he was
right of way. X requested an advance of handed a letter of retraction of offer because
P5,000,000.00 on the purchase price, but Y of material inconsistencies in the information
refused since the amount was substantial and provided. Was there a perfected contract of
not yet due based on their agreement. X employment and was there an employer-
rescinded the contract alleging that the employee relationship?
Conditional Deed of Sale was void because it
violates the mutuality of contracts. Does the A: (PERLAS-BERNABE) Yes there was a
perfected contract of employment but there was
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no employer-employee relationship established. The delay in the completion of the project as well
There was a perfected contract when A signed as the delay in delivery of the unit are breaches
Company B’s employment offer and agreed to the of statutory and contractual obligations which
terms and conditions which included the entitle respondent to rescind the contract,
background and other checks. However, there demand a refund and payment of damages.
was a suspensive condition to his employment, (Swire Realty Development Corporation v. Yu,
that Company B would be satisfied with his G.R. No. 207133, 2015)
background, bankruptcy and other checks all of
which partook of a suspensive condition. He Q: In a Contract Manufacturing Agreement
failed these checks thus the suspensive condition (CMA) between 2 groups, their
of satisfactorily passing these checks was not pharmaceutical products should be
met, consequently the obligation to employ A did exclusively manufactured by Company A and
not come into effect. Because A failed the the products will be sold, conveyed, and
suspensive condition of passing the background transferred to Company B. Subsequently,
checks, no employer-employee relationship was Company C entered into a Deed of
established. (Sagun v. ANZ Global Services and Sale/Assignment with Company B, wherein
Operatioms, G.R. No. 220399, August 22,2016) the former agreed to transfer and assign all its
rights over 28 pharmaceutical products in
Q: What are reciprocal obligations? favor of the latter, provided that the products
will be manufactured by Company A, based
A: Reciprocal obligations are those that arise on the existing CMA. A month prior to the
from the same cause, and in which each party is expiration of the CMA, Company A proposed
a debtor and a creditor of the other at the same a new manufacturing agreement which
time, such that the obligations of one are Company B found unacceptable. Company B
dependent upon the obligations of the other. They entered into a Contract to Manufacture
are to be performed simultaneously, so that the Products with Company D, and manufactured
performance by one is conditioned upon the some of the products covered by the Deed of
simultaneous fulfillment by the other. Sale/Assignment. A Complaint for Breach of
Furthermore, neither party incurs in delay if the Contract, Damages, and Injunction was filed
other does not comply or is not ready to comply against Company B. Company B maintained
in a proper manner with, what is incumbent upon that they did not violate the stipulation in the
him. From the moment one of the parties fulfills Deed of Sale/Assignment regarding the
his obligation, delay by the other begins. continuous manufacture of the subject
(Megaworld Properties and Holdings, Inc. vs. pharmaceutical products by Company A
Majestic Finance and Investment Co., Inc., G.R. because: (a) said stipulation did not confer to
No. 169694, 2015) Company A the exclusive right to
manufacture the said products; (b) Company
Q: X and ABC Realty entered into a contract B’s compliance with the stipulation became
to sell covering one residential condominium impossible or difficult as Company A itself
unit. X paid the full purchase price and made refused to enter into a new manufacturing
a down payment for the parking lot. agreement. Is Company B liable for breach of
Notwithstanding this, ABC Realty failed to its contractual obligations?
complete and deliver the subject unit on time.
X filed a complaint for rescission of contract A: (PERLAS-BERNABE) Yes. The Agreement
With damages before the HLURB. Will the and the Deed of Sale/Assignment explicitly
complaint prosper? provided that Company A had the right to
exclusively manufacture the subject 28
A: Yes. Under Art. 1191, the right of rescission of pharmaceutical products; thus, the act of
a party to an obligation is predicated on a breach Company B in contracting with Company D to
of faith by the other party who violates the manufacture some of the said products
reciprocity between them. The breach constituted a clear violation of their contractual
contemplated is the obligor’s failure to comply obligations for which they are liable for damages.
with an existing obligation. (S V More Pharma Corp. v. Drugmakers
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Laboratories, Inc., G.R. No. 200408. & 200416, Operating Agreement (OA) with Company B,
[November 12, 2014]). granting the latter “full, exclusive, and
irrevocable possession, use, occupancy, and
Q: Company A is the owner of 81 mining sites. control over the mining claims...” for a period
It entered into an Operating Agreement (OA) of 25 years. In a Letter addressed to B, A
with Company B, granting the latter "full, extra-judicially rescinded the OA due to B’s
exclusive and irrevocable possession, use, non-payment of royalties considering their
occupancy, and control over the mining express stipulation in the OA that said
claims” for a period of 25 years. Later, agreement may be cancelled on such ground.
Company A extra-judicially rescinded the OA, B contested A ’s extra-judicial rescission of
by invoking its provisions, upon Company B’s the OA, averring that its obligation to pay
failure to pay the stipulated royalties. royalties to A arises only when the mining
Company B contested Company A’s extra claims are placed in commercial production
judicial rescission of the OA averring therein which condition‘has not yet taken place. A no
that its obligation to pay royalties arises only longer responded to B ’s letter. Instead, it
when the mining claims are placed in entered into a Memorandum of Agreement
commercial production which condition has with C Company, whereby the latter was
not yet taken place. Company A did not granted the right to “enter, possess, occupy,
respond and instead, it entered into a and control the mining claims...” for a period
Memorandum of Agreement with Company C, of 25 years. Was there a valid rescission of the
whereby the latter was granted the same OA?
rights as Company B to "enter, possess,
occupy and control the mining claims" for a A: (PERLAS-BERNABE) Yes. In reciprocal
period of 25 years. Is the extrajudicial obligations, either party may rescind the contract
rescission of the OA by Company A was upon the other’s substantial breach of the
valid? obligation/s he had assumed thereunder. The
basis therefor is Article 1191 of the Civil Code. As
A: (PERLAS-BERNABE) Yes. The right of a general rule, the power to rescind an obligation
rescission under Article 1191 is predicated on a must be invoked judicially and cannot be
breach of faith that violates the reciprocity exercised solely on a party's own judgment that
between parties to the contract. As a general rule, the other has committed a breach of the
the power to rescind an ‘ obligation must be obligation. This is so because rescission of a
invoked judicially and cannot be exercised solely contract will not be permitted for a slight or casual
on a party’s own judgment that the other has breach, but only for such substantial and
committed a breach of the obligation. This is so fundamental violations as would defeat the very
because rescission of a contract will not be object of the parties in making the agreement. As
permitted for a slight or casual breach, but only a well-established exception, however, an injured
for such substantial and fundamental violations party need not resort to court action in order to
as would defeat the very object of the parties in rescind a contract when the contract itself
making the agreement. As a well-established provides that it may be revoked or cancelled upon
exception, however, an injured party need not violation of its terms and conditions. By expressly
resort to court action in order to rescind a contract stipulating in the OA that GVEI's non-payment of
when the contract itself provides that it may be royalties would give PMC sufficient cause to
revoked or cancelled upon violation of its terms cancel or rescind the OA, the parties clearly had
and conditions. Given this, Company A’s considered such violation to be a substantial
unilateral rescission of the OA due to Company’s breach of their agreement. Thus, in view of the
B’s non-payment of royalties is valid based on the above-stated jurisprudence on the matter, PMC's
parties’ express stipulation in the OA that said extra-judicial rescission of the OA based on the
agreement may be cancelled on such ground. said ground was valid. (Golden Valley
(Golden Valley Exploration v. Pinkian Mining Exploration, Inc. v. Pinkian Mining Co., G.R.
Company, G.R. No. 190080, June.11, 2014). 190080, June 11, 2014)
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by B were self-serving. During trial, A part of his obligation when the service has
presented Finance Officer X, who testified become so difficult as to be manifestly
that A was able to partially pay its loan, but beyond the contemplation of the parties)
she does not know how much has been paid. apply?
Given this, did A partially pay its obligation?
A: (FIFA)
A: (PERLAS-BERNABE) NO. While A insisted 1. The event or change in circumstances
that they had partially paid, the fact of such could not have been Foreseen at the time
payment was not established. One who pleads of the execution of the contract
payment has the burden of proving it. When the 2. It makes the performance of the contract
creditor is in possession of the document of extremely difficult but not Impossible
credit, proof of nonpayment is not needed for it is 3. The contract is for a Future prestation.
presumed. Here, Bank B’s possession of the 4. It must not be due to the Act of any of the
Credit Agreement, the promissory note, and the parties
surety agreement, especially with their
genuineness and due executed deemed The difficulty of performance contemplated
admitted, cements its claim that the obligation of should be such that one party would be placed at
A has not been extinguished. (Go Tong Electrical a disadvantage by the unforeseen event. Mere
Supply Co., Inc. v. BPI Family Savings Bank, Inc., inconvenience, or unexpected impediments, or
G.R. No. 187487, June 29, 2015) increased expenses did not suffice to relieve the
debtor from a bad bargain. ( Tagaytay Realty v.
II. LOSS OF THE THING DUE Gacutan G.R. No. 160033, 2015)
Q: X Corp and Y Corp entered into a contract III. CONDONATION OR REMISSION OF DEBT
of lease in 2000. X decided to pre-terminate
the lease due to the 1997 Asian currency IV. CONFUSION OR MERGER OF RIGHTS OF
crisis, relying on Art. 1267 of the Civil Code as CREDITOR AND DEBTOR
justification (i.e., the service has become so
difficult as to be manifestly beyond the V. COMPENSATION
contemplation of the parties, the obligor may
also be released therefrom, in whole or in Q: X had outstanding loan obligations to both
part). Is such contention correct? Bank A and Bank B. X and Bank B entered into
a dacion en pago whereby X ceded in favor of
A: No. The payment of lease rentals does not Bank B certain properties in consideration of:
involve a prestation “to do" which has been (a) the full and complete satisfaction of X's
rendered legally or physically impossible without loan obligations to Bank B, and (b) direct
the fault of the obligor-lessor. Art. 1267 speaks of assumption by Bank B of X's obligations to
a prestation involving service which has been Bank A. Bank B then leased back the property
rendered so difficult by unforeseen subsequent to X, which was obliged to pay rentals to be
events as to be manifestly beyond the shared by Bank A and B. Bank B also entered
contemplation of the parties. into a separate agreement with Bank A
whereby the Bank B confirmed its
In this case, the Asian currency crisis happened assumptions of X's obligation to Bank A, and
in 1997 and sometime thereafter but X cannot be undertaking to remit up to 30% of rentals due
permitted to blame its difficulties on such crisis from X to Bank A, serving as payment of the
because it entered into the subject lease only assumed obligations. Meanwhile, Bank A
more than 3 years after it began. By then,. X conveyed its rights, including Bank B's
already had known what business risks it assumed obligations, to Bank C. Bank C then
assumed when it entered into the contract of claims that the rentals have not been remitted
lease (Comglasco Corp. v: Santos Car Check despite demands, so Bank C filed a collection
Center, G.R. No. 202989, 2015). case against Bank B. Bank B said that the
obligations it assumed were payable only out
Q: How does Art. 1267 of the Civil Code (i.e., of the rental payments made by X, who has yet
where an obligor is released in whole or in to pay the same, so Bank B's obligation to
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Bank C has not yet arisen. The court ruled in undertook to remit up to 30% of any and all
favor of Bank C, and a writ of execution was rentals due from A to X (subject rentals) which
made, ordering Bank B to pay, but no order would serve as payment of the assumed
for X. In executing the judgment, however, it obligations, to be paid in monthly
was found that Bank B’s obligation only installments. Claiming that the subject rentals
becomes demandable upon payment by X, so have not been duly remitted, X filed a
Bank C should return all funds received by collection case against Y. In opposition, Y
Bank C from Bank B. Bank C then filed a countered that the obligations it assumed
manifestation to apply legal compensation were payable only out of the rental payments
between itself and Bank B to offset Bank B’s made by A. Thus, since A had yet to pay the
debts with the funds that Bank C has to return same, Y’s obligation to Bank X has not arisen.
to Bank B. The trial court denied the Can Bank X claim for legal compensation?
compensation since Bank B is not a debtor of
Bank C, and that there is nether a demandable A: (PERLAS-BERNABE) No. Art. 1279 provides:
or liquidated debt from Bank B to Bank C. In order that compensation may be proper, it is
Should there be legal compensation in this necessary:
case?
(1) That each one of the obligors be bound
A: (PERLAS-BERNABE) No. Compensation is principally, and that he be at the same time a
defined as a mode of extinguishing obligations principal creditor of the other;
whereby two persons in their capacity as (2) That both debts consist in a sum of money, or
principals are mutual debtors and creditors of if the things due are consumable, they be of the
each other with respect to equally liquidated and same kind, and also of the same quality if the
demandable obligations to which no retention or latter has been stated;
controversy has been timely commenced and (3) That the two debts be due;
communicated by third parties. The requisites of (4) That they be liquidated and demandable; and
compensation are found in Art. 1279 of the Civil (5) That over neither of them there be any
Code, which, when all are present, takes effect by retention or controversy, commenced by third
operation of law. In this case, legal compensation persons and communicated in due time to the
could not have taken place between these debts debtor.
for the apparent reason that requisites 3 and 4
under Article 1279 of the Civil Code are not Legal compensation could not have taken place
present. Since Bank B’s debts become due only between the X’s obligation to return the funds it
upon payment of Company Y, and that Bank B’s previously received from Y and with Y ’s assumed
obligations cannot be ascertained yet, it cannot obligations since the latter is contingent on the
be said that it is already liquidated and prior payment of A to Y, thus, both debts cannot
demandable. If the lease rentals are not yet paid, be said to be due and demandable. (Union Bank
there is nothing for Bank B to pay, and Bank B of the Philippines v. Development Bank of the
should not be considered to be in default. (Union Philippines. G.R. No. 191555, January 20, 2014)
Bank of the Phils. V. Development bank of the VI. NOVATION
Phils., G.R. No. 191555, January 20, 2014)
Q: ABC Corp. had an alternative obligation
Q: A had an outstanding loan obligation to X with X to pay the value of raw materials or to
and Y. A and Y entered into a dacion en pago deliver to X the finished products of
wherein A ceded in favor of the Y certain equivalent value. ABC exercised the option to
properties, including a processing plant in pay the price. Subsequently, ABC and Y
Bulacan, in consideration of the full entered into an agreement where X will be the
satisfaction of A’s loan obligations and Y’s supplier of the raw materials and the delivery
direct assumption of A ’s obligations to X. Y of the finished products will be made to Y. X
leased back the property to A, which was in demanded payment for the raw materials but
turn obliged to pay monthly rentals to X and no payment was made. The trial court ruled
Y. Y also entered into a separate agreement that the execution of the agreement
with X whereby Y: (a) confirmed its constituted a novation of the contract. Did the
assumption of A’s obligations to X; and (b) court rule correctly?
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A: No. Novation extinguishes an obligation. Q: A purchase order was entered into by and
between two parties when there is a substitution between A, Corp. and B, Corp. (supplier).
of objects or debtors or when there is subrogation Subsequently, an invoice receipt was then
of the creditor. It occurs only when the new again signed by the parties’ representatives
contract declares so "in unequivocal terms" or which included a title reservation statement:
that "the old and the new obligations be on every “title to sold property is reserved in B, Corp.
point incompatible with each other." until full compliance of the terms and
conditions of above and payment of the
In this case, X was not privy to the memorandum price.” This stipulation was not included in
of agreement, thus, his conformity to the contract the terms of the purchase order. Given the
need not be secured. If the agreement was subsequent inclusion of the title reservation
intended to novate the original agreement X must statement, was the original contract novated?
have first agreed to the substitution of Y as his
new debtor. The agreement must also state in A: (PERLAS-BERNABE) No. Novation is never
clear and unequivocal terms that it has replaced presumed, the animus novandi must appear: (1)
the original obligation of ABC company to X. by express agreement of the parties, or (2) by
Since there was no novation, ABC’s obligation to their clear and unequivocal acts. The fact that the
X remains valid and existing. ABC must pay X the Invoice Receipt was signed by a representative of
full amount of the materials (Arco Pulp and Paper ACE Foods does not, by itself, prove animus
Co, v. Lim, G.R. No. 206806, 2014). novandi since: (a) it was not shown that the agent
was authorized by ACE Foods to novate the
Q: What are the requisites of novation? original agreement; (b) the signature only proves
that the Invoice Receipt was received by a
A: (PENC) representative of ACE Foods to show the fact of
1. That there is a Previous valid obligation delivery. (ACE Foods Inc. v. Micro Pacfic
2. Intent to Extinguish or to modify the old Technologies Co. Ltd., G.R. No. 200602,
obligation by a substantial difference December 11, 2013).
— 3. Capacity and Consent of all the parties
(except in ex promision where the old Q: B filed a complaint against A, alleging that
debtor does not participate) A owed her P2.1 million. A purportedly issued
4. Validity of the New obligation (PARAS, a check to guarantee the payment of the debt,
i r h ed., p,491) but it was dishonored upon presentment. B
alleged that A refused to pay despite repeated
Q: How can an obligation be novated? demands. A, on the other hand, sought the
dismissal on the ground that it was her
A: (ROP) deceased parents who owed B the money,
1. Subrogating a third person in the Rights hence, B should have participated in the
of the creditor. estate proceedings. B countered that A
2. Changing their Object or principal personally borrowed P1.4million while her
conditions deceased parents only borrowed P700,000.
3. Substituting the Person of the debtor RTC and CA ruled in favor of B, on the ground
(CIVIL CODE, art. 1291) that novation took place and A was
substituted as the debtor as she assumed the
Q: Can novation be done without consent of liability of her deceased parents and agreeing
the debtor or creditor in case of substituting a to pay their debt in installments. Are the RTC
new debtor in the place of the original one? and CA correct in ruling that novation took
place?
A: It can only be done without the knowledge or
even against the will of the original debtor, but not A: (PERLAS-BERNABE) NO. While A admitted
without the consent of the creditor. ( Interport that she agreed to settle her late parents' debt, as
Resources Corporation v. Securities Specialist, evidenced by the check and several installment
Inc. G.R. No. 154069, 2016) payments she made, there was no allegation,
much less any proof to show, that the estates of
her deceased parents were released from
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liability. To constitute novation by substitution of Q: In a contract, when the offeror has not fixed
debtor, the former debtor must be expressly a period for the offeree to accept the offer, and
released from the obligation and the third person the offer is made to a person present, when
or new debtor must assume the former's place in should the acceptance be made?
the contractual relations. The mere fact that the A: Offer inter praesentes— When the offeror has
creditor accepts payments from a third persons, not fixed a period for the offeree to accept the
who merely assumed the obligation, will result offer, and the offer is made to a persbn present,
merely in the addition of debtors, not novation. the acceptance must be made immediately
Novation is never presumed and the animus (Malbarosa vs. CA, G.R. No. 125761, 2003)
novandi, totally or partially, must appear by
express agreement or by the parties' acts that are Q: What is a compromise agreement?
too clear to be mistaken. (Odiamar v. Valencia, A: It is a contract whereby the parties, by making
G.R. No. 213582, June 28, 2016). reciprocal concessions, avoid a litigation or put an
end to one already commenced. If a party fails or
B. CONTRACTS refuses to abide by a compromise agreement, the
other party may either enforce the compromise or
1. GENERAL PROVISIONS regard it as rescinded and insist upon his original
demand. (Asset Pool A (SPV-AMC), Inc. vs. Clark
2. ESSENTIAL REQUISITES Development Corporation, G.R. No. 205915,
2015)
Q: What are the exceptions to the principle of
relativity in contracts? Q: What are the elements of a compromise
agreement?
A: (SCAT) A: (COC) The same as ordinary contracts:
1. Stipulation pour atrui (CIVIL CODE, art. Consent, Object and Cause. Parties to a
1311(2)) compromise are motivated by the hope of
2. Contracts creating real rights (CIVIL gaining, balanced by the dangers of losing.
CODE, art. 1312) (Asset Pool A (SPV-AMC), Inc. vs. Clark
3. Accion pauiiana (CIVIL CODE, art. 1313) Development Corporation, G.R. No. 205915,
4. Tortious interference (CIVIL CODE, art. 2015)
1314) (DE LEON, 5th ed., p. 475)
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springs from a null and void source. A void made by one party. Contracts of adhesion are not
contract is equivalent to nothing: it produces no invalid per se as they are binding as ordinary
civil effect: and it does not create, modify or contracts. While the Court has struck down some
extinguish a juridical relation. (Borromeo v. Mina, contracts of adhesion as void, it did so when the
G.R. No. 193747, June 5, 2013) weaker party was subject to a “take it or leave it”
situation - when the weaker party was deprived
9. CONTRACT OF ADHESION of the opportunity to bargain on equal footing.
Thus, the validity or enforceability of contracts of
Q:Js contract of adhesion invalid per se? adhesion will have to be determined based on the
circumstances of each case. (Encarnacion
A: (PERLAS-BERNABE) No. A contract of Construction v. Phoenix Ready Mix, G.R. No.
adhesion is one wherein one party imposes a 225402, September 4, 2017)
ready-made form of contract on the other. It is a
contract whereby almost all of its provisions are
OBLIGATIONS AND CONTRACTS
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legal estate is transmitted to the donee, he of the grantor toward the grantee, a trust by virtue
nevertheless is either to have no beneficial of law is established. If the fulfillment of the
interest or only a part thereof. (Civil Code, Art. obligation is offered by the grantor when it
1449) becomes due, he may demand the reconveyance
of the property to him. (Civil Code, Ad. 1454)
3. Implied Trust in Sale of Property
If the price of a sale of property is loaned or paid A resulting trust is one that arises by implication
by one person for the benefit of another & the of law and presumed always to have been
conveyance is made to the lender or payor to contemplated by the parties, the intention as to
secure the payment of the debt, a trust arises by which can be found in the nature of their
operation of law in favor of the person to whom transaction although not expressed in a deed or
the money is loaned or for whom it is paid. The instrument of conveyance. (Heirs o f Yap v. CA,
latter may redeem the property & compel a G.R. No. 133047, 1999)
conveyance thereof to him. (Civil Code, Art.
1450) 8. Trustee’s Use of Funds Held in Trust
When any trustee, guardian or other person
4. Implied Trust in Succession holding a fiduciary relationship uses trust funds
When land passes by succession to any person for the purchase of property & causes the
& he causes the legal title to be put in the name conveyance to be made to him or to a third
of another, a trust is established by implication of person, a trust is established by operation of law
law for the benefit of the true owner. (Civil Code, in favor of the person to whom the funds belong.
Art. 1451) (Civil Code, Ad. 1455)
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VI. SALES | An exception to the rule where the seller need not
be the owner of the subject matter at the-time of
A. NATURE AND FORM perfection of the contract of sale would be
foreclosure sales. (Art. 2085)
Q: What is a contract of sale?
Under Art. 1475, the contract of sale is perfected
A: It is a contract where one of the contracting at the moment there is a meeting of minds upon
parties (Seller) obligates himself to transfer the the thing which is the object of the contract and
ownership and to deliver a determinate thing, and upon the price. From that moment, the parties
the other party (Buyer) to pay a price certain in may reciprocally demand performance, subject to
money or its equivalent. A contract of sale may be the provisions of the. law governing the form of
absolute or conditional. (Art. 1458) contracts. (Ace Foods, inc. v. Micro Pacific
Technologies Co, Ltd., G.R. No. 200602,
Q: What are the elements of a contract of December 11, 2013).
sale?
Q: What are the requisites for a valid price?
A: The elements of a contract of sale are: (CSP)
1. Consent A: The price or consideration of a contract of sale
2. Determinate or Determinable Subject must have the following requisites at the time of
Matter the perfection of the sale: (RMC)
3. Price certain in money or its equivalent 1. It must be Real (Art. 1471);
(Coronet v. Court of Appeals, G.R. No. 2. It must be in Money or its equivalent,
103577, 1996) valueable consideration (Arts. 1458 and
1468);
The absence of any essential elements negates 3. It must be Certain or ascertainable (Art.
the existence of a perfected contract of sale. 1458)
(Dizon v. Court of Appeals, G.R. No. 122544,
1999)
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is the obligor’s failure person during the period designated, and within
to comply with an that period, to enter into such contract with the
obligation already one to whom the option was granted, if the latter
extant, not a failure of should decide to use the option. It is a separate
a condition to render agreement distinct from the contract of sale which
binding that the parties may enter into upon the
obligation. A non consummation of the option. (Carceller v. Court
existent obligation of Appeals, G. R. No. 124 791, 1999)
cannot be subject of
rescission. (Diego v. Q: What are the elements of an option
Diego, G.R. No. contract?
______________ i 179965, 2013)
(DE LEON, COMMENTS AND CASES ON A: The elements of an option contract are: (A-Su-
SALES AND LEASE, 2014, at p,21-23) C)
1. Acceptance of the offer to buy or sell;
Q: What are the stages in the life of a sale? 2. A determinate Subject matter for a price
certain;
A: The stages in a life of a sale are: (NPC) 3. Consideration, which is separate and
1. Policitacion/Negotiation Stage - Starts distinct from the purchase price. (Art.
from the time the prospective contracting 1479, par. 2)
parties indicate interest in the contract to
the time the contract is perfected; Q: What is the effect of an absolutely
2. Perfection - Takes place upon the simulated or fictitious contract of sale
concurrence of the essential elements of
the sale, which are metting of the minds A: Under Art. 1346 Of the Civil Code “An
as to the object of the contract and upon absolutely simulated or fictitious contract is void.
the price; (Tanchuling v. Cantela, G.R. No. 209284,
3. Consummation - Begins when the November 10, 2015.)
parties perform their respective
undertaking under the contract of sale, Q: What is the effect of relative simulated
culminating in the extinguishment of the contract?
contract of sale. (San Miguel Properties
Philippines v. Huang, G.R. No. 137290, A: A relative simulation, when it does not
2000) prejudice a third person and is not intended for
any purpose contrary to law, morals, good
Q: When is ownership of the thing sold customs, public order or public policy binds the
transferred to the buyer? parties to their agreement.” (Tanchuling v.
Cantela, G.R. No. 209284, November 10, 2015.)
A: Ownership of the thing sold is transferred to
the buyer upon actual or constructive delivery of Q: State the rules on option contracts.
the thing. (Art. 1477) The thing sold is understood
as delivered when it is placed in the control and A: The rules on option contracts are:
possession of the buyer. (Art. 1497) 1. If the period is NOT supported by a
separate consideration:
Q: What is an option contract? a. The option contract is void.
However, it still consitutes an offer
A: An option is a preparatory contract in which of a contract of sale which can be
one party grants to the other, for a fixed period withdrawn by the offeror before he
and under specified conditions, the power to learns of the acceptance by the
decide, whether or not to enter into a principal offeree. If the offer is accepted
contract. before withdrawal, it would give
rise to a valid sale. (Sanchez v.
It binds the party who has given the option, not to Rigos, G.R. No. L-25494, 1972)
enter into the principal contract with any other
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b. The right to withdraw must not be The Courts would not allow an action for specific
done whimsically or arbitrarily, performance or a rescission of the sale to a third
otherwise the other party may sue party which constitute the breach of the promise,
for damages under Article 19. even when the third party buyer was entering into
2. If the period has a separate consideration: the purchase of the subject property in bad faith.
a. The option contract is deemed (Guerrero v. Ynigo, G.R. No. L-5572, 1954)
perfected, if the option is
exercised within the period, it However, if the right of first refusal is attached to
would give rise to a sale which a valid principal contract, like a contract of lease,
can be enforced by specific the breach of the right by the promissor allows the
performance. promissee to enforce his right by way of
b. If the offer is withdrawn within the rescission of the sale entered into with the third
option period, the withdrawal party who was aware of the existence of the right
constitutes a breach of the option of first refusal (bad faith). (Equatorial Realty Dev.
contract. Inc., G.R. No. 106063, 1996) The right cannot be
c. However, if the offer is withdrawn enforced against a purchaser for value and in
before acceptance, good faith. (Rosencor Dev. Corp. v. Inquing, G.R.
i. The offeree may not sue No. 140479, 2001)
for specific performance
on the sale, since the sale Q: Is a right of first refusal subject to the
itself wass not perfected. Statute of Frauds?
ii. The offeror may be held
liable for damages for A: No. Art. 1403 (2) (e) of the Civil Code
breach of the option presupposes the existence of a perfected, albeit
contract. (Ang Yu unwritten, contract of sale; the right of first refusal
Asuncion v. Court o f is not by any means a perfected contract f sale of
Appeals, G.R. No. real property. At best, it is a contractual grant, not
109125, 1994) of the sale of real property involved, but of the
right of first refusal of the property to be sold. It
Q: What is a right of first refusal? need not be in writing and may be proven by oral
evidence (RosencorDevf v. Inquing, G.R. No.
A: It is a promise on the part of the owner that if 140479, 2001).
he decides to sell the property in the future, he
would first negotiate its sale to the promisee. Q: Distinguish Earnest Money and Option
(VILLANUEVA, Law on Sales, p. 156) Money *
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Q: Can the prior payment of earnest money Q: X filed a complaint for Declaration for
before the owner can agree to sell his nullity of Sale, Reconveyance and damages
property bind the owner to the obligations of involving the subject land originally owned by
a seller? Y. X alleged that they are grandchildren and
successor-in-interest of Z. Y denied
A: No. In a potential sale transaction, prior paymet respondents’ allegations and countered that
of earnest money even before the owner can he was a buyer in good faith, for value, and
agree to sell his property is irregular, and cannot was without any knowledge or participation in
be used to bind the owner to the obligations of a the alleged defects of the title thereof; and
seller. The property owner/prospective seller may were never in possession of the subject land
not be legally obliged to enter into a sale with a and they never paid real property taxes over
prospective buyer through the latter’s the same. Ultimately,X ciarmed that he was
employment of questionable practices which duped and swindled into buying the subject
prevent the owner from freely giving his consent land twice. The lower courts ruled in favour of
to the transaction; this constitutes a palpable Y, declaring that the parties are not real
transgression of the prospective seller’s rights of parties to the instant case considering that
ownership over his property.(First Optima Realty they are mere cjTand children of Z. Are the
Corp. v. Securitron Security Services, G.R. No. lower courts correct?
1999648, 2015).
A: Yes. The rule on real parties in interest has two
B. CAPACITY TO BUY AND SELL (2) requirements, namely: (a) to institute an
action, the plaintiff must be the real party in
Q: Who may enter into a contract of saie? interest; and (b) the action must be prosecuted in
the name of the real party in interest In the instant
A: All natural or juridical persons who have case, respondents claim to be the successors-in-
capacity to act, or the power to do acts with legal interest of the subject land just because they are
effects, or obligate themselves, may enter into a Z's grandchildren. Under the law, however,
contract of sale. (Art. 1489) respondents will only be deemed to have a
material interest over the subject land- and the
The following persons are incapacitated to enter rest of Z's estate for that matter if they would have
into a contract of sale because of their incapacity to show first that their mother: (a) predeceased Z;
to give consent: (MID-DRUNK-SPELL) (b) is incapacitated to inherit; or (c) was
1. Minors (Art. 1327) disinherited, if Z died testate. (Andy Ang v.
2. insane and Demented Persons (Art. 1327) Severino Pacunio; G.R NO 208928, July
o However, when the contract is 08,2015)
entered into during a lucid
interval the contract is valid. (Art. Q: Summarize the rules on sales of conjugal
1328) properties.
3. Deaf-Mutes (Art. 1327)
4. Persons who entered into a contract in a state A: Sales of conjugal properties by one spouse to
of DRUNKenness and hypnotic SPELLMrt. third persons, without the written consent of the
1328) other spouse is void. (FAMILY CODE, Art. 124)
The sale is not merely voidable, since the
Contracts entered into by these persons are resulting contract of sale lacks one of the
voidable (Art. 1378, 1390) subject to annulment essential elements of full consent. The sale will
or ratification. (Art. 1393) be classified as voidable if there was only vitiation
of the consent of one spouse. (Guiang v. Court of
Nonetheless, where necessaries are sold and Appeals, G.R. No. 125172, 1998)
delivered to minors or other persons without
capacity to act, he must still pay a reasonable The sale of property between spouses is void
price therefore, (Art. 1489)thus, the resulting except in the following instances: (separation of
contract is valid and not merely voidable. property)
1. When a separtion of property was agreed
upon in the marriage settlements; or
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2. When there has been a judicial decree for the Q: What does the seller have to deliver?
separtion of property. (Art. 1490)
A: The seller has to deliver the following: (Thi-F-
This prohibition relating to spouses is applicable A)
even to sales in legal redemption, compromises, 1. The thing sold (Art. 1495)
and renunciation. (Art. 1492) 2. Fruits, they belong to the buyer from the
day the contract of sale is perfected (Art.
Note: The prohibition applies to sale of property 1537)
between common law spouses. (Calimlim- 3. Accessions and accessories, in the
Cartullas v. Fortun, G.R. No. L-57499, 1984) condition in which they were upon the
perfection of the sale (Art. 1537)
Q: X and Y are heirs of Spouses W and Z.
Spouses W and Z owned Lot 2 which was DELIVERY OF THE THING SOLD
registered in W ’s name. The land was
eventually subdivided as Lots 2-A, 2-B, and 2- Q: When is there Real or Actual Delivery?
C in 1984. Sometime later, X discovered that
Lot 2-C was sold in 1978 by virtue of a A: When it is placed in the control and possession
notarized Deed of Sale to Y in the amount of of the vendee. (Art. 1497)
P150,000. The Deed did not specify the metes
and bounds of the lot being sold. This Q: What are the special remedies of unpaid
prompted X to file a complaint for annulment seller of goods?
of title and reconveyance against X, alleging
that the Deed of Sale was null and void A: When a seller is unpaid as defined in Article
because the signatures of Spouses W and Z 1525 of the Civil Code, whether or not ownership
thereon were forgeries. The lower courts over the goods has been transferred to the buyer,
ruled that the Spouses Z could not have sold the unpaid seller is entitled to the following rights
a specific portion of Lot 2 to petitioners, or remedies:
having been subdivided only in 1984. Are the 1. Possessory lien - The unpaid seller has a
lower courts correct? right to retain the goods for the price while
he is in possession of them (CIVIL CODE,
A: No. Article 1463 of the Civil Code expressly Art. 1526 (a))
states that "[t]he sole owner of a thing may sell an 2. Stoppage in transitu-\n case of insolvency
undivided interest therein." In the case at bar, Lot of the buyer, the unpaid seller has the right
2 , the original lot, was solely owned by W. As W to stop the goods in transitu after he has
was the sole owner of the original Lot 2 from parted with the possession of them (CIVIL
whence came Lot 2-C, he is therefore allowed by CODE, Art. 1526 (b);
law to convey or sell an unspecified portion 3. Special right of resale (CIVIL CODE, Art.
thereof (Ampray & Ambray v. Tsourous, G.R. No. 1526 (c)
209264, July 05, 2016). 4. Special right to rescind (CIVIL CODE, Art.
1526 (d)
C. EFFECTS OF THE CONTRACT WHEN THE
THING SOLD HAS BEEN LOST The four remedies have a hierarchical
application, as in fact, the special righs to resell
D. OBLIGATIONS OF THE VENDOR and.to rescind can be availed of by the unpaid
seller only when either of the two prior rights of
Q: What are the obligations of the seller? possessory lien or stoppage in transitu have been
exercised by the unpaid seller. (VILLANUEVA,
A: The vendor is bound to transfer the ownership Law on Sales, p. 366)
of and deliver, as well as warrant the thing which
is the object of the sale. (Art. 1495)
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Q: What are the requisites for the rules on of Sarili v. Lagrosa, GR No. 193517, January
double sales under Art. 1544 to apply? 14,2014)
2. Where the land sold is in the possession of a
A: The requisites for double sales are: (2SuV- person other than the vendor, as in this case,
2BC-S) the purchaser must go beyond the certificate
1. The two (or more) sales transactions in the of title and make inquiries concerning the
issue must pertain to exactly the same actual possessor. ( Norma C. Magsano v.
Subject matter, andmust be Valid sales Pangasinan Savings & Loan Bank, G.R No.
transactions. 215038, October 17,2016)
2. The two (or more) Buyers at odds over the
rightful ownershipof the subject matter must Q: X owned an undivided portion of a lot
each represent Conflicting interests; and registered in the name of Y. On a strength of
3. The two (or more) buyers at odds over the a contract to sell, purporting to convey half of
rightful ownership of the subject matter must his share to Z, they were able to transfer their
each have bought from the very same Seller. respective rights to Corporation A. X,
(Cheng v. Genato, G.R. No. 129760, 1998) claiming that he did not sold his share to Z nor
received any consideration of the said
Q: Who shall own the thing sold under a transfer, X sought to annul the deed of sale. Z
double sale situation? insisted that she paid X and took possession
of X’ portion and declared the same for
A: If the thing is a movable property, the owner is taxation purposes. Corporation A, claimed to
the first to possess the thing in good faith. (Art. be a purchaser in good faith. The RTC
1544) declared Corporation A to be a purchaser in
bad faith in view of the admission of its
Where it is an immovable property that is the representative that he was aware of the fact
subject of a double sale, ownership shall be that Domingo was part owner of the subject
transferred lot and that he even asked a someone to talk
1. To the person acquiring it who in good faith to X about the sale of his share. Is the lower
first recorded it in the Registry of Property; court correct?
2. In default thereof, to the person who in good
faith was first in possession; and A: Yes. Verily, one is considered a buyer in bad
3. In default thereof, to the person who presents faith not only when he purchases real estate with
the oldest title, provided there is good faith. knowledge of a defect or lack of title in his seller
(Art. 1544; Gabriel v. Spouses Mabanta, G.R. but also when he has knowledge of facts which
No. 142403, 2003) should have alerted him to conduct further inquiry
or investigation. Corporation A cannot veer away
The requirement of law is two-fold: acquisition in from the admission of its representative,that he
good faith and registration in good faith. (Gabriel was aware of X ’s interest in the subject lot, and
v. Spouses Mabanta, G.R. No. 142403, 2003) that Z had no title in her name at the time of the
sale, thus, giving rise to the conclusion that it had
NOTE: been reasonably apprised of the ownership
GR: As a general rule, every person dealing with controversy over the subject lot. Indeed, what it
registered land may safely rely on the correctness failed to realize is that, as one asserting the status
of the Certificate of Title issued and the will no of a buyer in good faith and for value, it had the
way oblige him to go beyond the certificate to burden of proving such status, which goes
determine the condition of the property. (Heirs of beyond a mere invocation of the ordinary
Sarili v. Lagrosa, GR No. 193517, January 14, presumption of good faith.( Krystle Realty
2014) Development Corp v. Alibin G.R No. 196117;
XPN: August 13,2014)
1. However, a higher degree of prudence is
required from one who buys from a person
who is not a registered owner, although the
object of the transaction is registered (Heirs
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CONDITIONS AND WARRANTIES expired, X passed away. X’s heirs now filed a
case for specific performance against
Q: What are warranties? Spouses Y, contending that no downpayment
A: These are express or implied statements or was required of X, X was allowed to pay
representation made by the seller of goods, as whenever she could, and that as of X’s death,
part of the contract of sale, having reference to she had already paid for the lot in full.
the character, quality, or title, of the goods, where Spouses Y, on the other hand, contend that X
he promises or undertakes to insure that certain did not pay downpayment even if it was
facts shall be as he represents. (CIVIL CODE, required of her, and that X was unable to pay
Arts. 1546-1547) for the lot in full because of several
restructuring agreements that increased the
E. OBLIGATIONS OF THE VENDEE purchase price. Hence, Spouses Y cannot be
compelled to execute a deed of sale. Are the
Q: In the sale of immovable property, how Spouses Y correct?
should the seller exercise his right to rescind
the sale upon the buyer’s failure to pay the A: Yes. A contract to sell differs from a conditional
price at the time agreed upon? contract of sale. A contract to sell is akin to a
conditional sale where the efficacy or obligatory
A: The seller should demand for rescission of the force of the vendor's obligation to transfer title is
contract either judicially or by notarial act. As long subordinated to the happening of a future and
as there is no demand for rescission, the vendee uncertain event, so that if the suspensive
may pay even after the expiration of the period condition does not take place, the parties would
agreed upon. After the demand for rescission, the stand as if the conditional obligation had never
court may not grant the buyer a new term. (Art. existed. In the case at bar, Spouses Y had no
1592) obligation to execute a deed of sale as the
amount paid by X was clearly insufficient to cover
A demand for rescission by judicial or notarial act the principal amount. In a contract to sell, the
(notarized demand letter or notice) is necessary fulfillment of the suspensive condition wiil not
before a valid rescission can take place, whether automatically transfer ownership to the buyer
or not automatic rescission has been although the property may have been previously
stipulated.(Iringan v. Court of Appeals, G.R. No. delivered to him. The prospective seller still has
129107,2001) to convey title to the prospective buyer by
entering into a contract of absolute sale. On the
Note: The requirement of demand by judicial or other hand, in a conditional contract of sale, the
notarial act under Article 1592, in case the vendor fulfillment of the suspensive condition renders the
of an immovable property wants to rescind, does sale absolute and the previous delivery of the
not apply to contracts to sell or promise to sell, property has the effect of automatically
where title remains wKh the vendor until full transferring the seller’s ownership or title to the
payment of the price (Valarao v. Court of Appeals, property to the buyer (Ventura v. Spouses
G.R. No. 130347, 1999) Endaya, G.R. No. 190016, October 2, 2013).
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Q: X sold a parcel of land to V on 01 January subject property under a contract of loan and the
2002, payment and delivery to be made on 01 buyer bought the property from a third party. In
February 2002. It was stipulated that if other words, the Recto Law will not apply when
payment were not to be made by Y on 01 there is no vendor-vendee relationship between
February 2002, the sale between the parties the parties, as in a contract of loan with chattel
would automatically be rescinded. Y failed to mortgage where the relationship of the parties is
pay on 01 February 2002, but offered to pay that of a debtor (mortgagor)-creditor
three days later, which payment X refused to (mortgagee)|Egu/fab/e Savings Bank v. Palces,
accept, claiming that their contract of sale had G.R. No. 214752, 2016)
already been rescinded. Is X’s contention
correct? Why? Note: Contracts to sell are not covered by the
Recto Law. (Visayan Sawmili Co. v. Cpurt o f
A: No, X is not correct. In the sale of immovable Appeals, G.R. No. 83851, 1993)
property, even though it may have been
stipulated, as in this case, that upon failure to pay Q: What are the remedies of a seller under the
the price at the time agreed upon the rescission Recto Law?
of the contract shall of right take place, the
vendee may pay, even after the expiration of the A: In case of default, the following remedies are
period, as long as no demand for rescission of the available to the seller:
contract has been made upon him either judicially 1. Exact fulfillment of the obligation,
or by a notarial act (Art. 1592). Since no demand should the buyer fail to pay;
for rescission was made on Y, either judicially or 2. Cancel the sale, if the buyer fails to pay
by a notarial act, X cannot refuse to accept the 2 or more installments;
payment offered by Y 3 days after the expiration 3. Foreclose the chattel mortgage on the
of the period. thing sold, if the buyer fails to pay 2 or
more installments;
F. BREACH OF CONTRACT
In case of foreclosure, the seller shall
1. REMEDIES have no further action against the buyer
to recover any unpaid balance of the
2. RECTO LAW AND MACEDA LAW price and any agreement to the contrary
shall be void. (Art. 1484)
A. RECTO LAW
These remedies are alternative and exclusive,
Q: What is the coverage of the Recto Law? and the exercise of one would bar the exercise of
the others. (Delta Motor Sales Corp. v. Niu Kim
A: Recto Law covers: Duan, G.R. No. 61043,1992)
1. Contracts of sale of personal property by
installments (Art. 1484)] Q: Y purchased a car from Bank X in the
2. Contracts purporting to be leases of amount of P1 million. In connection therewith,
personal property with option to buy, when Y executed a Promissory Note with Chattel
the lessor has deprived the lessee of the Mortgage in favor of Bank X, and stipulated
possession or enjoyment of the thing (Art. that Y will pay the amount in 36-monthly
1485)] installments. Y eventually defaulted on her
installments, prompting Bank X to send her a
Note: In case of financing transactions derived or demand letter and file a complaint for
arising from sale of movables on installments, the Recovery of Possession with Replevin. Y, for
financing company is bound by the Recto Law, if her part, admitted that she defaulted payment
the seller is the agent of the financing company for the months of January and February but
or when the seller assigned his credit to the called Bank X’s officer who consented to a
financing company. (Zayas v. Luneta Motor delayed payment scheme. Y made payments
Company, G.R. No. L-30583, 1982)However, the in the amount of P103,000 in March but was
Recto Law will not apply to the financing surprised when Bank X filed the instant
company, if it merely financed the purchase of the complaint. Y contends that Bank X had
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already waived its right to recover any unpaid 1. Pay the unpaid installments due without
installments when it sought for a writ of additional interests, within the grace
replevin in order to gain possession of the period. The grace period is 1 month for
subject vehicle. Is Y correct? every year of installment payments made.
This right shall be exercised only once
A: (PERLAS-BERNABE) No. Article 1484 every 5 years of the life of the contract and
provides that in cases of a contract of sale of its extensions.
personal property the price of which is 2. Cancel the contract and receive 50% of
payable in installments, “the vendor may the cash surrender value of the total
exercise: (1) exact fulfillment of the obligation, payments made as refund.
should the vendee fail to pay; (2) cancel the sale, a. Receive additional refund of 5%
should the vendee's failure to pay cover two or for every year exceeding 5 years,
more installments; and (3) foreclose the chattel if the buyer has paid more than 5
mortgage on the thing sold if one has been years of installments, provided
constituted, should the vendee's failure to pay that the total amount to be
cover two or more installments. In this case, he refunded shall not exceed 90% of
shall have no further action against the purchaser the total payments made. (R.A.
to recover any unpaid balance of the price. Any 6552, Sec. 3)
agreement to the contrary shall be void.” In the
present case, there was no vendor-vendee If the buyer has paid less than 2 years of
relationship between Bank X and Y as Y did not installments:
buy the car from Bank X but merely sought • The buyer has the right to a grace period
financing from the latter. Only a vendor may of not less than 60 days from the date the
exercise the remedies provided for under Art. installment became due. (R.A. 6552,
1484 (Equitable Savings Bank v. Palces, G.R. Sec. 4)
No. 214752, March 09, 2016).
However, if the buyer fails to pay the installments
Exception: Even if the seller had chosen specific due at the expiration of the grace period, the
performance, if the same has become seller has to give a notice of cancellation or
impossible, the seller may still choose rescission. demand rescission of the contract by a notarial
(Art. 1191). act from the buyer, and only after 30 days from
the buyer’s receipt of such can the seller cancel
B. MACEDA LAW the contract. (R.A. 6552, Sec. 4)
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However, the vendor may still exercise the right Q: Explain the right of legal redemption
to repurchase within 30 days from the time final among co-owners.
judgment was rendered in a civil action on the
basis that the contract was a true sale with right A: A co-owner may exercise the right of
to repurchase. (Art. 1606 par. 3) redemption in case the shares of all the other co
owners or of any of them, are sold to a third
person. If the price for the sale is grossly
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Things that the Seller Thi-F-A The seller has to deliver the following:
must Deliver 1. The Thing sold (CIVIL CODE, Art. 1495)
2. Fruits, they belong to the buyer from the day
the contract of sale is perfected (CIVIL
CODE, Art. 1537)
3. Accessions and accessories, in the condition
in which they were upon the perfection of the
sale (CIVIL CODE Art. 1537)
Requisites for the 2SuV-2BC-S The requisites for double sales are:
Rules on Double 1. The two (or more) sales transactions in the
Sales issue must pertain to exactly the same
Subject matter, and must be Valid sales
transactions.
2. The two (or more) Buyers at odds over the
rightful ownershipof the subject matter must
each represent Conflicting interests; and
3. The two (or more) buyers at odds over the
rightful ownership [Compl] of the subject
matter must each have bought from the very
sameSeller. (Cheng v. Genato, G.R. No.
129760, 1998)
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co-owned property;
4. The right of redemption must be exercised by
one or more Co-owners within a Period of
thirty days to be counted from the time he or
they were Notified in writing by the co-owner
seller; and
5. The buyer must be Reimbursed the price of
the sale. (Calma \/. Santos, G.R. No. 161027,
2009)
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Q: X and Y pooled their resources and Q: Can corporations enter into partnership
industry together and entered into a agreements?
partnership engaged in the business of
selling lumber and hardware and construction A: As a general rule, corporations cannot enter
supplies, which was called “Benguet into a contract of partnership with an individual or
Lumber,” which they jointly managed until X’s another corporation; however, it may be allowed
death. In the 40 years of business, X never to do so provided it complies with certain
asked for accounting of the assets. The conditions, to wit: (a) the authority to enter into a
business prospered and it was later turned partnership relation is expressly conferred by the
into a corporation called “Benguet Lumber charter of or AOI of the corporation,' and the
Company.” Alleging that the incorporation nature of the business venture to be undertaken
was done to deprive X and his heirs their by the partnership is in line with business
rightful share in the profits, they prayed for authorized by the charter or AOI of the
accounting of the partnership assets, and the corporation involved; (b) if it is a foreign
dissolution and winding up and liquidation corporation, it must obtain a license to transact
thereof. RTC held that it was a joint venture business in the country in accordance with the
akin to a particular partnership. CA reversed. Corporation Code of the Philippines. HOWEVER,
Is the RTC correct in ruling that X and Y are while a corporation has no power to enter into a
partners in a particular partnership? partnership, nevertheless, it may validly enter into
a joint venture agreement, where the nature of
A: NO. There was no partnership whatsoever. A that venture is in line with the business authorized
particular partnership is distinguished from a joint by its charter. (SEC OGC-OpinionNo. 16-22,
adventure, to wit: (a) A joint adventure (an October 4, 2016).
American concept similar to our joint accounts) is
a sort of informal partnership, with no firm name Q: How is an architectural firm formed?
and no legal personality. In a joint account, the
participating merchants can transact business A: Under The Architecture Act of 2004 (R.A. No.
under their own name, and can be individually 9266), a firm may be registered or licensed as
liable therefor, (b) Usually, but not necessarily a such for the practice of architecture under the
joint adventure is limited to a SINGLE following conditions:
TRANSACTION, although the business of 1. Only Filipino citizens properly registered
pursuing to a successful termination may and licensed as architects under this Act
continue for a number of years; a partnership may, among themselves, or together with
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allied technical professionals, form and Q: What are the consequences if an industrial
obtain registration as a firm, company, partner engages in any business?
partnership, association or corporation
for the practice of architecture; A: If the industrial partner engages in business for
2. Registered and licensed architects shall himself, the capitalist partners may either:
compose at least seventy-five percent i. exclude him from the partnership, or
(75%) of the owners, shareholders, ii. avail themselves of the benefit
members incorporators, directors, obtained by him from the business,
executive officers, as the case may be; iii. file an action for damages against the
3. Individual members of such firm, industrial partner, in either case.
partnership association or corporation (Civil Code, Article 1789)
shall be responsible for their individual
and collective acts as an entity and as Q: What are the consequences if a capitalist
provided by law; partner engages in a business whidh
4. Such firm, partnership, association or competes with the business of the
corporation shall be registered with the partnership?
Securities and Exchange Commission
and Board. A: if a capitalist partner engages in a business
which competes with the business of the
Q: What is the liability of partners (including partnership:
industrial partners and limited partners) in a i. he may be required to bring to the
partnership? common funds the profits he derived
from the other business
A: All partners, including industrial ones, shall be ii. he shall personally bear the losses
liable pro rata with all their property and after all iii. he may be ousted from the
the partnership assets have been exhausted, for partnership, especially if there was
the contracts which may be entered into in the warning (Civil Code, Art. 1808)
name and for the account of the partnership,
under its signature and by a person authorized to Q: What are the obligations of a managing
act for the partnership. However, any partner may partner who collects debt from a person who
enter into a separate obligation to perform a also owed the partnership?
partnership contract. (Civil Code, Article 1816). A
limited partner is not allowed to contribute A: When a managing partner collects debt from a
services, only “cash or other property” (Civil person who also owed him in his personal
Code, Article 1845); otherwise, he is considered capacity, he must apply the sum collected to 2
an “industrial and general partner” and thus, not credits (the partnership and his own) in proportion
exempted from personal liability. to their amounts, even though he may have given
a receipt for his own credit only. But if the amount
Q: What are the prohibitions imposed upon was received for the account of the partnership,
industrial and capitalist partners? the whole sum shall be applied to partnership
credit. (Civil Code, Art. 1792)
A: Industrial partner cannot engage in business
(w/n same line of business with the partnership) Q: What are the obligations of a partner who
unless partnership expressly permits him to do receives his share of the partnership credit,
so. (Civil Code, Article 1789) While a capitalist when the other partners have not collected
partner cannot engage in business (with same theirs and the debtor thereafter becomes
kind of business with the partnership) for his own insolvent?
account, unless there is a stipulation to the
contrary. (Civil Code, Article 1808) A: He is obliged to bring to the partnership capital
what he received even though he may have given
receipt for his share only. (Civil Code, Art. 1793)
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Q: When does the contributing partner bear Q: What are the rights of an assignee to whom
the risk of loss of things contributed? a partner assigns his interest in the
partnership?
A: When specific and determinate things
contributed are not fungible and only the use and A:
fruits thereof is contributed. (Civil Code, Art. 1. Assignee gets whatever the assignor-
1795) partner would have obtained
2. Assignee can avail of the usual remedies
Q: How are profits distributed among the in case of fraud in the management
partners? 3. Assignee can ask for the annulment of
contract of assignment if he was induced
A: If there is an agreement: profits and losses to join through any of the vices of consent
shall be distributed according to what is agreed 4. Demand an accounting (only in case of
upon. If there is no agreement: the capitalist dissolution) (Civil Code, Art. 1813)
partner shall have his share in proportion to his
capital contribution while the industrial partner Q: What are the responsibility of the
shall be given what is just and equitable under the partnership to the partners?
circumstances. (Civil Code, Art. 1797)
A:
Q: How are losses distributed among the 1. To refund the amounts disbursed by
partners? partner in behalf of the partnership plus
corresponding interest from the time the
A: If there is an agreement, losses shall be expenses are made (loans and advances
distributed according to what is agreed upon. If made by a partner to the partnership
there is no agreement as to the distribution of aside from capital contribution)
losses, but distribution of profits is agreed upon, 2. To answer for obligations the partner
the agreement as to the distribution of profits shall may have contracted in good faith in the
also appiy to the distribution of losses. If there is interest of the partnership business
no agreement as to the distribution of losses and 3. To answer for risks in consequence of it
profits, the capitalist partner shall bear the losses management (Civil Code, Art. 1796)
in proportion to their capital contribution. The
industrial partner shall not be liable for losses. Q: What is the consequence of the inclusion
(Civil Code, Art. 1797) of a person’s name in the partnership name?
Q: Can a stipulation exempting a partner from A: Persons who include their name in the
losses valid? partnership name, even if they are not members,
shall be liable as a partner. (Civil Code, Art. 1815)
A: Yes, if a person can make a gift to another,
there is no sound reason why a person cannot Q: What is the liability of the partners for
also agree to bear all the losses. But, as far as contractual obligations of the partnership?
third persons are concerned, any such stipulation
may be declared as void. (De Leon, pp. 124-125, A: All partners, including industrial ones, shall be
citing Espiritu v. Cibal) liable pro rata with all their property for contractual
obligations of the partnership with their property,
Q: What are the property rights of a partner? after all partnership assets have been exhausted.
(Civil Code, Art. 1816)
A:
i. His rights in specific partnership Q: What is the liability of an incoming partner
property to obligations of the partnership arising
ii. His interest in the partnership before his admission?
iii. His right to participate in the
management (Civil Code, Art. 1810) A: A person admitted as partner into an existing
partnership is liable for existing obligations of the
partnership only to the extent of his share in the
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ili. Partner guilty of conduct prejudicial to Q: What are the rights of a partner in a
. business of partnership partnership dissolved in contravention of a
iv. Willful or persistent breach of partnership partnership agreement?
agreement or conduct which makes it
reasonably impracticable to carry on A:
partnership with him i. For partner who has not caused the
v. Business can only be carried on at a loss dissolution wrongfully:
vi. Other circumstances which render a. Apply partnership property to
dissolution equitable discharge liabilities of partnership
vii. Upon application by purchaser of partner’s b. Apply surplus, if any to pay in cash
interest: the net amount owed to partners
a. After termination of specified c. Indemnity for damages caused by
term/particular undertaking partner guilty of wrongful dissolution
b. Anytime if partnership at will when d. Continue business in same name
interest was assigned/charging order during agreed term
issued (Civil Code, Art. 1831) e. Possess partnership property if
business is continued
Q: When can a partner still bind the •
partnership even after dissolution? ii. For a partner who wrongfully caused the
dissolution
A: • 1. If business not continued by
i. Transactions in connection to winding up others
partnership affairs/completing transactions a. Apply partnership property to
unfinished discharge liabilities of partnership &
ii. Transactions which would bind partnership if receive in cash his share of surplus
not dissolved, when the other party/obligee: less damages caused by his
wrongful dissolution
- - - Situation 1 • 2. If business continued by
1. Had extended credit to partnership prior others
to dissolution; and a. Have the value of his interest at time
2. Had no knowledge/notice of dissolution of dissolution ascertained and paid
in cash/secured by bond & be
Situation 2 released from all existing/future
1. Did not extend credit to partnership; partnership liabilities
2. Had known partnership prior to • (Civil Code, Art. 1837)
dissolution; and
3. Had no knowledge/notice of Q: What is the effect if the business of a
dissolution/fact of dissolution not dissolved partnership is continued?
advertised in a newspaper of general
circulation in the place where partnership A:
is regularly carried on (Civil Code, Art. 1. Creditors of old partnership are also
1834) creditors of the new partnership, which
continues the business of the old one w/o
Q: When is a partner discharged from any liquidation of the partnership affairs (Civil
existing liability upon dissolution? Code, Art. 1840)
2. Creditors have an equitable lien on the
A: As a general rule, dissolution of the partnership consideration paid to the retiring
does not of itself discharge the existing liability of /deceased partner by the purchaser
any partner. Except when there is an agreement when retiring/deceased partner sold his
to that effect between himself, the partnership interest w/o final settlement with creditors
creditor and person/partnership continuing the (Civil Code, Art. 1840). The retired or
business. (Civil Code, Art. 1835)
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deceased partner or his legal limited. (Jo Chung Gang v. Pacific Commercial
representatives may Co., 45 P h il142) "
a. Have the value of his interest
ascertained as of the date of Q: Can a person be admitted as a partner in a
dissolution limited partnership even without the consent
b. May receive as ordinary creditor or ratification of all the limited partners?
the value of his share in the
dissolved partnership with A: Yes, if he is admitted as a limited partner, not
interest or profits attributable to as a general partner, and if the admission of a
use of his right, at his option limited partner even without the consent or
(Civil Code, Art. 1841) ratification of ail the limited partners is authorized
in the certificate of partnership. (Civil Code,
Q: Who are the persons authorized to wind up Article 1850)
the partnership business?
Q: What are the requisites for the return of the
A: contribution of a limited partner?
i. Partners designated by the agreement
ii. In absence of agreement, all partners who A: (1) All liabilities of partnership have been paid/if
have not wrongfully dissolved the not yet paid, at least sufficient to cover them; (2)
partnership consent of all members has been obtained; and
iii. Legal representative of last surviving partner (3) certificate is cancelled/amended as to set forth
(Civil Code, Art. 1836) withdrawal or reduction of contribution. (Civil
Code, Article 1851)
Q: What are the characteristics of a limited
partnership? Q: What are the instances where a limited
partner does not become liable as a general
A: partner to partnership creditors even if his
i. Formed by compliance with statutory surname appears in the partnership name?
requirements (Civil Code, Art. 1843)
ii. One or more general partners control the A:
business (Civil Code, Art. 1843) 1. if the creditors have actual knowledge
iii. One or more general partners and one or that he is not a general partner;
more limited partners. (Civil Code, Art. 1843) 2. If the surname is also the surname of a
Limited partners contribute cash or other general partner; or
property, but not services (Civil Code, Art. 3. If prior to the time the partner became a
1845) and share in the profits but do not limited partner, the business has been
participate in the management of the carried under such name. (Civil Code,
business (Civil Code, Art. 1848) and are not Art. 1846)
personally liable for partnership obligations
beyond their capital contributions (Civil l IX. AGENCY |
Code, Art. 1858)
iv. May ask for the return of their capital Q: Can a principal be compelled to reinstate
contributions under conditions prescribed by an agent after the former illegally terminated
law (Civil Code, Art. 1857) their agency contract?
Q: What is the result if a limited partnership is A: No. An illegal termination of agency does not
formed without substantially complying with justify reinstatement of the agent as such. The
all the requirements under Article 1844 of the agency cannot be compelled by the courts to be
Civil Code? reinstated because such relationship can only be
given effect with the consent of the principal.
A: The firm becomes a general partnership as far (Orient Air Services v. Court of Appeals, 197
as third persons are concerned. However, as •SCR.A 645)
amongst the partners, the partnership is still
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Q: Will a broker be paid if the transaction was telegram. (Civil Code, Art. 1872)
effected after the expiration of his authority?
Q: What are the requisites of an Agency by
A: Yes, if the broker is the efficient procuring Estoppel?
cause in bringing the sale. He is the efficient
procuring cause when there is a close proximate A:
and causal connection between the efforts and 1. The principal manifested a representation of
labor of the agent and the principal’s sale of the agent’s authority or knowingly allowed the
property if he is the efficient procuring cause. agent to assume such authority;
(Pratts v. Court of Appeals, 81 SCRA 360) 2. The third person, in good faith, relied upon
such representation; and
Q: What are the requisites for a Principal to be 3. Relying upon such representation, such third
bound by act of his agent? person has changed his position to his
detriment (Country Bankers Insurance
A: Corporation v. Keppel Cebu Shipyard, et. al.,
1. The agent must act in behalf of the principal G.R. No. 166044, 2012).
(Civil Code, Art. 1868)
2. The agent must act within the scope of his Q: What are the cases where Special Power of
authority (Civil Code, Art. 1897) Attorney is Necessary? (PECWAM-LLB-
BOCARO)
Q: When may the Principal be bound by the
acts of an agent who has acted without or A:
beyond the scope of his authority? 1. To make such Payments as are not usually
considered as acts of administration;
A: 2. To Effect novations which put an end to
1. Where the acts of the principal have obligations already in existence at the time
contributed to deceive a 3rd person in good the agency was constituted;
- faith; (Civil Code, Art. 1900) 3. To Compromise, to submit questions to
2. Where the limitations upon the power created arbitration, to renounce the right to appeal
by the principal could not have been known from a judgment, to waive objections to the
by the 3 rd person; (Civil Code, Art. 1900) venue of an action or to abandon a
3. Where the principal has placed in the hands prescription already acquired;
of the agent instruments signed by him in 4. To Waive any obligation gratuitously;
blank; (can’t find legal basis) 5. To Enter into any contract by which the
4. Where the principal has ratified the acts of the ownership of an immovable is transmitted or
agent (Civil Code, Art. 1910) acquired either gratuitously or for a valuable
consideration;
Q: How is implied acceptance manifested as 6. To Make gifts, except customary ones for
between persons who are present and those charity or those made to employees in the
who are absent? business managed by the agent;
7. To Loan or borrow money, unless the latter
A: As between persons who are present, the act be urgent and indispensable for the
acceptance of the agency may be implied if the preservation of the things which are under
principal delivers his power of attorney to the administration;
agent and the latter receives it without any 8. To Lease any real property to another person
objection. (Civil Code, Art. 1871). Meanwhile, as for more than one year;
to those who are absent, the acceptance of the 9. To Bind the principal to render some service
agency cannot be implied from the silence of the without compensation;
agent, except (1) when the principal delivers his 10. To Bind the principal in a contract of
power of attorney to the agent, who receives it partnership;
without any objection; or (2) when the principal 11. To Obligate the principal as a guarantor or
entrust to him by letter or telegram a power of surety;
attorney in which he is habitually engaged as an 12. To Create or convey real rights over
agent, and he did not reply to the letter or immovable property;
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A: Yes, Art. 1878 of the NCC provides that a A: Two persons may contract separately with the
special power of attorney is necessary in order to agent and the principal with regard to the same
loan or borrow money, unless the latter act be thing. If the two contracts are incompatible with
urgent and indispensable for the preservation of each other, the one of prior date shall be
the things which are under administration. Such preferred. This is subject, however, to the rules
authorization, however, need not be in writing. As on Double Sales under Art. 1544 of the Civil Code
long as the mandate is express, such authority (i.e. for movables: first in possession, first in right;
may be either oral or written. (Patrimonio v. for immovables: first to register in good faith, first
Gutierrez, 2014) in right; absent any inscription: first in possession
or party who presents oldest title acquires
Q: A constituted B as his agent. Can B appoint ownership). (Civil Code, A rt.1916)
a substitute?
Q: Who can be estopped to deny Agency?
A: Yes. The agent may appoint a substitute or
sub-agent if the principal has not prohibited him A:
from doing so, but he shall be responsible for the t. Estoppel of Agent - one professing to act as
acts of the substitute: agent is estopped to deny his agency both as
a. When he was not given the power to against his asserted principal and the third
appoint one; persons interested in the transaction in which
b. When he was given such power, but he is engaged
without designating the person, and the
person appointed was notoriously 2. Estoppel by the Principal
incompetent or insolvent. (Civil Code, i. As to agent - one knowing another is
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acting as his agent and fails to repudiate Q: Can the heirs continue the agency?
his acts, or accept the benefits of them,
will be estopped to deny the agency as A: General rule: Agency calls for personal
against such other services on the part of the agent; personal rights
ii. As to sub-agent - for the principal to be & obligations are not transmissible
estopped from denying his liability to a
third person, he must have known or be Exceptions:
charged with knowledge of the i. Agency by operation of law, or a presumed
transaction and the terms of the or tacit agency
agreement between the agent and sub ii. Agency is coupled with an interest in the
agent subject matter of the agency (e.g. power of
iii. As to third persons - one who knows that sale in a mortgage). (Civil Code, Art. 1827)
another is acting as his agent or
permitted another to appear as his agent, Q: What are the exceptions to the
to the injury of third persons who have extinguishment of an agency upon loss or
dealt with the apparent agent as such in destruction of the subject matter?
good faith and in the exercise of A:
reasonable prudence, is estopped to i. If it is possible to substitute other material for
deny the agency (Litonjua, Jr. v. Etemit that which was destroyed without substantial
Corp., G.R. No 144805, 2006) detriment to either party or if the destroyed
subject matter was not in fact essential to the
3. Estoppel of Third Persons - a third person, contract;
having dealt with one as an agent may be ii. A partial loss or destruction does not always
estopped to deny the agency as against the result in a complete termination of the
principal, agent or 3rd persons in interest. agency, and under such circumstances,
while the agency may be ended in so far as
4. Estoppel of the Government - government the destroyed property is concerned, it may
neither estopped by the mistake/error of its continue in existence as to other property not
agents; may be estopped through affirmative affected
acts of its officers acting within the scope of iii. If the loss brought about by the principal (ex.
their authority. principal sells subject matter to another party
even if an agent has been constituted in
Q: When is a principal liable for damages reference to it), principal liable for damages
despite revocation of agency? for his wrongful terminating act; if subject
matter is lost without principal’s fault, no
A: liability assumed by him
1. If the agency was constituted for a fixed
period, the principal shall be liable for Q: May the agency be extinguished at will?
damages occasioned by the wrongful
discharge of the agent before expiration A: Agent may do so but subject to the contractual
of the period fixed. obligations owing to the principal (i.e. fixed period
2. Even if there was no time fixed for the of time for the agency or purpose not yet
continuance of the agency, but the accomplished).
agency can prove that the principal acted
in bad faith by revoking the agency in
order to avoid the payment of
commission about to be earned, the
principal can be held liable for damages.
(VILLANUEVA supra at 209-210 (citing
Dialosa v. CA, 130 SCRA 350 (1984) &
Valenzuela v. CA 191 SCRA 1 (1990))).
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Q: What are the 2 kinds of a loan? Bailor may demand Lender may not
the return of the thing demand its return
A: The two kinds of a loan are: loaned before the before the lapse of the
(a) Commodatum - bailor delivers to bailee a expiration of the term term agreed upon
non-consumable thing so that the latter may in case of urgent need except under Article
use it for a certain time and return the or if the bailee 1198 when the debtor
identical thing commits acts of loses the right to
(b) Mutuum or Simple Loan - lender delivers to ingratitude make use of the
the borrower money or other consumable NOTE: In case of period
temporary use by the
thing upon the condition that the latter will pay
bailor, the contract of
the same amount of the same kind and
commodatum is
quality
suspended while the
thing is in the
Q: Distinguish Commodatum from Mutuum.
possession of the
bailor (Art. 1946 (2)).
A:
Loss of the subject Borrower suffers the
COMMODATUM MUTUUM
matter by a fortuitous loss even if caused
Ordinarily not Money or other
event is suffered by exclusively by a
consumable consumable thing
the bailor since he is fortuitous event and
theowner he is not therefore
Exception:
discharged from his
Consumable goods
duty to pay
may be the subject of
Purely personal Not purely personal
commodatum if the
(1) The death of
purpose of the
either the bailor or
contract is not the
the bailee
consumption of the
extinguishes the
object, as when it is
merely for exhibition contract;
(Art. 1936). (2) The bailee can
neither lend nor
Ownership is retained Ownership is
lease the object of
by the lender transferred to the
the contract to
borrower
third person.
Essentially gratuitous Gratuitous or However, the
onerous, that is with members of the
stipulation to pay bailee’s
interest household may
make use of the
Borrower must return Borrower need only thing loaned,
the same thing loaned pay or return a unless there is a
consumable thing of stipulation to the
the same amount of contrary, or
the same kind and unless the nature
quality of the ting forbids
May involve real or Only personal such use. (Art.
personal property property 1939)
In other words, the
lender takes into
account the
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writing (Art.
the contrary, shall be the
Q: Spouses X owes Z back rentals. Z demands 1956). payment of the interest
the settlement of the outstanding obligation agreed upon, and in the
and interest on the delayed payments. Can Z absence of stipulation, the
properly demand monetary interest on legal interest, which is 6%
delayed rental payments? p.a. (Art. 2209)
Interest due shall earn legal
A: No, Z cannot demand monetary interest on the interest from the time it is
delayed rental payments. Back rentals are judicially demanded,
equivalent to a loan or forbearance of money. In although the obligation may
the absence of stipulation as to interest, Z is be silent upon this point.
entitled to legal interest only at 12% per annum ________________ (Art. 2212)________________
(now 6% per annum) collected from the time of (Siga-anv. Villanueva, 596 Phil. 760, 769(2009))
extrajudicial demand. (Sps. Castro v. Palenzuela,
G.R. No. 184698, January 21, 2013) B. DEPOSIT
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3. Made by Passengers with common carriers Does not contract Pay the creditor
• As to baggage the passengers or their that the principal will without qualification
agents carry (i.e., hand-carried luggage) pay, but simply that if the principal debtor
4. Made by Travelers in hotels or inns (Art. he is able to do so does not pay. Hence,
1998) the responsibility or
• Before keepers of hotels or inns may be obligation assumed
held responsible as depositaries with by the surety is
regard to the effects of their guests, the greater or more
following must concur: onerous than that of a
1. They have been previously guarantor
informed about the effects Guarantor can avail of Surety cannot avail
brought by the guests; and the benefit of the benefit of
2. The latter have taken the excussion and excussion and
precautions prescribed division in case the division.
regarding their safekeeping. creditor proceeds
against him.
C. GUARANTY AND SURETYSHIP Not bound to take Held to know every
notice of the non default of the
Q: Distinguish Guaranty From Suretyship performance of the principal.
principle
A:
GUARANTY SURETYSHIP Q: What is a double or sub-guaranty?
Liability depends Assumes liability as a
upon an independent regular party to the A: It is one constituted to guarantee the obligation
agreement to pay the undertaking of a guarantor. It should not be confounded with
obligation if the guaranty wherein several guarantors concur. (Art.
principal debtor fails 2051(2))
to do so
D. PLEDGE. MORTGAGE AND ANTICHRESIS.
Engagement is a Charged as an CHATTEL MORTGAGE
collateral undertaking original promisor
PROVISIONS COMMON TO PLEDGE AND
Secondarily liable - Primarily liable - MORTGAGE (Arts. 2085-2123)
he contracts to pay if, undertakes directly for
by the use of due the payment without Q: What are the essential requisites common
diligence, the debt reference to the to Contracts of Pledge and Mortgage?
cannot be paid solvency of the (FARVAS)
principal, and is so
responsible at once A: The essential requisites common to pledge
the latter makes and mortgage are the following:
default, without any 1. Constituted to Secure the fulfillment of a
demand by the principal obligation;
creditor upon the 2. Pledgor or mortgagor be the Absolute owner
principal whatsoever of the thing pledged or mortgaged;
or any notice of
default NOTE: Before partition of estate, each heir
Only binds himself to Undertakes to pay if only has an undivided interest in the estate
pay if the principal the principal does not and in each specific piece of property in the
cannot or is unable to pay, without regard to estate. Any mortgage on said property
pay his ability to do so undertaken by an heir is valid, but only up the
Insurer of the Insurer of the debt portion that may be allotted in partition to the
solvency of the heir (Rural Bank of Cabadbaran, Inc. v.
debtor Melencio-Yap, G.R. No. 178451, 2014,
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3. The persons constituting the pledge or Q: What are the effects of the sale of the thing
mortgage have the Free disposal of their pledged at a public auction?
property, and in the absence thereof, that
they be legally authorized for the purpose; A: The sale extinguishes the principal obligation
4. Cannot exist without a Valid obligation; whether the price of the sale is more ,or less than
5. Debtor Retains the ownership of the thing the amount due. If the price is more than amount
given as a security; and due, the debtor is not entitled tothe excess unless
6. When the principal obligation becomes due, the contrary is provided. If the price of the sale is
the thing in which the pledge or mortgage less, neither is the creditor entitled to recover the
consists may be Alienated for the payment to deficiency; a contrary stipulation is void.
the creditor.
REAL ESTATE MORTGAGE
Q: What is Pactum Com m issorium ?
Q: How can a mortgagee be in good faith, and
A: It is a stipulation in a contract of pledge or thus have his right or lien upon the land
mortgage for an automatic appropriation by the mortgaged respected and protected?
creditor of the property in the event of
nonpayment of the debt within the fixed term. A: A mortgagee is considered in good faith when
(Pen v. Julian, G.R. No. 160208, January 11, he relies upon what appears on the face of a
2016) This stipulation is void because ownership Torrens title and lends money in all good faith on
of the security passes to the creditor by mere the basis of the title in the name of the mortgagor,
default of the debtor. (Solitarios v. Jaque, G.R. only thereafter to learn that the latter’s title was
No. 199852, 2014) defective. His or her right or lien upon the land
mortgaged must be respected and protected.
PLEDGE (Mahinay vs. Gako, Jr., G.R. Nos. 165338 &
179375,2011)
Q: What are the modes of extinguishing a
contract of pledge? (RAP-TAP) However, a bank whose business is impressed
with public interest is expected to exercise more
A: care and prudence in its dealings than a private
1. If the thing pledged is Returned by the individual, even in cases involving registered
pledgee to the pledgor or owner, pledge is lands. A bank cannot assume that it is relieved of
extinguished, the responsibility of taking further steps to verify
2. A statement in writing by the pledgee that he the title and inspect the properties to be
renounces or Abandons the pledge is mortgaged.
sufficient to extinguish it. For this purpose,
neither the acceptance by the pledgor or In Armando V. Alano v. Planter's Development
owner, nor the return of the thing pledged is Bank, G.R. No. 171623, June 13, 2011, the SC
necessary, the pledgee becoming a ruled that the Bank was not a mortgagee in good
depositary. faith because the credit investigator oniy checked
3. If subsequent to the perfection of the pledge, the finishing of the house and the number of
the thing is in the Possession of the pledgor bedrooms and CR in the house, but did not
or owner ascertain whether the property was occupied by
NOTE: Only a prim a facie presumption other persons other than the mortgagor.
that the thing has been returned by the
pledgee. BUT: SC has held in a case that while the bank
4. If the thing is in the possession of Third failed to exercise greater care in conducting the
person who has received it from the pledgor ocular inspection of the properties offered for
or owner after the constitution of the pledge, mortgage, its omission did not prejudice any
there is prima facie presumption that the thing innocent third parties because the cause of the
has been returned by the pledge. mortgagors’ defective title was the simulated sale
land. Y has registered interest, lien or Q: What are the classifications of Public
encumbrance annotated on the additional Domain? Who classifies them?
sheet of the said certificate of title of X. In case
that additional sheet is destroyed or missing, A: Under the Constitution,.these are:
may Y file a petition for reconstitution of the 1. Agricultural;
certificate of title of X? 2. Forest or timber;
3. Mineral lands; and
A: Yes. Under Sec. 11 of R.A. No. 26, a petition 4. National parks. (Sec. 3, Art. XII, 1987
for reconstitution of registered interests, liens and Constitution)
other encumbrances may be filed when the
certificate of title affected has not been totally The classification of public lands is an exclusive
destroyed, that is, when the certificate of title is prerogative of the Executive Department and not
composed of more than one sheet and only the of the courts. ' In the absence of such
portion of the additional sheet, on which such classification, the land remains as unclassified
interest, lien or encumbrance was noted is land until it is released therefrom and rendered
missing. (Ungay Malobago v. Republic, G.R. No. open to disposition. (Dir. O f Lands v. CA, 129
187892, 2015) SCRA 689, 1984)
description of the land, tax A: It is the decree issued by the LRA pursuant to
declarations the order of the court (Sec. 31, P.D. 1529). One
c. Private ownership year after the date of entry of decree, it becomes
i. Tax declarations (Note: not incontrovertible and amendments will not be
conclusive evidence of allowed except for correcting clerical errors. It is
ownership; must be coupled with deemed conclusive upon and against all persons,
proof of actual possession) whether or not mentioned by name in the
ii. Presidential issuances and application or notice.
legislative acts
iii. Other kinds of proof (e.g., Q: What is the consequence if it is shown that
testimonial evidence, photos of the decree of registration had included lands
improvements introduced) not included in the original application as
d. Open, exclusive, continuous, and published?
peaceful possession in the concept of
owner A: The registration proceedings are null and void
i. Tax declaration insofar as the land not included in the publication
ii. Regular realty tax payments is concerned. (Benin v.Tuason, G.R. No. L-
iii. Muniments of title (e.g., deeds of 26127, June 28, 1974)
sale, wills, donation; to tack
possession to that of Q: Is republication required if the land subject
predecessors-in-interest) of a petition for registration of title was
iv. Other kinds of proof (e.g., reduced in area due to a discrepancy in the
testimonial evidence, photos of technical description?
improvements introduced)
The payment of realty taxes and declaration of A: No. Amendments in a petition that do not
the subject land in the name of the applicant for a involve an addition but only a reduction of the
certain year gives rise to the presumption that he original area that was published no longer require
claimed ownership and possession thereof oniy a republication because the amended area was
in that year. (Republic v. Science Park o f the already included in the first publication (Republic
Philippines, G.R. No. 237714, Nov. 12, 2018) v. San Mateo, et al., G.R. No. 20356, 2014).
Q: Can an applicant for original registration Q: What remedy can be availed of in cases of
engage in dealings over said land during the actual fraud committed in the adjudication or
pendency of the registration proceedings? confirmation of title? What are the requisites
to avail of the same?
A: Yes. After the filing of the application and
before the issuance of the decree of registration, A: A petition for review of the decree of
the land therein described may still be the subject registration may be filed by any aggrieved party,
of dealings in whole or in part, in which case the including persons deprived of the opportunity to
interested party shall present to the court the be heard, including the government. Such party
pertinent instruments together with a subdivision does not need to be an oppositor or original
plan approved by the Director of Lands in case of claimant in the proceedings (Sec. 32, P.D. 1529).
transfer of portions thereof and the court, after This remedy, however, is not available to an
notice to the parties, shall order such land oppositor who abandoned his claim and oppositor
registered subject to the conveyance or who had notice of the proceedings but failed to
encumbrance created by said instruments, or raise his claims (Crisolo v. CA, G.R. No. L-33093,
order that the decree of registration be issued in 1975).
the name of the person to whom the property has
been conveyed by said instruments. (Sec. 22, Requisites: (InFA-ReD)
P.D. 1529) 1. The property has not yet passed to an
Innocent purchaser for value;
Q: What is the decree of registration and what 2. Petition is Filed within 1 year from entry
is the effect of its entry in the LRA? of the decree;
3. There was Actual or extrinsic fraud;
.4. Petitioner has a Real and dominical right; keeping him away from court, a false promise of
5. Be was Deprived thereof; (Walstrom v. a compromise; or where the defendant never had
Mapa, 181 SCRA 431, 1990) knowledge of the suit, being kept in ignorance by
the acts of the plaintiff; or when an attorney
Q: What are the other grounds for a review of fraudulently or without authority connives at his
the decree of registration? defeat. (Baclaran Marketing Corp. v. Nieva, G.R.
No. 189881, 2017)
A:
a. Fatal infirmity of the decision for want of Intrinsic fraud refers to the acts of a party at a
due process trial that prevented a fair and just determination of
b. Lack of jurisdiction of the court the case, but the difference is that the acts or
things, iike falsification and false testimony, couid
Q: Who is an “innocent purchaser for value”? have been litigated and determined at the trial or
adjudication of the case. (Pinausukan Seafood
A: One who buys property of another, without House v. Far East Bank & Trust Co., G.R. No.
notice that some other person has a right to or 159926, 2014)
interest in such property and pays a full and fair
price for the same, at the time of such purchase C. CERTIFICATE OF TITLE
or before he has notice of the claims or interest of
some other person in the property. (Sps. Villamif Q: What are the attributes of an original
v. Villarosa, G.R. No. 177187, 2009). Torrens certificate of title?
2. incontrovertible and indefeasible - Upon possibility that the real property may be under co-
the expiration of 1 year from and after the ownership with' persons not named in the
entry of the decree of registration in the certificate or that the registrant may only be a
LRA trustee or that other parties may have acquired
Exceptions: (PUF) interest subsequent to the issuance of the
a. If Previous valid title of the same certificate of title. (Go v. Estate of De
land exists Buenaventura, G.R. Nos. 211972 & 212045,
b. When land covered is 2015)
Unregistrable
c. When acquisition of certificate is Q: Does a certificate of title confer ownership
attended by Fraud over the property described therein?
3. Not subject to collateral attack - It cannot A: No. Registration under the Torrens system, not
be altered, modified, or cancelled except in being a mode of acquiring ownership, does not
a direct proceeding in accordance with the create or vest title. The Torrens certificate of title
law. An action is an attack on a title when is merely an evidence of ownership or title in the
the object of the action is to nullify the title, particular property described therein. (Casimiro
and thus challenge the judgment or Development Corporation vs. Mateo, G.R. No.
proceeding pursuant to which the title was 175485, July 27, 2011)
decreed.
• Direct attack - when the object of Q: What is the rule where two transfer
an action is to annul or set aside certificates of title have been issued on
such judgment or enjoin its different dates?
enforcement.
• Indirect or collateral attack - A: The one who holds the earlier title prevails.
when, in an action to obtain a This rule, however, may apply only in the absence
different relief, an attack on the of any anomaly or irregularity in the process of its
judgment or proceeding is registration. (Bangis v. Heirs o f Adolfo, G.R. No.
nevertheless made as an 190875, 2012)
incident thereof. (Sampaco v.
Lantud, G.R. No. 163551, 2011). D. SUBSEQUENT REGISTRATION
Q: What are the instances when the ROD may Q: What are the exceptions to the “Mirror
validly deny registration of a voluntary Doctrine”?
instrument?
A: (BOB-MILKA)
A: 1. When the purchaser or mortgagee is a
Where there is more than 1 copy of the Bank/financing institution, as banks are
owner’s duplicate certificate of title and presumed to have employed due
not all such copies are presented to the diligence (through ocular inspection, etc.)
ROD.; in ascertaining the status, condition, and
Where the voluntary instrument bears on occupancy of the property involved.
its face an infirmity (e.g., where the (Dela Merced v. GSIS, G.R. No. 140398,
property is presumed to be conjugal but 2001) .
the instrument of conveyance bears the 2. Where the Owner still holds a valid arrd
signature of only one spouse); existing certificate of title covering the
Where the validity of the instrument same property. The law protects the
sought to be registered is in issue in a lawful holder of a registered title over the
pending court suit, notice of which must transfer of a vendor bereft of any
be given to parties; transmissible right. (Tomas v. Tomas,
Where required certificates or documents G.R. No. L-36897, 1980).
such as DAR clearance, copy of latest tax 3. When the purchaser is in Bad faith (Egao
declaration, are not submitted. (Balbin v. v.CA,G .R . No. L-79787, 1989).
ROD, G.R. No. L-20611, 1969) 4. Where the land is bought not from the
The ROD may also refuse to register a registered owner but from one whose
private document since Section 112 of rights have been Merely annotated on
P.D. 1529 provided that deeds of the certificate of title (Quiniano v. C.4,
conveyances affecting lands should be G.R. No. L-23024, 1971).
verified and acknowledged before a 5. When there are sufficiently strong
notary public or other public officer indications to impel closer inquiry into the
authorized by iaw to take location, boundaries, and condition of the
acknowledgement. ( Gallardo v. IAC, lot (Francisco v. CA, G.R. No. L-30112,
G.R. No. L-67742, 1987) 1987).
on the correctness of the certificate of title Q: Can a forged deed be a source of a valid
issued therefor and the law will in no way oblige title?
him to go beyond the certificate to determine the
condition of the property. However, a higher A: Yes. As a general rule, after the entry of the
degree of prudence is required from one who registration decree on the original application,
buys from a person who is not the registered any subsequent registration procured by the
owner, although the land object of the transaction presentation of a forged duplicate certificate of
is registered. In such a case, the buyer is title, or a forged deed or other instrument is void
expected to examine not only the certificate of title (Sec. 53, P.D. 1529)
but all factual circumstances necessary for him to
determine if there are any flaws in the title of the The exception states that a forged or fraudulent
transferor. (Heirs of Sarili v. Lagrosa, G.R. No. document may become the root of a valid title
193517, 2014) when the certificate of title over the land has
already been transferred from the name of the
Q: What is the Chain of Title rule? owner to that of the forger, and the land is sold
later to an innocent purchaser for value. (Sps.
A: The general rule is that a forged deed is null Villamil v. Velasco, G.R. No. 177187, 2009).
and cannot convey title. However, an exception
is when title is acquired from a forger to an 2. INVOLUNTARY DEALINGS
innocent purchaser for value (Sec. 55, Land
Registration Act). However, there must be a Q: What is an adverse claim?
complete chain of registered titles; all the A: An adverse claim is a notice to third persons
transfers starting from the original rightful owner that someone is claiming an interest on the
to the innocent holder for value, including the property or has a better right than the registered
transfer to the forger, must be duly registered, owner thereof. The disputed land is subject to the
and the title must be properly issued to the outcome of the dispute (Sajonas v. CA, G.R No.
transferee. (Spouses Peralta v. Heirs of 102377, 1996).
Bernardina Abalon, G.R. No. 183448, June 30,
2014) Q: What are the purposes of an adverse
claim?
Although generally a forged or fraudulent deed or A:
document is a nullity and conveys no title, it may It apprises third persons of the
become the root of a valid title when the certificate controversy over the ownership of the
of title over the land has already been transferred land
from the name of the owner to that of the forger It preserves and protects the right of the
and the land is sold later to an innocent purchaser adverse claimant during the pendency of
for value. A person who deals with registered the controversy
property in good faith will acquire good title from It is notice to third persons that any
a forger and will be absolutely protected by a transaction regarding the disputed land is
Torrens title (Sps. Villamil v. Velasco, 2009). subject to the outcome of the dispute.
(Arrazola v. Bernas, 86 SCRA 279,1978)
While, it is a familiar doctrine that a forged or
fraudulent document may become the root of a Q: What are the substantive requisites of an
valid title, if title to the property has been adverse claim?
transferred from the forger to an innocent
purchaser in good faith, the same does not apply A:
in case of banking institutions or those engaged 1. A claimant’s right or interest in the
in real estate for they are expected to exercise registered land is adverse to the
more care and prudence than private individuals registered owner;
in their dealing with registered lands. In the 2. Such right arose subsequent to date of
absence of inquiry, the respondent Bank cannot original registration;
and should not be regarded as a 3. No other provision is made in the Decree
mortgagee/purchaser in good faith. (Erasusta v. for the registration of such right or claim
CA, G.R. No. 149231, 2006) (Sec. 70, P.D. 1529)
Q: What is notice of lis pendens? of molesting the adverse party, or that it is not
necessary to protect the rights of the party who
A: A notice of lis pendens is an announcement to caused it to be registered. It may also be
the whole world that a particular real property is canceled by the Register of Deeds upon verified
in litigation, serving as a warning that one who petition of the party who caused the registration
acquires an interest over said property does so at thereof. (Sec. 77, P.D. 1529)
his own risk, or that he gambles on the result of
the litigation over the said property ( Spouses Po 3. JUDICIAL RECONSTITUTION OF TITLE
Lam v. Court o f Appeals, G.R. No. 116220,
( 2000). Q: What are the requirements for judicial
reconstitution of title?
No action to recover possession of real estate, or
to quiet title thereto, or to remove clouds upon the A: (LDR-FB)
title thereof, or for partition, or other proceedings 1. The certificate of title had been Lost or
of any kind in court directly affecting the title to destroyed.
land or the use or occupation thereof or the 2. The Documents presented by petitioner
buildings thereon, and no judgment, and no are sufficient and proper to warrant
proceeding to vacate or reverse any judgment, reconstitution of the lost or destroyed
shall have any effect upon registered land as certificate of title.
against persons other than the parties thereto, 3. The petitioner is the Registered owner of
UNLESS a memorandum or notice shall have the property or had an interest therein.
been filed and registered, stating the following: 4. The certificate of title was in Force at the
1. Institution of such action or proceeding
time it was lost or destroyed.
2. The court wherein the same is pending
5. The description, area and Boundaries of
3. The date of the institution thereof
the property are substantially the same
4. A reference to the number of the
and those contained in the lost or
certificate of title
destroyed certificate of title (Heirs o f
r : 5. An adequate description of the land
Toring v. Heirs o f Boquilaga, G.R.
affected and the registered owner thereof
No. 163610, 2010, citing R.A. 26, Secs.
- (P.D. 1529, Sec. 76).
2, 3, 12 and 13).
Q: X, in disputing the sale of a certain piece
Q: What are the valid sources for judicial
land by Y to Z, filed with the Register of Deeds
reconstitution of title?
a notice of lis pendens on the back oftheTC T.
During the pendency of the case, Z sold the
A: Original certificates of title (OCT) and Transfer
land further to W. Upon discovery, X sought
certificates of title (TOT) shall be reconstituted
to annul the subsequent sale to W, but W
from such of the sources hereunder enumerated
countered that he should be considered an
as may be available, in the following order:
innocent purchaser for value.
of the innocent purchaser for value’s title should | XII. TORTS AND DAMAGES 1
only be considered as a condition sine qua non to . ............. ■ ............... ................. ............ ...
file such an action and not as a form of
A. TORTS/QUASf-DELICTS
constructive notice for the purpose of reckoning
(Arts. 2176 - 21941
prescription. This is because the concept of
registration as a form of constructive notice is
1. DEFINITION, ELEMENTS
essentially premised on. the policy of protecting
the innocent purchaser for value's title, which
consideration does not obtain in Assurance Fund
Q: What is a "quasi-delict?"
cases. Thus, when they filed their complaint on
A: Whoever by act or omission causes damage to
March 18, 2009, the Spouses' claim has not yet
another, there being fault or negligence, is
prescribed. (Spouses Stilianopoulos v. ROD for
obliged to pay for the damage done. Such fault or
Legazpi City, G.R. No. 224678, July 3, 2018)
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi
delict and is governed by the provisions of this
Chapter. (Art.2176)
Q: What is a tort?
A:
1. Damage suffered by plaintiff
2. Fault or Negligence of the defendant, or
some other person for whose acts he must
respond
3. Connection of cause and effect between the
fault or negligence of the defendant and the
damages incurred by the plaintiff
4. No pre-existing contractual relation between
the parties (Andamo v. International
Appellate Court G.R. No. 74761, 1990)
A: Generally no.
Keihin-Everett Forwarding Co., Inc., G.R. No. recognizes that a man's house is his castle,
191937, August 9, 2017) where his right to privacy cannot be denied or
even restricted by others. It includes "any act of
2. CLASSIFICATION OF TORTS intrusion into, peeping or peering inquisitively into
the residence of another without consent of the
(a) Negligent Torts latter."
Q: What is captain of the ship rule? Does this negligence of the other party. (Picart v. Smith,
doctrine apply in our jurisdiction? Jr., G.R. No. L-12219, March 15, 1918)
A: Under the captain of the ship rule, the Alternative formulation: Where both parties are
operating surgeon is the person in complete guilty of negligence, but the negligent act of one
charge of the surgery room and all personnel succeeds that of the other by an appreciable
connected with the operation whose duty is to interval of time, the person who has the last fair
obey the orders of the former. Yes, it applies chance to avoid the impending harm and fails to
under Philippine law (PS/ v. Agana, G.R. No. do so is chargeable with the consequences,
126297, 2010). without reference to the prior negligence of the
other party. (Achevara v. Ramos, G.R. No.
Q: May a hospital be held liable for the 175172, September 29, 2009)
negligence committed by its doctors, who are
not its employees? (c) Proximate Cause
A: Yes. The court has applied the doctrine of Q: Define "proximate cause.”
agency by estoppel to hold hospitals liable for the
negligent acts of physicians. This doctrine A: That cause which, in natural and continuous
applies when: sequence, unbroken by any efficient intervening
1. The hospital represents that a physician or cause, produces the injury, and without which the
doctor is its employee or agent (example: result would not have occurred. (Vda. de
displaying a doctor’s name in the hospital Bataclan v. Medina, G.R. No. L-10126, 1957).
lobby); and
2. The patient relies on such representations. (d) Damnum Absque Injuria
(Professional Services, Inc. v. Agana, G.R.
No. 126297, 2007) Q: Explain the concept of "damnum absque
injuria?
Q: What are the elements of the "Doctrine of
Informed Consent?" A: It means "damage without injury." A person
may have suffered physical hurt or injury, but for
A: The elements are: as long as no legal injury or wrong has been
1. The physician had a duty to disclose material done, there is no liability.
risks;
2. He failed to disclose or inadequately To justify an award of damages, the elements of
disclosed those risks; “injury”, “damage”, and “damages" must concur.
3. As a direct and proximate result of the failure Injury is the illegal invasion of a legal right;
to disclose, the patient consented to the damage is the loss, hurt, or harm which results
treatment, which he or she would otherwise from the injury; and damages are the
not have consented to; and recompense or compensation awarded for the
4. The patient was injured by the proposed damage suffered. Thus, there can be damage
treatment (Li v. Soliman, G.R. No. 165279, without injury in those instances in which the loss
2011) or harm was not the result of a violation of a legal
duty. These situations are often called damnum
(b) Last Clear Chance absque injuria. (Spouses Custodio v. Court of
Appeals, G.R. No. 116100, 1996)
Q: State the Doctrine of Last Clear Chance
(also known as the Doctrine of Discovered This defense applies when a plaintiff sustains
Peril and the Doctrine of Supervening damage as a result of the defendant’s exercise of
Negligence). his/her rights, but without any bad faith, malice, or
gross negligence. This defense does not apply
A: Whoever had the last fair chance to avoid the when there is an abuse of a person’s rights.
impending harm and fails to do so is chargeable (Amonoyv. Gutierrez, G.R. No. 140420, 2001)
with the consequences with reference to the prior
A: Common carriers, by reason of the nature of More particularly, when someone enters the
their business, should observe extraordinary property of another with the latter's knowledge
diligence in the vigilance over the goods they and consent, they have a reasonable expectation
carry (Art. 1733). of not getting injured. Thus, the property owner
(or non-owner resident) is responsible for
In case of loss of the goods, the common carrier maintaining a relatively safe environment, arid
is presumed to have been at fault or to have acted s/he may be held liable for accidents and injuries
negligently. (Art. 1735) that occur on his/her property. Note that the same
responsibility is not owed to trespassers.
In case of death of or injuries to passengers,
common carriers are presumed to have been at
fault or to have acted negligently. (Art. 1756)
A: [2/3 x (80 - (age at the time o f death)] x NET (2) “Net Annual Income” may be computed on
ANNUAL INCOME the basis of the prevailing minimum wage for
workers in the non-agricultural sector at the time
NOTE: In the absence of documentary evidence of the minor’s death or permanent incapacity.
of expenses, it is reasonable to presume that it (Spouses Pereha v. Spouses Zarate, G.R. No.
Net Income is 50% of Gross Income. (Philippine 157917, 2012; and Abrogar v. Cosmos Bottling
Hawk Corporation v. Lee, G.R. No. 166869, Co., G.R. No. 164749, 2017)
2010)
Q: When are attorney's fees awardable?
Q: May loss of earning capacity be awarded
as damages for the death of a minor child who A:
had no history of earnings? 1. When exemplary damages are awarded;
2. When the defendant's act or omission has
A: YES - Art. 2206(1) provides that damages for compelled the plaintiff to litigate with third
LEC shall be assessed and awarded by the court persons or to incur expenses to protect his
“unless the deceased on account of permanent interest;
physical disability not caused by the defendant, 3. In criminal cases of malicious prosecution
had no earning capacity at the time of his death”. against the plaintiff;
Damages for LEC may be awarded to a minor’s 4. In case of a clearly unfounded civil action or
heirs although he had no history of earnings proceeding against the plaintiff;
because compensation of this nature is awarded 5. Where the defendant acted in gross and
not for loss of time or earnings but for loss of the evident bad faith in refusing to satisfy the
deceased’s power or ability to earn money. plaintiffs plainly valid, just and demandable
(Spouses Pereha v. Spouses Zarate, G.R. No. claim;
157917, 2012) 6. In actions for legal support;
7. In actions for the recovery of wages of
How to Compute LEC of Non-Earning Student household helpers, laborers and skilled
As a general rule, damages for LEC are workers;
computed by applying the following formula: 8. In actions for indemnity under workmen's
compensation and employer's liability laws;
Damages for LEC = 2/3(80-X) multiplied by Net 9. In a separate civil action to recover civil
Annual Income where: liability arising from a crime;
10. When at least double judicial costs are
(1) “X ” is the deceased or permanently awarded. (Art. 2208)
incapacitated person’s age at the time of the
accident; and Q: When are moral damages recoverable?
(2) “Net Annual Income” is equivalent to a A: Cases when Moral Damages may be
person’s Gross Annual Income less Necessary recovered
and Living Expenses (in the absence of evidence, 1. Criminal offense resulting in physical injuries
it is presumed that Necessary and Living 2. Quasi-delicts causing physical injuries
Expenses are equal to half of a person’s Gross 3. Seduction, abduction, rape or other acts of
Annual Income). lasciviousness
4. Adultery and concubinage
The formula may be modified when a minor who 5. Illegal or arbitrary detention or arrest
was not yet earning is involved: 6. Illegal search
7. Libel, slander or other form of defamation
(1) “X” may be fixed at 21, instead of the person’s 8. Malicious prosecution
age at the time of his death or permanent
"9. Acts mentioned in ART. 309 of the RPC temperate, liquidated to compensatory damages;
relating to disrespect of the dead and also called corrective or punitive damages.'
interference with funeral
10. Acts and actions referred to in Arts. 21, 26, NOTE: Exemplary damages cannot be recovered
27, 28, 29, 30, 32, 34 and 35 (Art. 2219) as a matter of right; the court will decide whether
or not they should be adjudicated.
NOTE: Art. 2219 is not an exclusive
enumeration.
A:
(a) Iniquitous or unconscionable
(b) Partial or irregular performance